Document:

avt_Ex10_1

		
			Exhibit 10.1
		

		
			September 1, 2016
		

		
			William J. Amelio

		

		
			Dear Bill:
		

		
			We are pleased that you have agreed to serve as the Chief Executive Officer of Avnet, Inc. (the “Company”).  This letter replaces the letter dated July 10, 2016, in its entirety.  
		

		
			1.Position and Term.  On and after the date hereof,  you shall serve as Chief Executive Officer of the Company.  In addition, you will continue to serve without additional compensation as a member of the Board of Directors of the Company (the “Board”).    Except with respect to the restrictive covenants set forth in Annex A, this letter may be cancelled by either party upon written notice at any time.  The period for which you will serve as the Chief Executive Officer of the Company is referred to herein as the “Term.”  
		

		
			2.Base Salary.  During the Term, you will be paid a base salary of at least $850,000 per annum.  The base salary will be paid in accordance with the Company’s standard payroll procedures.
		

		
			3.Bonus.  The target amount for your annual cash incentive shall be no less than 150% of your base salary.  Any bonus will be determined based upon the achievement of specific financial and strategic targets in the sole discretion of the Compensation Committee of the Board.
		

		
			4.Equity Grants.  On July 11, 2016, you received a long-term incentive award with a total grant value equal to $2 million.  In addition to the awards previously granted to you, you will be eligible to participate in the Company’s various stock option and other equity incentive plans as in effect from time to time, subject to the terms of such plans.
		

		
			5.Employee Benefits.  You will be eligible to participate in the Company’s employee benefit plans on the same basis as other senior executives, in accordance with the terms of such plans as they may be amended from time-to-time.    
		

		
			6.Severance.  If the Company terminates your employment without Cause, you will receive a lump sum payment equal to your base annual salary and your target bonus for the year in which the termination occurs.  For purposes hereof, “Cause” includes, but is not limited to, your gross misconduct, breach of any material term of this letter, willful breach, habitual neglect or wanton disregard of your duties, or conviction of any criminal act.
		

		
			7.Relocation.  You will establish a residence in the Phoenix area by December 31, 2016.  The Company will reimburse the reasonable and customary expenses associated with your relocation.  Effective as of December 31,  2016, the Company will cease reimbursing you for commuting expenses.
		

		
			

		 

 

8.Restrictive Covenants.   You agree to the restrictive covenants set forth in Annex A, which is attached hereto.  
		

		
			9.Tax Withholding.  All amounts payable to you by the Company are subject to all applicable tax withholdings.  In addition, you acknowledge that this letter shall be interpreted consistent with the intent to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, such that there are no adverse tax consequences, interest, or penalties as a result of any amount paid or payable pursuant to this letter.  
		

		
			10.Recoupment.    Any incentive or bonus payment made to you shall be subject to the terms and conditions of the Company’s recoupment or clawback policy, as in effect and amended from time to time, including disgorgement or repayment to the extent required by such policy.
		

		
			11.Entire Agreement/Governing Law.  This letter supersedes and replaces any prior agreements, representations or understandings (whether written, oral, implied or otherwise) between you and the Company, including that certain letter agreement dated July 10, 2016, and constitutes the complete agreement between you and the Company regarding your position as Chief Executive Officer.   This letter shall be construed, interpreted and governed by the law of the State of Arizona, without giving effect to principles regarding conflict of laws. 
		

		
			12.Counterparts.  This letter may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
		

		
			13.Headings.  Headings in this letter are for reference only and shall not be deemed to have any substantive effect.
		

		
			
		

		
			

		 

		

			2

		

 

We are very excited to have you in a leadership role during this exciting time for the Company.  Please confirm your agreement to the terms specified in this letter by signing below.
		

		
			Sincerely,
		

		
			 
		

		
			 
		

		
			 
		

		
			By:  /s/ William H. Schumann____
		

		
			Name: William H. Schumann
		

		
			Title: Chairman of the Board
		

		
			 
		

		
			AGREED AND ACKNOWLEDGED:
		

		
			 
		

		
			 
		

		
			/s/ William J. Amelio____________
William J. Amelio 
		

		
			 
		

		
			
		

		
			

		 

		

			3

		

 

Annex A
		

		
			Restrictive Covenants
		

		
			 
		

		
			The Chief Executive Officer acknowledges and recognizes (i) his possession of Confidential Information (as defined in Section b., below), (ii) the highly competitive nature of the business of the Company and its affiliates and subsidiaries, which is worldwide in scope, and (iii) that reasonable restrictions on the Chief Executive Officer’s future business endeavors and the Chief Executive Officer’s ability to disclose Confidential Information are necessary to protect valuable client and customer relationships of the Company.  Accordingly, in consideration of the premises contained herein, the Chief Executive Officer agrees to the restrictions set forth in this Annex A.
		

		
			 
		

			
	
			
				 a.
			Non-Competition.  The Chief Executive Officer agrees that during the Term and for one (1) year thereafter, he shall not, either individually or as an officer, director, stockholder, member, partner, agent, employee, consultant, principal, or committee-member of another business firm or sole proprietorship, (i) engage in, or be connected in any manner with, any business operating anywhere in the world that is in direct or indirect competition with any active business of the Company or any of its affiliates or subsidiaries, or any planned business of the Company or any of its affiliates or subsidiaries of which the Chief Executive Officer is aware (each a “Competitive Business”); (ii) be employed by an entity or person that controls a Competitive Business; or (iii) directly or indirectly solicit any customer or client of the Company or any of its affiliates or subsidiaries; provided, however, that the restrictions set forth in this section shall not prohibit the Chief Executive Officer from being a passive shareholder of a public company if the Chief Executive Officer owns less than one percent (1%) of such company.

			
	
			
				 b.
			Confidential Information.  The Chief Executive Officer agrees that he shall not, at any time during the term of this Agreement or thereafter, disclose to another, or use for any purpose other than performing his duties and responsibilities under this Agreement, any Confidential Information.  For purposes of this Agreement, Confidential Information includes all trade secrets and confidential information of the Company and its affiliates and subsidiaries including, but not limited to, the Company’s unique business methods, processes, operating techniques and “know-how” (all of which have been developed by the Company or its affiliates and subsidiaries through substantial effort and investment), profit and loss results, market and supplier strategies, customer identity and needs, information pertaining to employee effectiveness and compensation, inventory strategy, product costs, gross margins, and other information relating to the affairs of the Company and its affiliates and subsidiaries that Chief Executive Officer shall have acquired during his employment with the Company.

			
	
			
				 c.
			Non-Solicitation of Employees.  The Chief Executive Officer agrees that he shall not, at any time while employed by the Company and for three  (3) years thereafter, directly or indirectly solicit or induce any of the employees of the Company or any of its affiliates or subsidiaries to terminate employment with their employer.

		
			 
		

		 

		

			4EXHIBIT 10.1

 

SECOND AMENDMENT TO PLAN SUPPORT AGREEMENT

 

THIS SECOND AMENDMENT TO THE PLAN SUPPORT AGREEMENT (this “Amendment”) is made as of August 31, 2016 by and among all of the following: (a) the Requisite First Lien Lenders; (b) the Requisite Second Lien Noteholders; and (c) the Company (collectively, the “Required Amendment Parties”) and amends that certain Plan Support Agreement, dated as of April 30, 2016, by and among the Company and the Consenting Parties (as amended, the “Plan Support Agreement”).  Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in the Plan Support Agreement.

 

WHEREAS, the Consenting Parties desire to amend the Plan Support Agreement as set forth in this Amendment;

 

WHEREAS, Section 10 of the Plan Support Agreement permits the Consenting Parties to modify, amend or supplement the Plan Support Agreement with the consent of the Required Amendment Parties as set forth above;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Consenting Parties and the Company hereto hereby agree to amend the Plan Support Agreement as follows:

 

1.         Amendment to the Plan Support Agreement.

 

1.01.               Section 5(a)(iv)(B) of the Plan Support Agreement is hereby deleted in its entirety and replaced with the following:

 

(i) file the Plan, Disclosure Statement (other than exhibits attached thereto), and the Disclosure Statement Motion with the Bankruptcy Court within fourteen (14) calendar days of the Petition Date (the “Plan Filing Date”); (ii) obtain approval of the Disclosure Statement Motion by July 14, 2016, and (iii) obtain entry of the Confirmation Order by October 14, 2016 (such date that the Confirmation Order is entered, the “Confirmation Date”);

 

1.02.               Section 6(b)(xvii) of the Plan Support Agreement is hereby deleted in its entirety and replaced with the following:

 

the Effective Date shall not have occurred on or before October 31, 2016, provided, however, that such deadline may be extended with the written consent of Requisite First Lien Lenders and Requisite Second Lien Noteholders.

 

1.03.               Section 10 of the Plan Support Agreement is hereby amended by the addition of a new paragraph at the end of that section that states the following:

 

 

During the Plan Support Period and notwithstanding any language herein to the contrary, any amendments, waivers, modifications, or supplements to the Term Sheet, attached to the Plan Support Agreement as Exhibit A, which contains those certain agreements, understandings, settlements and compromises by and between the Consenting Second Lien Noteholders, Consenting Cross-Over Noteholders and the Company, that may require amendment or modification of the Plan Support Agreement may be effectuated without need of obtaining approval for such amendment or modification to the Plan Support Agreement by the Consenting First Lien Lenders, provided that, in the sole and absolute discretion of the First Lien Agent, the First Lien Agent determines that such amendments, waivers, modifications, or supplements to the Term Sheet do not adversely impact the rights, treatment, or protections afforded the Consenting First Lien Lenders in the Plan Support Agreement and such determination of the First Lien Agent is expressly given in writing to the Company.

 

2.         Amendment to Exhibit A of the Plan Support Agreement.  Exhibit A to the Plan Support Agreement, the Term Sheet, is hereby amended as set forth in the redlined pages attached hereto as Exhibit 1 (such Term Sheet, as so amended, the “Amended Term Sheet”).  A conformed version of the Amended Term Sheet is attached hereto as Exhibit 2.

 

3.         Ratification.  Except as specifically provided for in the First Amendment to the Plan Support Agreement, dated June 29, 2016, and this Amendment (together, the “PSA Amendments”), no changes, amendments, or other modifications have been made on or prior to the date hereof or are being made to the terms of the Plan Support Agreement or the rights and obligations of the parties thereunder, all of which such terms are hereby ratified and confirmed and remain in full force and effect.

 

4.         Effect of Amendment.  This Amendment shall be effective on the date on which the Company has received all of the Required Amendment Parties’ signature pages and delivered its signature page to counsel to the First Lien Agent and counsel to the Consenting Second Lien Ad Hoc Committee.  Following the effective date of this Amendment, whenever the Plan Support Agreement is referred to in any agreements, documents, and instruments, such reference shall be deemed to be to the Plan Support Agreement as amended by the PSA Amendments.

 

[Signature pages follow.]

 

2

 

Exhibit A

 

Redline Pages

 

MIDSTATES PETROLEUM COMPANY, INC.

 

AMENDED RESTRUCTURING TERM SHEET

 

This non-binding indicative term sheet (the “Restructuring Term Sheet”) sets forth the principal terms of a financial restructuring (the “Restructuring”) of the existing debt and other obligations of the Company (as defined herein). The Restructuring will be consummated through cases under chapter 11 (the “Chapter 11 Case(s)”) of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”), in accordance with the terms of a plan support agreement (the “PSA”) to be executed by the Company, the Administrative Agent, the 2012 Credit Facility Lenders, the members of the Second Lien Group and the members of the Cross-Over Group (each as defined below, and together, the “Parties”).

 

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

 

THE TRANSACTIONS DESCRIBED HEREIN WILL BE SUBJECT TO THE NEGOTIATION AND COMPLETION OF DEFINITIVE DOCUMENTS INCORPORATING THE TERMS SET FORTH HEREIN AND THE CLOSING OF ANY TRANSACTION SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SUCH AGREED DEFINITIVE DOCUMENTS.

 

The Parties

 

	
Company
    	
 
    	
Midstates Petroleum Company, Inc. and   Midstates Petroleum Company LLC shall be collectively referred to as “Midstates”   or, the “Company,” and, as reorganized pursuant to the Restructuring,   “Reorganized Midstates.” 
    
	
 
    	
 
    	
 
    
	
2012 Credit Facility Lenders
    	
 
    	
The lenders (collectively, the “2012 Credit   Facility Lenders”) under that certain Second Amended and Restated Credit   Agreement, dated as of June 8, 2012, by and among Midstates Petroleum   Company, Inc., as Parent, Midstates Petroleum Company LLC, as borrower,   the banks and other financial institutions named therein as lenders, SunTrust   Bank, N.A. as administrative agent, swing line lender, issuing lender, and   lender (the “Administrative Agent”), and the other mandated lead   arranger, bookrunner parties, syndication agent, and co-documentation agents   thereto, by which the lenders made available to Midstates a reserve based   senior secured revolving credit facility (as amended, restated, modified or supplemented from time to time prior to the date   hereof,   the “2012 Credit Facility”).  As   of the date hereof, approximately $249.2 million of the principal amount   remains outstanding under the 2012 Credit Facility, plus accrued and unpaid   interest and outstanding letters of credit in the approximate amount of $2.8   million.
    

 

 

	
Second Lien Noteholders
    	
 
    	
The holders (collectively, the “Second Lien   Noteholders”) of the 10.0% Second Lien Senior Secured Notes Due 2020   issued pursuant to that certain Indenture dated as of May 21, 2015,   among Midstates Petroleum Company, Inc. and Midstates Petroleum Company   LLC, as issuers, and Wilmington Trust, N.A. (in such capacity, the “Second   Lien Trustee”), as Trustee and Collateral Agent (as may be amended and   restated from time to time, the “Second Lien Notes”).  As of the date hereof, approximately $625.0   million of the principal amount remains outstanding under the Second Lien   Notes, plus accrued and unpaid interest.
    
	
 
    	
 
    	
 
    
	
Third Lien Noteholders
    	
 
    	
The holders (collectively, the “Third Lien   Noteholders”) of the 12.0% Third Lien Senior Secured Notes Due 2020   issued pursuant to that certain Indenture dated as of May 21, 2015,   among Midstates Petroleum Company, Inc. and Midstates Petroleum Company   LLC, as issuers, and Wilmington Trust, N.A. (in such capacity, the “Third   Lien Trustee”), as Trustee and Collateral Agent (as may be amended and   restated from time to time, the “Third Lien Notes”).  As of the date hereof, approximately $529.7   million of the principal amount remains outstanding under the Third Lien   Notes, plus accrued and unpaid interest.    
    
	
 
    	
 
    	
 
    
	
10.75% Unsecured Noteholders
    	
 
    	
The holders (collectively, the “10.75%   Unsecured Noteholders”) of the 10.75% Senior Notes Due 2020 issued   pursuant to that certain Indenture dated as of October 1, 2012, among   Midstates Petroleum Company, Inc. and Midstates Petroleum Company LLC,   as issuers, and Wells Fargo Bank , N.A., as Trustee (as may be amended and   restated from time to time, the “10.75% Unsecured Notes”).  As of the date hereof, approximately $293.6   million of the principal amount remains outstanding under the 10.75%   Unsecured Notes, plus accrued and unpaid interest.  
    
	
 
    	
 
    	
 
    
	
9.25% Unsecured Noteholders
    	
 
    	
The holders (collectively, the “9.25%   Unsecured Noteholders,” and together with the 10.75% Unsecured   Noteholders, the “Unsecured Noteholders”) of the 9.25% Senior Notes   Due 2021 issued pursuant to that certain Indenture dated as of May 31,   2013, among Midstates Petroleum Company, Inc. and Midstates Petroleum   Company LLC, as issuers, and Wells Fargo Bank, N.A., as Trustee (as may be   amended and restated from time to time, the “9.25% Unsecured Notes,”   and together with the 10.75% Unsecured Notes, the “Unsecured Notes”).  As of the date hereof, approximately $347.7   million of the principal amount remains outstanding under the 9.25% Unsecured   Notes, plus accrued and unpaid interest.    
    
	
 
    	
 
    	
 
    
	
Lien Trade Creditors
    	
 
    	
The holders (collectively, the “Lien Trade   Creditors”) of claims against the Company arising from the provision to   the Company of goods or services, which claims may be secured by valid and   enforceable liens or security interests, whether pursuant to an agreement   with the 
    

 

2

 

	
 
    	
 
    	
Company or applicable law (the “Lien Trade   Claims”).
    
	
 
    	
 
    	
 
    
	
General Unsecured Claims
    	
 
    	
The holders (collectively, the “General   Unsecured Creditors”), other than the Unsecured Noteholders, of unsecured   claims against the Company, including, without limitation, claims arising   from the rejection of any executory contract or unexpired lease in connection   with the Chapter 11 Cases.
    
	
 
    	
 
    	
 
    
	
Ad Hoc Noteholder Groups 
    	
 
    	
The ad hoc group of Second Lien Noteholders (the   “Second Lien Group”) and the ad hoc group of certain holders of both   Second Lien Notes and Third Lien Notes (the “Cross-Over Group”).
    

 

The Settlement

 

	
Intercreditor Settlement 
    	
 
    	
In accordance with and subject to the terms and   conditions of the PSA, the PSA and the chapter 11 plan described herein (the   “Plan”) shall be proposed and supported by the Company in its Chapter   11 Cases and shall incorporate and implement the terms of the intercreditor   settlement (the “Settlement”) among the Company, the Administrative   Agent, the 2012 Credit Facility Lenders, the members of the Second Lien   Group, and the members of the Cross-Over Group as described below:

 

·                  agreement among the   Parties on a valuation allocation with respect to the Company’s assets that   are encumbered by valid, perfected and enforceable liens (the “Prepetition   Collateral”) and any of the Company’s assets that are unencumbered as of   the Petition Date (as defined below) (the “Unencumbered Assets”), such   that the New Midstates Equity (as defined below) will be allocated ninety-eighttwo and eightnine-tenths percent (98.892.9%)   on account of Prepetition Collateral and seven   and one and two-tenths-tenth   percent (7.1.2%) on account of   Unencumbered Assets, which valuation allocation reflects the Debtors good   faith determination of their encumbered and unencumbered assets as of the   Petition DateAugust 23, 2016; provided that the Administrative Agent, on behalf of the   2012 Credit Facility Lenders, and the Second Lien Trustee, on behalf of the   Second Lien Noteholders, shall be granted a provisional claim and lien on the   Unencumbered Assets as part of their respective adequate protection packages   under the cash collateral order to be entered by the Court at the outset of   the Chapter 11 Cases, which adequate protection claim and lien shall be   waived only if the Settlement is consummated.

 

·                  agreement by the   Administrative Agent, the 2012 Credit Facility Lenders, the Second Lien   Trustee and the Second Lien Lenders to waive any adequate protection claim,   under section 
    

 

3

 

	
 
    	
 
    	
507(b) of the Bankruptcy Code or otherwise,   as it relates to any diminution in value with respect to the Prepetition   Collateral, solely to the extent that such adequate protection claim would   otherwise be satisfied through a claim against and lien on the Unencumbered   Assets (the “Diminution in Value Claim”); provided,   however, that in the event of any   challenge to the Settlement and/or the Plan by the statutory committee of   unsecured creditors appointed in the Company’s Chapter 11 Cases (the “Committee”),   any Unsecured Noteholder or any General Unsecured Creditor (and together with   the Committee and the Unsecured Noteholders, the “General Unsecured   Parties”), the Diminution in Value Claim will not be waived, the   contingent adequate protection claim and lien will attach to the Unencumbered   Assets, and will include, without limitation, all estate fees and costs   associated with any General Unsecured Party’s challenge to the Settlement or   the Plan (i.e., a dollar-for-dollar reduction will occur in the value of the   recovery for the General Unsecured Creditors and the Unsecured Noteholders   for the fees and costs incurred or reimbursed by the Debtors’ estates in   connection with defending or prosecuting any such challenge);

 

·                  agreement by the   Second Lien Noteholders and the Third Lien Noteholders to waive any   deficiency claims otherwise assertable as General Unsecured Claims (the “Noteholder   Deficiency Claims”) or giving rise to the right to share pro rata in any distribution available to holders of   General Unsecured Claims, including the Noteholders; provided,   however, that in the event of any   challenge to the Settlement and/or the Plan by any General Unsecured Party,   the Noteholder Deficiency Claims shall share pro rata in any recovery   available to the class of General Unsecured Creditors;

 

·                  agreement by:   (i) the Third Lien Noteholders to waive any and all objections or   challenges to, or arguments opposing confirmation of, the Plan, and any and   all claims, causes of action or other challenges against the Second Lien   Noteholders and the Second Lien Trustee (the “Second Lien Secured Parties”)   regardless of whether the Settlement is approved by the Bankruptcy Court but   only to the extent the PSA remains in full force and effect, in full and   final resolution of all disputes and claims between the Second Lien Secured   Parties and the Third Lien Noteholders and the Third Lien Trustee (the “Third   Lien Secured Parties”), including, without limitation, valuation issues   and any rights of the Third Lien Noteholders as General Unsecured Creditors   (the “Third Lien Waiver”), (ii) the Second 
    

 

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Lien Noteholders to waive any and all objections   or challenges to, or arguments opposing confirmation of, the Plan,(1) and any and all claims, causes of   action or other challenges against the Third Lien Secured Parties regardless   of whether the Settlement is approved by the Bankruptcy Court but only to the   extent the PSA remains in full force and effect, in full and final resolution   of all disputes and claims between the Second Lien Secured Parties and the   Third Lien Secured Parties, including, without limitation, valuation issues   and any rights of the Second Lien Noteholders as General Unsecured Creditors   (the “Second Lien Waiver” and, together with the Third Lien Waiver,   the “Waivers”), and (iii) the Second Lien Noteholders that the   Third Lien Noteholders shall receive through the Plan their pro rata share of   two and one-half percent (2.5%) of the equity interests in Reorganized   Midstates (the “New Midstates Equity”) and 3.5-year, out of the   money, standard warrants (the “Warrants”) for   fifteen percent (15%) of the New Midstates Equity struck at a strike price of   $600 million (the “Third Lien Intercreditor Settlement” and, together   with the Waivers, the “2nd/3rdSecond/Third Lien Plan Settlement”), provided that the   PSA remains in full force and effect.    The Waivers are granted by the Second Lien Noteholders and the Third   Lien Noteholders in consideration of the Second Lien Noteholders and Third   Lien Noteholders’ willingness to enter into the Third Lien Intercreditor   Settlement.

 

The Debtors shall use their commercially   reasonable efforts to obtain language in the order approving the Disclosure   Statement providing that the Waivers shall be binding on the Second Lien   Secured Parties and the Third Lien Secured Parties to the extent the PSA   remains in full force and effect.

 

The Plan filed on or about the Petition Date will   be consistent in all material respects with the terms of the Settlement.

 

If the Settlement is not approved in connection   with confirmation of the Plan, the Plan (pursuant to its terms) will be   automatically deemed modified to exclude: (i) the Third Lien   Intercreditor Settlement and (ii) the waiver of (a) the Diminution   in Value Claim and (b) the Noteholder Deficiency Claims by the 2012   Credit Facility Lenders, the Second Lien Noteholders, and the Third Lien   Noteholders (as applicable).

 

To the extent the Settlement is not approved in   connection with confirmation of the Plan, the Diminution in Value Claim,   including all fees and costs associated with defending any challenge to the
    

 

(1) Notwithstanding anything else in this Plan Support Agreement, the Second Lien Noteholders reserve their rights with respect to the Debtors’ analyses and calculation of Diminution in Value Claims, Noteholder Deficiency Claims, and the value of unencumbered assets that exceeds the value of 1.2% of the New Midstates Equity.

 

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Settlement or to the Plan, will be determined in   connection with confirmation of the Plan and the litigation schedule to be   set and approved in connection with approval of the disclosure statement   related to the Plan.

 

For the avoidance of doubt, the 2nd/3rdSecond/Third Lien Plan Settlement will bind the Second Lien   Noteholders and the Third Lien Noteholders (including, for the avoidance of   doubt, the Second Lien Group and the Cross-Over Group) in the event the Plan   is immaterially modified, altered, or revised, or any or all of the   Settlement is approved as part of the Plan.

 

For the avoidance of doubt, and notwithstanding anything to the   contrary herein, although in the event of any challenge the Noteholder Deficiency Claims shall   be taken into account for purposes of calculating distributions to the   holders of Unsecured Notes Claims (as defined herein) and General Unsecured   Claims (other than Deficiency Claims) pursuant to the Plan, the assertion of   such Noteholder Deficiency Claims shall   not result in any increased distribution to the holder of Third Lien Notes   Claims (as defined herein) and such distributions shall continue to be solely   as set forth in the Second/Third Lien Plan Settlement with any distribution   on account of Noteholder Deficiency Claims that otherwise would be owed to   the holders of Third Lien Notes   Claims going instead to holders of Second Lien Notes Claims (as defined   herein).

 

The Plan shall contain a condition precedent to effectiveness   requiring that the percentage of Unencumbered Assets Equity Distribution   received by Holders of Unsecured Notes Claims and General Unsecured Claims   (excluding Deficiency Claims) not exceed three and seven-tenths percent   (3.7%) of the New Common Stock (which shall be subject to dilution under the   MIP (as defined herein) and New Midstates Equity issuable upon exercise of   the Warrants)
    

 

The Restructuring

 

	
Definitions
    	
 
    	
“Excess Cash” means cash in an amount   equal to any cash remaining on any of the Debtors’ balance sheets as of the   Plan Effective Date, less (a) the amount of cash to be paid to holders   of the 2012 Facility Claims (as defined below) on the Plan Effective Date, less   (b) all payments of cash and reserves of cash required under the Plan   (other than distributions of cash on account of Second Lien Note Claims (as   defined below), including, but not limited to, payments and reserves on   account of administrative claims, priority claims, tax claims, and   transaction and professional fees, less (c) $110 million (the minimum   amount of cash needed for the Debtors’ balance sheets as agreed to by the   Debtors, the 2012 Credit Facility Lenders and the Second Lien Group); provided that the amount of Excess Cash shall be no   greater than $60 million.
    

 

6

 

	
Treatment of Claims/Equity Interests
    	
 
    	
The Plan will provide that each holder of an   allowed claim will receive the following on or as soon as practicable after   the effective date of the Plan (the “Plan Effective Date”), unless   different treatment is agreed to by the holder of such allowed claim and the   Company:

 

·                  Administrative,   Priority, and Priority Tax Claims: Allowed administrative, priority, and tax   claims will be satisfied in full, in cash, or otherwise receive treatment   consistent with the provisions of section 1129(a)(9) of the Bankruptcy   Code.

 

·                  2012   Credit Facility Claims: On the Plan Effective Date, the holders of allowed   claims under the 2012 Facility shall have an allowed claim in the approximate   principal amount of $252,000,000, plus accrued interest and fees (the “2012   Facility Claims”).  Holders of 2012   Facility Claims will receive their pro rata share of (i) approximately   $82 million in cash and (ii) the New Credit Facility (in each case, on   the terms and conditions as set forth in the RBL Term Sheet attached as   Exhibit B to the PSA).

 

·                  Second   Lien Notes Claims:  On the Plan   Effective Date, the holders of allowed claims under the Second Lien Notes   shall have an allowed claim in the principal amount of $625,000,000, plus   accrued interest and fees (the “Second Lien Notes Claims”).  Holders of Second Lien Notes Claims will   receive their pro rata share of (a) ninety-sixseven and threefive-tenths percent (96.397.5%)   of the New Midstates Equity less the   Unencumbered Assets Equity Distribution(2) and (b) the Excess   Cash; provided, however,   if the Settlement is not approved and consummated as part of the Plan, holders   of Second Lien Note Claims will instead receive their pro rata share of   (x) ninety-eight and eight-tenthsone   hundred percent (98.8100.0%)   of the New Midstates Equity less the   Unencumbered Assets Equity Distribution, (y) the Excess Cash, and   (z) their pro rata share of the Unencumbered Assets Equity Distribution   (as defined below) on account of the Noteholder Deficiency Claims held by   such holders of Second Lien Notes Claims.

 

·                  Third Lien   Notes Claims:  On the Plan Effective Date, the   holders of allowed claims under the Third Lien Notes shall have an allowed   claim in the principal amount of $529,653,388, plus accrued interest and fees   (the “Third Lien Notes Claims”).    Holders of
    

 

(2) “Unencumbered Assets Equity Distribution” means a percentage of New Midstates Equity of a value equal to the value of the Debtors’ unencumbered assets as determined by the Court that shall be up to seven and one-tenth percent (7.1%) of the New Midstates Equity and no less than one and two-tenths percent (1.2%) of the New Common Stock, subject to certain dilutions under the MIP (as defined herein) set forth in the Plan and the Warrants; provided that, as required under the Cash Collateral Order (as defined in the Plan), the Unencumbered Assets Equity Distribution shall be reduced by the amount of fees and expenses incurred by the Committee that are not permitted to be paid from Cash Collateral (as defined in the Plan) pursuant to paragraph 19 of the Cash Collateral Order, to the extent allowed by the Court and paid by the Debtors.

 

7

 

	
 
    	
 
    	
Third Lien Notes Claims will receive their pro   rata share of the Third Lien Intercreditor Settlement if the Settlement is   consummated as part of the Plan in accordance with the terms of the PSA.  For the avoidance of doubt, if the   Settlement is not approved and consummated as part of the Plan, the holders   of the Third Lien Notes Claims shall receive only their pro rata share of the   Unencumbered Assets Equity Distribution on account of the Noteholder   Deficiency Claims held by the holders of Third Lien Notes Claims (and shall   not receive the Third Lien Intercreditor Settlement).

 

·                  10.75%   Unsecured Notes Claims and 9.25% Unsecured Notes Claims:  On the Plan Effective Date, the holders of   allowed claims under the 10.75% Unsecured Notes shall have an allowed claim   in the principal amount of $293,626,000, plus accrued interest and fees (the   “10.75% Unsecured Notes Claims”) and the holders of allowed claims   under the 9.25% Unsecured Notes shall have an allowed claim in the principal   amount of $347,651,000, plus accrued interest and fees (the “9.25%   Unsecured Notes Claims,” and together with the 10.75% Unsecured Notes   Claims, the “Unsecured Notes Claims”)).  Holders of Unsecured Notes Claims will   receive their pro rata share of one and two-tenths percent (1.2%) of the   New Midstates Equity on account of the Company’s unencumbered assets (the   “Unencumbered Assets Equity Distribution”);; provided, however,   if the Settlement is not approved and consummated as part of the Plan, the   Unencumbered Assets Equity Distribution will be (a) charged for any   Diminution in Value Claims and (b) shared among all holders of Unsecured   Notes Claims and General Unsecured Claims, including the holders of Second   Lien Notes Claims and Third Lien Notes Claims on account of their respective   Noteholder Deficiency Claims.

 

·                  Lien Trade   Claims:  Holders of Lien Trade Claims   will be paid in full on account of such Lien Trade Claims on the later of   (a) the Plan Effective Date and (b) the date a holder’s Lien Trade   Claim comes due in the ordinary course of business.

 

·                  GUC Claims: Holders of General   Unsecured Claims will receive their pro rata share of the Unencumbered Assets   Equity Distribution (either free of dilution if the Settlement is approved or   subject to dilution, for both the Diminution in Value Claim and the   Noteholder Deficiency Claims, if the Settlement is not approved).

 

·                  Existing   Equity: All existing equity interests (including common stock, preferred stock   and any options, warrants or rights to acquire any equity interests) in   Midstates Petroleum Company, Inc. shall be cancelled on the Plan   Effective Date and holders of such interests shall receive no recovery under   the Plan.  
    

 

8

 

Other Plan Terms

 

	
Releases and Exculpation
    	
 
    	
The Plan and Confirmation Order shall provide   customary releases (including third party releases) and exculpation   provisions, in each case, to the fullest extent permitted by law, for the   benefit of the Debtors, Reorganized Midstates, 2012 Credit Facility Lenders,   the Administrative Agent, the Second Lien Noteholders, the Third Lien   Noteholders, such entities’ respective current and former   affiliates, and such entities’ and their current and former affiliates’   current and former officers, managers, directors, equity holders (regardless   of whether such interests are held directly or indirectly), predecessors,   successors, and assigns, subsidiaries, and each of their current and former   officers, managers, directors, equity holders, principals, members, employees,   agents, managed accounts or funds, management companies, fund advisors,   advisory board members, financial advisors, partners, attorneys, accountants,   investment bankers, consultants, representatives, and other professionals,   each in their capacity as such.  
    
	
 
    	
 
    	
 
    
	
Management Incentive Plan and Management   Employment Agreements
    	
 
    	
The Plan will provide for the establishment of a   management equity incentive plan (the “MIP”) under which 10% of the New   Midstates Equity (on a fully-diluted/fully-distributed basis) will be   reserved for grants made from time to time to the directors, officers, and   other management of Reorganized Midstates.  The other aspects of the MIP   and the remainder of compensation issues, including to what extent the MIP   and such compensation issues will be determined by the new board, will be   negotiated in connection with the Plan.

 

Existing employment agreements will be assumed   and/or amended and assumed with the consent of management and the Second Lien   Group.
    
	
 
    	
 
    	
 
    
	
Corporate Governance
    	
 
    	
The terms and conditions of the new corporate   governance documents of the Reorganized Midstates (including the bylaws,   certificates of incorporation, among other governance documents) shall be   subject to the consent of the Second Lien Group; provided that, if the   Settlement is approved in connection with confirmation of the Plan, the new corporate governance   documents shall provide for all members of the initial board of directors (or   similar governing body) of reorganized Midstates Petroleum Company, Inc.   to be appointed by those parties to the PSA who hold, in the aggregate, at   least 50.1% in principal amount outstanding of the Second Lien Notes held by   all parties to the PSA.
    

 

9

 

Exhibit B

 

Amended Term Sheet

 

MIDSTATES PETROLEUM COMPANY, INC.

 

AMENDED RESTRUCTURING TERM SHEET

 

This non-binding indicative term sheet (the “Restructuring Term Sheet”) sets forth the principal terms of a financial restructuring (the “Restructuring”) of the existing debt and other obligations of the Company (as defined herein). The Restructuring will be consummated through cases under chapter 11 (the “Chapter 11 Case(s)”) of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”), in accordance with the terms of a plan support agreement (the “PSA”) to be executed by the Company, the Administrative Agent, the 2012 Credit Facility Lenders, the members of the Second Lien Group and the members of the Cross-Over Group (each as defined below, and together, the “Parties”).

 

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

 

THE TRANSACTIONS DESCRIBED HEREIN WILL BE SUBJECT TO THE NEGOTIATION AND COMPLETION OF DEFINITIVE DOCUMENTS INCORPORATING THE TERMS SET FORTH HEREIN AND THE CLOSING OF ANY TRANSACTION SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SUCH AGREED DEFINITIVE DOCUMENTS.

 

The Parties

 

	
Company
    	
 
    	
Midstates Petroleum Company, Inc. and   Midstates Petroleum Company LLC shall be collectively referred to as “Midstates”   or, the “Company,” and, as reorganized pursuant to the Restructuring,   “Reorganized Midstates.” 
    
	
 
    	
 
    	
 
    
	
2012 Credit Facility Lenders
    	
 
    	
The lenders (collectively, the “2012 Credit   Facility Lenders”) under that certain Second Amended and Restated Credit   Agreement, dated as of June 8, 2012, by and among Midstates Petroleum   Company, Inc., as Parent, Midstates Petroleum Company LLC, as borrower,   the banks and other financial institutions named therein as lenders, SunTrust   Bank, N.A. as administrative agent, swing line lender, issuing lender, and   lender (the “Administrative Agent”), and the other mandated lead   arranger, bookrunner parties, syndication agent, and co-documentation agents   thereto, by which the lenders made available to Midstates a reserve based   senior secured revolving credit facility (as amended, restated, modified or supplemented from time to time prior to the date   hereof,   the “2012 Credit Facility”).  As   of the date hereof, approximately $249.2 million of the principal amount   remains outstanding under the 2012 Credit Facility, plus accrued and unpaid   interest and outstanding letters of credit in the approximate amount of $2.8   million.
    

 

 

	
Second Lien Noteholders
    	
 
    	
The holders (collectively, the “Second Lien   Noteholders”) of the 10.0% Second Lien Senior Secured Notes Due 2020   issued pursuant to that certain Indenture dated as of May 21, 2015,   among Midstates Petroleum Company, Inc. and Midstates Petroleum Company   LLC, as issuers, and Wilmington Trust, N.A. (in such capacity, the “Second   Lien Trustee”), as Trustee and Collateral Agent (as may be amended and   restated from time to time, the “Second Lien Notes”).  As of the date hereof, approximately $625.0   million of the principal amount remains outstanding under the Second Lien   Notes, plus accrued and unpaid interest.
    
	
 
    	
 
    	
 
    
	
Third Lien Noteholders
    	
 
    	
The holders (collectively, the “Third Lien   Noteholders”) of the 12.0% Third Lien Senior Secured Notes Due 2020   issued pursuant to that certain Indenture dated as of May 21, 2015,   among Midstates Petroleum Company, Inc. and Midstates Petroleum Company   LLC, as issuers, and Wilmington Trust, N.A. (in such capacity, the “Third   Lien Trustee”), as Trustee and Collateral Agent (as may be amended and   restated from time to time, the “Third Lien Notes”).  As of the date hereof, approximately $529.7   million of the principal amount remains outstanding under the Third Lien   Notes, plus accrued and unpaid interest.    
    
	
 
    	
 
    	
 
    
	
10.75% Unsecured Noteholders
    	
 
    	
The holders (collectively, the “10.75%   Unsecured Noteholders”) of the 10.75% Senior Notes Due 2020 issued   pursuant to that certain Indenture dated as of October 1, 2012, among   Midstates Petroleum Company, Inc. and Midstates Petroleum Company LLC,   as issuers, and Wells Fargo Bank , N.A., as Trustee (as may be amended and   restated from time to time, the “10.75% Unsecured Notes”).  As of the date hereof, approximately $293.6   million of the principal amount remains outstanding under the 10.75%   Unsecured Notes, plus accrued and unpaid interest.  
    
	
 
    	
 
    	
 
    
	
9.25% Unsecured Noteholders
    	
 
    	
The holders (collectively, the “9.25%   Unsecured Noteholders,” and together with the 10.75% Unsecured   Noteholders, the “Unsecured Noteholders”) of the 9.25% Senior Notes   Due 2021 issued pursuant to that certain Indenture dated as of May 31,   2013, among Midstates Petroleum Company, Inc. and Midstates Petroleum   Company LLC, as issuers, and Wells Fargo Bank, N.A., as Trustee (as may be   amended and restated from time to time, the “9.25% Unsecured Notes,”   and together with the 10.75% Unsecured Notes, the “Unsecured Notes”).  As of the date hereof, approximately $347.7   million of the principal amount remains outstanding under the 9.25% Unsecured   Notes, plus accrued and unpaid interest.    
    
	
 
    	
 
    	
 
    
	
Lien Trade Creditors
    	
 
    	
The holders (collectively, the “Lien Trade   Creditors”) of claims against the Company arising from the provision to   the Company of goods or services, which claims may be secured by valid and   enforceable liens or security interests, whether pursuant to an agreement   with the
    

 

2

 

	
 
    	
 
    	
Company or applicable law (the “Lien Trade   Claims”).
    
	
 
    	
 
    	
 
    
	
General Unsecured Claims
    	
 
    	
The holders (collectively, the “General   Unsecured Creditors”), other than the Unsecured Noteholders, of unsecured   claims against the Company, including, without limitation, claims arising   from the rejection of any executory contract or unexpired lease in connection   with the Chapter 11 Cases.
    
	
 
    	
 
    	
 
    
	
Ad Hoc Noteholder Groups 
    	
 
    	
The ad hoc group of Second Lien Noteholders (the   “Second Lien Group”) and the ad hoc group of certain holders of both   Second Lien Notes and Third Lien Notes (the “Cross-Over Group”).
    

 

The Settlement

 

	
Intercreditor Settlement 
    	
 
    	
In accordance with and subject to the terms and   conditions of the PSA, the PSA and the chapter 11 plan described herein (the   “Plan”) shall be proposed and supported by the Company in its Chapter   11 Cases and shall incorporate and implement the terms of the intercreditor   settlement (the “Settlement”) among the Company, the Administrative   Agent, the 2012 Credit Facility Lenders, the members of the Second Lien   Group, and the members of the Cross-Over Group as described below:

 

·                  agreement among the   Parties on a valuation allocation with respect to the Company’s assets that   are encumbered by valid, perfected and enforceable liens (the “Prepetition   Collateral”) and any of the Company’s assets that are unencumbered as of   the Petition Date (as defined below) (the “Unencumbered Assets”), such   that the New Midstates Equity (as defined below) will be allocated ninety-two   and nine-tenths percent (92.9%) on account of Prepetition Collateral and   seven and one-tenth percent (7.1%) on account of Unencumbered Assets, which   valuation allocation reflects the Debtors good faith determination of their   encumbered and unencumbered assets as of August 23, 2016; provided that the Administrative Agent, on behalf of the   2012 Credit Facility Lenders, and the Second Lien Trustee, on behalf of the   Second Lien Noteholders, shall be granted a provisional claim and lien on the   Unencumbered Assets as part of their respective adequate protection packages   under the cash collateral order to be entered by the Court at the outset of   the Chapter 11 Cases, which adequate protection claim and lien shall be   waived only if the Settlement is consummated.

 

·                  agreement by the   Administrative Agent, the 2012 Credit Facility Lenders, the Second Lien   Trustee and the Second Lien Lenders to waive any adequate protection claim,   under section 507(b) of the Bankruptcy Code or otherwise, as it relates   to any 
    

 

3

 

	
 
    	
 
    	
diminution in value with respect to the   Prepetition Collateral, solely to the extent that such adequate protection   claim would otherwise be satisfied through a claim against and lien on the Unencumbered   Assets (the “Diminution in Value Claim”); provided,   however, that in the event of any   challenge to the Settlement and/or the Plan by the statutory committee of   unsecured creditors appointed in the Company’s Chapter 11 Cases (the “Committee”),   any Unsecured Noteholder or any General Unsecured Creditor (and together with   the Committee and the Unsecured Noteholders, the “General Unsecured   Parties”), the Diminution in Value Claim will not be waived, the   contingent adequate protection claim and lien will attach to the Unencumbered   Assets, and will include, without limitation, all estate fees and costs   associated with any General Unsecured Party’s challenge to the Settlement or   the Plan (i.e., a dollar-for-dollar reduction will occur in the value of the   recovery for the General Unsecured Creditors and the Unsecured Noteholders   for the fees and costs incurred or reimbursed by the Debtors’ estates in   connection with defending or prosecuting any such challenge);

 

·                  agreement by the   Second Lien Noteholders and the Third Lien Noteholders to waive any   deficiency claims otherwise assertable as General Unsecured Claims (the “Noteholder   Deficiency Claims”) or giving rise to the right to share pro rata in any distribution available to holders of   General Unsecured Claims, including the Noteholders; provided,   however, that in the event of any   challenge to the Settlement and/or the Plan by any General Unsecured Party,   the Noteholder Deficiency Claims shall share pro rata in any recovery   available to the class of General Unsecured Creditors;

 

·                  agreement by:   (i) the Third Lien Noteholders to waive any and all objections or   challenges to, or arguments opposing confirmation of, the Plan, and any and   all claims, causes of action or other challenges against the Second Lien   Noteholders and the Second Lien Trustee (the “Second Lien Secured Parties”)   regardless of whether the Settlement is approved by the Bankruptcy Court but   only to the extent the PSA remains in full force and effect, in full and   final resolution of all disputes and claims between the Second Lien Secured   Parties and the Third Lien Noteholders and the Third Lien Trustee (the “Third   Lien Secured Parties”), including, without limitation, valuation issues   and any rights of the Third Lien Noteholders as General Unsecured Creditors   (the “Third Lien Waiver”), (ii) the Second 
    

 

4

 

	
 
    	
 
    	
Lien Noteholders to waive any and all objections   or challenges to, or arguments opposing confirmation of, the Plan,(1) and   any and all claims, causes of action or other challenges against the Third   Lien Secured Parties regardless of whether the Settlement is approved by the   Bankruptcy Court but only to the extent the PSA remains in full force and   effect, in full and final resolution of all disputes and claims between the   Second Lien Secured Parties and the Third Lien Secured Parties, including,   without limitation, valuation issues and any rights of the Second Lien   Noteholders as General Unsecured Creditors (the “Second Lien Waiver”   and, together with the Third Lien Waiver, the “Waivers”), and   (iii) the Second Lien Noteholders that the Third Lien Noteholders shall   receive through the Plan their pro rata share of two and one-half percent   (2.5%) of the equity interests in Reorganized Midstates (the “New   Midstates Equity”) and 3.5-year, out of the money, standard warrants (the   “Warrants”) for fifteen percent (15%) of the New Midstates Equity   struck at a strike price of $600 million (the “Third Lien Intercreditor   Settlement” and, together with the Waivers, the “Second/Third Lien   Plan Settlement”), provided that the PSA remains in full force and   effect.  The Waivers are granted by the   Second Lien Noteholders and the Third Lien Noteholders in consideration of   the Second Lien Noteholders and Third Lien Noteholders’ willingness to enter   into the Third Lien Intercreditor Settlement.

 

The Debtors shall use their commercially   reasonable efforts to obtain language in the order approving the Disclosure   Statement providing that the Waivers shall be binding on the Second Lien   Secured Parties and the Third Lien Secured Parties to the extent the PSA   remains in full force and effect.

 

The Plan filed on or about the Petition Date will   be consistent in all material respects with the terms of the Settlement.

 

If the Settlement is not approved in connection   with confirmation of the Plan, the Plan (pursuant to its terms) will be   automatically deemed modified to exclude: (i) the Third Lien   Intercreditor Settlement and (ii) the waiver of (a) the Diminution   in Value Claim and (b) the Noteholder Deficiency Claims by the 2012   Credit Facility Lenders, the Second Lien Noteholders, and the Third Lien   Noteholders (as applicable).

 

To the extent the Settlement is not approved in   connection with confirmation of the Plan, the Diminution in Value Claim,   including all fees and costs associated with defending any challenge to the
    

 

(1)  Notwithstanding anything else in this Plan Support Agreement, the Second Lien Noteholders reserve their rights with respect to the Debtors’ analyses and calculation of Diminution in Value Claims, Noteholder Deficiency Claims, and the value of unencumbered assets that exceeds the value of 1.2% of the New Midstates Equity.

 

5

 

	
 
    	
 
    	
Settlement or to the Plan, will be determined in   connection with confirmation of the Plan and the litigation schedule to be   set and approved in connection with approval of the disclosure statement   related to the Plan.

 

For the avoidance of doubt, the Second/Third Lien   Plan Settlement will bind the Second Lien Noteholders and the Third Lien   Noteholders (including, for the avoidance of doubt, the Second Lien Group and   the Cross-Over Group) in the event the Plan is immaterially modified,   altered, or revised, or any or all of the Settlement is approved as part of   the Plan.

 

For the avoidance of doubt, and notwithstanding anything to the   contrary herein, although in the event of any challenge the Noteholder Deficiency   Claims shall be taken into   account for purposes of calculating distributions to the holders of Unsecured   Notes Claims (as defined herein) and General Unsecured Claims (other than   Deficiency Claims) pursuant to the Plan, the assertion of such Noteholder Deficiency   Claims shall not result in   any increased distribution to the holder of Third Lien Notes Claims (as   defined herein) and such distributions shall continue to be solely as set   forth in the Second/Third Lien Plan Settlement with any distribution on   account of Noteholder Deficiency Claims that otherwise would be owed to the   holders of Third Lien Notes Claims   going instead to holders of Second Lien Notes Claims (as defined herein).

 

The Plan shall contain a condition precedent to effectiveness   requiring that the percentage of Unencumbered Assets Equity Distribution   received by Holders of Unsecured Notes Claims and General Unsecured Claims   (excluding Deficiency Claims) not exceed three and seven-tenths percent   (3.7%) of the New Common Stock (which shall be subject to dilution under the   MIP (as defined herein) and New Midstates Equity issuable upon exercise of   the Warrants)
    

 

The Restructuring

 

	
Definitions
    	
 
    	
“Excess Cash” means cash in an amount   equal to any cash remaining on any of the Debtors’ balance sheets as of the   Plan Effective Date, less (a) the amount of cash to be paid to holders   of the 2012 Facility Claims (as defined below) on the Plan Effective Date,   less (b) all payments of cash and reserves of cash required under the   Plan (other than distributions of cash on account of Second Lien Note Claims   (as defined below), including, but not limited to, payments and reserves on   account of administrative claims, priority claims, tax claims, and   transaction and professional fees, less (c) $110 million (the minimum amount   of cash needed for the Debtors’ balance sheets as agreed to by the Debtors,   the 2012 Credit Facility Lenders and the Second Lien Group); provided that the amount of Excess Cash shall be no   greater than $60 million.
    

 

6

 

	
Treatment of Claims/Equity Interests
    	
 
    	
The Plan will provide that each holder of an   allowed claim will receive the following on or as soon as practicable after   the effective date of the Plan (the “Plan Effective Date”), unless   different treatment is agreed to by the holder of such allowed claim and the   Company:

 

·                  Administrative,   Priority, and Priority Tax Claims: Allowed administrative, priority, and tax   claims will be satisfied in full, in cash, or otherwise receive treatment   consistent with the provisions of section 1129(a)(9) of the Bankruptcy   Code.

 

·                  2012   Credit Facility Claims: On the Plan Effective Date, the holders of allowed   claims under the 2012 Facility shall have an allowed claim in the approximate   principal amount of $252,000,000, plus accrued interest and fees (the “2012   Facility Claims”).  Holders of 2012   Facility Claims will receive their pro rata share of (i) approximately   $82 million in cash and (ii) the New Credit Facility (in each case, on   the terms and conditions as set forth in the RBL Term Sheet attached as   Exhibit B to the PSA).

 

·                  Second   Lien Notes Claims:  On the Plan   Effective Date, the holders of allowed claims under the Second Lien Notes   shall have an allowed claim in the principal amount of $625,000,000, plus   accrued interest and fees (the “Second Lien Notes Claims”).  Holders of Second Lien Notes Claims will   receive their pro rata share of (a) ninety-seven and five-tenths percent   (97.5%) of the New Midstates Equity less the Unencumbered Assets Equity   Distribution(2) and (b) the Excess Cash; provided,   however, if the Settlement is not   approved and consummated as part of the Plan, holders of Second Lien Note   Claims will instead receive their pro rata share of (x) one hundred   percent (100.0%) of the New Midstates Equity less the Unencumbered Assets   Equity Distribution, (y) the Excess Cash, and (z) their pro rata   share of the Unencumbered Assets Equity Distribution on account of the   Noteholder Deficiency Claims held by such holders of Second Lien Notes   Claims.

 

·                  Third Lien   Notes Claims:  On the Plan Effective Date, the   holders of allowed claims under the Third Lien Notes shall have an allowed   claim in the principal amount of $529,653,388, plus accrued interest and fees   (the “Third Lien Notes Claims”).    Holders of Third Lien Notes Claims will receive their pro rata share   of the
    

 

(2)  “Unencumbered Assets Equity Distribution” means a percentage of New Midstates Equity of a value equal to the value of the Debtors’ unencumbered assets as determined by the Court that shall be up to seven and one-tenth percent (7.1%) of the New Midstates Equity and no less than one and two-tenths percent (1.2%) of the New Common Stock, subject to certain dilutions under the MIP (as defined herein) set forth in the Plan and the Warrants; provided that, as required under the Cash Collateral Order (as defined in the Plan), the Unencumbered Assets Equity Distribution shall be reduced by the amount of fees and expenses incurred by the Committee that are not permitted to be paid from Cash Collateral (as defined in the Plan) pursuant to paragraph 19 of the Cash Collateral Order, to the extent allowed by the Court and paid by the Debtors.

 

7

 

	
 
    	
 
    	
Third Lien Intercreditor Settlement if the   Settlement is consummated as part of the Plan in accordance with the terms of   the PSA.  For the avoidance of doubt,   if the Settlement is not approved and consummated as part of the Plan, the   holders of the Third Lien Notes Claims shall receive only their pro rata   share of the Unencumbered Assets Equity Distribution on account of the   Noteholder Deficiency Claims held by the holders of Third Lien Notes Claims   (and shall not receive the Third Lien Intercreditor Settlement).

 

·                  10.75%   Unsecured Notes Claims and 9.25% Unsecured Notes Claims:  On the Plan Effective Date, the holders of   allowed claims under the 10.75% Unsecured Notes shall have an allowed claim   in the principal amount of $293,626,000, plus accrued interest and fees (the   “10.75% Unsecured Notes Claims”) and the holders of allowed claims   under the 9.25% Unsecured Notes shall have an allowed claim in the principal   amount of $347,651,000, plus accrued interest and fees (the “9.25%   Unsecured Notes Claims,” and together with the 10.75% Unsecured Notes   Claims, the “Unsecured Notes Claims”)).  Holders of Unsecured Notes Claims will   receive their pro rata share of the Unencumbered Assets Equity Distribution; provided, however, if   the Settlement is not approved and consummated as part of the Plan, the   Unencumbered Assets Equity Distribution will be (a) charged for any   Diminution in Value Claims and (b) shared among all holders of Unsecured   Notes Claims and General Unsecured Claims, including the holders of Second   Lien Notes Claims and Third Lien Notes Claims on account of their respective   Noteholder Deficiency Claims.

 

·                  Lien Trade   Claims:  Holders of Lien Trade Claims   will be paid in full on account of such Lien Trade Claims on the later of   (a) the Plan Effective Date and (b) the date a holder’s Lien Trade   Claim comes due in the ordinary course of business.

 

·                  GUC Claims: Holders of General   Unsecured Claims will receive their pro rata share of the Unencumbered Assets   Equity Distribution (either free of dilution if the Settlement is approved or   subject to dilution, for both the Diminution in Value Claim and the   Noteholder Deficiency Claims, if the Settlement is not approved).

 

·                  Existing   Equity: All existing equity interests (including common stock, preferred stock   and any options, warrants or rights to acquire any equity interests) in   Midstates Petroleum Company, Inc. shall be cancelled on the Plan   Effective Date and holders of such interests shall receive no recovery under   the Plan.  
    

 

8

 

Other Plan Terms

 

	
Releases and Exculpation
    	
 
    	
The Plan and Confirmation Order shall provide   customary releases (including third party releases) and exculpation   provisions, in each case, to the fullest extent permitted by law, for the   benefit of the Debtors, Reorganized Midstates, 2012 Credit Facility Lenders,   the Administrative Agent, the Second Lien Noteholders, the Third Lien   Noteholders, such entities’ respective current and former   affiliates, and such entities’ and their current and former affiliates’   current and former officers, managers, directors, equity holders (regardless   of whether such interests are held directly or indirectly), predecessors,   successors, and assigns, subsidiaries, and each of their current and former   officers, managers, directors, equity holders, principals, members, employees,   agents, managed accounts or funds, management companies, fund advisors,   advisory board members, financial advisors, partners, attorneys, accountants,   investment bankers, consultants, representatives, and other professionals,   each in their capacity as such.  
    
	
 
    	
 
    	
 
    
	
Management Incentive Plan and Management   Employment Agreements
    	
 
    	
The Plan will provide for the establishment of a   management equity incentive plan (the “MIP”) under which 10% of the New   Midstates Equity (on a fully-diluted/fully-distributed basis) will be   reserved for grants made from time to time to the directors, officers, and   other management of Reorganized Midstates.  The other aspects of the MIP   and the remainder of compensation issues, including to what extent the MIP   and such compensation issues will be determined by the new board, will be   negotiated in connection with the Plan.

 

Existing employment agreements will be assumed   and/or amended and assumed with the consent of management and the Second Lien   Group.
    
	
 
    	
 
    	
 
    
	
Corporate Governance
    	
 
    	
The terms and conditions of the new corporate   governance documents of the Reorganized Midstates (including the bylaws,   certificates of incorporation, among other governance documents) shall be   subject to the consent of the Second Lien Group; provided that, if the   Settlement is approved in connection with confirmation of the Plan, the new corporate governance   documents shall provide for all members of the initial board of directors (or   similar governing body) of reorganized Midstates Petroleum Company, Inc.   to be appointed by those parties to the PSA who hold, in the aggregate, at   least 50.1% in principal amount outstanding of the Second Lien Notes held by   all parties to the PSA.
    

 

9

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