Exhibit 10.5

 

 

 

ENERGY XXI LTD

 

PLAN SUPPORT AGREEMENT

 

November 14, 2016

 

 

 

This Plan Support Agreement (together with the Plan Mediation Term Sheet (as
defined below) and the Plan (as defined below), as such may be amended,
restated, supplemented, or otherwise modified from time to time in accordance
with the terms hereof, this “Agreement”),1 dated as of November 14, 2016, is
entered into by and among: (a) the Debtors; and (b) the undersigned noteholders
who are members of the ad hoc committee of Second Lien Noteholders (the “Second
Lien Plan Support Parties”), the Second Lien Notes Trustee, the Creditors’
Committee, the undersigned noteholders who are members of the ad hoc group of
EGC Unsecured Noteholders (collectively with the EGC Unsecured Notes Indenture
Trustee, the “EGC Plan Support Parties”), and the undersigned noteholders who
are members of the ad hoc group of EPL Unsecured Noteholders (collectively with
the EPL Unsecured Notes Indenture Trustee, the “EPL Plan Support Parties”)
(collectively with the EXXI 3.0% Senior Convertible Notes Trustee, and together
with any such parties that may enter into this Agreement in accordance with
Section 13 and/or Section 14 hereof, the “Plan Support Parties”); provided,
however that the Indenture Trustees shall not be required to sign this
Agreement; provided further, however that each Indenture Trustee shall be deemed
a Plan Support Party unless and until such Indenture Trustee files an objection
to the approval, acceptance, or implementation of the Plan and/or directly or
indirectly votes to reject the Plan; provided further, however, that an
Indenture Trustee shall remain a Plan Support Party notwithstanding the filing
of any objection to the Plan solely on the grounds that the Plan does not comply
with this Plan Support Agreement or the Plan Mediation Term Sheet or pertains
solely to the effect of one or more specific Plan provisions (including
omissions) on the rights and duties of such Indenture Trustee. This Agreement
(x) collectively refers to the Second Lien Plan Support Parties, the EGC Plan
Support Parties, and the EPL Plan Support Parties as the “Noteholder Plan
Support Parties” and each of the foregoing individually as a “Noteholder Plan
Support Party” and (y) collectively refers to the Debtors and the Plan Support
Parties as the “Parties” and each individually as a “Party.”

 

RECITALS

 

WHEREAS, on September 16, 2016, the Court appointed Judge Leif Clark as the
mediator pursuant to the Order (A) Adjourning the Confirmation Hearing and
Extending Related Deadlines, (B) Extending the Filing Exclusivity Period and
Soliciting Exclusivity Period, and (C) Appointing a Mediator [Docket No. 1337];

 

 

1Capitalized terms used but not defined herein are used as defined in the
Debtors’ First Amended Joint Chapter 11 Plan of Reorganization [Docket No. 1418]
(the “Existing Plan”).

 

 

 

 

WHEREAS, in an effort to consensually resolve outstanding disputes among the
parties in interest in the Debtors’ Chapter 11 Cases and achieve a consensual
and value-maximizing restructuring, representatives for the Debtors, the First
Lien Agent, the Second Lien Ad Hoc Committee, the Second Lien Indenture Trustee,
the Creditors’ Committee, the Equity Committee, the ad hoc group of EGC
Unsecured Noteholders, the EGC Unsecured Notes Indenture Trustee, the ad hoc
group of EPL Unsecured Noteholders, the EPL Unsecured Notes Indenture Trustee,
and the EXXI 3.0% Senior Convertible Notes Indenture Trustee (collectively, the
“Mediation Parties”) participated in a confidential and non-binding mediation
process, as discussed on the record at a hearing before the Court on September
13, 2016;

 

WHEREAS, the Debtors, in consultation with the independent directors of EGC and
EPL respectively, and their respective Boards, have continued to engage in
extensive, good-faith, arms’ length mediation negotiations with the Plan Support
Parties;

 

WHEREAS, the Parties have reached agreement on the terms of a global settlement
that contemplates (a) the execution of this Agreement and (b) the modification
of the Existing Plan on the terms set forth in that certain plan mediation term
sheet (the “Plan Mediation Term Sheet”) attached hereto as Exhibit A;

 

WHEREAS, as a result of these negotiations, the Parties have agreed to support
the Existing Plan as modified in accordance with the terms of this Agreement and
the Plan Mediation Term Sheet (as modified, the “Plan”) attached hereto as
Exhibit B;

 

WHEREAS, the independent directors of EGC and EPL have determined that the
Debtors’ entry into this Agreement and consummation of the Plan in accordance
with the Plan Mediation Term Sheet are in the best interests of the EGC and EPL
estates (as applicable);

 

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

 

AGREEMENT

 

1.           PSA Effective Date. This Agreement shall become effective, and the
obligations contained herein shall become binding upon the Parties, upon the
first date (such date, the “PSA Effective Date”) that this Agreement has been
executed by all of the following: (a) each Debtor; (b) the Creditors’ Committee;
(c) the Second Lien Plan Support Parties, holding, in the aggregate, at least
66.6% in principal amount outstanding of the Second Lien Notes Claims; (d) the
EGC Plan Support Parties holding, in the aggregate, at least 26% in principal
amount outstanding of the EGC Unsecured Notes Claims (excluding the EGC
Repurchased Bonds); (e) the EPL Plan Support Parties holding, in the aggregate,
at least 55.7% in principal amount outstanding of the EPL Unsecured Notes Claims
(excluding the EPL Repurchased Bonds).

 

2.           Exhibits and Schedules Incorporated by Reference. Each of the
exhibits attached hereto and any schedules to such exhibits (collectively, the
“Exhibits and Schedules”) is expressly incorporated herein and made a part of
this Agreement, and all references to this Agreement shall include the Exhibits
and Schedules. In the event of any inconsistency between this Agreement (without
reference to the Exhibits and Schedules) and the Exhibits and Schedules, this
Agreement (without reference to the Exhibits and Schedules) shall govern. For
the avoidance of doubt, in the event of any inconsistency between the Plan
Mediation Term Sheet and the Plan, the Plan Mediation Term Sheet shall govern.

 

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3.           Definitive Documentation.

 

(a)The definitive documents and agreements governing the Restructuring
Transactions (collectively, the “Definitive Documentation”) shall include:

 

(i)the Plan;

 

(ii)the Confirmation Order; and

 

(iii)the second supplement (as amended, supplemented, or otherwise modified from
time to time, the “Second Supplement”) to the Debtors’ Third Amended Disclosure
Statement for the Debtors’ Proposed Joint Chapter 11 Plan of Reorganization
[Docket No. 809] (the “Disclosure Statement”).

 

(b)The Definitive Documentation identified in Section 3(a) will, after the PSA
Effective Date, remain subject to negotiation and shall, upon completion,
contain terms, conditions, representations, warranties, and covenants consistent
with the terms of this Agreement (including all exhibits hereto) and be in form
and substance reasonably satisfactory to each of: (i) the Second Lien Plan
Support Parties who hold, in the aggregate, at least 66.6% in principal amount
outstanding of the Second Lien Notes Claims held by the Second Lien Plan Support
Parties (the “Majority Second Lien Plan Support Parties”); (ii) the Creditors’
Committee; (iii) the EGC Unsecured Notes Indenture Trustee and the EGC Plan
Support Parties who hold, in the aggregate, at least 66.6% in principal amount
outstanding of the EGC Unsecured Notes Claims held by the EGC Plan Support
Parties (the “Majority EGC Plan Support Parties”); and (iv) the EPL Unsecured
Notes Indenture Trustee and the EPL Plan Support Parties who hold, in the
aggregate, at least 66.6% in principal amount outstanding of the EPL Unsecured
Notes Claims held by the EPL Plan Support Parties (the “Majority EPL Plan
Support Parties” and, collectively with the Majority Second Lien Plan Support
Parties, the Creditors’ Committee, and the Majority EGC Plan Support Parties,
the “Majority Plan Support Parties”). For the avoidance of doubt, when used
herein, the term “Majority Plan Support Parties” shall require the independent
approval of the Majority Second Lien Plan Support Parties, the Creditors’
Committee, the Majority EGC Plan Support Parties, and the Majority EPL Plan
Support Parties.

 

4.           Milestones. Subject to Section 7, the Debtors shall implement the
Restructuring Transactions on the following timeline (each deadline, a
“Milestone”):

 

(a)no later than December 15, 2016, the Court shall have commenced the
Confirmation Hearing;

 

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(b)no later than December 31, 2016, the Court shall have entered the
Confirmation Order; and

 

(c)no later than January 31, 2017, the Effective Date shall have occurred.

 

Subject to the individual termination right set forth in Sub-Clause (a) of
Section 10, the Debtors may extend a Milestone with the express prior written
consent of the Majority Plan Support Parties.

 

5.           Commitment of the Noteholder Plan Support Parties. Each Noteholder
Plan Support Party shall (severally and not jointly), solely as it remains the
legal owner, beneficial owner, and/or investment advisor or manager of or with
power and/or authority to bind any claims held by it, from the PSA Effective
Date until the occurrence of a Termination Date (as defined in Section 11)
applicable to such Noteholder Plan Support Party:

 

(a)use commercially reasonable efforts to support and cooperate with the Debtors
to take all commercially reasonable actions necessary to consummate the
Restructuring Transactions in accordance with the Plan and the terms and
conditions of this Agreement and the Plan Mediation Term Sheet (but without
limiting consent, approval, or termination rights provided in this Agreement and
the Definitive Documentation), including vote all of its claims against, or
interests in, as applicable, the Debtors now or hereafter owned by such
Noteholder Plan Support Party (or for which such Noteholder Plan Support Party
now or hereafter has voting control over) to accept the Plan in accordance with
the applicable procedures set forth in the Disclosure Statement, the Second
Supplement, and the solicitation materials with respect to the Plan
(collectively, the “Solicitation Materials”); as approved consistent with the
Bankruptcy Code upon receipt of Solicitation Materials approved by the Court and
timely return a duly-executed ballot in connection therewith;

 

(b)not withdraw, amend, or revoke (or cause to be withdrawn, amended, or
revoked) its tender, consent, or vote with respect to the Plan; provided,
however, that upon termination of this Agreement, the votes of the Noteholder
Plan Support Parties shall be deemed immediately withdrawn and deemed timely
votes to reject the Plan unless the applicable Noteholder Plan Support Party
elects otherwise in writing to the Debtors, and each Party agrees that nothing
in this Agreement, the Bankruptcy Code, or applicable law prohibits such
Noteholder Plan Support Party from making such election; and

 

(c)use commercially reasonable efforts to support and not object to, delay,
impede, or take any other action to interfere with the Restructuring
Transactions, or propose, file, support, or vote for any restructuring, workout,
or chapter 11 plan for any of the Debtors other than the Restructuring
Transactions and the Plan (but without limiting consent, approval, or
termination rights provided in this Agreement and the Definitive Documentation).

 

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Notwithstanding anything herein to the contrary, nothing in this Agreement shall
require any Second Lien Plan Support Party to take any action or refrain from
taking any action that is inconsistent with such Second Lien Plan Support
Party’s obligations under that certain Intercreditor Agreement, dated as of
March 12, 2015, between The Royal Bank of Scotland plc, as Priority Lien Agent,
and U.S. Bank National Association, as Second Lien Collateral Trustee.

 

Notwithstanding anything herein to the contrary, nothing in this Agreement and
neither a vote to accept the Plan by any Noteholder Plan Support Party nor the
acceptance of the Plan by any Noteholder Plan Support Party shall (w) be
construed to prohibit any Noteholder Plan Support Party from contesting whether
any matter, fact, or thing is a breach of, or is inconsistent with, this
Agreement or the Definitive Documentation, or exercising rights or remedies
specifically reserved herein, (x) be construed to limit any Noteholder Plan
Support Party’s rights under any applicable indenture, credit agreement, other
loan document, and/or applicable law or to prohibit any Noteholder Plan Support
Party from appearing as a party-in-interest in any matter to be adjudicated in
the Chapter 11 Cases, so long as, from the PSA Effective Date until the
occurrence of a Termination Date, such appearance and the positions advocated in
connection therewith are consistent with this Agreement and are not for the
purpose of hindering, delaying, or preventing the consummation of the
Restructuring Transactions, provided, however, that any delay or other impact on
consummation of the Restructuring Transactions caused by a Noteholder Plan
Support Party’s opposition to any relief that is inconsistent with the terms of
this Agreement, the Plan Mediation Term Sheet, or the Plan shall not constitute
a violation of this Agreement, or (y) impair or waive the rights of any
Noteholder Plan Support Party to assert or raise any objection permitted under
this Agreement in connection with any hearing on confirmation of the Plan or in
the Court.

 

6.           Commitment of the Creditors’ Committee. The Creditors’ Committee
(solely in its capacity as an official committee) shall from the PSA Effective
Date until the occurrence of a Termination Event (as defined in Section 9)
applicable to the Creditors’ Committee:

 

(a)Subject to Sub-Clause (c) of this Section 6, use commercially reasonable
efforts to support and cooperate with the Debtors to take all commercially
reasonable actions necessary to consummate the Restructuring Transactions in
accordance with the Plan and the terms and conditions of this Agreement (but
without limiting consent, approval, or termination rights provided in this
Agreement, the Plan and the Definitive Documentation).

 

(b)Subject to Sub-Clause (c) of this Section 6, use commercially reasonable
efforts to not object to, delay, impede, or take any other action to interfere
with the Restructuring Transactions, or propose, file or support any
restructuring, workout, or chapter 11 plan for any of the Debtors other than the
Restructuring Transactions and the Plan.

 

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(c)Notwithstanding anything herein to the contrary, nothing in this Agreement
shall (i) be construed to prohibit the Creditors’ Committee from contesting
whether any matter, fact, or thing is a breach of, or is inconsistent with, this
Agreement or the Definitive Documentation, or exercising rights or remedies
specifically reserved herein, (ii) be construed to limit the Creditors’
Committee’s rights under applicable law or to prohibit the Creditors’ Committee
from appearing as a party-in-interest in any matter to be adjudicated in the
Chapter 11 Cases, so long as, from the PSA Effective Date until the occurrence
of a Termination Date, such appearance and the positions advocated in connection
therewith are consistent with this Agreement and the Plan Mediation Term Sheet
and are not for the purpose of hindering, delaying, or preventing the
consummation of the Restructuring Transactions, provided, however, that any
delay or other impact on consummation of the Restructuring Transactions caused
by the Creditors’ Committee’s opposition to any relief that is inconsistent with
the terms of this Agreement or the Plan shall not constitute a violation of this
Agreement, or (ii) impair or waive the rights of the Creditors’ Committee to
assert or raise any objection permitted under this Agreement in connection with
any hearing on confirmation of the Plan or in the Court.

 

(d)Notwithstanding anything to the contrary herein, nothing in this Agreement
shall prevent the Creditors’ Committee from taking or refraining from taking any
action that, after receiving advice from counsel, it is obligated to take or
refrain from taking in the performance of its fiduciary obligations under
applicable law. Further, for the avoidance of doubt, and notwithstanding any
provisions to the contrary herein, in order to fulfill its fiduciary
obligations, the Creditors’ Committee may analyze and consider unsolicited
proposals or offers for any alternative chapter 11 plan or restructuring
transaction and may ask clarifying questions regarding that offer without
breaching its obligations under this Agreement or giving rise to a Termination
Event.

 

(e)The Creditors’ Committee agrees to submit a letter, which shall be included
in the Solicitation Materials, recommending that the Debtors’ unsecured
creditors vote in favor of the Plan, which letter and recommendation shall not
be subsequently withdrawn, provided however, that if this Agreement is
terminated with respect to the Creditors’ Committee for any reason such letter
shall be deemed automatically withdrawn and shall not be utilized by the Debtors
for any further purpose without the express written consent of the Creditors’
Committee.

 

For the avoidance of doubt, the obligations of the Creditors’ Committee under
this Agreement shall be binding on the Creditors’ Committee itself, and nothing
set forth in this Agreement shall be construed to bind any individual member of
the Creditors’ Committee in its individual capacity, unless such member has
separately executed this Agreement in its individual capacity.

 

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7.           Commitment of the Debtors.

 

(a)Subject to Sub-Clause (b) of this Section 7, each of the Debtors (i) agrees
to (A) support and make commercially reasonable efforts to complete the
Restructuring Transactions set forth in the Plan and this Agreement, (B) take
any and all necessary and appropriate actions in furtherance of the Plan
Mediation Term Sheet, the Plan and this Agreement, and (C) make reasonable best
efforts to complete the Restructuring Transactions set forth in the Plan in
accordance with each Milestone set forth in Section 4 of this Agreement, and
(ii) shall not undertake any action inconsistent with the adoption and
implementation of the Plan and the confirmation thereof, including, without
limitation, filing any motion to terminate this Agreement.

 

(b)Notwithstanding anything to the contrary herein, nothing in this Agreement
shall prevent the directors, officers, or managers of any Debtor (in such
person’s capacity as a director, officer, or manager of such Debtor) from taking
or refraining from taking any action that, after receiving advice from counsel,
it is obligated to take or refrain from taking in the performance of its
fiduciary obligations under applicable law.

 

(c)The Debtors shall timely file a formal objection, in form and substance
reasonably acceptable to the Majority Plan Support Parties, to any motion filed
with the Court seeking the entry of an order (i) directing the appointment of a
trustee or examiner (with expanded powers beyond those set forth in section
1106(a)(3) and (4) of the Bankruptcy Code), (ii) converting the Chapter 11 Cases
to cases under chapter 7 of the Bankruptcy Code, or (iii) dismissing the Chapter
11 Cases.

 

(d)The Debtors shall timely file a formal objection, in form and substance
reasonably acceptable to the Majority Plan Support Parties, to any motion filed
with the Court seeking the entry of an order modifying or terminating the
Debtors’ exclusive right to file and/or solicit acceptances of a plan of
reorganization, as applicable.

 

(e)The Debtors may receive (but not solicit) proposals or offers for any chapter
11 plan or restructuring transaction (including, for the avoidance of doubt, a
transaction premised on an asset sale under section 363 of the Bankruptcy Code)
other than the Restructuring Transactions (an “Alternative Transaction”) from
other parties and discuss such Alternative Transactions received; provided,
however, that the Debtors shall provide a copy of any written offer or proposal
(and notice of all terms of any oral offer or proposal) for an Alternative
Transaction received to the legal counsel and financial advisors to Plan Support
Parties within one (1) day of the Debtors’ or their advisors’ receipt of such
offer or proposal.

 

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For the avoidance of doubt, nothing in this Section 7 shall be construed to
limit in any way any Plan Support Party’s rights under this Agreement, including
upon occurrence of any Termination Event.

 

8.           Plan Support Party Termination Events. Each of the Majority Second
Lien Plan Support Parties, the Creditors’ Committee, the Majority EGC Plan
Support Parties, and the Majority EPL Plan Support Parties (each such group, a
“Terminating Support Group”) shall have the right, but not the obligation, upon
notice to the other Parties, to terminate the obligations of the Second Lien
Plan Support Parties, the Creditors’ Committee, the EGC Plan Support Parties,
and the EPL Plan Support Parties, respectively, under this Agreement upon the
occurrence of any of the following events (other than with respect to the events
enumerated in Sections 8(h) and (m)), unless waived, in writing, by the Majority
Plan Support Parties on a prospective or retroactive basis (each, a “Plan
Support Party Termination Event”). Only the Majority Second Lien Plan Support
Parties shall have the right, but not the obligation, upon notice to the other
Parties, to terminate the obligations of the Second Lien Plan Support Parties
under this Agreement upon the occurrence of any of the events enumerated in
Sections 8(h) and (m):

 

(a)the failure to meet any of the Milestones in Section 4 unless (i) such
failure is the direct result of any act, omission, or delay on the part of any
Plan Support Party in violation of its obligations under this Agreement or
(ii) such Milestone is extended in accordance with Section 4;

 

(b)the conversion of one or more of the Chapter 11 Cases to a case under
chapter 7 of the Bankruptcy Code;

 

(c)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
one or more of the Chapter 11 Cases;

 

(d)any Debtor (i) files, amends or modifies, or files a pleading seeking
authority to amend or modify, the Definitive Documentation in a manner that is
inconsistent with this Agreement, the Plan, or the Plan Mediation Term Sheet,
(ii) revokes the Restructuring Transactions without the prior consent of the
Majority Plan Support Parties, or (ii) publicly announces its intention to take
any such acts listed in (i) or (ii) of this Sub-Clause (d);

 

(e)any Debtor files or publicly announces that it will file or joins in or
supports any plan of reorganization other than the Plan;

 

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(f)a material breach by any Debtor or the Creditors’ Committee of any
representation, warranty, or covenant of such Debtor or the Creditors’ Committee
set forth in this Agreement (it being understood and agreed that any actions
required to be taken by the Debtors or the Creditors’ Committee that are
included in the Plan Mediation Term Sheet attached to this Agreement but not in
this Agreement are to be considered “covenants” of the Debtors and the
Creditors’ Committee, and therefore covenants of this Agreement, notwithstanding
the failure of any specific provision in the Plan Mediation Term Sheet to be
re-copied in this Agreement) that could reasonably be expected to impair the
economic treatment provided under the Plan Mediation Term Sheet for the
applicable Terminating Support Group (or the constituency such Terminating
Support Group represents) or prevent confirmation of the Plan in accordance with
the Plan Mediation Term Sheet, which (to the extent curable) remains uncured for
a period of five (5) business days after the receipt by the Plan Support Parties
or the Debtors or the Creditors’ Committee (as applicable) of written notice of
such breach; provided, however, that the Debtors or the Creditors’ Committee, as
applicable shall provide written notice of such breach promptly upon becoming
aware of such breach following reasonable inquiry;

 

(g)a material breach by a Plan Support Party that is not or was not formerly a
member of the same ad hoc group or ad hoc committee as the Terminating Support
Group of any representation, warranty, or covenant of such Plan Support Party
set forth in this Agreement that could reasonably be expected to impair the
economic treatment provided under the Plan Mediation Term Sheet for the
applicable Terminating Support Group (or the constituency such Terminating
Support Group represents) or prevent confirmation of the Plan in accordance with
the Plan Mediation Term Sheet (to the extent curable) remains uncured for a
period of five (5) business days after the receipt by such Plan Support Party of
notice and description of such breach; provided, however, that in the event of
such breach, the Debtors and the Majority Plan Support Parties (excluding the
breaching Plan Support Party) may elect to terminate this Agreement as to such
breaching Plan Support Party, in which case such Plan Support Party shall no
longer be considered a Party to this Agreement and all Parties reserve their
rights against the breaching Party;

 

(h)with the exception of any challenge that is the subject of a pleading that
has been filed with the Court as of the PSA Effective Date, (which pleadings
need not be withdrawn until the Plan is confirmed and the Effective Date
occurs),either (i) any Party files, supports, or directs any party to file or
support a motion, application, or adversary proceeding (A) challenging the
validity, enforceability, perfection, or priority of, or seeking avoidance or
subordination of the Second Lien Notes Claims or the liens securing such claims,
or (B) asserting any other cause of action against and/or with respect or
relating to such claims or the prepetition liens securing such claims; or (ii)
the Court (or any court with jurisdiction over the Chapter 11 Cases) enters an
order providing relief against the interests of any Second Lien Plan Support
Party, the Second Lien Noteholders, the Second Lien Indenture Trustee, or the
collateral agent under the Second Lien Indenture with respect to any of the
foregoing causes of action or proceedings;

 

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(i)any Debtor or the Creditors’ Committee terminates its obligations under and
in accordance with this Agreement;

 

(j)any board, director, officer, or manager (or party with authority to act) of
a Debtor (or the Debtors themselves) takes any action in furtherance of the
rights available to it (or them) under Section 7(b) of this Agreement that are
inconsistent with the Restructuring Transactions as contemplated by the Plan
Mediation Term Sheet;

 

(k)any of the orders approving this Agreement, the Plan, the Second Supplement,
or any supplement to the Disclosure Statement are (A) stayed and such stay is
not vacated or does not expire by its own terms by the later of the applicable
Milestone for the entry of such order or 14 days after the imposition of such
stay, (B) vacated and no replacement order (which otherwise complies with the
terms of this Agreement) is entered by the later of the applicable Milestone for
entry of such order or 5 days after such vacatur, or (C) reversed;

 

(l)the failure of any Definitive Documentation to be in form and substance
reasonably satisfactory to the Majority Plan Support Parties; or

 

(m)the Creditors’ Committee fails to comply with Section 6(e) of this Agreement.

 

(n)In addition to the foregoing, the Creditors’ Committee shall have the right,
but not the obligation, upon notice to the other Parties, to terminate the
Creditors’ Committee’s obligations under this Agreement (i) upon the occurrence
of any Plan Support Party Termination Event unless waived, in writing, by the
Majority Plan Support Parties and the Creditors’ Committee on a prospective or
retroactive basis, and (ii) if the Creditors’ Committee determines, after
receiving advice from counsel, that proceeding with the Restructuring
Transactions (including, without limitation, the Plan or solicitation of the
Plan) would be inconsistent with the exercise of its fiduciary duties.

 

9.           The Debtors’ Termination Events. Each Debtor may, upon notice to
the Plan Support Parties, terminate its obligations under this Agreement upon
the occurrence of any of the following events (each a “Debtor Termination
Event,” and together with the Plan Support Party Termination Events, the
“Termination Events”), in which case this Agreement shall terminate with respect
to all Parties, subject to the rights of the Debtors to fully or conditionally
waive, in writing, on a prospective or retroactive basis, the occurrence of a
Debtor Termination Event:

 

(a)a material breach by a Plan Support Party of any representation, warranty, or
covenant of such Plan Support Party set forth in this Agreement that could
reasonably be expected to prevent confirmation of the Plan in accordance with
the Plan Mediation Term Sheet;

 

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(b)upon notice to the Plan Support Parties, if the board of directors or board
of managers, as applicable, of a Debtor determines, after receiving advice from
counsel, that proceeding with the Restructuring Transactions (including, without
limitation, the Plan or solicitation of the Plan) would be inconsistent with the
exercise of its fiduciary duties; or

 

(c)the issuance by any governmental authority, including the Court, any
regulatory authority, or any other court of competent jurisdiction, of any
ruling or order that could reasonably be expected to prevent confirmation of the
Plan in accordance with the Plan Mediation Term Sheet; provided, however, that
the Debtors have made commercially reasonable, good faith efforts to cure,
vacate, or have overruled such ruling or order prior to terminating this
Agreement.

 

10.         Individual Termination. (a) Any Plan Support Party may terminate
this Agreement as to itself in the event that the Milestone set forth in
Sub-Clause (c) of Section 4 is not met, (b) any Plan Support Party may terminate
this Agreement as to itself in the event the economic treatment provided under
the Plan or the Plan Mediation Term Sheet for such Plan Support Party is amended
or modified in a manner adverse to such Plan Support Party (or the constituency
such Plan Support Party represents), or (c) any Second Lien Plan Support Party
may terminate this Agreement as to itself in the event that any Definitive
Document is filed or executed that specifically provides, with respect to
distributions under the Plan, for the allocation for tax purposes between
principal and interest in a manner that is not acceptable to such Second Lien
Plan Support Party, in each case, by giving ten (10) business days’ notice to
the Debtors and the other Plan Support Parties within five (5) business days of
such missed Milestone, filing, or execution.

 

11.         Mutual Termination; Automatic Termination. This Agreement and the
obligations of all Parties hereunder may be terminated by mutual written
agreement by and among (a) each of the Debtors and (b) each of the Majority Plan
Support Parties. Notwithstanding anything in this Agreement to the contrary,
this Agreement shall terminate automatically upon the occurrence of the
Effective Date.

 

12.         Effect of Termination. The earliest date on which termination of
this Agreement as to a Party is effective in accordance with Sections 8, 9, 10
or 11 of this Agreement shall be referred to, with respect to such Party, as a
“Termination Date.” Upon the occurrence of a Termination Date, the terminating
Party’s and, solely in the case of a Termination Date in accordance with Section
11, all Parties’ obligations under this Agreement shall be terminated effective
immediately, and such Party or Parties hereto shall be released from all
commitments, undertakings, and agreements hereunder; provided, however, that
each of the following shall survive any such termination: (a) any claim for
breach of this Agreement that occurs prior to such Termination Date, and all
rights and remedies with respect to such claims shall not be prejudiced in any
way; (b) the Debtors’ obligations in Section 15 of this Agreement accrued up to
and including such Termination Date; and (c) Sections 12, 16, 18, 19, 20, 21,
22, 23, 24, 25, 26, 29, 31, and 32 hereof. The automatic stay applicable under
section 362 of the Bankruptcy Code shall not prohibit a Party from taking any
action necessary to effectuate the termination of this Agreement pursuant to and
in accordance with the terms hereof. The Parties agree that the giving of notice
under and/or termination of this Agreement in accordance with its terms is not
prohibited as a matter of law by the automatic stay imposed by section 362 of
the Bankruptcy Code, and the Debtors agree not to raise any argument or take any
position to the contrary.  To the extent the Debtors raise any such argument or
take any such position, the occurrence of any of the Termination Events in
Section 8 of this Agreement shall result in an automatic termination of the
Agreement.

 

 11 

 

 

13.         Transfers of Claims and Interests.

 

(a)No Noteholder Plan Support Party shall (i) sell, transfer, assign, pledge,
grant a participation interest in, or otherwise dispose of, directly or
indirectly, its right, title, or interest in respect of any of such Noteholder
Plan Support Party’s claims against any Debtor subject to this Agreement, as
applicable, in whole or in part, or (ii) deposit any of such Noteholder Plan
Support Party’s claims against any Debtor, as applicable, into a voting trust,
or grant any proxies, or enter into a voting agreement with respect to any such
claims or interests (the actions described in clauses (i) and (ii) are
collectively referred to herein as a “Transfer” and the Noteholder Plan Support
Party making such Transfer is referred to herein as the “Transferor”), unless
such Transfer is to another Noteholder Plan Support Party or any other entity
that first agrees in writing to be bound by the terms of this Agreement by
executing and delivering to the Debtors a Transferee Joinder substantially in
the form attached hereto as Exhibit C (the “Transferee Joinder”). With respect
to claims against or interests in a Debtor held by the relevant transferee upon
consummation of a Transfer in accordance herewith, such transferee is deemed to
make all of the representations, warranties, and covenants of a Noteholder Plan
Support Party, as applicable, set forth in this Agreement. Upon compliance with
the foregoing, 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. Any Transfer made in violation of this
Sub-Clause (a) of this Section 13 shall be deemed null and void ab initio and of
no force or effect, regardless of any prior notice provided to the Debtors
and/or any Noteholder Plan Support Party, and shall not create any obligation or
liability of any Debtor or any other Plan Support Party to the purported
transferee.

 

 12 

 

 

(b)Notwithstanding Sub-Clause (a) of this Section 13, (i) an entity that is
acting in its capacity as a Qualified Marketmaker shall not be required to be or
become a Noteholder Plan Support Party to effect any transfer (by purchase,
sale, assignment, participation, or otherwise) of any claim against any Debtor,
as applicable, by a Plan Support Party to a transferee; provided that such
transfer by a Noteholder Plan Support Party to a transferee shall be in all
other respects in accordance with and subject to Sub-Clause (a) of this
Section 13; and (ii) to the extent that a Noteholder Plan Support Party, acting
in its capacity as a Qualified Marketmaker, acquires any claim against, or
interest in, any Debtor from a holder of such claim who is not a Noteholder Plan
Support Party, it may transfer (by purchase, sale, assignment, participation, or
otherwise) such claim or interest without the requirement that the transferee be
or become a Plan Support Party in accordance with this Section 13. For purposes
of this Sub-Clause (b), a “Qualified Marketmaker” means an entity that (x) holds
itself out to the market as standing ready in the ordinary course of its
business to purchase from customers and sell to customers claims against any of
the Debtors (including debt securities or other debt) or enter with customers
into long and short positions in claims against the Debtors (including debt
securities or other debt), in its capacity as a dealer or market maker in such
claims against the Debtors, and (y) is in fact regularly in the business of
making a market in claims against issuers or borrowers (including debt
securities or other debt).

 

14.         Further Acquisition of Claims or Interests. Except as set forth in
Section 13, nothing in this Agreement shall be construed as precluding any
Noteholder Plan Support Party or any of its affiliates from acquiring additional
First Lien Claims, Second Lien Notes Claims, unsecured notes claims, existing
equity interests, or interests in the instruments underlying the First Lien
Claims, Second Lien Notes Claims, unsecured notes claims, or existing equity
interests; provided, however, that any additional First Lien Claims, Second Lien
Notes Claims, unsecured notes claims, existing equity interests, or interests in
the underlying instruments acquired by any Noteholder Plan Support Party and
with respect to which such Noteholder Plan Support Party is the legal owner,
beneficial owner, and/or investment advisor or manager of or with power and/or
authority to bind any claims or interests held by it shall automatically be
subject to the terms and conditions of this Agreement. Upon any such further
acquisition, such Noteholder Plan Support Party shall notify the Debtors in
advance of the Confirmation Hearing.

 

15.         Fees and Expenses. On the Effective Date (and thereafter with
respect to fees and expenses relating to post-Effective Date services), the
Debtors shall pay in Cash all reasonable and documented unpaid fees and expenses
of the Second Lien Plan Support Parties and the Ad Hoc Committee of Second Lien
Noteholders and their advisors, including counsel, without application to or
approval of the Court; provided, however that such fees and expenses will be
subject to review as set forth in the Final Cash Collateral Order (whether or
not the Final Cash Collateral Order remains in effect as of the Effective Date).

 

16.         Consents and Acknowledgments. Each Party irrevocably acknowledges
and agrees that this Agreement is not and shall not be deemed to be a
solicitation for consents to the Plan. The acceptance of the Plan by each of the
Plan Support Parties will not be solicited until such Parties have received the
Second Supplement and related ballots in accordance with applicable law, and
will be subject to sections 1125, 1126 and 1127 of the Bankruptcy Code. The EGC
Plan Support Parties and the EPL Plan Support Parties agree that the agreements
set forth herein constitute a direction to the applicable trustees for the EGC
Unsecured Notes Indenture and the EPL Unsecured Notes Indenture, respectively,
to take all necessary and appropriate actions to carry out the intent and
purpose of this Agreement and to consummate the transactions contemplated
thereby.

 

 13 

 

 

17.         Representations and Warranties.

 

(a)Each Plan Support Party hereby represents and warrants on a several and not
joint basis for itself and not any other person or entity that the following
statements are true, correct, and complete, to the best of its actual knowledge,
as of the date hereof:

 

(i)it has the requisite organizational power and authority to enter into this
Agreement and to carry out the transactions contemplated by, and perform its
respective obligations under, this Agreement (as limited by the Bankruptcy Code
and applicable law with respect to the Creditors’ Committee);

 

(ii)the execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary corporate or
other organizational action on its part;

 

(iii)the execution, delivery and performance by it of this Agreement does not
violate any provision of law, rule, or regulation applicable to it, or its
certificate of incorporation, or bylaws, or other organizational documents in
any material respect;

 

(iv)subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code,
this Agreement is the legally valid and binding obligation of it, 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;

 

(v)except for the Creditors’ Committee, it is an “accredited investor” within
the meaning of Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the “Securities Act”), with sufficient knowledge and
experience to evaluate properly the terms and conditions of this Agreement and
to consult with its legal and financial advisors with respect to its investment
decision to execute this Agreement, and it has made its own analysis and
decision to enter into this Agreement;

 

(vi)except for the Creditors’ Committee, it (A) either (1) is the sole owner of
the claims and interests identified below its name on its signature page hereof
and in the amounts set forth therein, or (2) has all necessary investment or
voting discretion with respect to the principal amount of claims and interests
identified below its name on its signature page hereof, and has the power and
authority to bind the owner(s) of such claims and interests to the terms of this
Agreement; (B) is entitled (for its own accounts or for the accounts of such
other owners) to all of the rights and economic benefits of such claims and
interests; or (C) does not directly or indirectly own any claims against any
Debtor other than as identified below its name on its signature page hereof; and

 

 14 

 

  

(vii)solely for the Creditors’ Committee, the Creditors’ Committee has been
represented by counsel in connection with this Agreement and the transactions
contemplated by the Agreement.

 

(b)Each Debtor hereby represents and warrants on a joint and several basis (and
not any other person or entity other than the Debtors) that the following
statements are true, correct, and complete as of the date hereof:

 

(i)it has the requisite corporate or other organizational power and authority to
enter into this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement;

 

(ii)the execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary corporate or
other organizational action on its part, including approval of each of the
independent director(s) or manager(s), as applicable, of each of the corporate
entities that comprise the Debtors;

 

(iii)the execution and delivery by it of this Agreement does not (A) violate its
certificates of incorporation, or bylaws, or other organizational documents, or
those of any of its affiliates, or (B) result in a breach of, or constitute
(with due notice or lapse of time or both) a default (other than, for the
avoidance of doubt, a breach or default that would be triggered as a result of
the Chapter 11 Cases or any Debtor’s undertaking to implement the Restructuring
Transactions through the Chapter 11 Cases) under any material contractual
obligation to which it or any of its affiliates is a party;

 

(iv)the Plan Mediation Term Sheet and this Agreement have been reviewed,
approved and authorized by each of the independent directors of EGC and EPL,
respectively, each of whom has had the benefit of the advice of independent
counsel and a financial advisor, and such independent directors (A) have
concluded that the Debtors’ entry into this Agreement and performance of their
obligations hereunder are in the best interests of the EGC and EPL estates (as
applicable) under the circumstances and (B) approve, authorize and support the
Debtors’ proposal, prosecution, confirmation, and consummation of the Plan and
other Definitive Documents on the terms described in the Plan Mediation Term
Sheet and the Definitive Documents prepared in accordance with this Agreement;

 

 15 

 

 

(v)the execution and delivery by it of this Agreement does not require any
registration or filing with, the consent or approval of, notice to, or any other
action with any federal, state, or other governmental authority or regulatory
body, other than, for the avoidance of doubt, the actions with governmental
authorities or regulatory bodies required in connection with implementation of
the Restructuring Transactions;

 

(vi)subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code
and, to the extent applicable, approval by the Court, this Agreement is the
legally valid and binding obligation of it, 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; and

 

(vii)it has sufficient knowledge and experience to evaluate properly the terms
and conditions of the Plan and this Agreement, and has been afforded the
opportunity to consult with its legal and financial advisors with respect to its
decision to execute this Agreement, and it has made its own analysis and
decision to enter into this Agreement and otherwise investigated this matter to
its full satisfaction.

 

(c)Each of the Plan Support Parties and the Debtors (including the independent
directors of EGC and EPL, respectively) agree to support consummation of the
Restructuring Transactions in accordance with the Plan Mediation Term Sheet and
the terms and conditions of this Agreement and to take all actions as may be
appropriate to consummate the Restructuring Transactions, including, without
limitation, filing pleadings and making statements in open Court in support of
the Restructuring Transactions.

 

18.         Survival of Agreement. Each of the Parties acknowledges and agrees
that (i) the rights granted in this Agreement are enforceable by each signatory
hereto without approval of any court, including the Court, and (ii) the Debtors
waive any rights to assert that the exercise of such rights violate the
automatic stay or any other provisions of the Bankruptcy Code.

 

19.         Waiver. If the Restructuring Transactions contemplated herein are
not consummated, or following the occurrence of a Termination Event, if
applicable, nothing herein shall be construed as a waiver by any Party of any or
all of such Party’s rights, other than as provided in Section 16, and the
Parties expressly reserve any and all of their respective rights. The Parties
acknowledge that this Agreement, the Plan, and all negotiations relating hereto
are part of a proposed settlement of matters that could otherwise be the subject
of litigation. Pursuant to Rule 408 of the Federal Rules of Evidence, any
applicable state rules of evidence and any other applicable law, foreign or
domestic, the Plan, this Agreement, the Plan Mediation Term Sheet, any related
documents, and all negotiations relating thereto shall not be admissible into
evidence in any proceeding other than a proceeding to enforce its terms.

 

 16 

 

 

20.         Relationship Among Parties. Notwithstanding anything herein to the
contrary, the duties and obligations of the Plan Support Parties under this
Agreement shall be several, not joint. No Party shall have any responsibility by
virtue of this Agreement for any trading by any other entity. No prior history,
pattern, or practice of sharing confidences among or between the Parties shall
in any way affect or negate this Agreement. The Parties acknowledge that this
Agreement does not constitute an agreement, arrangement, or understanding with
respect to acting together for the purpose of acquiring, holding, voting, or
disposing of any equity securities of the Debtors and do not constitute a
“group” within the meaning of Rule 13d-5 under the Securities Exchange Act of
1934, as amended. No action taken by any Plan Support Party pursuant to this
Agreement shall be deemed to constitute or to create a presumption by any of the
Parties that the Plan Support Parties are in any way acting in concert or as
such a “group.”

 

21.         Specific Performance. It is understood and agreed by the Parties
that money damages may be an insufficient remedy for any breach of this
Agreement by any Party and each non-breaching Party shall be entitled to seek
specific performance and injunctive or other equitable relief as a remedy of any
such breach of this Agreement, including, without limitation, an order of the
Court or other court of competent jurisdiction requiring any Party to comply
promptly with any of its obligations hereunder.

 

22.         Governing Law & Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, without
regard to such state’s choice of law provisions which would require or permit
the application of the law of any other jurisdiction. By its execution and
delivery of this Agreement, each Party (a) agrees that the Court shall have
exclusive jurisdiction of all matters arising out of or in connection with this
Agreement and (b) irrevocably and unconditionally submits to the personal
jurisdiction of the Court solely for purposes of any action, suit, proceeding,
or other contested matter arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment rendered or order entered in any such
action, suit, proceeding, or other contested matter.

 

23.         Waiver of Right to Trial by Jury. Each of the Parties waives any
right to have a jury participate in resolving any dispute, whether sounding in
contract, tort or otherwise, between any of the Parties arising out of,
connected with, relating to, or incidental to the relationship established
between any of them in connection with this Agreement. Instead, any disputes
resolved in court shall be resolved in a bench trial without a jury.

 

24.         Successors and Assigns. Except as otherwise provided in this
Agreement, this Agreement is intended to bind and inure to the benefit of each
of the Parties and each of their respective permitted successors, assigns,
heirs, executors, administrators, and representatives.

 

 17 

 

 

25.         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 of this Agreement.

 

26.         Notices. All notices (including, without limitation, any notice of
termination or breach) and other communications from any Party hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered by courier service, messenger, email, or facsimile to the other
Parties at the applicable addresses below, or such other addresses as may be
furnished hereafter by notice in writing. Any notice of termination or breach
shall be delivered to all other Parties.

 

(a)If to any Debtor:

 

Energy XXI Ltd
Attn:    John D. Schiller
1021 Main, Suite 2626
Houston, TX 77002
Tel:     (713) 351-3000
Fax:    (713) 351-33000
Email:  jschiller@energyxxi.com

 

with a copy to:

 

Vinson & Elkins L.L.P.
Attn:    Harry A. Perrin
1001 Fannin Street

Houston, TX 10022-4611
Tel:     (713) 758-2222
Fax:    (713) 758-2346
Email:  hperrin@velaw.com

 

Vinson & Elkins L.L.P.
Attn:    David S. Meyer
666 Fifth Avenue, 26th Floor
New York, NY 10103-0040
Tel:     (212) 237-0000
Fax:    (212) 237-0100
Email:  dmeyer@velaw.com

 

(b)If to a Second Lien Plan Support Party:

 

To the address set forth on its signature page hereto

 

with a copy to

 

Milbank, Tweed, Hadley & McCloy LLP

Attn:    Dennis F. Dunne and Samuel A. Khalil

28 Liberty Street

 

 18 

 

 

New York, NY 10005

Tel:      (212) 530-5000

Fax:      (212) 530-5219

Email:   ddunne@milbank.com

   skhalil@milbank.com

 

(c)If to the Creditors’ Committee:

 

Latham & Watkins LLP

Attn:    Mitchell A. Seider and Adam J. Goldberg

885 Third Avenue

New York, NY

Tel:      (212) 906-1637

Fax:      (212) 751-4864

Email:   mitchell.seider@lw.com

   adam.goldberg@lw.com

 

and

 

Heller, Draper, Patrick, Horn & Dabney, L.L.C.

Attn: William H. Patrick III and Tristan Manthey

650 Poydras Street, Suite 2500

New Orleans, Louisiana 70130

Tel:      (504) 299-3345

Fax:      (504)299-3399

Email:   wpatrick@hellerdraper.com

   tmanthey@hellerdraper.com

 

(d)If to an EGC Plan Support Party:

 

To the address set forth on its signature page hereto

 

with a copy to

 

White & Case LLP

Southeast Financial Center

200 South Biscayne Boulevard, Suite 4900

Miami, Florida 33131-2532

Attn: Thomas E Lauria

 

and

 

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036-2787

Attn:  Harrison Denman

Andrew Zatz

 

 19 

 

 

(e)If to an EPL Plan Support Party:

 

To the address set forth on its signature page hereto

 

with a copy to

 

Wilmer Cutler Pickering Hale and Dorr LLP

7 World Trade Center

250 Greenwich Street

New York, NY 10007

Attn: Philip D. Anker

 

and

 

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston MA 02109

Attn: Dennis L. Jenkins

 

27.         Entire Agreement. This Agreement (including the Exhibits and
Schedules) constitutes the entire agreement of the Parties with respect to the
subject matter of this Agreement, and supersedes all prior negotiations,
agreements, and understandings, whether written or oral, among the Parties with
respect to the subject matter of this Agreement.

 

28.         Amendments. Except as otherwise provided herein, this Agreement may
not be modified, amended, or supplemented without the prior written consent of
the Debtors and the Majority Plan Support Parties; provided, however, that (a)
the prior written consent of all Parties shall be required to modify, amend, or
supplement Sections 10(a) or 10(b) of this Agreement and (b) the prior written
consent of all Second Lien Plan Support Parties shall be required to modify,
amend, or supplement Section 10(c) of this Agreement.

 

29.         Reservation of Rights.

 

(a)Except as expressly provided in this Agreement or the Plan Mediation Term
Sheet, including Section 5(a) of this Agreement, nothing herein is intended to,
or does, in any manner waive, limit, impair, or restrict the ability of any
Party to protect and preserve its rights, remedies and interests, including
without limitation, its claims against any of the other Parties.

 

 20 

 

 

(b)Without limiting Sub-Clause (a) of this Section 29 in any way, if the Plan is
not consummated in the manner set forth, and on the timeline set forth, in this
Agreement and the Plan Mediation Term Sheet, or if this Agreement is terminated
for any reason, nothing shall be construed herein as a waiver by any Party of
any or all of such Party’s rights, remedies, claims, and defenses and the
Parties expressly reserve any and all of their respective rights, remedies,
claims and defenses, subject to Section 19 of this Agreement. The Plan Mediation
Term Sheet, this Agreement, the Plan, and any related document shall in no event
be construed as or be deemed to be evidence of an admission or concession on the
part of any Party of any claim or fault or liability or damages whatsoever. Each
of the Parties denies any and all wrongdoing or liability of any kind and does
not concede any infirmity in the claims or defenses which it has asserted or
could assert.

 

30.      Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when so executed, shall constitute the same
instrument, and the counterparts may be delivered by facsimile transmission or
by electronic mail in portable document format (.pdf).

 

31.      Public Disclosure. This Agreement, as well as its terms, its existence,
and the existence of the negotiation of its terms are expressly subject to any
existing confidentiality agreements executed by and among any of the Parties as
of the date hereof; provided, however, that, after the PSA Effective Date, the
Parties may disclose the existence of, or the terms of, this Agreement or any
other material term of the transaction contemplated herein without the express
written consent of the other Parties; provided further, however, that no Party
or its advisors shall disclose to any person or entity (including, for the
avoidance of doubt, any other Party) the holdings information of any Plan
Support Party without such Plan Support Party’s prior written consent.

 

32.      Headings. The section headings of this Agreement are for convenience of
reference only and shall not, for any purpose, be deemed a part of this
Agreement.

 

33.      Interpretation. This Agreement is the product of negotiations among the
Parties, and the enforcement or interpretation hereof, is to be interpreted in a
neutral manner, and any presumption with regard to interpretation for or against
any Party by reason of that Party having drafted or caused to be drafted this
Agreement or any portion hereof, shall not be effective in regard to the
interpretation hereof.

 

[Signatures and exhibits follow.]

 

 21 

 

 

[Signature Pages Redacted.]

 

 

 

 

Exhibit A to the Plan Support Agreement

 

Plan Mediation Term Sheet

 

 

 

 

EXXI – Plan Mediation Term Sheet1

 

I.Definitions:

 

·“Ad Hoc Group of EGC Unsecured Noteholders” means the ad hoc group of holders
of EGC Unsecured Notes, represented by White & Case LLP, as defined in that
certain Verified Statement of White & Case LLP and the Ad Hoc Group of EGC
Unsecured Noteholders Pursuant to Bankruptcy Rule 2019 filed on or about June
10, 2016 [Docket No. 475], as it may be amended or supplemented from time to
time.

 

·“Ad Hoc Group of EPL Unsecured Noteholders” means (a) the ad hoc group of
holders of EPL 8.25% Senior Notes, represented by Wilmer Cutler Pickering Hale
and Dorr LLP, as defined in that certain Sixth Supplemental Verified Statement
Pursuant to Bankruptcy Rule 2019 filed on or about November 3, 2016 [Docket No.
1617], as it may be amended or supplemented from time to time, and (b) the “EPL
Sponsor Group,” as defined in that certain First Supplemental Verified Statement
Pursuant to Bankruptcy Rule 2019 of Bryan Cave LLP and the EPL Sponsor Group
filed on or about August 10, 2016 [Docket No. 1010], as it may be amended or
supplemented from time to time.

 

·“EGC New Warrant Package” means warrants equal to an aggregate of 3.6% of the
New Equity (subject to dilution from the Management Incentive Plan, but
otherwise subject to anti-dilution adjustments for stock dividends, stock
splits, and similar combinations or subdivisions of the common stock) with a
maturity of five (5) years from the Effective Date and an equity strike price
equal to $1.45 billion divided by the number of shares of common stock in New
Parent outstanding on the Effective Date.

 

·“EGC Unsecured Notes Claims” means, collectively, Claims arising on account of
the EGC Unsecured Notes, including any guaranty Claims arising on account of the
EGC Unsecured Notes and the EGC Unsecured Notes Indentures, other than any
Claims arising on account of the EGC Repurchased Bonds, which, for the purposes
of this Plan, shall not be considered EGC Unsecured Notes Claims.

 

·“EPL New Warrant Package” means warrants equal to an aggregate of 2.4% of the
New Equity (subject to dilution from the Management Incentive Plan, but
otherwise subject to anti-dilution adjustments for stock dividends, stock
splits, and similar combinations or subdivisions of the common stock) with a
maturity of five (5) years from the Effective Date and an equity strike price
equal to $1.45 billion divided by the number of shares of common stock in New
Parent outstanding on the Effective Date.

 

·“EPL Unsecured Notes Claims” means, collectively, Claims arising on account of
the EPL 8.25% Senior Notes other than any Claims arising on account of the EPL
Repurchased Bonds, which, for purposes of this Plan, shall not be considered EPL
Unsecured Notes Claims.

 

 

1Capitalized terms used but not defined herein are used as defined in the
Debtors’ First Amended Joint Chapter 11 Plan of Reorganization [Docket No. 1418]
(as amended, the “Plan”) or the Plan Support
Agreement (as defined herein), as applicable.

 

 - 1 - 

 

 

·“Exculpated Party” means each of the following solely in its capacity as such:
(a) the Debtors; (b) the Reorganized Debtors; (c) the Plan Support Parties; (d)
the Creditors’ Committee and its past and current members in their capacities as
such; (e) the First Lien Agent; (f) the First Lien Secured Parties; (g) the
Second Lien Indenture Trustee; (h) the Second Lien Collateral Trustee; (i) the
Provisional Liquidator; and (j) with respect to each of the foregoing Entities
in clauses (a) through (i), such Entity’s current and former Affiliates, and
such Entities’ and their current and former Affiliates’ current and former
directors, managers, officers, managed accounts and funds, predecessors,
successors, and assigns, subsidiaries, and each of their respective current and
former officers, directors, managers, principals, members, employees,
subcontractors, agents, advisory board members, financial advisors, partners,
attorneys, accountants, investment bankers, consultants, representatives,
management companies, fund advisors, and other professionals, each solely in
their capacity as such.

 

·“General Unsecured Claim Distribution” means $1,470,000.

 

·“Management Equity Pool” means up to 5% of the total New Equity on a fully
diluted basis reserved under the Management Incentive Plan, 3% of which will be
allocated by the New Parent Board to officers, directors, employees, and
consultants of the Reorganized Debtors no later than 120 days after the
Effective Date on terms and conditions determined by the New Parent Board,
including the type of equity based awards. 

 

·“New Warrant Agreement” means the document governing the New Warrant Package,
the form of which shall be included in the Plan Supplement. The New Warrant
Agreement will (i) provide for anti-dilution adjustments (in addition to those
included in the definitions of EGC New Warrant Package and EPL New Warrant
Package) solely for spin-offs and other asset distributions and extraordinary
cash distributions, and (ii)  provide that, in connection with a merger or
similar sale of New Parent, each warrant will become exercisable for such cash,
stock, securities or other assets or property as would have been payable in such
sale transaction with respect to the New Parent securities issuable upon
exercise of such warrant if such warrant had been exercised immediately prior to
the occurrence of such transaction.

 

·“New Warrant Package” means, collectively, the EGC New Warrant Package and the
EPL New Warrant Package.

 

·“Plan Support Agreement” means that certain plan support agreement among the
Debtors, the Second Lien Plan Support Parties, the Creditors’ Committee, and the
other Plan Support Parties (except as otherwise noted herein) and satisfactory
to the Debtors, the ad hoc committee of Second Lien Noteholders, the Creditors’
Committee, and the other Plan Support Parties.

 

 2 

 

 

·“Plan Support Parties” means the Second Lien Plan Support Parties, the Debtors,
the Creditors’ Committee, the EGC Plan Support Parties, the EGC Unsecured Notes
Indenture Trustee, the EPL Plan Support Parties, the EPL Unsecured Notes
Indenture Trustee, and the EXXI 3.0% Senior Convertible Notes Trustee; provided
that the Indenture Trustees shall not be required to execute the Plan Support
Agreement to become a Plan Support Party and shall be deemed a Plan Support
Party unless they file an objection to the approval, acceptance or
implementation of the Plan and/or directly or indirectly solicit votes to reject
the Plan; provided, further, that an Indenture Trustee shall remain a Plan
Support Party notwithstanding the filing of any objection to the Plan solely on
the grounds that the Plan does not comply with the Plan Support Agreement or
this Plan Mediation Term Sheet or pertains solely to the effect of one or more
specific Plan provisions (including omissions) on the rights and duties of such
Indenture Trustee.

 

·“Released Party” means each of the following solely in its capacity as such:
(a) the Debtors; (b) the Reorganized Debtors; (c) the Creditors’ Committee and
its past and current members in their capacities as such; (d) the First Lien
Agent; (e) the First Lien Secured Parties; (f) the Plan Support Parties; (g) the
Second Lien Indenture Trustee; (h) the Second Lien Collateral Trustee; (i) the
Provisional Liquidator; and (j) with respect to each of the foregoing parties
under (a) through (i) such Entity and its current and former Affiliates, and
such Entity’s current and former Affiliates’ current and former directors,
managers, officers, managed accounts and funds, predecessors, successors, and
assigns, subsidiaries, and each of their respective current and former equity
holders, officers, directors, managers, principals, members, employees,
subcontractors, agents, advisory board members, financial advisors, partners,
attorneys, accountants, investment bankers, consultants, representatives,
management companies, fund advisors, and other professionals, each solely in
their capacity as such.

 

·“Releasing Party” means each of the following solely in its capacity as such:
(a) the Debtors; (b) the Reorganized Debtors; (c) the Creditors’ Committee and
its past and current members in their capacities as such; (d) the First Lien
Agent; (e) the First Lien Secured Parties; (f) the Second Lien Indenture
Trustee; (g) the Plan Support Parties; (h) the Provisional Liquidator; (i) all
holders of Claims and Interests that are deemed to accept the Plan; (j) all
holders of Claims and Interests who vote to accept the Plan; (k) all holders of
Claims and Interests who abstain from voting on the Plan and who do not opt out
of the releases provided by the Plan; (l) all holders of Claims and Interests
who vote to reject the Plan and who do not opt out of the releases provided by
the Plan; and (m) with respect to each of the foregoing parties under (a)
through (l), such Entity and its current and former Affiliates, and such
Entities’ and their current and former Affiliates’ current and former directors,
managers, officers, managed accounts and funds, predecessors, successors, and
assigns, subsidiaries, and each of their respective current and former officers,
directors, managers, principals, members, employees, subcontractors, agents,
advisory board members, financial advisors, partners, attorneys, accountants,
investment bankers, consultants, representatives, management companies, fund
advisors, and other professionals, each solely in their capacity as such. For
the avoidance of doubt, the term “Releasing Party” does not include (i) holders
of Claims or Interests who are not entitled to vote on the Plan or (ii) holders
of EXXI Interests in their capacities as such.

 

·“Second Lien Plan Support Parties” means the members of the ad hoc committee of
Second Lien Noteholders party to the Plan Support Agreement.

 

 3 

 

 

II.Changes to Current Plan Treatment:

 

·Each holder of an Allowed Second Lien Notes Claim receives such holder’s Pro
Rata share of 84% of the New Equity under the Plan, subject to dilution by the
Management Incentive Plan and the New Warrant Package.

 

·Each holder of an Allowed EGC Unsecured Notes Claim receives such holder’s Pro
Rata share of (a) 12% of the New Equity under the Plan, subject to dilution by
the Management Incentive Plan and the New Warrant Package, and (b) the EGC New
Warrant Package.2

 

·Each holder of an Allowed EPL Unsecured Notes Claim receives such holder’s Pro
Rata share of (a) 4% of the New Equity under the Plan, subject to dilution by
the Management Incentive Plan and the New Warrant Package, and (b) the EPL New
Warrant Package.3

 

·Each holder of an Allowed EXXI Convertible Notes Claim receives such holder’s
Pro Rata share of $2,000,000.

 

III.Settlements under the Plan:

 

·The Plan constitutes a settlement of all issues in respect of the Chapter 11
Cases (collectively, the “Settled Issues”), including, without limitation, the
following:

 

othe EGC Intercompany Note Dispute and any other disputes concerning in any way
the validity, effectiveness, or priority of the EGC Intercompany Note or the
Liens granted in connection therewith;

 

othe valuation of the Reorganized Debtors’ enterprise, including the value of
any unencumbered assets;

 

oany dispute regarding the application of the equities of the case exception
under section 552(b) or surcharge under section 506(c) in respect of the Second
Lien Prepetition Indebtedness;

 

oamount of the Second Lien Prepetition Indebtedness and such holders’ Allowed
Claims, and the validity and enforceability of the liens securing such Claims;

 

oamount of adequate protection claims held by the Second Lien Noteholders and/or
the First Lien Lenders under the Final Cash Collateral Order;

 

 

2The distribution to holders of EGC Unsecured Notes Claims does not include a
distribution to EGC on account of the EGC Repurchased Bonds. For the avoidance
of doubt, EGC will not receive a distribution on account of the EGC Repurchased
Bonds.

 

3The distribution to holders of EPL Unsecured Notes Claims does not include a
distribution to EGC on account of the EPL Repurchased Bonds. For the avoidance
of doubt, EGC will not receive a distribution on account of the EPL Repurchased
Bonds.

 

 4 

 

 

oany dispute regarding the appropriate allocation of general and administrative
costs across the Debtors’ Estates and the amount of the Second Lien Notes
Deficiency Claims;

 

oany challenges to cash transfers and the EPL note interest;

 

oany challenges to transfers made by the Debtors to any related entities;

 

othe releases, exculpations, and injunctions provided in the Plan;

 

oany dispute related to the allowance or disallowance of the EGC Repurchased
Bonds or the EPL Repurchased Bonds;

 

oany dispute related to the amount and validity of the intercompany payables
between EGC and EPL;

 

oany claims for payment of administrative expenses as a substantial contribution
under section 503 of the Bankruptcy Code; and

 

othe allocation of the $90 million minimum cash requirement under the Debtors’
Exit Facility.

 

 5 

 

 

IV.Additional Plan Changes:

 

·To the extent not already authorized pursuant to the Final Cash Collateral
Order, and except as provided herein with respect to the Debtors and the
Creditors’ Committee and in the Plan Support Agreement with respect to the
Second Lien Plan Support Parties, the reasonable and documented fees and
expenses incurred on or after the Petition Date of (a) counsel, financial
advisors (including valuation and any other experts), and management and
industry consultants to the Plan Support Parties, the Ad Hoc Group of EGC
Unsecured Noteholders, and the Ad Hoc Group of EPL Unsecured Noteholders, and
(b) the Indenture Trustees that are Plan Support Parties as of the Effective
Date (such fees and expenses, the “Plan Support Parties Fees”) in an amount
equal to reasonable estimates provided by each of the Plan Support Parties will
be escrowed on the Effective Date. For the avoidance of doubt, such Plan Support
Parties Fees shall exclude the fees and expenses incurred on or after the
Effective Date of the Indenture Trustees payable pursuant to Article
VI.B.1(e)-(g)) of the Plan). Each of the Plan Support Parties Fees will be
subject to a review period by the Debtors and the Creditors’ Committee of seven
(7) business days following submission of each invoice (including reasonable
documentation of such fees and expenses, which may be redacted to preserve
privilege and/or confidentiality).  Each Plan Support Party may submit more than
one but not more than two invoices per professional covering the period from the
Petition Date through the Effective Date.  To the extent either the Debtors or
the Creditors’ Committee delivers to the applicable Plan Support Party a written
notice of objection within the seven (7) business day review period, and the
applicable Plan Support Party and objecting party are unable to resolve such
objection on a consensual basis within seven (7) business days after such
objection has been submitted, the Debtors or the Creditors’ Committee, as
applicable, may file with the Court a motion or other pleading setting forth the
specific objections to the disputed invoice, and the Court shall adjudicate the
matter. The Reorganized Debtors will promptly pay any undisputed Plan Support
Parties Fees one (1) business day following the expiration of the seven (7)
business day review period. When all such amounts owing to Plan Support Parties
have been paid in full, any remaining amount in the Plan Support Parties Fee
Escrow Account shall promptly be turned over to the Reorganized Debtors without
any further action or order of the Court. Notwithstanding anything contained
herein to the contrary, (i) the fees and expenses of counsel and financial
advisors (including valuation and any other experts) to the Debtors and the
Creditors’ Committee shall remain subject to the Court’s Order Establishing
Procedures for Monthly and Interim Compensation and Reimbursement of Expenses
for Retained Professionals [Docket No. 409], the applicable provisions of the
Appendix B Guidelines for Reviewing Applications for Compensation and
Reimbursement of Expenses Filed Under United States Code by Attorneys in Large
Chapter 11 Cases, all other applicable law and Court orders, and all applicable
retention orders entered during the course of these Chapter 11 Cases for the
professionals of the Debtors and the Creditors’ Committee, (ii) the disallowance
of any disputed fees or expenses of any Indenture Trustee shall not affect or
modify in any way such Indenture Trustee’s charging lien or other rights to
recover such fees and expenses pursuant to the relevant indenture, and (iii) the
Debtors’ liability for fees and expenses for counsel, financial advisors
(including valuation and any other experts), and management and industry
consultants to: (A) the Ad Hoc Group of EGC Unsecured Noteholders and the EGC
Unsecured Notes Indenture Trustee shall not exceed $11.5 million in the
aggregate, and (B) the Ad Hoc Group of EPL Unsecured Noteholders and the EPL
Unsecured Notes Indenture Trustee shall not exceed $11 million in the aggregate;
provided, further, that notwithstanding the foregoing, the Debtors shall
promptly pay (x) up to $15,000 of the undisputed reasonable and documented fees
and expenses incurred prior to the Petition Date by counsel, financial advisors
(including valuation and any other experts), and management and industry
consultants to the EGC Unsecured Notes Indenture Trustee or by the EGC Unsecured
Notes Indenture Trustee, which fees and expenses shall be subject to review by
the Creditors’ Committee and the Debtors and (y) up to $15,000 of the undisputed
reasonable and documented fees and expenses incurred prior to the Petition Date
by counsel, financial advisors (including valuation and any other experts), and
management and industry consultants to the EPL Unsecured Notes Indenture Trustee
or by the EPL Unsecured Notes Indenture Trustee, which fees and expenses shall
be subject to review by the Creditors’ Committee and the Debtors. Nothing herein
or in the Plan shall affect the rights of any of the Plan Support Parties to
appear before the Court and be heard with respect to any application for the
payment of fees or expenses of any of the counsel or advisors (including
valuation and any other experts) to the Creditors’ Committee or the Debtors.

 

 6 

 

 

·The following minority protections for New Equity holders:4

 

othe New Parent Board shall consist of seven members, consisting of John D.
Schiller, Jr. as President and Chief Executive Officer of New Parent (the
“CEO”), and six additional Persons selected by the Second Lien Plan Support
Parties who are independent from the Second Lien Plan Support Parties pursuant
to the standard for independence under NYSE rules; provided, however that the
Second Lien Plan Support Parties shall consult with the Ad Hoc Group of EGC
Unsecured Noteholders and the Ad Hoc Group of EPL Unsecured Noteholders with
respect to the selection of one of the initial directors of the New Parent
Board; and

 

ocustomary preemptive rights for each holder that, together with its affiliates
(including accounts managed by a common investment manager), owns 1% or more of
the outstanding common stock of New Parent to subscribe for its share
(calculated pro rata in accordance with the percentage of shares of outstanding
common stock of New Parent held) of any equity (including securities convertible
into equity) issued by New Parent or any of its subsidiaries, including a
customary right for New Parent to provide such preemptive rights promptly
following the completion of such an issuance.

 

·The Warrant Agreement will be withdrawn and replaced in its entirety by the New
Warrant Agreement.

 

·The EGC Intercompany Note Trust and all provisions related thereto will be
deleted from the Plan.

 

·It shall be a condition to Confirmation of the Plan that (i) the Court has
approved in all material respects the compromise and settlement of all the
Settled Issues, which approval shall be included in the Confirmation Order, and
(ii) the Plan Support Agreement has not been breached and remains in full force
and effect. For the avoidance of doubt, in the event the Court does not approve
in all material respects the compromise and settlement of all the Settled Issues
or the Plan is otherwise not confirmed in a manner consistent in all material
respects with the terms provided for in this Plan Mediation Term Sheet, no party
shall be bound to support any of the terms of this Plan Mediation Term Sheet,
such parties’ votes in favor of the Plan shall be deemed withdrawn and deemed
timely votes to reject the Plan unless the applicable party elects otherwise in
writing to the Debtors, and all parties’ rights, remedies, claims, and defenses
shall be expressly preserved as if no settlement had been reached.

 

·The New Warrant Agreement, the Plan, the Confirmation Order, and any New Money
Contribution shall be in form and substance reasonably acceptable to the
Majority Plan Support Parties, which shall be defined to include the EGC
Unsecured Notes Indenture Trustee, and consistent with this Plan Mediation Term
Sheet. With respect to all other Definitive Documentation (as defined in the
Plan), the Majority Plan Support Parties (excluding the Majority Second Lien
Plan Support Parties) shall have reasonable consent rights with respect to only
those terms (which, for the avoidance of doubt, shall include the terms
providing for the specific minority protections that are expressly set forth in
the Plan Mediation Term Sheet) that could reasonably be expected to impair the
economic treatment provided under the Plan and this Plan Mediation Term Sheet
for the applicable Majority Plan Support Party. Notwithstanding anything herein
to the contrary, (i) the Majority Plan Support Parties shall have a right to
review and consult with the Debtors with respect to all Definitive Documentation
prior to such Definitive Documentation being filed in the Chapter 11 Cases, and
(ii) all Definitive Documentation and the Plan Supplement shall be in form and
substance reasonably acceptable to the Majority Second Lien Plan Support Parties
and consistent with this Plan Mediation Term Sheet.

 

 

4It is not contemplated that there will be a shareholders agreement. Such
minority protections will be set forth in the organizational documents for the
Reorganized Debtors.

 

 7 

 

 

·Waiver of conditions precedent to the Effective Date shall require consent of
the Plan Support Parties.

 

·Except as expressly provided under the Plan, the releases set forth in Article
VIII.F of the Plan shall not release obligations arising under agreements among
the Releasing Parties and the Released Parties other than the Debtors
(including, without limitation, the indemnification rights of the Indenture
Trustees under the Indentures and related documentation).

 

·The agreement of each of the Plan Support Parties to this Plan Mediation Term
Sheet shall be subject to the terms set forth herein and the Plan Support
Agreement. No Plan Support Party shall remain bound by this Plan Mediation Term
Sheet in the event that the Plan, the Confirmation Order, the New Warrant
Agreement, or any other Definitive Documentation differs materially from the
terms set forth herein, including with respect to the treatment of any Plan
Support Parties or other parties in interest.

 

·The terms and conditions of the Management Incentive Plan shall be consistent
with the terms set forth in Exhibit 1 to this Plan Mediation Term Sheet.

 

·On the Effective Date, New Parent shall enter into a new employment agreement
with John D. Schiller, Jr. as Chief Executive Officer of New Parent (such
agreement, the “CEO Employment Agreement”), which CEO Employment Agreement shall
include the terms and conditions set forth in Exhibit 1 to this Plan Mediation
Term Sheet. The form of the CEO Employment Agreement shall be included in the
Plan Supplement.

 

·The Debtors shall reject all existing employment agreements or other severance
arrangements with management and any existing management incentive programs on
the Effective Date. The terms and conditions of any post-Effective Date
employment agreements for management other than John D. Schiller, Jr. shall be
determined by the New Parent Board; provided, however, that any such employment
agreements shall contain a release of claims against the Debtors consistent with
the release set forth in the CEO Employment Agreement.

 

·Except as expressly set forth herein, the terms of the existing Plan will
remain unchanged with respect to the treatment of the Debtors’ directors and
officers and holders of Claims and Interests, including holders of First Lien
Claims, the BOEM, and Exxon.

 

 8 

 

 

EXHIBIT 1

 

Terms of the CEO Employment Agreement

 

 - 1 - 

 

 

EXXI – Terms of the CEO Employment Agreement1

 

Schiller

Employment Agreement

New Parent will enter into a new employment agreement (the “New Agreement”) with
John D. Schiller, Jr. as Chief Executive Officer of New Parent on terms and
conditions generally consistent with those proposed in the Energy XXI Ltd
Proposed Forms of Employment Agreement summary circulated by Vinson and Elkins
on 8/16/16 (the “Employment Agreement Matrix”); provided, however, that the New
Agreement will not include provisions that are off-market, generally
inconsistent with prevailing practices of publicly traded companies, or may
cause governance issues. The New Agreement, which shall be in form and substance
acceptable to the Majority Second Lien Plan Support Parties and consistent with
this term sheet, will be effective as of the Effective Date.

 

Material terms of the New Agreement will include:

 

Term: Three-year initial term, no automatic renewals.

 

Severance: The severance payments and benefits under the New Agreement will be
generally consistent with those proposed in the Employment Agreement Matrix;
provided that if Mr. Schiller’s employment is terminated by the New Parent
without Cause or by Mr. Schiller for Good Reason (including with respect to a
termination that occurs in connection with a change of control) before the first
anniversary of the Effective Date, then Mr. Schiller’s sole remedy will be a
cash payment of $2 million, less applicable withholding and deductions as
required by law (the “Initial Severance Amount”).

 

New Parent Board Evaluation Right: Until the first anniversary of the Effective
Date, the New Parent Board will have the right to reevaluate the New Agreement
to ensure that its terms are consistent with market practices. To the extent the
New Parent Board determines that the New Agreement is inconsistent with market
practices, the New Parent Board will provide a notice (the “Notice”) to Mr.
Schiller and the parties will negotiate in good faith to revise the New
Agreement as necessary. If the parties are unable to reach an agreement within
30 days of the Notice, the New Parent may terminate the New Agreement and Mr.
Schiller’s sole remedy will be the Initial Severance Amount. For the avoidance
of doubt, nothing will limit the ability of the New Parent Board to terminate
Mr. Schiller’s employment for any reason, for Cause or without Cause at any
time.

 

Other Non-Economic Terms: Other than the economic and other terms contemplated
by this term sheet, the other terms of the New Agreement will generally be
consistent with those in Mr. Schiller’s existing employment agreement (e.g.,
restrictive covenants, release, etc.); provided that the parties will agree that
the Effective Date shall not have constituted a change in control. Mr. Schiller
shall release any and all claims he may have, or now has, against any of the
Debtors (including, without limitation, claims arising from his existing
employment agreement or the Debtors’ rejection of such agreement), and Mr.
Schiller agrees not to assert any such claim; provided, however, that Mr.
Schiller may assert and receive a recovery on any prepetition indemnification
claims as Class 11 General Unsecured Claims in accordance with the terms of the
Plan.

 

 

1Capitalized terms used but not defined herein are used as defined in the
Debtors’ First Amended Joint Chapter 11 Plan of Reorganization [Docket No. 1418]
(as amended, the “Plan”).

 

 - 1 - 

 

 

Management Incentive Plan

Awards under the Management Incentive Plan will be awarded to the Reorganized
Debtors’ officers, directors, employees, and consultants at the discretion of
the New Parent Board; provided, however, that at least 3% of the Management
Equity Pool2 will be allocated by the New Parent Board to such officers,
directors, employees, and consultants no later than 120 days after the Effective
Date on terms and conditions determined by the New Parent Board, including the
type of equity based awards.

 

 

2Capitalized terms used but not defined herein are used as defined in the
Debtors’ First Amended Joint Chapter 11 Plan of Reorganization [Docket No. 1418]
(as amended, the “Plan”).

 

 2 

 

 

Exhibit B to the Plan Support Agreement

 

Plan

 

 

 

 

Exhibit C to the Plan Support Agreement

 

Form of Transferee Joinder

 

 

 

 

Form of Transferee Joinder

 

This joinder (this “Joinder”) to the Plan Support Agreement (the “Agreement”),1
dated as of [__], 2016, by and among (i) the Debtors, and (ii) the Plan Support
Parties, is executed and delivered by [________________] (the “Joining Party”)
as of [________________].

 

1.     Agreement to be Bound. The Joining Party hereby agrees to be bound by all
of the terms of the Agreement, a copy of which is attached to this Joinder as
Annex 1 (as the same has been or may be hereafter amended, restated, or
otherwise modified from time to time in accordance with the provisions thereof).
The Joining Party shall hereafter be deemed to be a Party for all purposes under
the Agreement and one or more of the entities comprising the Plan Support
Parties, as applicable.

 

2.      Representations and Warranties. The Joining Party hereby represents and
warrants to each other Party to the Agreement that, as of the date hereof, such
Joining Party (a) is the legal or beneficial holder of, and has all necessary
authority (including authority to bind any other legal or beneficial holder)
with respect to, the claims identified below its name on the signature page
hereof, and (b) makes, as of the date hereof, the representations and warranties
set forth in Section 17 of the Agreement to each other Party.

 

3.      Governing Law. This Joinder shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
any conflicts of law provisions which would require or permit the application of
the law of any other jurisdiction.

 

4.      Notice. All notices and other communications given or made pursuant to
the Agreement shall be sent to:

 

  To the Joining Party at:

 

  [JOINING PARTY]

  [ADDRESS]

  Attn:

  Facsimile: [FAX]

  EMAIL:

 

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

 

 

1Each capitalized term used herein but not otherwise defined shall have the
meaning ascribed to it in the Agreement.

 

 

 

 

  [JOINING PARTY]             By:       Name:               Title:              
Holdings: $__________________ of Debt       Under the First Lien Credit
Agreement             Holdings: $__________________ of Debt       Under the
Second Lien Indenture             Holdings: $__________________ of Debt      
Under the 9.25% Indenture             Holdings: $__________________ of Debt    
  Under the 7.75% Indenture             Holdings: $__________________ of Debt  
    Under the 7.5% Indenture             Holdings: $__________________ of Debt  
    Under the 6.875% Indenture             Holdings: $__________________ of Debt
      Under the 8.25% Indenture             Holdings: $__________________ of
Debt       Under the 3.0% Indenture             Holdings:  __________________  
    shares of Common Equity             Holdings: __________________      
shares of Preferred Equity  

 

 

 

 

Annex 1 to the Form of Transferee Joinder

 

Plan Support Agreement