case 19-10684-kg doc 447 filed 05/23/19 page 1 of 108 …€¦ · chapter 11 case no. 19-10684 (kg)...

SOLICITATION VERSION

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: HEXION HOLDINGS LLC, et al.,1 Debtors.

x : : : : : x

Chapter 11 Case No. 19-10684 (KG) Jointly Administered

DISCLOSURE STATEMENT FOR

SECOND AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF HEXION HOLDINGS LLC AND ITS DEBTOR AFFILIATES UNDER CHAPTER 11 OF

THE BANKRUPTCY CODE

1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are Hexion Holdings LLC (6842); Hexion LLC (8090); Hexion Inc. (1250); Lawter International Inc. (0818); Hexion CI Holding Company (China) LLC (7441); Hexion Nimbus Inc. (4409); Hexion Nimbus Asset Holdings LLC (4409); Hexion Deer Park LLC (8302); Hexion VAD LLC (6340); Hexion 2 U.S. Finance Corp. (2643); Hexion HSM Holdings LLC (7131); Hexion Investments Inc. (0359); Hexion International Inc. (3048); North American Sugar Industries Incorporated (9735); Cuban-American Mercantile Corporation (9734); The West India Company (2288); NL Coop Holdings LLC (0696); and Hexion Nova Scotia Finance, ULC (N/A). The address of the Debtors’ corporate headquarters is 180 East Broad Street, Columbus, Ohio 43215.

George A. Davis (admitted pro hac vice) Andrew M. Parlen (admitted pro hac vice) Hugh Murtagh (admitted pro hac vice) LATHAM & WATKINS LLP 885 Third Avenue New York, New York 10022 Telephone: (212) 906-1200 Facsimile: (212) 751-4864 Email: [email protected] [email protected] [email protected] - and -

Caroline A. Reckler (admitted pro hac vice) Jason B. Gott (admitted pro hac vice) LATHAM & WATKINS LLP 330 North Wabash Avenue, Suite 2800 Chicago, Illinois 60611 Telephone: (312) 876-7700 Facsimile: (312) 993-9767 Email: [email protected] [email protected]

Mark D. Collins (No. 2981) Michael J. Merchant (No. 3854) Amanda R. Steele (No. 5530) Brendan J. Schlauch (No. 6115) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Fax: (302) 651-7701 Email: [email protected] [email protected] [email protected] [email protected]

May 23, 2019

RLF1 21302589v.1

Case 19-10684-KG Doc 447 Filed 05/23/19 of 108

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IMPORTANT NOTICES

Plan Voting

The voting deadline to accept or reject the Plan is 5:00 p.m. Eastern Time (the “Voting Deadline”), on June 19, 2019, unless extended by the Debtors. The record date for determining which Holders of Claims or Interests may vote on the Plan is May 16, 2019 (the “Voting Record Date”)

For your vote to be counted, you must return your properly completed Ballot to your Voting Nominee in accordance with the voting instructions on the Ballot in sufficient time for your Voting Nominee to transmit a master ballot including your vote (a “Master Ballot”) so that it is actually received by the Debtors’ voting agent, Omni Management Group, Inc. (the “Voting Agent”), before the Voting Deadline.

Voting Nominees may transmit Master Ballots to the Voting Agent via:

Mail, Courier, or Personal Delivery: Hexion Holdings LLC c/o Omni Management Group, Inc. 5955 DeSoto Avenue, Suite 100 Woodland Hills, CA 91367

Electronic Mail: [email protected]

Online Upload: www.omnimgt.com/hexionballots

Additional details on voting are discussed herein and set forth on Ballots delivered to Voting Nominees and Holders of Claims entitled to vote on the Plan.

Third-Party Releases

You may be deemed to be granting releases to third parties under this Plan. Pursuant to Article IX.C of the Plan, each Holder of a Claim or Interest is deemed to grant a third-party release if such Holder (a) is presumed to accept the Plan, (b) votes to accept the Plan, (c) is entitled to vote on the Plan and abstains from voting on the Plan or votes to reject the Plan and does not opt out of the releases provided by the Plan, or (d) is deemed to reject the Plan and does not timely object to confirmation of the Plan with respect to the releases. This release is discussed further in Article V.G of this Disclosure Statement.

Recommendation by the Board and Creditor Support

The Board of Directors of Hexion Holdings LLC and the board of directors, managers, members, or partners, as applicable, of each of its affiliated Debtors (as of the date hereof) have unanimously approved the transactions contemplated by the Solicitation and the Plan and recommend that all creditors whose votes are being solicited submit ballots to accept the Plan. Consenting Noteholders holding approximately 90% of the Debtors’ prepetition funded debt have already agreed to vote in favor of the Plan.


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Hexion Holdings LLC and certain of its direct and indirect subsidiaries, as debtors and debtors in possession (collectively, the “Debtors”) in the above-captioned chapter 11 cases (the “Chapter 11 Cases”), are providing you with the information in this Disclosure Statement because you may be a creditor of the Debtors and may be entitled to vote on the Joint Chapter 11 Plan of Reorganization of the Debtors (including all exhibits and schedules thereto, and as maybe amended, modified, or supplemented from time to time, the “Plan”). A draft of the Plan is attached hereto as Exhibit A. All capitalized terms used but not otherwise defined herein have the definition given to them in the Plan. The Debtors believe that the Plan is in the best interests of the Debtors’ creditors and other stakeholders. All creditors entitled to vote on the Plan are urged to vote in favor of the Plan. A summary of the voting instructions is set forth in Article I.B of this Disclosure Statement and in the Disclosure Statement Order (Docket No. 441). More detailed instructions are contained in the Ballots distributed to the creditors entitled to vote on the Plan. To be counted, your Ballot must be properly completed and returned to your Voting Nominee in accordance with the voting instructions on such Ballot and actually received from your Voting Nominee by the Voting Agent (as defined herein), via regular mail, overnight courier, or personal delivery at the appropriate address, via email, or via the Voting Agent’s ballot upload site, by the Voting Deadline. This Disclosure Statement, the Plan Supplement, and any attachments, exhibits, supplements and annexes hereto are the only documents to be used in connection with the solicitation of votes on the Plan, and also may not be relied upon for any purpose other than to determine how to vote on the Plan. Neither the Bankruptcy Court nor the Debtors have authorized any person to give any information or to make any representation in connection with the Plan or the solicitation of acceptances of the Plan other than as contained in this Disclosure Statement, the Plan Supplement, and any attachments, exhibits, supplements or annexes attached hereto. If given or made, such information or representation may not be relied upon as having been authorized by the Bankruptcy Court or the Debtors. The delivery of this Disclosure Statement will not under any circumstances represent that the information herein is correct as of any time after the date hereof. This Disclosure Statement shall not constitute an offer to sell, or solicitation of an offer to buy, nor will there be any distribution of, any of the securities described herein until the Effective Date of the Plan. ALL CREDITORS ENTITLED TO VOTE ON THE PLAN ARE ENCOURAGED TO READ AND CAREFULLY CONSIDER THIS ENTIRE DISCLOSURE STATEMENT, INCLUDING THE RISK FACTORS DESCRIBED IN ARTICLE IX BELOW, THE PLAN ATTACHED AS EXHIBIT A, AND THE PLAN SUPPLEMENT BEFORE SUBMITTING BALLOTS IN RESPONSE TO SOLICITATION OF THE PLAN. The summaries of the Plan and other documents contained in this Disclosure Statement are qualified in their entirety by reference to the Plan itself, the exhibits thereto that will be included in the Plan Supplement, and documents described therein as filed prior to approval of this Disclosure Statement or subsequently as part of the Plan Supplement. In the event that any inconsistency or conflict exists between this Disclosure Statement and the Plan, or between the Plan Supplement and the Plan, the terms of the Plan will control. Except as otherwise indicated herein or in the Plan, the Debtors will file all Plan Supplement documents with the Bankruptcy Court and make them available for review at the Debtors’ document website located online at http://www.omnimgt.com/HexionRestructuring no later than 14 calendar days before the Confirmation Hearing. This Disclosure Statement contains, among other things, descriptions and summaries of provisions of the Plan. The Debtors reserve the right to modify the Plan consistent with section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019, subject to the terms of the Plan. Among other things, the Plan requires


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the Debtors to consult with the Creditors’ Committee before modifying the Plan in a way that adversely impacts the rights or treatment of unsecured creditors (including, for the avoidance of doubt, Holders of Junior Notes Claims, the Junior Notes Indenture Trustees and General Unsecured Creditors). The statements contained in this Disclosure Statement are made only as of the date of this Disclosure Statement, and there can be no assurance that the statements contained herein will be correct at any time after this date. The information contained in this Disclosure Statement, including the information regarding the history, businesses and operations of the Debtors, the financial information regarding the Debtors and the liquidation analyses relating to the Debtors, is included for purposes of soliciting acceptances of the Plan, but, as to contested matters and adversary proceedings (if any), is not to be construed as an admission or stipulation, but rather as a statement made in settlement negotiations as part of the Debtors’ attempt to settle and resolve claims and controversies pursuant to the Plan. This Disclosure Statement will not be admissible in any non-bankruptcy proceeding, nor will it be construed to be conclusive advice on the tax, securities, or other legal effects of the Plan as to Holders of Claims against, or Interests in, either the Debtors or the Reorganized Debtors. Except where specifically noted, the financial information contained in this Disclosure Statement and in its exhibits has not been audited by a certified public accountant and has not been prepared in accordance with generally accepted accounting principles in the United States. The Debtors believe that the solicitation of votes on the Plan made in connection with this Disclosure Statement, and the offer of certain new securities that may be deemed to be made pursuant to the solicitation of votes on the Plan, are exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) and related state statutes by reason of the exemption provided by section 1145(a)(1) of the Bankruptcy Code and that the offer of certain other new securities to be issued in connection with the consummation of the Plan are exempt pursuant to section 4(a)(2) of the Securities Act and expect that the offer and issuance of the securities under the Plan will be exempt from registration under the Securities Act and related state statutes by reason of the applicability of section 1145(a)(1) of the Bankruptcy Code and section 4(a)(2) of the Securities Act. The effectiveness of the Plan is subject to material conditions precedent. See Article V.F below and Article VIII of the Plan. There is no assurance that these conditions will be satisfied or waived. If the Plan is confirmed by the Bankruptcy Court and the Effective Date occurs, all Holders of Claims against, and Interests in, the Debtors (including without limitation those Holders who do not submit Ballots to accept or reject the Plan or who are not entitled to vote on the Plan, but excluding holders who are entitled to, and do, opt out), will be bound the by the terms of the Plan and the transactions contemplated thereby, including the third-party releases contained therein.

FORWARD-LOOKING STATEMENTS This Disclosure Statement contains forward-looking statements based primarily on the current expectations of the Debtors and projections about future events and financial trends affecting the financial condition of the Debtors’ businesses and assets. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions identify these forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described below in Article IX. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this Disclosure Statement may not occur, and actual results could differ materially from those anticipated in the forward-looking statements. The Debtors do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.


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THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 3016 AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER NON-BANKRUPTCY LAWS. THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), ANY STATE SECURITIES COMMISSION OR ANY SECURITIES EXCHANGE OR ASSOCIATION NOR HAS THE SEC, ANY STATE SECURITIES COMMISSION OR ANY SECURITIES EXCHANGE OR ASSOCIATION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.

QUESTIONS AND ADDITIONAL INFORMATION

If you would like to obtain copies of this Disclosure Statement, the Plan, the Plan Supplement, or any of the documents attached hereto or referenced herein, or have questions about the solicitation and voting process or the Debtors’ Chapter 11 Cases generally, please contact the Debtors’ voting agent (the “Voting Agent”) Omni Management Group, Inc. (“Omni”) by (i) visiting the Debtors’ document website at http://www.omnimgt.com/HexionRestructuring, (ii) calling 888-204-1627 (for U.S. callers) or 818-906-8300 (for international callers), or (iii) sending e-mail correspondence to [email protected].



TABLE OF CONTENTS

Page

I. INTRODUCTION ........................................................................................................................1

A. Material Terms of the Plan ......................................................................................2 B. Voting on the Plan .................................................................................................12 C. Confirmation Hearing and Deadline for Objections to Confirmation ...................16 D. Advisors .................................................................................................................16

II. OVERVIEW OF THE DEBTORS’ OPERATIONS ................................................................17

A. The Debtors’ Corporate Structure ..........................................................................17 B. The Debtors’ Corporate History ............................................................................18 C. The Debtors’ Business Operations .........................................................................18 D. The Debtors’ Prepetition Capital Structure ............................................................24

III. EVENTS LEADING TO COMMENCEMENT OF THE CHAPTER 11 CASES .................28

A. Maturities and Liquidity ........................................................................................28 B. Prepetition Restructuring Efforts ...........................................................................29 C. Restructuring Support Agreement .........................................................................30

IV. OVERVIEW OF THE CHAPTER 11 CASES .......................................................................30

A. Commencement of Chapter 11 Cases ....................................................................30 B. First Day Motions ..................................................................................................31 C. Procedural Motions ................................................................................................31 D. DIP Financing ........................................................................................................31 E. Appointment of Creditors’ Committee ..................................................................33 F. Backstop Commitment Agreements. .....................................................................33 G. Exclusivity .............................................................................................................34 H. Employee Matters ..................................................................................................34

V. SUMMARY OF THE PLAN ....................................................................................................35

A. Classification and Treatment of Claims and Interests under the Plan. ..................35 B. Acceptance or Rejection of the Plan; Effect of Rejection of Plan .........................36 C. Treatment of Executory Contracts and Unexpired Leases; Employee

Benefits; and Insurance Policies ............................................................................37 D. Provisions Governing Distributions .......................................................................39 E. Procedures for Resolving Disputed, Contingent, and Unliquidated Claims

or Interests ..............................................................................................................40 F. Conditions Precedent to the Effective Date ...........................................................41 G. Release, Injunction, and Related Provisions ..........................................................42


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VI. CAPITAL STRUCTURE AND CORPORATE GOVERNANCE OF REORGANIZED DEBTORS ............................................................................................48

A. Summary of Capital Structure of Reorganized Debtors ........................................48 B. Corporate Governance and Management of the Reorganized Debtors .................51

VII. CONFIRMATION OF THE PLAN .......................................................................................52

A. Confirmation Hearing ............................................................................................52 B. Confirmation ..........................................................................................................53 B. Standards Applicable to Releases ..........................................................................58 C. Classification of Claims and Interests. ...................................................................59 D. Consummation. ......................................................................................................59 E. Exemption from Certain Transfer Taxes. ..............................................................59 F. Retiree Benefits ......................................................................................................59 G. Dissolution of Creditors’ Committee .....................................................................59 H. Termination of Professionals .................................................................................59 I. Amendments ..........................................................................................................60 J. Revocation or Withdrawal of the Plan ...................................................................60 K. Post-Confirmation Jurisdiction of the Bankruptcy Court ......................................60

VIII. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN .................................................................................................................................63

A. Continuation of Chapter 11 Cases .........................................................................63 B. Liquidation under Chapter 7 ..................................................................................63 C. Dismissal of Chapter 11 Cases. .............................................................................63

IX. FACTORS TO CONSIDER BEFORE VOTING ...................................................................64

A. Certain Bankruptcy Law Considerations ...............................................................64 B. Risks Relating to the Capital Structure of the Reorganized Debtors .....................66 C. Risks Relating to the Debtors’ Business Operations and Financial

Conditions ..............................................................................................................70 D. Additional Factors ..................................................................................................76

X. RIGHTS OFFERING ................................................................................................................77

A. Overview of Rights Offering .................................................................................77 B. Rights Offering Procedures ....................................................................................78 C. Calculation of Total Outstanding Shares ...............................................................80

XI. SECURITIES LAW MATTERS .............................................................................................80

A. Issuance & Transfer of 1145 Securities .................................................................80 B. Issuance & Transfer of New Common Equity Issued as Unsubscribed

Shares .....................................................................................................................83


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XII. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ...............85

A. Introduction ............................................................................................................85 B. Federal Income Tax Consequences to Hexion LLC and its U.S.

Subsidiaries ............................................................................................................87 C. Federal Income Tax Consequences to Holders of Certain Claims ........................92

XIII. CONCLUSION AND RECOMMENDATION ..................................................................100

EXHIBIT A: Plan

EXHIBIT B: Restructuring Support Agreement

EXHIBIT C: Rights Offering Procedures

EXHIBIT D: Equity Backstop Agreement

EXHIBIT E: Debt Backstop Agreement

EXHIBIT F: Corporate Structure Chart

EXHIBIT G: Financial Projections

EXHIBIT H: Liquidation Analysis

EXHIBIT I: Valuation Analysis



I. INTRODUCTION

This is the disclosure statement (the “Disclosure Statement”) of Hexion Holdings LLC; Hexion LLC; Hexion Inc.; Lawter International Inc.; Hexion CI Holding Company (China) LLC; Hexion Nimbus Inc.; Hexion Nimbus Asset Holdings LLC; Hexion Deer Park LLC; Hexion VAD LLC; Hexion 2 U.S. Finance Corp.; Hexion HSM Holdings LLC; Hexion Investments Inc.; Hexion International Inc.; North American Sugar Industries Incorporated; Cuban-American Mercantile Corporation; The West India Company; NL Coop Holdings LLC; and Hexion Nova Scotia Finance ULC (each, a “Debtor,” and collectively, the “Debtors”) in the above-captioned Chapter 11 Cases pending in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), filed pursuant to section 1125 of title 11 of the United States Code (the “Bankruptcy Code”) and in connection with the Second Amended Joint Chapter 11 Plan of Reorganization of Hexion Holdings LLC and Its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code dated May 22, 2019 (the “Plan”).2 The Debtors are proposing the Plan following extensive arm’s-length, good-faith discussions with certain of their key stakeholders. These discussions have resulted in significant majorities of the Holders of the Debtors’ funded indebtedness agreeing to support the restructuring contemplated by the Plan and vote to accept the Plan pursuant to a Restructuring Support Agreement entered into immediately prior to the commencement of the Chapter 11 Cases by and among the Debtors and the other parties thereto, including certain Holders of First Lien Notes Claims and certain Holders of Junior Notes Claims (collectively, the “Consenting Noteholders”) and Holders of Interests in Hexion Holdings LLC (the “Consenting Sponsors,” and together with the Consenting Noteholders, the “Consenting Parties”). A copy of the Restructuring Support Agreement is attached hereto as Exhibit B.3 In connection with negotiating the Restructuring Support Agreement, the Debtors and three separate groups of Holders of the Debtors’ funded indebtedness exchanged several proposals and counter-proposals regarding the terms of a comprehensive restructuring, and the parties conferred on numerous occasions in an attempt to achieve a global consensus with respect to the same. The Plan reflects such a consensus, and the Debtors and the Consenting Parties believe the Plan represents the best available option for all creditors and parties in interest. Under the Plan, the Debtors will restructure their prepetition funded debt obligations with the proceeds of $1.641 billion in New Long-Term Debt and a $300 million Rights Offering for New Common Equity, in each case backstopped by certain Consenting Noteholders. The Reorganized Debtors will also enter into a New ABL Credit Facility as of the Effective Date. General Unsecured Claims, which include inter alia all trade-related Claims, Claims arising from the rejection of Unexpired Leases or Executory Contracts and Claims arising from any litigation or other court, administrative or regulatory proceeding, will be paid in full or otherwise left Unimpaired. Holders of Allowed First Lien Notes Claims will receive their pro rata share of (a) Cash in the amount of $1,450,000,000 (but less the sum of Adequate Protection Payments paid on account of the First Lien Notes during the Chapter 11 Cases), (b) 72.5% of New Common Equity (subject to the Agreed Dilution), and (c) 72.5% of the Rights to purchase additional New Common Equity pursuant to the Rights Offering. Holders of Allowed 1.5L Notes Claims, Second Lien

2 Capitalized terms used in this Disclosure Statement but not otherwise defined herein shall have the meanings given to them in the Plan. To the extent there are any inconsistencies between this Disclosure Statement and the Plan, the Plan shall govern.

3 The Bankruptcy Court entered an order on May 15, 2019, approving assumption of the Restructuring Support Agreement pursuant to section 365 of the Bankruptcy Code authorizing, among other things, the payment of certain fees, expenses and other amounts thereunder, and granting related relief (Docket No. 366).


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Notes Claims, and Borden Debenture Claims (collectively, the “Junior Notes Claims”) will receive their pro rata share of (a) 27.5% of the New Common Equity (subject to the Agreed Dilution) and (b) 27.5% of the Rights to purchase additional New Common Equity pursuant to the Rights Offering. The Agreed Dilution results from the Rights Offering, the Management Incentive Plan, and certain premiums payable under the Equity Backstop Agreement and the Debt Backstop Agreement (to the extent such premiums due under such agreements are elected to be received in the form of New Common Equity). Holders of Equity Interests will receive no distributions and all such Equity Interests will be cancelled. Copies of the Rights Offering Procedures, the Equity Backstop Agreement, and the Debt Backstop Agreement are attached hereto as Exhibit C, Exhibit D, and Exhibit E, respectively.4 In addition, the Plan includes certain release, injunctive, and exculpatory provisions described in greater detail below. This Disclosure Statement sets forth certain information regarding the prepetition operating and financial history of the Debtors, the events leading up to the commencement of the Chapter 11 Cases, material events that have occurred during the Chapter 11 Cases, and the anticipated organization, operations, and capital structure of the Reorganized Debtors if the Plan is confirmed and the Effective Date occurs. This Disclosure Statement also describes terms and provisions of the Plan, including certain effects of confirmation and effectiveness of the Plan, certain risk factors (including those associated with securities to be issued under the Plan), the manner in which distributions will be made under the Plan, and certain alternatives to the Plan. On May 22, 2019, the Bankruptcy Court entered the Disclosure Statement Order (Docket No. 441) approving this Disclosure Statement as containing “adequate information,” i.e., information of a kind and in sufficient detail to enable a hypothetical reasonable investor to make an informed judgment about the Plan. THE BANKRUPTCY COURT’S APPROVAL OF THIS DISCLOSURE STATEMENT CONSTITUTES NEITHER A GUARANTY OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN NOR AN ENDORSEMENT BY THE BANKRUPTCY COURT OF THE MERITS OF THE PLAN.

A. Material Terms of the Plan

The Plan is the product of extensive, vigorous, arm’s-length and good-faith negotiations among the Debtors and the Consenting Parties. The Plan will allow the Debtors to strengthen their balance sheet by reducing their leverage by more than half relative to their prepetition leverage, as described more fully herein, and will also ensure that the Debtors continue to operate as a going concern, preserving the jobs of the Debtors’ employees. The Debtors believe that the implementation of the Plan is in the best interests of the Debtors and their stakeholders. For all of the reasons described in this Disclosure Statement, the Debtors urge you to return your Ballot accepting the Plan by the Voting Deadline, which is June 19, 2019, at 5:00 p.m. Eastern Time.

4 The Bankruptcy Court entered orders on May 15, 2019, granting authority to enter into the Equity Backstop Agreement and the Debt Backstop Agreement pursuant to section 363 of the Bankruptcy Code and authorizing, among other things, the payment of certain fees, expenses and other amounts thereunder, and granting related relief (Docket Nos. 367, 368). The Bankruptcy Court approved the Rights Offering Procedures through entry of the Disclosure Statement Order on May 22, 2019 (Docket No. 441).


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The following table summarizes the material terms of the Plan and certain related agreements. For additional description of the Plan, please refer to the discussion in Article V (entitled “SUMMARY OF THE PLAN”) of this Disclosure Statement, and the Plan itself:

Treatment of Certain Claims and Interests

As further detailed therein, the Plan contemplates the following treatment of Claims and Interests: General Administrative Claims. Subject to the provisions of

sections 328, 330(a), and 331 of the Bankruptcy Code, except to the extent that a Holder of an Allowed General Administrative Claim and the applicable Debtor(s) (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) agree to less favorable treatment with respect to such Allowed General Administrative Claim, each Holder of an Allowed General Administrative Claim will be paid the full unpaid amount of such Allowed General Administrative Claim in Cash: (a) on the Effective Date or as soon as reasonably practicable thereafter or, if not then due, when such Allowed General Administrative Claim is due or as soon as reasonably practicable thereafter; (b) if a General Administrative Claim is Allowed after the Effective Date, on the date such General Administrative Claim is Allowed or as soon as reasonably practicable thereafter or, if not then due, when such Allowed General Administrative Claim is due or as soon as reasonably practicable thereafter; (c) at such time and upon such terms as may be agreed upon by such Holder and the Debtors (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) or the Reorganized Debtors, as the case may be; or (d) at such time and upon such terms as set forth in an order of the Bankruptcy Court; provided that Allowed General Administrative Claims that arise in the ordinary course of the Debtors’ business during the Chapter 11 Cases shall be paid in full in Cash in the ordinary course of business in accordance with the terms and conditions of any controlling agreements, course of dealing, course of business, or industry practice. These Claims are unclassified under the Plan and are not entitled to vote.

Professional Fee Claims. On or immediately prior to the Effective Date, the Debtors shall pay all amounts owing to the Retained Professionals for all unpaid Professional Fee Claims relating to prior periods and for the period ending on the Effective Date. The Retained Professionals shall estimate Professional Fee Claims due for periods that have not been billed as of the Effective Date, which amounts, for the avoidance of doubt, shall be paid on or immediately prior to the Effective Date. On or prior to forty-five (45) days after the Effective Date, each Retained Professional shall file with the Bankruptcy Court its final fee application seeking final approval of all fees and expenses from the Petition Date through the Effective Date; provided that the Debtors may pay Retained Professionals or


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other Entities in the ordinary course of business after the Effective Date, without further Bankruptcy Court order; and provided, further, that any Retained Professional who may receive compensation or reimbursement of expenses pursuant to the Ordinary Course Professionals Order may continue to receive such compensation or reimbursement of expenses for services rendered before the Effective Date, without further Bankruptcy Court order, pursuant to the Ordinary Course Professionals Order. Objections to any Professional Fee Claim must be filed and served on the Debtors and the requesting party no later than twenty (20) days after such Professional Fee Claim is filed with the Bankruptcy Court. To the extent necessary, the Plan and the Confirmation Order shall amend and supersede any previously entered order regarding the payment of Professional Fee Claims. Within ten (10) days after entry of a Final Order with respect to its final fee application, each Retained Professional shall remit any overpayment to the Debtors and the Debtors shall pay any unpaid amounts to each Retained Professional. These Claims are unclassified under the Plan and are not entitled to vote.

DIP Facility Claims. In full and final satisfaction, settlement, release and discharge of and in exchange for release of all Allowed DIP Facility Claims, on the Effective Date, the Allowed DIP Facility Claims shall be paid indefeasibly in Cash in full (including, in the case of DIP Facility Claims arising under the DIP Term Loan Facility, by the repayment in Cash in full of the DIP Intercompany Loan by Hexion Inc. to Hexion International Holdings B.V. and the immediate repayment in Cash in full of the DIP Facility Claims arising under the DIP Term Loan Facility by Hexion International Holdings B.V.), or receive such other treatment as agreed by the Debtors (with the consent of the Required Consenting Noteholders not to be unreasonably withheld), the applicable Holder of an Allowed DIP Facility Claim and, as applicable, the applicable DIP Agent. All of the Debtors’ contingent and unliquidated obligations under the DIP Credit Agreements, including, without limitation, the DIP Agents’ and the DIP Lenders’ rights to indemnification from the Debtors, to the extent any such obligation has not been paid in Cash in full on the Effective Date, shall survive the Effective Date and shall not be released or discharged pursuant to the Plan or Confirmation Order, notwithstanding any provisions thereof to the contrary. These Claims are unclassified under the Plan and are not entitled to vote.

Priority Tax Claims. Except to the extent that a Holder of an Allowed Priority Tax Claim and the Debtor(s) against which such Allowed Priority Tax Claim is asserted agree (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) to a less favorable treatment, in exchange for full and final satisfaction, settlement, release, and


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discharge of each Allowed Priority Tax Claim, each Holder of an Allowed Priority Tax Claim due and payable on or prior to the Effective Date shall receive, as soon as reasonably practicable after the Effective Date, on account of such Claim: (1) Cash in an amount equal to the amount of such Allowed Priority Tax Claim; (2) Cash in an amount agreed to by the applicable Debtor or Reorganized Debtor, as applicable, and such Holder; provided that such parties may further agree for the payment of such Allowed Priority Tax Claim at a later date; or (3) at the option of the Debtors, Cash in an aggregate amount of such Allowed Priority Claim payable in installment payments over a period not more than five years after the Petition Date, pursuant to section 1129(a)(9)(C) of the Bankruptcy Code. To the extent any Allowed Priority Tax Claim is not due and owing on or before the Effective Date, such Claim shall be paid in full in Cash in accordance with the terms of any agreement between the Debtors and such Holder, or as may be due and payable under applicable non-bankruptcy law or in the ordinary course of business. These Claims are unclassified under the Plan and are not entitled to vote.

Other Priority Claims. Except to the extent that a Holder of an Allowed Other Priority Claim and the Debtor against which such Allowed Other Priority Claim is asserted agree (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) to less favorable treatment for such Holder, in full satisfaction of each Allowed Other Priority Claim, each Holder thereof shall receive payment in full in Cash or other treatment, rendering such Claim Unimpaired. These Claims are unclassified under the Plan and are not entitled to vote.

United States Trustee Statutory Fees. The Debtors and the Reorganized Debtors, as applicable, shall pay all quarterly fees due to the United States Trustee under 28 U.S.C § 1930(a)(6), plus any interest due and payable under 31 U.S.C. § 3717 on all disbursements, including Plan payments and disbursements in and outside the ordinary course of the Debtors’ or Reorganized Debtors’ business (or such amount agreed to with the United States Trustee or ordered by the Bankruptcy Court), for each quarter (including any fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever occurs first. These Claims are unclassified under the Plan and are not entitled to vote.

Other Secured Claims. Except to the extent that a Holder of an Allowed Other Secured Claim agrees to less favorable treatment, in exchange for full and final satisfaction, settlement, release, and discharge of each Allowed Other Secured Claim, each Holder of an Allowed Other Secured Claim, at the option


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of the applicable Debtor with the reasonable consent of the Required Consenting Noteholders, shall (i) be paid in full in Cash including the payment of any interest required to be paid under section 506(b) of the Bankruptcy Code, (ii) receive the collateral securing its Allowed Other Secured Claim, (iii) receive any other treatment that would render such Claim Unimpaired. These Claims are Unimpaired under the Plan and are not entitled to vote (deemed to accept).

First Lien Notes Claims. Except to the extent that a Holder of an Allowed First Lien Notes Claim agrees to less favorable treatment (with the consent of the Required Consenting Noteholders not to be unreasonably withheld), in exchange for full and final satisfaction, settlement, release, and discharge of each First Lien Notes Claim, (x) each Holder of an Allowed First Lien Notes Claim shall receive its Pro Rata Share of the 6.625% First Lien Notes Ration, the 10.000% First Lien Notes Ration or the 10.375% First Lien Notes Ration, as applicable, of the First Lien Notes Recovery, and (y) on the Effective Date, the Debtors or the Reorganized Debtors, as applicable, shall pay in full in Cash, all outstanding First Lien Notes Trustee Fees.5 These Claims are Impaired under the Plan and are entitled to vote.

Junior Notes Claims. Except to the extent that a Holder of an Allowed Junior Notes Claim agrees to less favorable treatment (with the consent of the Required Consenting Noteholders not to be unreasonably withheld), in exchange for full and final satisfaction, settlement, release, and discharge of each Junior Notes Claim, (x) each Holder of an Allowed Junior Notes Claim shall receive its Pro Rata Share of (i) 27.5% of New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants), subject to the Agreed Dilution, and (ii) 27.5% of the Rights, and (y) on the Effective Date, the Debtors or the Reorganized Debtors, as applicable, shall pay in full in Cash, all outstanding Junior Notes Trustee Professional Fees. These Claims are Impaired under the Plan and are entitled to vote.

General Unsecured Claims. Except to the extent that a Holder

5 The above-mentioned “Rations” are applicable percentages of the First Lien Notes Recovery, which are allocated between the 6.625% First Lien Notes, 10.000% First Lien Notes and 10.375% First Lien Notes based on existing agreements between the Holders of the First Lien Notes. The First Lien Notes Recovery means, collectively, (i) Cash in the amount of $1,450,000,000 less the aggregate amount of Adequate Protection Payments made to the Holders of First Lien Notes Claims during the Chapter 11 Cases, (ii) 72.5% of New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) (subject to the Agreed Dilution), a portion of which may be in the form of New Warrants to the extent permitted by the Plan, and (iii) 72.5% of the Rights.


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of an Allowed General Unsecured Claim agrees to less favorable treatment (including, without limitation, with respect to the Consenting Sponsor Claim Settlement), in exchange for full and final satisfaction, settlement, release, and discharge of each Allowed General Unsecured Claim (subject to Article III.C), on the later of (i) the Effective Date (or as soon as practicable thereafter) or (ii) the date such General Unsecured Claim becomes due and payable, each Holder of an Allowed General Unsecured Claim shall receive payment in full in Cash in an amount equal to such Allowed General Unsecured Claim, or such other treatment that will render such Claim Unimpaired, including, but not limited to, Reinstatement of such Allowed General Unsecured Claim pursuant to section 1124 of the Bankruptcy Code. For the avoidance of doubt, no provision of the Plan shall diminish, enhance, or modify any applicable nonbankruptcy legal, equitable, and/or contractual rights of any Holder of a General Unsecured Claim to receive payment on account of such Claim, subject, however, to any applicable limitations on the allowance of such Claims under the Bankruptcy Code and to the rights of the Debtors, Reorganized Debtors, or any party in interest to dispute or defend such Claim in accordance with applicable nonbankruptcy law as if the Chapter 11 Cases had not been commenced. These Claims are Unimpaired under the Plan and are not entitled to vote (deemed to accept).

Subordinated Securities Claims. Subordinated Securities Claims shall be discharged, cancelled, released and extinguished on the Effective Date. Each Holder of Subordinated Securities Claims shall receive no recovery or distribution on account of such Subordinated Securities Claims. These Claims are Impaired under the Plan and are not entitled to vote (deemed to reject).

Intercompany Claims. No property will be distributed to the Holders of Allowed Intercompany Claims. Unless otherwise provided for under the Plan, each Intercompany Claim will either be Reinstated or canceled and released at the option of the Debtors with the consent of the Required Consenting Noteholders. These Claims are either Impaired or Unimpaired under the Plan and in either case are not entitled to Vote (deemed to accept or to reject).

Intercompany Interests. Intercompany Interests shall receive no recovery or distribution and be Reinstated solely to the extent necessary to maintain the Debtors’ corporate structure. These Claims are either Impaired or Unimpaired under the Plan and in either case are not entitled to Vote (deemed to accept or to reject).


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Equity Interests. Holders of Equity Interests shall receive no distribution on account of their Equity Interests. On the Effective Date, all Equity Interests will be canceled, released, and extinguished, and will be of no further force or effect. These Claims are Impaired under the Plan and are not entitled to vote (deemed to reject).

Rights Offering The Debtors will conduct a Rights Offering which will provide Holders of Allowed First Lien Notes Claims and Allowed Junior Notes Claims rights to purchase for cash their Pro Rata Shares (see Treatment of Certain Claims, above) of $300 million of New Common Equity issued on the Effective Date at a 35% discount to a stipulated post-new money equity value of $1.374 billion. The Rights Offering will be backstopped by certain Consenting Noteholders pursuant to the Equity Backstop Agreement. Holders of Allowed First Lien Notes Claims and Junior Notes Claims will have the right to oversubscribe for the purchase of New Common Equity in the Rights Offering, subject to the procedures and limitations set forth in the Rights Offering Procedures.

New Warrants Any Backstop Party (together with its Affiliates) that would otherwise be entitled to receive more than 9.9% of the aggregate amount of the New Common Equity to be issued as of the Effective Date (excluding New Common Equity to be issued to other Backstop Parties that would entitle them to receive more than 9.9% of the New Common Equity to be issued as of the Effective Date and excluding New Common Equity issued pursuant to the Management Incentive Plan) based upon (x) its holdings of Notes as of the subscription expiration deadline for the Rights Offering, (y) its participation in the Rights Offering (including oversubscription rights) and (z) any shares of New Common Equity payable to such Backstop Party as Equity Backstop Premium and the Debt Backstop Premium, may elect to receive New Warrants (perpetual warrants issued by Reorganized Hexion with a nominal exercise price to purchase a corresponding amount of New Common Equity) in lieu of such portion of New Common Equity that would otherwise be issued to such Backstop Party and its Affiliates under the Plan in excess of 9.9% of the aggregate amount of New Common Equity issued as of the Effective Date (excluding New Common Equity to be issued to other Backstop Parties that would entitle them to receive more than 9.9% of the New Common Equity to be issued as of the Effective Date and excluding New Common Equity issued pursuant to the Management Incentive Plan), provided that any Backstop Party eligible to elect to receive New Warrants under the Plan may only elect to receive New Warrants up to an equivalent of 3.5% of the New Common Equity issued as of the Effective Date (including any New Common Equity issuable upon exercise of the New Warrants but excluding New Common Equity issued pursuant to the Management Incentive Plan) and the shares of New Common Equity represented by New Warrants shall be shares that would have otherwise been issued under the Plan as First Lien Notes Recovery


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and/or in exchange for Junior Notes Claims.

Registration Rights Agreement

On the Effective Date, Reorganized Hexion and certain Holders of the New Common Equity shall enter into the Registration Rights Agreement in substantially the form included in the Plan Supplement. The Registration Rights Agreement shall be deemed to be valid, binding, and enforceable in accordance with its terms.

New Debt The Debtors’ exit financing will comprise the following: New Long-Term Debt. An aggregate of $1.641 billion new

debt, comprising a term loan credit facility to be entered into by the Reorganized Debtors on the Effective Date and/or senior notes to be issued (or guaranteed) by certain of the Reorganized Debtors on the Effective Date, including for the avoidance doubt, any portion of such financing extended pursuant to the commitments provided under the Debt Backstop Agreement; and

New ABL Credit Facility. A new asset-based revolving credit facility entered into by the Reorganized Debtors on the Effective Date.

Backstop Agreements and Premiums

The Rights Offering and the New Long-Term Debt will be backstopped as follows: Equity Backstop Agreement and Premium. Pursuant to the

Equity Backstop Agreement among the Debtors and the Equity Backstop Parties thereto, the Equity Backstop Parties will backstop the Rights Offering on a several, and not joint and several, basis in exchange for the Equity Backstop Premium of 8% of the obligations backstopped thereunder, which premium was earned in full upon entry of the EBA Approval Order and which is payable either in Cash or in New Common Equity at the option of each Equity Backstop Party.

Debt Backstop Agreement and Premiums. Pursuant to the Debt Backstop Agreement among the Debtors and the Debt Backstop Parties thereto, the Debt Backstop Parties will backstop the New Long-Term Debt on a several, and not joint and several, basis in exchange for (a) the Debt Backstop Premium of 3.375% of the backstop commitments thereunder payable either in Cash or in New Common Equity at the option of each Debt Backstop Party and (b) for certain Debt Backstop Parties, the Additional Debt Backstop Premium of 1.5% of the backstop commitments thereunder payable in Cash, both of which premiums (described in (a) and (b)) were earned in full upon entry of the DBA Approval Order.

Management Incentive Plan Up to 10% of the fully diluted New Common Equity issued on the


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Effective Date shall be issuable in connection with a management incentive plan, the details and allocation of which shall be determined by the New Board (including with respect to form, structure, allocation, participation, timing, vesting and structure of such issuances).

Corporate Governance As of the Effective Date, the terms of the current members of the board of managers of Hexion shall expire and, without further order of the Bankruptcy Court, the New Board shall be approved. The New Board will initially consist of seven (7) members, which shall comprise Craig Rogerson, in his capacity as Chief Executive Officer of the Reorganized Debtors, and six (6) other directors, who shall be selected by the Board Committee in consultation with Craig Rogerson in his capacity as Chief Executive Officer; provided that if the New Board is not fully selected by the Effective Date then the members of the New Board selected as of the Effective Date shall select the remaining members in consultation with the Board Committee. The identities of the members of the New Board will be disclosed in the Plan Supplement to the extent known. Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will, to the extent reasonably practicable, disclose in advance of Confirmation the identity and affiliations of any person proposed to serve on the New Board. The occurrence of the Effective Date shall have no effect on the composition of the board of directors or managers of each of the subsidiary Debtors.

Compensation and Benefit Arrangements

Subject to the provisions of the Plan, all Compensation and Benefits Programs shall be treated as Executory Contracts under the Plan and deemed assumed on the Effective Date pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code, so long as current and future liabilities associated with such programs have previously been provided or made available to the advisors to the Consenting Noteholders. All Proofs of Claim filed for amounts due under any Compensation and Benefits Program shall be considered satisfied by the applicable agreement and/or program and agreement to assume and cure in the ordinary course as provided in the Plan.

None of the Restructuring, the Restructuring Transactions, or any assumption of Compensation and Benefits Programs pursuant to the terms herein shall be deemed to trigger any applicable change of control, vesting, termination, acceleration or similar provisions therein. No counterparty shall have rights under a Compensation and Benefits Program assumed pursuant to the Plan other than those applicable immediately prior to such assumption.

Settlement Note On the Effective Date, the Consenting Sponsors shall receive the $2.5 million senior unsecured Settlement Note to be issued by Reorganized Hexion in full and final satisfaction, compromise, and discharge of any General Unsecured Claims held by the Consenting Sponsors as of the Effective Date, other than any Claims arising under or related to the Debtors’ Indemnification Provisions or the


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D&O Liability Insurance Policies. The Settlement Note shall (i) mature on March 31, 2020, (ii) be payable upon any public offering or listing of New Common Equity (or any other equity interests of the Reorganized Debtors) on The Nasdaq Global Select Market, The New York Stock Exchange, or any successor national securities exchanges, on or after the Effective Date, (iii) be freely transferable by the holder, and (iv) contain other terms and conditions reasonably acceptable to the Required Consenting Parties. The Settlement Note shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute a preferential transfer, fraudulent conveyance, or other voidable transfer under the Bankruptcy Code or any other applicable non-bankruptcy law.

Releases, Injunction and Exculpation

Articles IX.B, IX.C, IX.D and IX.E of the Plan contain certain release, injunction and exculpation provisions that are set forth in Article V.G below. Article IX.C of the Plan contains a third-party release by Holders of Claims and Interests. Pursuant to Article IX.C of the Plan, each Holder of Claims and Interests is deemed to grant a third-party release if such Holder (a) is presumed to accept the Plan, (b) votes to accept the Plan, (c) is entitled to vote on the Plan and abstains from voting on the Plan or votes to reject the Plan and does not opt out of the releases provided by the Plan, or (d) is deemed to reject the Plan and does not timely object to confirmation of the Plan with respect to the releases.

Means of Implementation The Plan contains standard means of implementation, including provisions authorizing the Debtors to engage in corporate restructuring transactions (including incurring the New Debt and issuing the New Common Equity), provisions regarding cancellation of prepetition debt agreements and equity interests, provisions specifying the sources of Plan distributions, provisions regarding the Reorganized Debtors’ corporate existence and corporate governance, and the vesting of assets in the Reorganized Debtors, among other matters.

Good Faith Compromise Pursuant to Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan shall constitute a good faith compromise of all Claims, Interests, and controversies relating to the contractual, legal, and subordination rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Interest, or any distribution to be made on account of such Allowed Claim or Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all


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such Claims, Interests, and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates, and Holders of Claims and Interests and is fair, equitable, and reasonable. In accordance with the provisions of the Plan, pursuant to Bankruptcy Rule 9019, without any further notice to or action, order, or approval of the Bankruptcy Court, after the Effective Date, the Reorganized Debtors may compromise and settle Claims against the Debtors and their Estates and Causes of Action against other Entities.

Proofs of Claim There is no bar date for the submission of Claims. The Debtors will make distributions in accordance with their books and records. Accordingly, Holders of Claims shall not be required to File a Proof of Claim, and except as otherwise expressly set forth in the Plan (including with respect to Claims arising from the rejection, if any, of Unexpired Leases or Executory Contracts), no parties should File a Proof of Claim. The Plan expressly provides that (a) Administrative Claims must be filed by the Administrative Claims Bar Date, and (b) Claims arising from the Debtors’ rejection (if any) of Executory Contracts or Unexpired Leases must be filed within thirty (30) days after entry of an order of the Bankruptcy Court (including the Confirmation Order) approving such rejection.

B. Voting on the Plan

The Disclosure Statement Order (Docket No. 441) approved certain procedures governing the solicitation of votes on the Plan from Holders of Claims against the Debtors, including setting the deadline for voting, which Holders of Claims are eligible to receive Ballots to vote on the Plan, and other voting procedures.

THE DISCLOSURE STATEMENT ORDER IS HEREBY INCORPORATED BY REFERENCE AS THOUGH FULLY SET FORTH HEREIN. YOU SHOULD READ THE DISCLOSURE STATEMENT ORDER, THE CONFIRMATION HEARING NOTICE, AND THE INSTRUCTIONS ATTACHED TO YOUR BALLOT IN CONNECTION WITH THIS SECTION, AS THEY SET FORTH IN DETAIL PROCEDURES GOVERNING VOTING DEADLINES AND OBJECTION DEADLINES.

The Plan, though proposed jointly and consolidated for purposes of making distributions to Holders of Claims under the Plan, constitutes a separate Plan proposed by each Debtor. Therefore, the classifications set forth in the Plan apply separately with respect to each Plan proposed by, and the Claims against and Interests in, each Debtor. Your vote will count as votes for or against, as applicable, each Plan proposed by each Debtor.

1. Parties Entitled to Vote on the Plan

Under the Bankruptcy Code, only holders of claims or interests in “impaired” classes are entitled to vote on the plan (unless, for reasons discussed below, such holders are deemed to reject the plan pursuant to section 1126(g) of the Bankruptcy Code). Under section 1124 of the Bankruptcy Code, a class of claims or interests is deemed to be “impaired” unless (i) the plan leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitles the holder thereof or (ii) notwithstanding any legal right to an accelerated payment of such claim or interest, the plan cures all existing defaults (other


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than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claim or interest as it existed before the default.

The following table summarizes which Classes are Impaired, which are entitled to vote on the Plan, the estimated Allowed amount (in USD millions), and the estimated recovery percentage for each of the Classes of Claims provided for in the Plan. The table is qualified in its entirety by reference to the full text of the Plan.

Class Designation Impaired Entitled to Vote Est. Amount

Est. Recovery6

1 Other Secured Claims No No (deemed to accept) $4,000,000 100%

2

First Lien Notes Claims Yes Yes $2,496,558,6817 84.6%-89.3%8

3 Junior Notes Claims Yes Yes $1,088,256,3189 23.1%-27.1%10

4 General Unsecured Claims

No No (deemed to accept) $228,000,00011 100%

5 Subordinated Securities Claims

Yes No (deemed to reject) $0 0%

6 Intercompany Claims Yes/No No (deemed to accept or reject)

$N/A N/A

7 Intercompany Interests Yes/No No (deemed to accept or reject)

$N/A N/A

8 Equity Interests Yes No (deemed to reject) $0 0%

Accordingly, only Holders of record of Claims in Classes 2 and 3, as of May 16, 2019, the Voting Record Date established by the Debtors for purposes of the solicitation of votes on the Plan, are entitled to vote on the Plan. If your Claim or Interest is not in one of these Classes, you are not entitled to vote on the

6 Prior to dilution of New Common Equity through Management Incentive Plan. 7 Includes principal and interest accrued prior to the Petition Date.

8 Range represents recoveries in the absence of Rights Offering participation (84.6%) through full Rights Offering Participation (89.3%).

9 Includes principal and interest accrued prior to the Petition Date. 10 Range represents recoveries in the absence of Rights Offering participation (23.1%) through full Rights Offering Participation (27.1%). 11 Includes trade claims, litigation/environmental reserve, long-term pension obligations, and certain other estimated liabilities, without reduction for amounts paid on such liabilities after the Petition Date; actual amount expected to be meaningfully lower than estimate due to post-petition payments.


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Plan and you will not receive a Ballot with this Disclosure Statement. If your Claim is in one of these Classes, you should read your Ballot and follow the listed instructions carefully. Please use only the Ballot that accompanies this Disclosure Statement.

A vote on the Plan may be disregarded if the Bankruptcy Court determines, pursuant to section 1126(e) of the Bankruptcy Code, that it was not cast, solicited or procured in good faith or in accordance with the provisions of the Bankruptcy Code. The Disclosure Statement Order (Docket No. 441) also sets forth assumptions and procedures for determining the amount of Claims that each creditor is entitled to vote in these Chapter 11 Cases and how votes will be counted under various scenarios.

Your vote on the Plan is important. The Bankruptcy Code requires as a condition to confirmation of a plan of reorganization that each class that is impaired and entitled to vote under a plan votes to accept such plan, unless the plan is being confirmed under the “cramdown” provisions of section 1129(b) of the Bankruptcy Code. Section 1129(b) permits confirmation of a plan of reorganization, notwithstanding the nonacceptance of the plan by one or more impaired classes of claims or equity interests, so long as at least one impaired class of claims or interests votes to accept a proposed plan. Under that section, a plan may be confirmed by a bankruptcy court if it does not “discriminate unfairly” and is “fair and equitable” with respect to each non-accepting class. The Debtors are seeking confirmation pursuant to section 1129(b) of the Bankruptcy Code to the extent that one or more impaired classes vote to reject the Plan.

The Bankruptcy Code defines acceptance of a plan by a class of claims as acceptance by holders of at least two-thirds (⅔) in dollar amount and more than one-half (½) in number of the claims of that class that cast ballots for acceptance or rejection of a plan. Thus, acceptance by a class of claims occurs only if at least two-thirds (⅔) in dollar amount and a majority in number of the holders of claims voting cast their ballots to accept the plan.

2. Solicitation Package

The package of materials (the “Solicitation Package”) sent to Holders of Claims entitled to vote on the Plan contains:

a copy of the notice of the Confirmation Hearing (the “Confirmation Hearing Notice”);

a copy of this Disclosure Statement together with the exhibits thereto, including the Plan;

a copy of the Disclosure Statement Order entered by the Bankruptcy Court (Docket No. 439) that approved this Disclosure Statement, established the voting procedures, scheduled a Confirmation Hearing, and set the Voting Deadline and the deadline for objecting to Confirmation of the Plan; and

for Holders of Claims in voting Classes (i.e., Classes 2 and 3), an appropriate form of Ballot, instructions on how to complete the Ballot, and a prepaid, pre-addressed Ballot return envelope.

In addition, the Plan, the Disclosure Statement, and, once they are filed, all exhibits to both documents (including the Plan Supplement) will be made available online at no charge at the website maintained by the Debtors’ Voting Agent at http://www.omnimgt.com/HexionRestructuring. The Debtors will provide parties in interest (at no charge) with hard copies of the Plan and/or Disclosure Statement, as well as any exhibits thereto, upon request to the Voting Agent by email at [email protected] or by telephone for U.S. callers at 888-204-1627 and for international callers at 818-906-8300.


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3. Voting Procedures, Ballots, and Voting Deadline

If you are entitled to vote to accept or reject the Plan, a Ballot(s) has been enclosed in your Solicitation Package for the purpose of voting on the Plan. Please vote and return your Ballot(s) in accordance with the instructions accompanying your Ballot.

Prior to voting on the Plan, you should carefully review (1) the Plan and the Plan Supplement, (2) this Disclosure Statement, (3) the Disclosure Statement Order, (4) the Confirmation Hearing Notice, and (5) the detailed instructions accompanying your Ballot.

Each Ballot has been coded to reflect the Class of Claims it represents. Accordingly, in voting to accept or reject the Plan, you must use only the coded Ballot or Ballots sent to you with this Disclosure Statement. If you (1) hold Claims in more than one voting Class, or (2) hold multiple Claims within one Class, including if you (a) are the beneficial owner of Claims held under the name of your broker, bank, dealer, or other agent or nominee (each, a “Voting Nominee”) (rather than under your own name) through one or more than one Voting Nominee or (b) are the beneficial owner of Claims registered in your own name as well as the beneficial owner of Claims registered under the name of your Voting Nominee (rather than under your own name), you may receive more than one Ballot.

The Debtors believe that all Holders of Claims entitled to vote on the Plan hold their Claims through Voting Nominees. As a result, for your votes with respect to such Claims to be counted, your Ballots must be mailed to the appropriate Voting Nominees at the addresses on the envelopes enclosed with your Ballot(s) (or otherwise delivered to the appropriate Voting Nominees in accordance with such Voting Nominees’ instructions) so that such Voting Nominees have sufficient time to record the votes of such beneficial owner on a master ballot aggregating votes of Beneficial Holders (a “Master Ballot”) and return such Master Ballot so it is actually received by the Voting Agent by the Voting Deadline.

All Master Ballots, in order to be counted, must be properly completed in accordance with the voting instructions on the Master Ballot and actually received from your Voting Nominee no later than the Voting Deadline (i.e., June 19, 2019, at 5:00 p.m. (Eastern Time)) by the Voting Agent through one of the following means:

Mail, Courier, or Personal Delivery: Hexion Holdings LLC c/o Omni Management Group, Inc. 5955 DeSoto Avenue, Suite 100 Woodland Hills, CA 91367

Electronic Mail: [email protected]

Online Upload: www.omnimgt.com/hexionballots

Detailed instructions for completing and transmitting Ballots and Master Ballots are included with the Ballots and Master Ballots, respectively, provided in the Solicitation Package.

If the Voting Agent receives more than one timely, properly completed Master Ballot with respect to a single Claim prior to the Voting Deadline, the vote that will be counted for purposes of determining whether sufficient acceptances required to confirm the Plan have been received will be the vote recorded on the last timely, properly completed Master Ballot, as determined by the Voting Agent, received last with respect to such Claim.


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If you are a Holder of a Claim who is entitled to vote on the Plan and did not receive a Ballot, received a damaged Ballot, or lost your Ballot, or if you have any questions concerning the Disclosure Statement, the Plan, the Ballot, or the procedures for voting on the Plan, please contact the Voting Agent at the phone numbers or email address listed above or your Voting Nominee.

Before voting on the Plan, each Holder of a Claim in Classes 2 or 3 should read, in its entirety, this Disclosure Statement, the Plan and the Plan Supplement, the Disclosure Statement Order (Docket No. 441), the Confirmation Hearing Notice, and the instructions accompanying the Ballots. These documents contain important information concerning how Claims are classified for voting purposes and how votes will be tabulated. Holders of Claims entitled to vote are also encouraged to review the relevant provisions of the Bankruptcy Code and Bankruptcy Rules and/or consult their own attorney.

C. Confirmation Hearing and Deadline for Objections to Confirmation

The Bankruptcy Code requires the Bankruptcy Court, after notice, to hold a hearing on whether the Debtors have fulfilled the confirmation requirements of section 1129 of the Bankruptcy Code. The Confirmation Hearing has been scheduled for June 24, 2019, at 10:00 a.m. (Eastern Time), before the Honorable Judge Kevin Gross, United States Bankruptcy Judge for the District of Delaware, in the United States Bankruptcy Court for the District of Delaware, located at 824 North Market Street, 6th Floor, Courtroom #2, Wilmington, Delaware. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice. Any objection to Confirmation must (1) be in writing, (2) state the name and address of the objecting party and the nature of the Claim or Interest of such party, and (3) state with particularity the basis and nature of such objection. Any such objections must be filed and served upon the persons designated in the Confirmation Hearing Notice in the manner and by the deadline described therein.

D. Advisors

The Debtors’ bankruptcy legal advisors are Latham & Watkins LLP and Richards, Layton & Finger, P.A. Their financial advisor is Moelis & Company. Their restructuring advisor is AlixPartners. The Debtors’ advisors can be contacted at:

Latham & Watkins LLP

885 Third Avenue New York, New York 10022 Telephone: (212) 906-1200 Facsimile: (212) 751-4864 Attn: George A. Davis Andrew M. Parlen Hugh K. Murtagh - and - 330 North Wabash Avenue, Suite 2800 Chicago, Illinois 60611 Telephone: (312) 876-7700 Facsimile: (312) 993-9767 Attn: Caroline A. Reckler Jason B. Gott

Moelis & Company

399 Park Avenue, Fifth Floor New York, New York 10022 Telephone: (212) 883-3800 Facsimile: (212) 880-4260 Attn: Zul Jamal Andrew Swift

Richards, Layton & Finger, P.A. AlixPartners


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One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Fax: (302) 651-7701 Attn: Mark D. Collins Michael J. Merchant Amanda R. Steele Brendan J. Schlauch

909 Third Avenue New York, New York 10022 Telephone: (212) 490-2500 Facsimile: (212) 490-1344 Attn: Randall Eisenberg Steve Spitzer

II. OVERVIEW OF THE DEBTORS’ OPERATIONS

A. The Debtors’ Corporate Structure

Hexion Holdings LLC is the sole member of Hexion LLC, which is the sole owner of Hexion Inc. Hexion Inc. is the direct or indirect parent of all of the Debtors in these Chapter 11 Cases as well as the non-Debtor affiliates. A detailed organizational chart is attached hereto as Exhibit F. The following is a simplified version:12

12 The simplified chart set forth herein does not reflect that a single non-operating foreign subsidiary, Hexion Nova Scotia Finance ULC, which is an issuer of the Debtors’ 9.00% Second Lien Notes (as defined herein), is also a Debtor.


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B. The Debtors’ Corporate History

Hexion was formed in 2005 through the combination of Borden Chemical, Inc., Resolution Performance Products LLC and Resolution Specialty Materials LLC. Together, these legacy companies had been leaders in the specialty chemicals industry for over a hundred years. In 2010, Hexion LLC (formerly known as Momentive Specialty Chemicals Holdings LLC), and Momentive Performance Materials Holdings Inc. (“MPM Holdings”), the parent company of Momentive Performance Materials Inc. (“MPM”), became subsidiaries of a newly formed holding company, Hexion Holdings LLC (formerly known as Momentive Performance Materials Holdings LLC, “Hexion Holdings”). We refer to this transaction as the “Momentive Combination.” As a result of the Momentive Combination, Hexion Holdings became the ultimate parent of MPM and Hexion. Hexion Holdings is controlled by investment funds managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and its subsidiaries, “Apollo”). During the period between 2010 and 2014, MPM and Hexion maintained a common parent but maintained separate capital structures. Also, a shared services agreement was put in place to allow for MPM and Hexion to utilize a common management team to operate the businesses and to share administrative costs between the two companies. As a result of the 2014 chapter 11 proceedings of MPM, Hexion and MPM no longer share a common parent. Hexion has nevertheless maintained certain important contractual relationships with MPM including, until recently, a shared services agreement. In December 2014, the company resumed use of the Hexion name, noting at the time the desire to align itself with the heritage described above.

C. The Debtors’ Business Operations

The Debtors, together with their non-debtor affiliates (the “Non-Debtor Affiliates”), are leaders in the field of thermoset resins. These resins are created through a variety of chemical processes, and they serve an even broader array of industrial purposes. Among thousands of applications and end markets, Hexion’s products are used in forest products, architectural and industrial coatings and adhesives, packaging, consumer products, composites and automotive coatings. Hexion serves many industry sectors, including industrial/marine, construction, consumer/durable goods, automotive, wind energy, aviation, electronics, architectural, civil engineering, repair/remodeling and oil and gas field support. Importantly, this product and customer diversity limits Hexion’s dependence on any one market or end-use. Finally, Hexion has a history of product innovation and success in introducing new products to new markets, as evidenced by over 750 granted patents, the majority of which relate to the development of new products and manufacturing processes. Hexion is constantly looking at new ways to introduce new products in its currently established markets.

1. Business Segments Hexion divides its business into two operating segments13 for reporting purposes: the Epoxy, Phenolics and Coatings Resins Division (“EPCD”) and the Forest Products Division (“FPD”). As detailed below, the EPCD segment comprises a variety of epoxy and phenolic specialty products, while FPD focuses on formaldehyde and formaldehyde-based resins useful in wood-adhesion applications.

13 Hexion reports a third segment, Corporate and Other, which is primarily corporate, general and administrative expenses that are not allocated to the other segments, such as shared service and administrative functions, unallocated foreign exchange gains and losses and legacy company costs not allocated to continuing segments.


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a. Epoxy, Phenolics and Coatings Resins Segment Division (EPCD) EPCD further divides into the five business units detailed below.

Base Epoxy Resins & Intermediates. Hexion is one of the world’s largest suppliers of base epoxy resins. Base epoxy resins are used primarily in coatings including “electrocoat” applications for the automotive industry, powder coatings for automotive, oil and gas, general industry and white goods (e.g., appliances), and heat-cured coatings for metal packaging, coiled steel and general industry.

Epoxy Specialty Resins. Hexion is a leading producer of epoxy specialty resins including

infusion resins and bonding pastes for the wind turbine industry, low-emission waterborne coatings to combat corrosion, and blends and resins for lightweight materials and composites critical to the automotive and aircraft industries.

Versatics. Hexion is a leading producer of versatic acids and derivatives. Versatic acids and

derivatives are specialty monomers that provide performance advantages for finished coatings, including superior adhesion, water resistance, appearance and ease of application. Applications for these specialty monomers include decorative, automotive and protective coatings.

Phenolic Specialty Resins. Hexion is a leading producer of phenolic specialty resins, which are

used in applications that require extreme heat resistance and strength, such as after-market automotive and OEM truck brake pads, filtration, aircraft components and foundry resins. These products are sold under globally recognized brand names such as BORDEN, BAKELITE, DURITE and CELLOBOND. Hexion’s phenolic specialty resins are also known for their binding qualities and are used widely in the production of mineral wool and glass wool used for commercial and domestic insulation applications.

Oilfield. Hexion is an innovator in oilfield specialty products, including additives both for

drilling and for cementing, and resin-coated proppants.

b. Forest Products Segment Division (FPD)

FPD further subdivides into the two business units detailed below.

Formaldehyde. Hexion is a significant producer of formaldehyde, a key raw material used to manufacture thousands of other chemicals and products.

Forest Products Resins / Wood Adhesive. Hexion is the leading producer of formaldehyde-based

resins for the North American forest products industry, and also holds significant positions in Latin America, Australia, New Zealand, and Europe. Formaldehyde-based resins, also known as forest products resins, are a key adhesive and binding ingredient used in the production of a wide variety of engineered lumber products, including medium-density fiberboard, particleboard, oriented strand board and various types of plywood and laminated veneer lumber. These products are used in a wide range of applications in the construction, remodeling and furniture industries.

2. Production Facilities


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The Debtors and the Non-Debtor Affiliates have 47 total active production sites around the world. Through their worldwide network of strategically located production facilities, the Debtors and their Non-Debtor Affiliates serve more than 3,100 customers in approximately 85 countries. The following map illustrates Hexion’s global operations:

Most of the Debtors’ facilities are used for the production of thermosetting resins, and most of them manufacture more than one type of thermosetting resin, the nature of which varies by site. These facilities typically use batch technology, and range in size from small sites, with a limited number of reactors, to larger sites, with dozens of reactors. In addition, the Debtors, together with their Non-Debtor Affiliates, have the ability to internally produce key intermediate materials such as formaldehyde, BPA, ECH, and versatic acid. This backward integration provides cost advantages and facilitates adequacy of supply. These facilities are usually co-located with downstream resin manufacturing facilities they serve. As these intermediate materials facilities are often much larger than a typical resins plant, the Debtors, and their Non-Debtor Affiliates generally, capture the benefits of manufacturing efficiency and scale by selling excess production to third parties. The Debtors own or lease 27 production facilities in the United States. The following chart details the Debtors’ facilities:

Count Segment Site St. Owned/Leased Employees+ 1 FPD &

EPCD - PSR Louisville KY Owned 120

2 EPCD – BERI Deer Park TX Owned* 130 3 EPCD – EPS Argo IL Owned* 40

4 FPD Hope AR Owned 25 5 FPD Springfield OR Owned 50 6 FPD Fayetteville NC Owned 70 7 FPD Diboll TX Owned 40 8 FPD Luling LA Owned* 10


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9 FPD Missoula MT Leased 20 10 FPD Sheboygan WI Owned 30 11 FPD Morganton NC Leased 30 12 FPD Alexandria LA Owned 25 13 FPD Geismar LA Owned++ 50 14 FPD Baytown TX Owned* 10 15 EPCD - EPS Lakeland FL Owned 45 16 FPD Acme NC Owned 30 17 FPD LaGrande (Island City) OR Owned 10

18 FPD Moreau NY Owned 10 19 FPD Columbus GA Owned* 5 20 FPD Portland OR Owned 5 21 EPCD - Oilfield Brady^ TX Owned 22 EPCD - Oilfield Shreveport^ LA Owned* 23 EPCD - Oilfield Cleburne^ TX Owned 24 FPD Virginia^ MN Owned 25 FPD Mount Jewett^ PA Owned 26 FPD Demopolis^ AL Owned 27 EPCD - Oilfield Batesville^ AR Owned * Machinery and equipment owned; ground lease

+ Approximate; includes manufacturing employees, contractors, and regional/commercial staff ++ G6 Formaldehyde Reactor leased ^ Idle

3. Research and Development

Hexion conducts robust research and development activities geared towards developing and enhancing products, processes and application technologies to maintain Hexion’s position as the world’s largest producer of thermosetting resins. Among other projects, Hexion’s research and development facilities include a broad range of synthesis, testing and formulating equipment and small-scale versions of customer manufacturing processes for applications development and demonstration. Hexion has approximately 360 scientists and technicians worldwide. More recently, efforts have focused on incorporation of green chemistry principles into technology innovations to remain competitive and to address customer demands for more environmentally preferred solutions. Initiatives include developing resin technologies that reduce emissions, maximize efficiency and increase the use of bio-based raw materials. Some examples of meaningful results of this investment in the development of green products include: EPIKOTE / EPIKURE epoxy systems for wind energy applications, which provide superior mechanical and process properties, reducing air emissions when hours of energy are created; EPIKOTE and Bakelite resin systems for automotive applications, which produce lightweight automotive composite components and other automotive parts that allow customers to build cars with better mileage, reducing air emissions without sacrificing performance; EcoBind Resin Technology, an ultra-low-emitting binder resin used to produce engineered wood products; and Epi-Rez Epoxy Waterborne Resins, which provide for lower volatile organic compounds, reducing air emissions.

4. Intellectual Property As of December 31, 2018, Hexion owned, licensed or had rights to over 1000 patent filings and over 1,100 registered trademarks, as well as various patent and trademark applications and technology licenses around the world, which are used or held for use in operations. A majority of these patents relate to developing new products and processes for manufacturing and will expire between 2019 and 2036.


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Trademarks are renewed on a regular basis. The Debtors own or have the rights over the substantial majority of this intellectual property.

5. Employees As of the Petition Date, Hexion had approximately 4,000 employees around the world. Debtor Hexion Inc. employs approximately 1,300 of these employees, including approximately 275 in Columbus, Ohio, providing executive management, oversight, procurement and other globally shared services. None of the other Debtors employs any employees. Approximately 40% of Hexion employees are members of a labor union or are represented by workers’ councils globally that have collective bargaining agreements, including 6% of the Debtors’ U.S. employees. Debtor Hexion, Inc. sponsors and maintains the Hexion Inc. Pension Plan (the “Hexion Pension Plan”), a defined benefit single-employer pension plan. The Hexion Pension Plan is governed by the provisions of Title IV of the Employee Retirement Income Security Act of 1974, as amended §§ 1301-1461 (2012, Supp. V 2017) (“ERISA”), and the Internal Revenue Code. The Pension Benefit Guaranty Corporation (“PBGC”), a United States Government corporation, guarantees the payment of certain pension benefits upon termination of a pension plan covered by Title IV of ERISA. PBGC asserts that Hexion Inc. and all members of the controlled group are obligated to pay the contributions necessary to satisfy the minimum funding standards under sections 412 and 430 of the Internal Revenue Code (“IRC”) and sections 302 and 303 of ERISA. 26 U.S.C. § 412(c)(11), 29 U.S.C. § 1082(c)(11). Upon confirmation of the Plan, the Reorganized Debtors will continue to maintain the Hexion Pension Plan, and will contribute to the Hexion Pension Plan the amount necessary to satisfy the minimum funding standards under sections 302 and 303 of ERISA, 29 U.S.C. §§ 1082 and 1083, and sections 412 and 430 of the Internal Revenue Code, 26 U.S.C. §§ 412 and 430. The Debtors have no reason to believe the Hexion Pension Plan will be terminated prior to the Effective Date. If the Hexion Pension Plan was terminated in the course of the bankruptcy proceeding, under the distress termination provisions of 29 U.S.C. § 1341(c) or under the provisions for PBGC termination initiation of 29 U.S.C. § 1342(a), certain claims would arise. PBGC asserts that in the event of termination of the Hexion Pension Plan, the sponsors of the Hexion Pension Plan and all members of its controlled group, including the Debtors, would be jointly and severally liable for the unfunded benefit liabilities of the terminated Pension Plan. See 29 U.S.C. § 1362(b). Therefore, PBGC asserts that it has an estimated contingent claim, subject to termination of the Hexion Pension Plan, against each of the Debtors for unfunded benefit liabilities. PBGC asserts that in the event of a termination of the Hexion Pension Plan the estimated unfunded benefit liabilities would be $61,500,000. PBGC asserts that this contingent claim is entitled to priority in an unliquidated amount under 11 U.S.C. §§ 507(a)(2) and (a)(8). PBGC asserts that the sponsor of the Hexion Pension Plan and all other members of its controlled group, including each of the Debtors, are obligated to pay the contributions necessary to satisfy the minimum funding standards under sections 412 and 430 of the Internal Revenue Code and sections 302 and 303 of ERISA. PBGC asserts that it has claims against each of the Debtors under 29 U.S.C. § 1362(c) for contributions owed to the Hexion Pension Plan in an unliquidated amount. PBGC asserts that the sponsor of the Hexion Pension Plan and all other members of its controlled group, including the Debtors, are jointly and severally liable to PBGC for all unpaid premium obligations owed to the Hexion Pension Plan. See 29 U.S.C. § 1307. PBGC asserts that is has claims against each of the Debtors for statutory premiums owed to PBGC on behalf of the Hexion Pension Plan in an unliquidated amount.


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6. Marketing, Customers, and Seasonality

The Debtors’ products are sold to industrial users around the world with a special focus on the industries highlighted above in discussion of Hexion’s business segments. Those customers include global leaders in the automotive, aircraft, consumer goods, construction, oil and gas, and wind energy industries, as well as other chemical and intermediates companies. Hexion’s products are sold to industrial users worldwide through a combination of a direct sales force that services the larger customers and third-party distributors that more cost-effectively serve Hexion’s smaller customers. Hexion’s customer service and support network is made up of key regional customer service centers. Hexion also has global teams that serve the needs of its global customers for technical support and supply and commercial term requirements. Where operating and regulatory factors vary from country to country, these functions are managed locally. Neither the Debtors’ overall business nor any of its reporting segments depends on any single customer or a particular group of customers; therefore, the loss of any single customer would not have a material adverse effect on either reporting segment (EPCD or FPD) or the Debtors—or Hexion—as a whole. The Debtors and their Non-Debtor Affiliates’ primary customers are manufacturers, and the demand for our products is seasonal in certain businesses, with the highest demand in the summer months and lowest in the winter months. Demand for the Debtors’ and their Non-Debtor Affiliates’ products can also be cyclical, as general economic health and industrial and commercial production levels are key drivers for the Debtors’ business.

7. Management Team

As of the date hereof, the Debtors’ current senior leadership team comprises the following individuals, each of whom has substantial industry experience, and who collectively represent decades of familiarity with Hexion and its predecessor companies:

Hexion Inc. Senior Management

Craig A. Rogerson Chairman, President, and Chief Executive Officer

George F. Knight Executive Vice President and Chief Financial Officer

Douglas A. Johns Executive Vice President, General Counsel, and Corporate Secretary

John P. Auletto Executive Vice President – Human Resources

Paul G. Barletta Executive Vice President - Operations

Nathan E. Fisher Executive Vice President – Procurement

Matthew A. Sokol Executive Vice President and Chief Administrative Officer

The supervision of the management team and the general course of the Debtors’ affairs and business operations is entrusted to the eight-member Board of Managers of Hexion Inc.’s indirect parent, co-Debtor Hexion Holdings LLC. Each member of the board of directors (the “Board”) has knowledge, experience and expertise relevant to serving as a director, and many of the directors have experience


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serving on boards of directors of other companies. As of the date hereof, four members are independent of Apollo and are not executives of Hexion Inc.

8. Shared Services Agreement As noted, the Debtors and MPM were owned by a common parent from 2010 to 2014, until MPM’s chapter 11 reorganization. Historically, the Debtors and MPM have derived efficiencies and cost savings through sharing services provided by a pool of employees utilized by both companies. These services have included certain aspects of management, administrative support, treasury services, audit and tax functions, financial services, legal affairs, property management, accounting and records keeping, credit management and collections, accounts payable, financial statement preparation, information technology and enterprise resource planning, investor and public relations, environmental, health, and safety, engineering, payroll management, risk management, insurance, human resources, procurement, and export services (collectively, the “Shared Services”) over the term of the relationship. Some of these services have been reduced over the last three years. To govern the relationship between the two sides as to the Shared Services, Debtor Hexion Inc. and non-Debtor Momentive Performance Materials Inc. entered into to that certain Second Amended and Restated Shared Services Agreement, dated as of October 24, 2014 (the “Shared Services Agreement”). The Shared Services Agreement established certain criteria upon which the costs of such services were allocated between the Debtors and MPM and required that the steering committee formed under the agreement meet no less than annually to evaluate and determine an equitable allocation percentage. The allocation percentages for 2018 and 2017 were 57% and 56%, respectively, for the Debtors and 43% and 44%, respectively, for MPM. The Shared Services Agreement was renewed for one year starting in October 2018 subject to termination by either Hexion Inc. and its subsidiaries or MPM, without cause, on not less than 30 days’ written notice. On February 11, 2019, MPM provided notice to the Debtors that they would be terminating the Shared Services Agreement effective March 14, 2019. The termination triggered a period of up to 14 months during which the parties will work together to facilitate an orderly transition of services provided under the agreement.

D. The Debtors’ Prepetition Capital Structure

The description of the Debtors’ Prepetition Capital Structure set forth herein does not reflect the Debtors’ entry into performance under the DIP ABL Facility and the DIP Term Loan Facility (together, the “DIP Facilities”). The DIP Facilities, and their respective collateral, are discussed below at Article IV.D. As a result of the Debtors’ performance under the DIP Facilities, the Debtors have repaid the prepetition ABL in full. As of the Petition Date, the Debtors had funded debt outstanding of approximately $3.8 billion. The following table summarizes the Debtors’ prepetition indebtedness and capital structure:

(USD in mm) Maturity Outstanding Rate Estimated Interest Expense

Prepetition ABL* 5-Dec-21 $297 L+2.250%** $7

10.375% First Lien Notes

1-Feb-22 $560 10.375% $58


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10.000% First Lien Notes

15-Apr-20 $315 10.000% $32

6.625% First Lien Notes 15-Apr-20 $1,550 6.625% $103

Total First Lien Debt $2,722 $199

13.750% 1.5 Lien Notes 1-Feb-22 $225 13.750% $31

9.000% Second Lien Notes

15-Nov-20 $574 9.000% $52

Lease Obligations*** Various $66 Various N/A

Foreign Local Debt Various $127 Various $17

Total Secured Debt $3,714 $299

9.200% Borden Debentures

15-Mar-21 $74 9.200% $7

7.875% Borden Debentures

15-Feb-23 $189 7.875% $15

Total Unsecured Debt $263 $22

Total Debt $3,977 $320

Total Debt (Excluding Foreign Local Debt)

$3,850

Cash & Equivalents $76

Total Net Debt $3,901

Total Net Debt (Excluding Foreign Local Debt)

$3,774

* The ABL amount does not include approximately $50 million in letters of credit ** Blended *** As of January 1, 2019 the Company adopted new lease standards to account for operating leases on the balance sheet.

The collateral securing the Prepetition ABL and the various Secured Notes (both as defined below) was substantially the same, and was subject to largely matching exclusions (and continues to secure the Secured Notes). Among other exclusions, the collateral for the Prepetition ABL and the Secured Notes did not include any Principal Property. “Principal Property” is a term defined in the indenture governing the Borden Debentures (defined below). With limited exceptions, no Principal Property could be made collateral for other financing unless the Borden Debentures were granted ratable security in such Principal Property (which did not occur prepetition).


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Subject to the enumerated exclusions, including the exclusion of any Principal Property, collateral for the ABL and the Secured Notes included substantially all of the Debtors’ other personal property. The following table summarizes the collateral for the prepetition secured debt, and the priorities in respect of the same among the secured instruments:14

Priority Instrument Collateral

First Lien

Prepetition ABL

Subject to enumerated exclusions, including exclusion of any Principal Property, a first lien on substantially all of the Debtors’ other personal property

Priority over the First Lien Notes in respect of the Debtors’ inventory and accounts

First Lien Notes

Subject to enumerated exclusions, including exclusion of any Principal Property, a first lien on substantially all of the Debtors’ other personal property

Priority over the ABL in respect of the Debtors’ personal property other than inventory and accounts

1.5 Lien 1.5 Lien Notes

Subject to enumerated exclusions, including exclusion of any Principal Property, a lien junior to the ABL and the First Lien Notes on substantially all of the Debtors’ other personal property

Second Lien Second Lien Notes

Subject to enumerated exclusions, including exclusion of any Principal Property, a lien junior to the ABL and the First Lien Notes and the 1.5 Lien Notes on substantially all of the Debtors’ other personal property

9. Prepetition ABL

Prior to the Petition Date, Hexion Inc. was a borrower under the Amended and Restated Asset-Based Revolving Credit Agreement dated as of December 21, 2016, by and among, inter alia, Debtor Hexion Inc., as U.S. borrower, certain foreign Non-Debtor Affiliates of Hexion Inc. as foreign borrowers, and JPMorgan Chase Bank, N.A., as administrative agent (among other capacities) (the “Prepetition ABL”).

The Prepetition ABL had a maturity date of December 5, 2021 subject to certain springing maturities linked to outstanding amounts under various of the Debtors’ notes. The Prepetition ABL bore interest at a floating rate based on, at the Company’s option, an adjusted LIBOR rate plus an applicable margin or an alternate base rate plus an applicable margin. As of the Petition Date, the applicable margin for LIBOR rate loans was 2.25% and for alternate base rate loans was 1.25%. Availability under the Prepetition ABL was $350 million, subject to a borrowing base for U.S. borrowings based on a specified percentage of U.S. eligible accounts receivable and inventory. While Foreign Borrowers could generally rely on the global borrowing base, a “U.S. Sublimit” prevented borrowings by Hexion Inc. when such borrowing would have caused U.S. borrowings to exceed the U.S.

14 The description and table for convenience and illustrative purposes only; these are not a complete description of the collateral, or the exclusions thereto, set forth in the collateral agreements governing the Debtors’ secured obligations.


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borrowing base—effectively limiting U.S. borrowings to the U.S. borrowing base.15 As of the Petition Date, U.S. borrowings under the ABL totaled $143 million, with remaining U.S. availability of $1.7 million after accounting for 49.6 million of Letters of Credit. Foreign Borrowers were borrowers of $203.8 million. Under the Prepetition ABL and related collateral documents, the Debtors guaranteed all obligations (both domestic and foreign), while the Foreign Borrowers and the foreign guarantors guaranteed only foreign obligations. The Prepetition ABL was secured by senior liens on most of the inventory and accounts of the Debtors (the “Prepetition ABL Priority Collateral”) and certain inventory, accounts, and other assets of certain of the foreign Non-Debtor Affiliates. The Prepetition ABL was further secured by junior liens (junior in priority only to the First-Lien Notes described below) on collateral that generally included most of the Debtors’ personal property other than the ABL Priority Collateral, subject to certain exclusions—including the exclusion of any Principal Property—and permitted liens (the “Notes Priority Collateral” and together with the Prepetition ABL Priority Collateral, the “Notes Collateral”). As noted, the liens in respect of the assets of the relevant Non-Debtor Affiliates, as Foreign Borrowers and foreign guarantors, secured only the foreign obligations, while the liens in respect of the assets of the Debtors secured all obligations under the ABL. As discussed further at Article IV.D below, the DIP ABL has replaced the Prepetition ABL.

10. First Lien Notes

In 2012, Hexion Inc. issued $450 million aggregate principal amount of First-Priority Senior Secured Notes due 2020 (the “6.625% First Lien Notes”). Hexion Inc. issued an additional $1,100 million aggregate principal amount of 6.625% First Lien Notes in January 2013. In 2016, Hexion Inc. issued $315 million aggregate principal amount of 10.000% First Priority Senior Secured Notes due 2020 (the “10.000% First Lien Notes”), proceeds of which were used to discharge maturing debenture indebtedness and to repay all amounts then outstanding under the then-existing ABL. In 2017, Hexion Inc. issued $560 million aggregate principal amount of 10.375% First Priority Senior Secured Notes due 2022 (the “10.375% First Lien Notes” and together with the 6.625% First Lien Notes and the 10.000% First Lien Notes, the “First Lien Notes”), the proceeds of which were used to discharge maturing notes indebtedness and for general corporate purposes. The aggregate outstanding principal amount of First Lien Notes as of the Petition Date is $2,425 million. There were scheduled interest payments due on April 15 in respect of the 6.625% First Lien Notes and the 10.000% First Lien Notes of $51.3 million and $15.8 million, respectively.

Subject to the Carve-Out and any senior Non-Primed Liens (both as defined in the Final DIP Order), the First Lien Notes continue to be secured by senior liens on the Notes Priority Collateral and by junior liens (junior in priority only to the DIP ABL described below) on the Prepetition ABL Priority Collateral.

11. 1.5 Lien Notes

In 2017, Hexion Inc. issued $225 million aggregate principal amount of 13.750% Senior Secured Notes due 2022 (the “1.5 Lien Notes”). The 1.5 Lien Notes continue to be secured by liens on the Notes Collateral that are junior to the liens in such collateral securing the First Lien Notes and the Prepetition

15 At such times, subject to availability to Foreign Borrowers, Foreign Borrowers were able draw and transfer the funds to Hexion Inc. via intercompany loans.


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ABL (as well as the Carve-Out and any senior Non-Primed Liens) but senior to the liens in such collateral securing the Second Lien Notes (defined below).

12. Second Lien Notes

In 2010, Debtors Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance ULC issued $574 million aggregate principal amount of 9.000% Second-Priority Senior Secured Notes due 2020 (the “Second Lien Notes” and together with the First Lien Notes and the 1.5 Lien Notes, the “Secured Notes”), proceeds of which were used to refinance existing second-lien note indebtedness. The Second Lien Notes continue to be secured by liens on the Notes Collateral that are junior to the liens in such collateral securing the First Lien Notes, the ABL, and the 1.5 Lien Notes (as well as the Carve-Out and any senior Non-Primed Liens).

13. Borden Debentures

In 1987 and 1991, Hexion Inc. predecessor Borden Inc. issued its 9.200% debentures due 2021 (the “Borden 2021 Debentures”) and 7.875% debentures due 2023 (the “Borden 2023 Debentures” and together with the 2021 Debentures, the “Borden Debentures”).

The Borden Debentures are unsecured obligations of Hexion Inc. The Borden Debentures indenture contains a negative pledge on the granting of liens on, or taking certain other actions in respect of, any “Principal Property.” A Principal Property is defined therein as any “manufacturing or processing plant or warehouse owned or leased by the issuer of the Borden Debentures or any subsidiary of the issuer and located within the United States of America . . . other than any such plant or warehouse or portion thereof which the Board of Directors reasonably determines not to be a Principal Property after due consideration of the materiality of such property to the business of the Issuer and its Subsidiaries as a whole.”

III. EVENTS LEADING TO COMMENCEMENT OF THE CHAPTER 11 CASES

The Debtors, together with their Non-Debtor Affiliates, are a strong business with a history of success and excellent long-term prospects. At the same time, the Debtors, together with the Non-Debtor Affiliates, participate in a highly competitive industry with constant pressure on revenue and margins, which in turn pressures EBITDA and liquidity. Prior to the commencement of these Chapter 11 Cases, the Debtors also faced near-term maturities of the majority of their funded debt. These two factors—declining liquidity and impending maturities—created an inflection point that required the Debtors to commence restructuring discussions with their key economic constituents in the late fall of 2018.

A. Maturities and Liquidity

The Debtors’ high leverage and burdensome debt-service largely created the current situation. Relative to 2018 segment EBITDA, the Debtors entered these Chapter 11 Cases over nine times levered, and they faced annual debt service in excess of $300 million. As debt service remained high, liquidity became a critical issue. Liquidity was further stressed in the first half of the year as seasonality in the Debtors’ business has historically resulted in working capital builds of approximately $100 million during the first quarter. The Debtors’ business is global and diverse with 60% of the revenues generated outside the U.S. and no end market making up more than 18% of its total revenue base. This diversity has been both a benefit and a challenge for the Debtors’ growth, as global and business cyclicality resulted in flat to declining EBITDA profitability from 2012-2017.


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The Debtors have continued to look for ways to reduce costs to improve profitability and cash flows across their businesses. In 2018, for example, the Company further reduced its global headcount and reduced its cost base by approximately $50 million. In 2018, SG&A represented 8% of the Company’s consolidated sales, which is low for a chemical company of comparable size. These cost reduction efforts contributed to strong performance in 2018. 2018 segment EBITDA of $440 million represents the Debtors’ best operational performance since 2012 and an improvement of 21% over the prior year. Despite this improvement, the Debtors were cash flow negative for fiscal 2018. Even beyond the prepetition liquidity issues, the Debtors’ leverage created a second pressure—impending maturities. Approximately $2.5 billion of the Debtors’ secured debt was due to mature in 2020. Repaying, in the absence of refinancing, these maturities was not a viable option, and the Debtors were advised that the outlook in capital markets made the likelihood of a reasonable refinancing of such debt facilities unlikely, given the Debtors’ leverage levels. As a result, the Debtors faced a going-concern qualification in their 2018 audit, which would have created increased liquidity pressures from the Debtors’ vendors and given rise to defaults under the Prepetition ABL, thereby causing cross defaults in all of the Debtors’ debt instruments. In response to the Debtors’ liquidity and maturity issues, the Debtors launched an asset sale process in the 4th quarter of 2017 to generate proceeds to pay down debt and de-lever the company. The initial focus was centered around businesses within the EPCD segment, but when the process did not yield offers that would de-lever the company, the process was expanded to also explore the sale of the FPD businesses. These processes continued through 2018 and the beginning of 2019 but did not result in offers for transactions that the Debtors considered to be in their best interests or those of their creditors and other stakeholders.

B. Prepetition Restructuring Efforts

In response to these challenges, the Board actively pursued and examined a number of potential strategic alternatives. These efforts included engaging advisors to assist the Debtors in their efforts to restructure their debt for the purpose of de-leveraging the Debtors’ balance sheet and exploring a sale of assets. Specifically, in November 2018, the Debtors retained Moelis & Company (“Moelis”) and Latham & Watkins LLP to assist the Debtors in analyzing their financial position and exploring potential financing and restructuring alternatives. The Debtors also retained AlixPartners in January 2019 to perform a variety of restructuring-related services. In early March 2019, the Debtors, with the assistance of their advisors, initiated a process to evaluate and consider various potential strategic and financial alternatives for the Debtors with a view to maximizing enterprise value, including, among other alternatives, a debt or equity financing, or a recapitalization, either in or out of court. The Debtors focused their restructuring efforts on discussions with certain Holders of the First Lien Notes (the “First Lien Group”), certain Holders of the 1.5 Lien Notes (the “1.5 Lien Group”), and a group with holdings across the capital structure (the “Crossover Group” and together with the First Lien Group and the 1.5 Lien Group, the “Ad Hoc Groups”). The primary goal of those discussions, and these Chapter 11 Cases, was, and is, to restructure the Debtors’ balance sheet through a plan of reorganization that enjoys the maximum achievable creditor support, is fair to all creditors and other stakeholders, and positions the Debtors and their Non-Debtor Affiliates for success upon emergence. After the advisors to the Ad Hoc Groups commenced due diligence on the Debtors through information provided in an online data room, the Debtors commenced good-faith, arm’s-length negotiations regarding a potential restructuring that would materially de-lever the Debtors’ balance sheet and allow the Debtors


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to retain sufficient liquidity to continue to operate their businesses going forward. In the course of these negotiations, the Debtors and the Ad Hoc Groups exchanged and considered, with the assistance of their respective advisors, numerous restructuring proposals. Throughout this process, the Board continued to seek refinancing alternatives and out-of-court restructuring options. Ultimately, the Debtors reached a global agreement with all of the Ad Hoc Groups and executed the Restructuring Support Agreement on April 1, 2019. Thus, faced with a lack of viable options available in the financial markets and impending interest payments in respect of the 6.625% and 10.000% First Lien Notes in an aggregate amount of approximately $67 million due on April 15, 2019, the Board, after engaging in good faith and arm’s-length negotiations with the Ad Hoc Groups as well as other stakeholders, ultimately determined that entry into the Restructuring Support Agreement and, thereafter, commencement of these Chapter 11 Cases to consummate the transactions contemplated by the Restructuring Support Agreement, was necessary to preserve the Debtors’ going concern value by de-levering their balance sheet.

C. Restructuring Support Agreement

As noted above, on April 1, 2019, the Debtors and the Consenting Parties entered into the Restructuring Support Agreement, memorializing the Debtors’ and the Consenting Parties’ support for the Plan. The Restructuring Support Agreement enjoys support at every level of the Debtors’ prepetition capital structure, and, as of the date hereof, includes Holders of approximately 90% of the debt to be restructured, including 87% of the First Lien Notes, 99% of the 1.5 Lien Notes, 97% of the Second Lien Notes, and 80% of the Borden Debentures (as defined below). The Restructuring Support Agreement contains certain covenants on the part of the Debtors and the Consenting Parties, including that the Consenting Noteholders will vote in favor of the Plan and otherwise facilitate the Restructuring, in each case subject to certain terms and conditions in the Restructuring Support Agreement. The consummation of the Plan will be subject to customary conditions and other requirements. The Restructuring Support Agreement also provides for termination by each party upon the occurrence of certain events, including without limitation, termination by the Consenting Noteholders upon the failure of the Debtors to achieve certain milestones set forth in the Restructuring Support Agreement. The relevant milestones to be achieved include (a) entry of the final DIP Order by May 17, 2019, (b) the entry of an order approving the Restructuring Support Agreement, the Equity Backstop Agreement, and the Debt Backstop Agreement by May 31, 2019, (c) the entry of the Disclosure Statement Order by June 28, 2019, (d) the commencement of Plan Confirmation hearings by August 3, 2019, and (e) the effective date of the Plan must have occurred by August 29, 2019. The Bankruptcy Court entered an order on May 15, 2019, granting a motion seeking the assumption of the Restructuring Support Agreement pursuant to section 365 of the Bankruptcy Code authorizing, among other things, the payment of certain fees, expenses and other amounts thereunder, and granting related relief (Docket No. 366).

IV.

OVERVIEW OF THE CHAPTER 11 CASES

A. Commencement of Chapter 11 Cases

After the execution of the Restructuring Support Agreement, also on April 1, 2019, the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors continue managing their operations in the ordinary course pursuant to sections 1107(a) and 1108 of the Bankruptcy


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Code. To facilitate the efficient and expeditious implementation of the Plan, and to minimize disruptions to the Debtors’ operations, the Debtors have filed the following motions.

B. First Day Motions

On the Petition Date, the Debtors filed multiple motions seeking various relief from the Bankruptcy Court and authorizing the Debtors to maintain their operations in the ordinary course (the “First Day Motions”). Such relief was aimed at ensuring a seamless transition between the Debtors’ prepetition and postpetition business operations, facilitating a smooth reorganization through the chapter 11 process, and minimizing disruptions to the Debtors’ businesses. The Bankruptcy Court granted substantially all of the relief requested in the First Day Motions and entered various orders authorizing the Debtors to, among other things:

Continue paying employee wages and benefits and processing workers’ compensation claims (Docket No. 92);

Continue the use of the Debtors’ cash management system, bank accounts, and business forms (Docket No. 88);

Continue insurance programs (Docket No. 95);

Continue the Debtors’ customer programs (Docket No. 97);

Pay certain prepetition taxes and fees (Docket No. 91);

Pay certain critical vendors and foreign vendors (Docket Nos. 102 and 94);

Pay certain lien claimants (Docket No. 98);

Establish record date and sell-down procedures for transferring claims (Docket No. 99);

Establish procedures for utility companies to request adequate assurance of payment and to prohibit utility companies from altering or discontinuing service (Docket No. 96\); and

Obtain postpetition financing and use of cash collateral (Docket No. 103).

C. Procedural Motions

The Debtors have filed various motions regarding procedural issues common to chapter 11 cases of similar size and complexity, including a motion for entry of an order establishing procedures for the interim compensation and reimbursement of expenses of professionals (Docket No. 175), a motion for entry of an order extending the time for the Debtors to file their schedules and statements until June 17, 2019 (Docket No. 174) and a motion for entry of an order authorizing the Debtors to employ professionals used in the ordinary course of business (Docket No. 176).

D. DIP Financing

Prior to the Petition Date, the Debtors and their advisors worked to ensure that the Debtors would have ample liquidity available should the Debtors be obliged to commence these Chapter 11 Cases. The process for raising the Debtors’ postpetition financing involved extensive marketing efforts undertaken by


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Moelis. Moelis engaged both third-party lenders and the Debtors’ existing stakeholders to obtain financing on the most competitive terms possible. Ultimately, the Debtors entered agreements for the $350 million DIP ABL Facility and the $350 million DIP Term Loan Facility, in each case with J.P. Morgan Chase Bank, N.A. (“JPMC”) as agent to the lenders thereunder, and in each case subject to the approval of the Bankruptcy Court. Pursuant to the DIP Term Loan Facility, the lenders thereunder agreed to lend, and upon entry of the Interim DIP Order did lend, $350 million to the Debtors’ foreign affiliate Hexion International Holdings B.V. (“HIH BV”). HIH BV agreed to lend, and upon entry of the Interim DIP Order did lend, $350 million dollars to Hexion Inc. Hexion Inc. used the proceeds of the borrowing to repay in full all outstanding obligations under the Prepetition ABL (other than letters of credit). Such repayment included repayment both of Hexion Inc.’s direct borrowings under the Prepetition ABL and the borrowings of the Foreign Borrowers under the Prepetition ABL, creating intercompany loan receivables in favor of Hexion Inc. Upon repayment of the Prepetition ABL, the Debtors and JPMC amended and restated the Prepetition ABL agreement to become the DIP ABL Agreement, with total availability, subject to entry of the Interim and Final DIP Orders, of $350 million (less the prepetition letters of credit, which were deemed transferred to the DIP ABL Facility). The DIP ABL Facility largely replicates the structure of the Prepetition ABL, including through use of distinct borrowing bases and borrowing limits. As a result, the Debtors may borrow from the Foreign Borrowers during the course of these Chapter 11 Cases in order to gain access to DIP ABL funding that can only be drawn against the Foreign Borrowers’ borrowing bases. The table below sets forth in summary form the collateral securing the DIP Facilities as well as the relative priorities in such collateral as among the DIP Facilities, the Secured Notes, the Carve-Out, and certain Non-Primed Liens. As the table discloses, the DIP ABL Facility collateral, and the priority of the same, generally matches the collateral and priority of the Prepetition ABL, though it also benefits from junior liens on DIP Term Loan collateral, which comprises most of the Debtors’ previously unencumbered assets, including the Principal Properties. The DIP Term Loan is secured by a senior lien on those previously unencumbered assets (subject to the Carve-Out and permitted Non-Primed Liens).

Pri

orit

y

DIP ABL Collateral

(Prepetition ABL Priority Collateral)

DIP ABL Collateral

(Notes Priority Collateral)

DIP Term Loan Collateral

(previously unencumbered assets)

Carve-Out Carve-Out Carve-Out

Senior Non-Primed Liens16 Senior Non-Primed Liens Permitted Non-Primed Liens17

16 “Non-Primed Liens” mean valid, perfected and unavoidable liens in existence immediately prior to the Petition Date and valid, unavoidable liens in existence as of the Petition Date and perfected after the Petition Date as permitted by section 546(b) of the Bankruptcy Code that are senior to the DIP ABL Liens.

17 “Permitted Non-Primed Liens” mean Non-Primed Liens of the types specified in Section 6.02(d), (e) and (h) of the DIP Term Loan Agreement, which generally include (a) mechanics’, warehousemens’, and similar liens, (b) certain tax liens, and (c) title exceptions, among other encumbrances.


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DIP ABL Liens First Lien Adequate Protection Liens

DIP Term Loan Liens

First Lien Adequate Protection Liens

Prepetition First Lien Notes Liens

DIP ABL Liens

Prepetition First Liens DIP ABL Liens First Lien Adequate Protection Liens

1.5 Lien Adequate Protection Liens



Prepetition 1.5 Liens Prepetition 1.5 Liens Second Lien Adequate Protection Liens

Second Lien Adequate Protection Liens

Second Lien Adequate Protection Liens

Prepetition Second Liens Prepetition Second Liens

On April 2, 2019, the Bankruptcy Court approved the Debtors’ entry into and performance under the DIP Facilities on an interim basis (Docket No. 103). On May 1, 2019, the Bankruptcy Court approved the Debtors’ entry into and performance under the DIP Facilities on a final basis (Docket No. 294).

Pursuant to the Final DIP Order, the Creditors’ Committee has a ninety-day (90-day) period to investigate and challenge the stipulations, admissions and releases of the Prepetition Secured Parties (as defined in the Final DIP Order); provided, that, such challenge period deadline is tolled while the RSA remains in effect, until the earlier of (i) the Plan Effective Date and (ii) the date that is ninety (90) days after the RSA is terminated or amended in a manner that adversely impacts the rights or treatment of general unsecured creditors under the Plan premised on the RSA.

E. Appointment of Creditors’ Committee

On April 10, 2019, the Official Committee of Unsecured Creditors (the “Creditors’ Committee”) was appointed by the Office of the United States Trustee for the District of Delaware (the “U.S. Trustee”) pursuant to section 1102 of the Bankruptcy Code to represent the interests of unsecured creditors in the Chapter 11 Cases (Docket No. 148). Thereafter, the U.S. Trustee filed two amended notices of appointment: (1) adding two members to the Creditors’ Committee on April 24, 2019 (Docket No. 190) and (2) replacing a member who resigned from the Creditors’ Committee on April 29, 2019 (Docket No. 226). The members of the Creditors’ Committee are: The Bank of New York Mellon, Southern Chemical Corporation, Mitsubishi Gas Chemical America, Inc., Agrium US, Inc., Pension Benefit Guaranty Corporation, PVS Chloralkali, Inc., Wilmington Savings Fund Society, FSB, Wilmington Trust Company and Blue Cube Operations LLC.. The Creditors’ Committee has proposed to retain Kramer Levin Naftalis & Frankel LLP and Bayard, P.A. as co-counsel and FTI Consulting, Inc. as its financial advisor.

F. Backstop Commitment Agreements.

1. Equity Backstop Agreement

On April 25, 2019, the Debtors entered into the Equity Backstop Agreement. Pursuant to that agreement, the Equity Backstop Parties agree to purchase all of the New Common Equity not subscribed through the Rights Offering on a several, and not joint and several, basis, on the terms set forth therein, and in


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exchange for certain consideration including the Equity Backstop Premium. A copy of the Equity Backstop Agreement is attached hereto as Exhibit D.

The Bankruptcy Court entered an order on May 15, 2019, approving a motion seeking authority to enter into the Equity Backstop Agreement pursuant to section 363 of the Bankruptcy Code and authorizing, among other things, the payment of the fees, premiums, expenses and other amounts due thereunder, and granting related relief, subject to the Definitive Document Consent Rights (Docket No. 367).

2. Debt Backstop Agreement

On April 25, 2019, the Debtors entered into the Debt Backstop Agreement. Pursuant to that agreement, the Debt Backstop Parties agree to backstop the New Long-Term Debt on a several, and not joint and several, basis, on the terms set forth therein, and in exchange for certain consideration including the Debt Backstop Premium and the Additional Debt Backstop Premium. A copy of the Debt Backstop Agreement is attached hereto as Exhibit E.

The Bankruptcy Court entered an order on May 15, 2019, approving a motion seeking authority to enter into the Debt Backstop Agreement pursuant to section 363 of the Bankruptcy Code and authorizing, among other things, the payment of the fees, premiums, expenses and other amounts due thereunder, and granting related relief, subject to the Definitive Document Consent Rights (Docket No. 368).

G. Exclusivity

Section 1121(b) of the Bankruptcy Code provides for a period of 120 days after the commencement of a chapter 11 case during which time a debtor has the exclusive right to file a plan of reorganization (the “Exclusive Plan Period”). In addition, section 1121(c)(3) of the Bankruptcy Code provides that if a debtor files a plan within the Exclusive Plan Period, it has a period of 180 days after commencement of the chapter 11 case to obtain acceptances of such plan, before the expiration of which no other party in interest may file a plan (the “Exclusive Solicitation Period,” and together with the Exclusive Plan Period, the “Exclusive Periods”). Pursuant to section 1121(d) of the Bankruptcy Code, the Bankruptcy Court may, upon a showing of cause, extend the Exclusive Periods.

H. Employee Matters

As of the Petition Date, the Debtors employed approximately 1,300 employees in the U.S. The Debtors have historically maintained incentive and compensation programs designed to attract, retain, or incentivize key employees.

On April 10, 2019, the Debtors filed Debtors’ Motion for Entry of an Order Approving the Key Employee Retention Program (the “Employee Retention Program Motion”), seeking approval of the key employee retention program (the “KERP”). On May 1, 2019, the Bankruptcy Court entered an order approving the relief sought in the Employee Retention Program Motion (Docket No. 291).

The Debtors’ KERP, as further described in the Employee Retention Program Motion, allows the Debtors to compensate certain key non-insider employees critical to the Debtors’ businesses and reorganization with retention bonuses in an aggregate amount of up to $2 million. Each key non-insider employee identified by the Debtors as a participant in the KERP will receive an award upon the Debtors’ emergence from chapter 11 based on their level within the organization and their criticality to the ongoing operation of the Debtors’ businesses.


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V. SUMMARY OF THE PLAN

THE TERMS OF THE PLAN, A COPY OF WHICH IS ATTACHED AS EXHIBIT A TO THIS DISCLOSURE STATEMENT, ARE INCORPORATED BY REFERENCE HEREIN. THE STATEMENTS CONTAINED IN THE DISCLOSURE STATEMENT INCLUDE SUMMARIES OF THE PROVISIONS CONTAINED IN THE PLAN AND IN THE DOCUMENTS REFERRED TO THEREIN, WHICH ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN (AS WELL AS THE EXHIBITS THERETO AND DEFINITIONS THEREIN). THE STATEMENTS CONTAINED IN THE DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE PLAN OR DOCUMENTS REFERRED TO THEREIN, AND REFERENCE IS MADE TO THE PLAN AND TO SUCH DOCUMENTS FOR THE FULL AND COMPLETE STATEMENT OF SUCH TERMS AND PROVISIONS OF THE PLAN OR DOCUMENTS REFERRED TO THEREIN. HOLDERS OF CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS AND OTHER INTERESTED PARTIES ARE URGED TO READ THE PLAN AND THE EXHIBITS THERETO IN THEIR ENTIRETY SO THAT THEY MAY MAKE AN INFORMED JUDGMENT CONCERNING THE PLAN.

A. Classification and Treatment of Claims and Interests under the Plan.

Under the Bankruptcy Code, only “allowed” claims and Interests may receive distributions under a chapter 11 plan. In general, an “allowed” claim or “allowed” interest means that the debtor agrees (or the bankruptcy court has ruled) that the claim or interest, including the amount, is in fact, a valid obligation of the debtor. The Bankruptcy Code also requires that, for purposes of treatment and voting, the chapter 11 plan divide the different claims against, and interests in, the debtor into separate classes based upon their legal nature. Claims of substantially similar legal nature are usually classified together, as are Interests of a substantially similar legal nature. Because an entity may hold multiple claims or interests that give rise to different legal rights, the claims and interests themselves, rather than their holders, are classified. Under a chapter 11 plan, the separate classes of claims and interests must be designated either as “impaired” (affected by the plan) or “unimpaired” (unaffected by the plan). If a class of claims or interests is “impaired,” the Bankruptcy Code affords certain rights to the holders of such claims or interests, such as the right to vote on the plan (unless the plan has deemed the class to reject the plan), and the right to receive under the chapter 11 plan, no less value than the holder would receive if the debtor were liquidated under chapter 7 of the Bankruptcy Code. Pursuant to section 1124 of the Bankruptcy Code, a class of claims or interests is “impaired” unless the plan (a) does not alter the legal, equitable, and contractual rights of the holders or (b) irrespective of the holders’ acceleration rights, cures all defaults (other than those arising from the debtor’s insolvency, the commencement of the case, or non-performance of a nonmonetary obligation), reinstates the maturity of the claims or interests in the class, compensates the holders for actual damages incurred as a result of their reasonable reliance upon any acceleration rights, and does not otherwise alter their legal, equitable, and contractual rights. Typically, this means the holder of an unimpaired claim will receive on the later of the effective date of the plan and the date on which amounts owing are due and payable, payment in full, in cash, with postpetition interest to the extent provided under the governing agreement (or if there is no agreement, under applicable non-bankruptcy law), and the remainder of the debtor’s obligations, if any, will be performed as they come due in accordance with their terms. Thus, other than the right to


36

accelerate the debtor’s obligations, the holder of an unimpaired claim will be placed in the position it would have been in had the chapter 11 cases not been commenced. Consistent with these requirements, as described in Articles I.A and I.B above, the Plan divides the Claims against, and Interests in, the Debtors into 8 distinct Classes. Pursuant to the Bankruptcy Code, not all Classes are entitled to vote on the Plan. Under the Plan: (a) Classes 2 and 3 are Impaired and the Holders of Claims in such Classes are entitled to vote to accept or reject the Plan; (b) Classes 1 and 4 are Unimpaired and the Holders of Claims in such Classes are conclusively presumed to have accepted the Plan and are thus not entitled to vote on the Plan; (c) Classes 5 and 8 are Impaired and the Holders of Claims and Equity Interests in such Classes (i) shall receive no distributions under the Plan on account of their Claims or Interests, (ii) are deemed to have rejected the Plan, and (iii) are not entitled to vote to accept or reject the Plan; and (d) Classes 6 and 7 are either Unimpaired or Impaired and the Holders of Intercompany Claims and Intercompany Interests in such Class are conclusively presumed to have either accepted or rejected the Plan and are thus not entitled to vote on the Plan. Except as otherwise provided in the Plan, nothing under the Plan shall affect the Debtors’ or the Reorganized Debtors’ rights in respect of any Unimpaired Claim, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claim; provided, for the avoidance of doubt, notwithstanding anything to the contrary in the Plan or the Confirmation Order or any related documents, until a Claim in Class 4 of the Plan has been (x) paid in full in accordance with applicable law, or on terms agreed to between the holder of such Claim and the Debtors or Reorganized Debtors, or in accordance with the terms and conditions of the particular transaction giving rise to such Claim, or received such other treatment that will render such Claim Unimpaired, including, but not limited to, Reinstatement of such Allowed General Unsecured Claim pursuant to section 1124 of the Bankruptcy Code, or (y) otherwise satisfied or disposed of as determined by a court of competent jurisdiction, (a) the provisions of Articles IX.A, IX.C, and IX.E of the Plan shall not apply with respect to such Unimpaired Claim, (b) such Unimpaired Claim shall not be deemed settled, satisfied, resolved, released, discharged, barred or enjoined by any provision of the Plan or the Definitive Documents, and (c) the property of each Debtor’s Estate that vests in the applicable Reorganized Debtor pursuant to Articles IV.D and IV.O of the Plan shall not be free and clear of such Claims to the extent Allowed. For the further avoidance of doubt, Holder of Class 4 Claims shall not be required to file a Proof of Claim with the Bankruptcy Court and, subject to Article X of the Plan, shall retain all of their rights under applicable nonbankruptcy law to pursue their claims in any forum with jurisdiction over the parties. The Debtors, the Reorganized Debtors and any other person or entity shall retain all rights, defenses, counterclaims, rights of setoff, and rights of recoupment as to Class 4 Claims to the extent such rights, defenses, counterclaims, rights of setoff and rights of recoupment exist under applicable law, including any applicable provisions of the Bankruptcy Code.

B. Acceptance or Rejection of the Plan; Effect of Rejection of Plan

Article III of the Plan sets forth certain additional rules governing the tabulation of votes under the Plan, and related matters. Among other things, Article III provides that (a) the Plan constitutes a separate chapter 11 plan of reorganization for each Debtor (III.A); (b) any Class of Claims that is not occupied as of the date of commencement of the Confirmation Hearing by the Holder of an Allowed Claim or a Claim temporarily Allowed under Bankruptcy Rule 3018 (i.e., no Ballots are cast in a Class entitled to vote on the Plan) shall be deemed eliminated from the Plan for purposes of voting (III.D); (c) in the event a Class of Claims or Interests that is entitled to vote on the Plan rejects the Plan, the Debtors will seek confirmation of the Plan pursuant to 1129(b) of the Bankruptcy Code, which permits confirmation of a plan provided that at least one Class entitled to vote has voted to accept the plan and certain other requirements are met, including that the plan does not discriminate unfairly and is fair and equitable with respect to each impaired, non-consenting class of claims or interests under the plan (III.E); and (d) if a


37

controversy arises as to whether any Claims or Interests, or any Class thereof, is Impaired, the Bankruptcy Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date (III.D).

C. Treatment of Executory Contracts and Unexpired Leases; Employee Benefits; and Insurance Policies

Article V of the Plan governs the treatment of the Debtors’ Executory Contracts and Unexpired Leases, among other things. Article V.A provides that on the Effective Date, except as provided otherwise elsewhere in the Plan, each of the Debtors’ Executory Contracts and Unexpired Leases not previously assumed or rejected pursuant to an order of the Bankruptcy Court will be deemed assumed as of the Effective Date except any Executory Contract or Unexpired Lease (1) identified on the Rejected Executory Contract/Unexpired Lease List (which shall initially be filed with the Bankruptcy Court on the Plan Supplement Filing Date) as an Executory Contract or Unexpired Lease designated for rejection, (2) that is the subject of a separate motion or notice to reject filed by the Debtors and pending as of the Confirmation Hearing, or (3) that previously expired or terminated pursuant to its own terms (disregarding any terms the effect of which is invalidated by the Bankruptcy Code). Article V.B provides that the Debtors will cure all monetary defaults in respect of assumed Executory Contracts and Unexpired Leases by payment of the applicable Cure Cost in Cash on the Effective Date (or on such other terms agreed between the parties). Any objection to a proposed assumption or cure amount will be scheduled to be heard by the Bankruptcy Court at the Reorganized Debtors’ first scheduled omnibus hearing after the date that is 10 days after the date which such objection is timely filed. In the event of a dispute regarding (1) the amount of any Cure Cost, (2) the ability of the Reorganized Debtors or any assignee to provide “adequate assurance of future performance” within the meaning of section 365(b) of the Bankruptcy Code, if applicable, under the Executory Contract or the Unexpired Lease to be assumed or assumed and assigned, and/or (3) any other matter pertaining to assumption and/or assignment, then such Cure Costs shall be paid following the entry of a Final Order resolving the dispute and approving the assumption and assignment of such Executory Contracts or Unexpired Leases or as may be agreed upon by the Debtors or the Reorganized Debtors and the counterparty to such Executory Contract or Unexpired Lease; provided that the Debtors may settle any dispute regarding the amount of any Cure Cost without any further notice to any party or any action, order, or approval of the Bankruptcy Court; provided, further, that notwithstanding anything to the contrary herein, the Debtors reserve the right to either reject or nullify the assumption of any Executory Contract or Unexpired Lease within 45 days after the entry of a Final Order resolving an objection to assumption, determining the Cure Cost under an Executory Contract or Unexpired Lease that was subject to a dispute, or resolving any request for adequate assurance of future performance required to assume such Executory Contract or Unexpired Lease. Article V.C addresses Claims based on rejection of Executory Contracts and Unexpired Leases and provides that (a) any Proofs of Claim in respect of such rejections must be filed with the Notice and Claims Agent (Omni) within thirty (30) days after the date of entry of an order of the Bankruptcy Court (including the Confirmation Order) approving such rejections; (b) any Proofs of Claim arising from the rejection of Executory Contracts and Unexpired Leases that are not timely filed shall be subject to disallowance by further order the Court upon objection on such grounds; and (c) Allowed Claims arising from rejection of Executory Contracts and Unexpired Leases shall constitute General Unsecured Claims. Article V.D provides that any contracts or leases entered into by the Debtors after the Petition Date (including any previously assumed Executory Contracts or Unexpired Leases) that have not been rejected prior to the Effective Date will survive and remain unaffected by entry of the Confirmation Order.


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Article V.E is a reservation of the Debtors’ rights, notwithstanding anything contained in the Plan or the Plan Supplement or in any proposed assumption and cure amount, to dispute whether any contract is in fact an Executory Contract or Unexpired Lease or that the Debtors’ have any liability thereunder. Article V.F provides that the Debtors will assume the Indemnification Provisions in favor of the Debtors’ and the Reorganized Debtors’ current and former directors, officers, equity holders, managers, members, employees, accountants, investment bankers, attorneys, other professionals, agents of the Debtors, and such current and former directors’, officers’, equity holders’, managers’, members’ and employees’ respective Affiliates (each of the foregoing solely in their capacity as such). Article V.G concerns the Debtors’ Compensation and Benefit Programs and the Debtors’ Workers’ Compensation Programs. Article V.G.1 provides that all Compensation and Benefits Programs shall be treated as Executory Contracts under the Plan and deemed assumed on the Effective Date pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code, so long as current and future liabilities associated with such programs have previously been provided or made available to the advisors to the Consenting Noteholders. All Proofs of Claim filed for amounts due under any Compensation and Benefits Program shall be considered satisfied by the applicable agreement and/or program and agreement to assume and cure in the ordinary course as provided in the Plan. All collective bargaining agreements to which any Debtor is a party, and all Compensation and Benefit Programs which are maintained, pursuant to such collective bargaining agreements or to which contributions are made or benefits provided, pursuant to a current or past collective bargaining agreement, will be deemed assumed on the Effective Date pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code and the Reorganized Debtors reserve all of their rights under such Agreements and the Reorganized Debtors shall reserve all rights under such agreements. None of the Restructuring, the Restructuring Transactions, or any assumption of Compensation and Benefits Programs pursuant to the terms herein shall be deemed to trigger any applicable change of control, vesting, termination, acceleration or similar provisions therein. No counterparty shall have rights under a Compensation and Benefits Program assumed pursuant to the Plan other than those applicable immediately prior to such assumption Article V.G.2 provides that, except as set forth in the Plan Supplement, the Debtors and the Reorganized Debtors shall continue to honor their obligations under: (1) all applicable state workers’ compensation laws; and (2) the Debtors’ written contracts, agreements, agreements of indemnity, self-insured workers’ compensation bonds, policies, programs, and plans for workers’ compensation and workers’ compensation Insurance Contracts (collectively, the “Workers’ Compensation Contracts”). All Proofs of Claims on account of workers’ compensation shall be deemed withdrawn automatically and without any further notice to or action, order, or approval of the Bankruptcy Court; provided that nothing in the Plan shall limit, diminish, or otherwise alter the Debtors’ or Reorganized Debtors’ defenses, Causes of Action, or other rights under applicable non-bankruptcy law with respect to the Workers’ Compensation Contracts; provided, further, that nothing herein shall be deemed to impose any obligations on the Debtors in addition to what is provided for under applicable state law and/or the Workers’ Compensation Contract. Article V.H. concerns the Debtors’ Insurance Contracts, and provides that, notwithstanding anything to the contrary in the Disclosure Statement, the Plan, the Plan Supplement, the Confirmation Order, any bar date notice or claim objection, any other document related to any of the foregoing or any other order of the Bankruptcy Court (including, without limitation, any other provision that purports to be preemptory or supervening, confers Bankruptcy Court jurisdiction, grants an injunction or release, or requires a party to opt out of any releases): (a) on the Effective Date, the applicable Reorganized Debtors shall assume the Insurance Contracts in their entirety pursuant to sections 105 and 365 of the Bankruptcy Code and the parties to the Insurance Contracts shall remain liable for all of the obligations thereunder (including any obligations of the Debtors), regardless of when they arise; (b) nothing shall alter, modify, amend, affect,


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impair or prejudice the legal, equitable or contractual rights, obligations, and defenses of the Insurers, the Debtors (or, after the Effective Date, the Reorganized Debtors), or any other individual or entity, as applicable, under any Insurance Contracts; any such rights and obligations shall be determined under the Insurance Contracts and applicable non-bankruptcy law as if the Chapter 11 Cases had not occurred; (c) nothing alters or modifies the duty, if any, that Insurers have to pay claims covered by the Insurance Contracts and the Insurers’ right to seek payment or reimbursement from the Debtors (or after the Effective Date, the Reorganized Debtors) or draw on any collateral or security therefor; (d) the Allowed Claims of the Insurers arising (whether before or after the Effective Date) under the Insurance Contracts (i) shall be paid in full in the ordinary course of business regardless of whether such amounts are or shall become liquidated, due or paid before or after the Petition Date or the Effective Date, and (ii) shall not be discharged or released by the Plan or the Confirmation Order or any other order of the Bankruptcy Court; (e) the Insurers shall not need to or be required to file or serve any objection to a proposed cure amount or a request, application, claim, proof or motion for payment or allowance of any Administrative Claim and shall not be subject to any bar date or similar deadline governing cure amounts or Administrative Claims; and (f) the automatic stay of section 362(a) of the Bankruptcy Code and the injunctions set forth in Article IX of the Plan, if and to the extent applicable, shall be deemed modified without further order of this Court, solely to permit: (I) claimants with valid workers’ compensation claims or direct action claims against an Insurer under applicable non-bankruptcy law to proceed with their claims; (II) the Insurers to administer, handle, defend, settle, and/or pay, in the ordinary course of business and without further order of this Bankruptcy Court, (A) workers’ compensation claims, (B) claims where a claimant asserts a direct claim against any Insurer under applicable non-bankruptcy law, or an order has been entered by this Court granting a claimant relief from the automatic stay to proceed with its claim, and (C) all costs in relation to each of the foregoing; (III) the Insurers to collect from any or all of the collateral or security provided by or on behalf of the Debtors (or the Reorganized Debtors, as applicable) at any time and to hold the proceeds thereof as security for the obligations of the Debtors (and the Reorganized Debtors, as applicable) and/or apply such proceeds to the obligations of the Debtors (and the Reorganized Debtors, as applicable) under the applicable Insurance Contracts, in such order as the applicable Insurer may determine; and (IV) the Insurers to cancel any Insurance Contracts, and take other actions relating thereto, to the extent permissible under applicable non-bankruptcy law, and in accordance with the terms of the Insurance Contracts.

D. Provisions Governing Distributions

Article VI sets forth the mechanics by which Plan distributions will be made. As set forth more fully therein, Article VI provides, among other things, that: (a) subject to certain exceptions, distributions under the Plan of the full amount provided for thereunder (i) on account of Claims and Interests Allowed on or before the Effective Date will generally be made on the Initial Distribution Date, and (ii) on account of Disputed Claims Allowed after the Effective Date will generally be made on the next Periodic Distribution Date that is at least thirty (30) days after the Claim is Allowed (VI.A-C); (b) distributions will be made based on the Debtors’ books and records as of the Distribution Record Date and at the address for the relevant Holder in the Debtors’ records as of the relevant distribution date (VI.D.1-2); (c) distributions on account of the Notes Claims will be made to the respective Indenture Trustees or a third-party disbursing agent (or, in the case of Class 2 Claims, directly to the applicable Holders at the direction of the applicable Indenture Trustees) (VI.D.3-4); (d) distributions on account of DIP Facility Claims will be made to the DIP Agents (VI.D.5); (e) the Debtors are authorized to employ Distribution Agents on the terms set forth in the Plan (VI.D.6); (f) except for Claims in Classes 1 and 4, the Debtors shall not be required to make distributions of less than $100 or to make partial distributions or payments of fractions of dollars (which amounts will instead be rounded) (VI.D.7); (g) the Debtors will hold undeliverable distributions, and will continue to honor un-negotiated checks, only for limited time-periods, after which the distributions shall revert to the Reorganized Debtors (VI.D.8); to the extent applicable, the Reorganized Debtors shall comply with all tax withholding and reporting requirements, and all


40

distributions pursuant to the Plan shall be subject to such requirements (VI.E); on the Effective Date or a soon as reasonably practicable thereafter, each Holder of a certificate or instrument evidencing a Claim or Interest shall be deemed to have surrendered the same, and such certificate or instrument will be canceled with respect to the Debtors, and, except as provided otherwise under the Plan, including the Debtor Release and the Third Party Release, such cancellation shall not alter the obligations or rights of any non-Debtor third parties vis-à-vis one another (including with respect to any indenture or agreement that governs the rights of a Holder of a Claim or Interest, which shall continue in effect to, inter alia, allow Holders to receive distributions under the Plan) (VI.F); no distributions under the Plan shall be made on account of an Allowed Claim that is payable pursuant to one of the Debtors’ insurance policies until the Holder of such Allowed Claim has exhausted all remedies with respect to such Insurance Contract, provided that the foregoing shall not apply to Allowed Claims asserting liability related to an asbestos-related disease and/or for asbestos premises liability (VI.G.1); except as otherwise provided in the Plan, distributions to Holders of Allowed Claims shall be in accordance with the provisions of any applicable Insurance Contract. Nothing contained in the Plan shall constitute or be deemed a waiver of any Cause of Action that the Debtors or any Entity may hold against any other Entity, including Insurers under any Insurance Contracts, nor shall anything contained herein constitute or be deemed a waiver by such Insurers of any rights or defenses, including coverage defenses, held by such Insurers under the Insurance Contracts (VI.G.2).

E. Procedures for Resolving Disputed, Contingent, and Unliquidated Claims or Interests

Article VII of the Plan governs the resolution of Disputed Claims and Interests. Pursuant to Article VII.A, all Claims shall be deemed Allowed, subject to any applicable provisions of the Bankruptcy Code (including, without limitation, section 502(b) of the Bankruptcy Code). If a dispute regarding the amount or liability (including the Allowed amount) of any Claim should arise, the Debtors and Reorganized Debtors intend to attempt to resolve any such disputes consensually or through judicial means outside the Bankruptcy Court. Nevertheless, the Debtors or Reorganized Debtors may, in their discretion, File with the Bankruptcy Court (or any other court of competent jurisdiction) an objection to the allowance of any Claim or any other appropriate motion or adversary proceeding with respect thereto. All such objections will be litigated to Final Order; provided, however, that the Debtors or Reorganized Debtors may compromise, settle, withdraw or resolve by any other method approved by the Bankruptcy Court any objections to Claims. Article VII.A further provides that, except as otherwise provided in the Plan, including with respect to Administrative Claims and any Claims on account of the Debtors’ rejection of the Debtors’ Executory Contracts and Unexpired Leases, Holders of Claims shall not be required to File a Proof of Claim, and no parties should File a Proof of Claim. Instead, the Debtors intend to make distributions, as required by the Plan, in accordance with their books and records. Except as to Proofs of Claim filed for Administrative Claims and any Claims on account of the Debtors’ rejection of the Debtors’ Executory Contracts and Unexpired Leases, all Proofs of Claim shall be considered objected to and Disputed without further action by the Debtors. Upon the Effective Date, all other Proofs of Claim filed against the Debtors, regardless of the timing of their filing and including any filed after the Effective Date, shall be deemed withdrawn and expunged, except for Proofs of Claim for Administrative Claims and any Claims on account of the Debtors’ rejection of the Debtors’ Executory Contracts and Unexpired Leases. Notwithstanding anything in the foregoing or otherwise in the Plan to the contrary: (1) all Claims against the Debtors that result from the Debtors’ rejection of an Executory Contract or Unexpired Lease; (2) disputes regarding the amount of any Cure Cost pursuant to section 365 of the Bankruptcy Code; and (3) Claims that the Debtors seek to have determined by the Bankruptcy Court shall, in all cases, be determined by the Bankruptcy Court.


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Article VII.B provides that, except as otherwise specifically provided in the Plan, the Reorganized Debtors shall have the sole authority: (1) to file, withdraw, or litigate to judgment objections to Claims or Interests; (2) to settle or compromise any Disputed Claim without any further notice to or action, order, or approval by the Bankruptcy Court; and (3) to administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court. Article VII.C addresses estimation of claims. It provides that the Debtors or the Reorganized Debtors, as applicable, may request that the Bankruptcy Court estimate any Disputed Claim that is contingent or unliquidated pursuant to section 502(c) of the Bankruptcy Code. A Claim or Interest that has been expunged from the Claims Register, but that either is subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars, unless otherwise ordered by the Bankruptcy Court. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim or Interest, that estimated amount shall constitute a maximum limitation on such Claim or Interest for all purposes under the Plan (including for purposes of distributions), and the relevant Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate distribution on such Claim or Interest. Article VII.D provides that if any portion of a Claim or Interest is Disputed, no payment or distribution provided under the Plan shall be made on account of such Claim or Interest unless and until such Claim or Interest becomes an Allowed Claim or Interest; provided that if only the Allowed amount of a Claim or Interest is Disputed, such Claim or Interest shall be deemed Allowed in the amount not Disputed and payment or distribution shall be made on account of such undisputed amount. Article VII.E provides that any objections to Claims shall be Filed on or before the Claims Objection Deadline, subject to any extensions thereof approved by the Bankruptcy Court.

F. Conditions Precedent to the Effective Date

Article VIII of the Plan sets forth the conditions precedent to the Effective Date, and related matters. The conditions precedent set forth at Article VIII.A include that (a) the Bankruptcy Court shall have approved this Disclosure Statement; (b) the Confirmation Order shall have been entered, shall be in effect, and shall be a Final Order; (c) the Bankruptcy Court shall have entered the RSA Approval Order, DBA Approval Order, and the EBA Approval Order; (d) all conditions precedent to the New Debt shall have been satisfied or waived; (e) the Rights Offering shall have been conducted in accordance with the Rights Offering Procedures and, to the extent necessary, the Equity Backstop Parties shall have performed their obligations under the Equity Backstop Agreement; (f) all documents and agreements necessary to implement the Plan shall have been executed and tendered for delivery, and all conditions precedent thereto shall have been satisfied or waived; (g) all actions, documents certificates, and agreements necessary to implement the Plan shall have been effected or executed and delivered and, to the extent necessary, filed with the applicable Governmental Unit; (h) all material authorizations, consents regulatory approvals, rulings, or documents that are necessary to implement and effectuate the Plan shall have been obtained; (i) all fees, including for the avoidance of doubt all premiums due to the Backstop Parties, expenses and other amounts payable to or on behalf of the Consenting Noteholders, the Debt Backstop Parties and the Equity Backstop Parties, as applicable, including counsel and financial advisors to each of the Ad Hoc Groups (as defined in the Restructuring Support Agreement) pursuant to the Restructuring Support Agreement, the Equity Backstop Agreement and the Debt Backstop Agreement shall have been paid in full in Cash or in New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants), as applicable; (j) the Restructuring Support Agreement, the Equity Backstop Agreement, and the Debt Backstop Agreement shall not have been terminated in accordance with their terms and


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remain in full force and effect and the parties thereto shall be in compliance therewith; and (k) the Consenting Sponsors, on behalf of themselves and their affiliates, shall have permanently waived any and all management, monitoring or like fees or expenses owed by any Debtor and any agreements providing for the same shall have been terminated with no liability of any Debtor other than in connection with the Consenting Sponsor Claim Settlement; provided, however, that if the conditions precedent in (a) through (j) above are satisfied, all such fees and expenses shall be deemed waived and all such agreements shall be deemed terminated with no liability of any Debtor other than in connection with the Consenting Sponsor Claim Settlement; provided, further, that the foregoing shall not limit, reduce, modify or impair the Debtors’ or the Reorganized Debtors’ Indemnification Provisions with respect to the Consenting Sponsors and their affiliates or the Consenting Sponsors’ or their affiliates’ rights under any of the D&O Liability Insurance Policies, which shall each be assumed and Unimpaired pursuant to Articles V.F and IV.N of the Plan, respectively.

Article VIII.B provides that the Debtors, with the consent of the Required Consenting Noteholders, may waive any of the foregoing conditions precedent at any time and without any notice to parties in interest or further approval of the Bankruptcy Court.

Article VIII.C addresses the effect of non-occurrence of the Effective Date. It provides that if the Effective Date does not occur on or before the termination of the Restructuring Support Agreement, then: (1) the Plan shall be null and void in all respects; (2) any settlement or compromise embodied in the Plan, assumption or rejection of Executory Contracts or Unexpired Leases effected under the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void; and (3) nothing contained in the Plan, the Confirmation Order, or the Disclosure Statement shall: (a) constitute a waiver or release of any Claims, Interests, or Causes of Action; (b) prejudice in any manner the rights of the Debtors or any other Entity; or (c) constitute an admission, acknowledgement, offer, or undertaking of any sort by the Debtors or any other Entity; provided, however, that the non-occurrence of the Effective Date shall not release the Debtors from any obligation to pay the Debt Backstop Premium or the Additional Debt Backstop Premium.

G. Release, Injunction, and Related Provisions

Article IX of the Plan addresses releases, injunctions and related provisions. These provisions include discharge of Claims and Interests under the Plan (IX.A); preservation of the rights of the Reorganized Debtors to setoff and recoup against Allowed Claims (IX.F); and release of Liens (IX.G). In addition, Articles IX.B, IX.C, IX.D, and IX.E of the Plan contain important releases, injunctions, and exculpatory provisions. These provisions are highlighted below. Article IX.C. contains a third-party release. Pursuant to Article IX.C of the Plan, each Holder of Claims and Interests is deemed to grant a third-party release if such Holder (a) is presumed to accept the Plan, (b) votes to accept the Plan, (c) is entitled to vote on the Plan and abstains from voting on the Plan or votes to reject the Plan and does not opt out of the releases provided by the Plan, or (d) is deemed to reject the Plan and does not timely object to confirmation of the Plan with respect to the releases.

1. Releases

The following definitions are important to understanding the scope of the releases being given under the Plan: “Exculpated Party” means each of the following, solely in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the Consenting Noteholders; (d) the Equity Backstop Parties; (e) the Debt


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Backstop Parties; (f) the New Lenders; (g) the New Debt Agents; (h) the New Debt Arrangers; (i) the DIP Lenders; (j) the DIP Agents; (k) the DIP Arrangers; (l) the Consenting Sponsors; (m) the Committee and its current and former members; (n) each of the First Lien Notes Indenture Trustees and the Junior Notes Indenture Trustees; and (o) with respect to each of the foregoing Entities in clauses (a) through (n), each such Entities’ predecessors, successors and assigns, subsidiaries, Affiliates, managed accounts or funds, current and former officers, directors, managers, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such Entities’ respective heirs, executors, estate, and nominees.

“Released Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors; (b) the Reorganized Debtors, and (c) with respect to each of the foregoing parties in clauses (i)(a) and (i)(b), each of such Entity’s current and former Affiliates, and such Entities’ and their current and former Affiliates’ current and former directors, managers, officers, principals, members, employees, predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, and such Entities’ respective heirs, executors, Estate, and nominees; and (ii)(a) the Consenting Noteholders, (b) the Consenting Sponsors (c) the Equity Backstop Parties, (d) the Debt Backstop Parties, (e) the New Lenders, (f) the New Debt Agents, (g) the New Debt Arrangers, (h) the DIP Lenders, (i) the DIP Agents; (j) the DIP Arrangers, (k) the First Lien ABL Agent, (l) the First Lien ABL Lenders, (m) the 6.625% First Lien Notes Indenture Trustee, (n) the 10.00% First Lien Notes Indenture Trustee, (o) the 10.375% First Lien Notes Indenture Trustee, (p) the 1.5 Lien Notes Indenture Trustee, (q) the Second Lien Notes Indenture Trustee, (r) the Borden Debentures Trustee, (s) Wilmington Trust, National Association in its capacity as former trustee under the 1.5 Lien Notes Indenture, (t) the Committee and its current and former members, and (u) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(t), each of such Entity’s current and former Affiliates, and such Entities’ and their current and former Affiliates’ current and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, managed accounts or funds, fund advisors, management companies, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, and such Entities’ respective heirs, executors, estate, and nominees; provided, that, any Holder of a Claim or Interest that validly opts out of or objects to the releases contained in the Plan, such that it is not a Releasing Party, shall not be a “Released Party.”

“Releasing Party” means each of the following, solely in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors, (c) the Consenting Noteholders, (d) the Consenting Sponsors, (e) the Equity Backstop Parties, (f) the Debt Backstop Parties, (g) the New Lenders, (h) the New Debt Agents, (i) the New Debt Arrangers, (j) the DIP Lenders, (k) the DIP Agents, (l) the DIP Arrangers, (m) the First Lien ABL Agent, (n) the First Lien ABL Lenders, (o) all Holders of Claims that are presumed to accept the Plan; (p) all Holders of Claims who vote to accept the Plan; (q) all Holders of Claims or Interests who are entitled to vote on the Plan and (i) abstain from voting on the Plan or vote to reject the Plan and (ii) do not opt out of the releases provided by the Plan; (r) all Holders of Claims or Interests who are deemed to reject the Plan and do not timely object to confirmation of the Plan with respect to the releases; and (s) with respect to the foregoing clauses (a) through (r), each such Entity and its current and former Affiliates, and such Entities’ and their current and former Affiliates’ current and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, managed accounts or funds, fund advisors, management companies, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals; provided that each such Entity that validly objects to or validly opts out of the releases contained in the Plan, such that it is not a Releasing Party in its capacity as a Holder of an


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impaired Claim or Interest, shall be bound by such releases in any other capacity to the extent it would be a Releasing Party in such other capacity.

a. Releases by the Debtors (IX.B)

NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY, PURSUANT TO SECTION 1123(B) OF THE BANKRUPTCY CODE, FOR GOOD AND VALUABLE CONSIDERATION, ON AND AFTER THE EFFECTIVE DATE, EACH RELEASED PARTY IS DEEMED RELEASED AND DISCHARGED BY THE DEBTORS, THE REORGANIZED DEBTORS, AND THEIR ESTATES FROM ANY AND ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR UNKNOWN, INCLUDING ANY DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS THAT THE DEBTORS, THE REORGANIZED DEBTORS, OR THEIR ESTATES WOULD HAVE BEEN LEGALLY ENTITLED TO ASSERT IN THEIR OWN RIGHT (WHETHER INDIVIDUALLY OR COLLECTIVELY) OR ON BEHALF OF THE HOLDER OF ANY CLAIM OR INTEREST, BASED ON OR RELATING TO, OR IN ANY MANNER ARISING FROM, IN WHOLE OR IN PART, THE DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP OR OPERATION THEREOF), THE DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING EFFORTS, ANY AVOIDANCE ACTIONS (BUT EXCLUDING AVOIDANCE ACTION BROUGHT AS COUNTERCLAIMS OR DEFENSES TO CLAIMS ASSERTED AGAINST THE DEBTORS), THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING SUPPORT AGREEMENT, OR ANY TRANSACTION CONTEMPLATED THEREBY, OR ANY CONTRACT, INSTRUMENT, RELEASE, OR OTHER AGREEMENT OR DOCUMENT (INCLUDING PROVIDING ANY LEGAL OPINION REQUESTED BY ANY ENTITY REGARDING ANY TRANSACTION, CONTRACT, INSTRUMENT, DOCUMENT, OR OTHER AGREEMENT CONTEMPLATED BY THE PLAN OR THE RELIANCE BY ANY RELEASED PARTY ON THE PLAN OR THE CONFIRMATION ORDER IN LIEU OF SUCH LEGAL OPINION) CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE RIGHTS OFFERING, THE DIP FACILITIES, THE DIP CREDIT AGREEMENTS, THE DEBT BACKSTOP AGREEMENT, THE EQUITY BACKSTOP AGREEMENT, THE NEW DEBT, THE NEW DEBT DOCUMENTATION, THE CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN, OR UPON ANY OTHER ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE RELATED OR RELATING TO THE FOREGOING. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE RELEASES SET FORTH ABOVE DO NOT RELEASE (A) ANY POST-EFFECTIVE DATE OBLIGATIONS OF ANY PARTY OR ENTITY UNDER THE PLAN, ANY POST-EFFECTIVE DATE TRANSACTION CONTEMPLATED BY THE RESTRUCTURING, OR ANY DOCUMENT, INSTRUMENT, OR AGREEMENT (INCLUDING THOSE SET FORTH IN THE PLAN SUPPLEMENT) EXECUTED TO IMPLEMENT THE PLAN, INCLUDING THE ASSUMPTION OF THE INDEMNIFICATION PROVISIONS AS SET FORTH IN THE PLAN OR (B) ANY INDIVIDUAL FROM ANY CLAIM RELATED TO AN ACT OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL FRAUD OR WILLFUL MISCONDUCT.


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ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THE DEBTOR RELEASE, WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS CONTAINED IN THE PLAN, AND FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S FINDING THAT THE DEBTOR RELEASE IS: (1) IN EXCHANGE FOR GOOD AND VALUABLE CONSIDERATION PROVIDED BY THE RELEASED PARTIES; (2) A GOOD FAITH SETTLEMENT AND COMPROMISE OF THE CLAIMS RELEASED BY THE DEBTOR RELEASE; (3) IN THE BEST INTERESTS OF THE DEBTORS AND ALL HOLDERS OF CLAIMS AND INTERESTS; (4) FAIR, EQUITABLE, AND REASONABLE; (5) GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING; AND (6) A BAR TO ANY OF THE DEBTORS, THE REORGANIZED DEBTORS, OR THE DEBTORS’ ESTATES ASSERTING ANY CLAIM OR CAUSE OF ACTION RELEASED PURSUANT TO THE DEBTOR RELEASE.

b. Releases by Holders of Claims and Equity Interests (IX.C)

NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY, AS OF THE EFFECTIVE DATE (OR SUCH LATER DATE AS PROVIDED FOR IN ARTICLE III.C), EACH RELEASING PARTY IS DEEMED TO HAVE RELEASED AND DISCHARGED EACH DEBTOR, REORGANIZED DEBTOR, AND RELEASED PARTY FROM ANY AND ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR UNKNOWN, INCLUDING ANY DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS THAT SUCH ENTITY WOULD HAVE BEEN LEGALLY ENTITLED TO ASSERT (WHETHER INDIVIDUALLY OR COLLECTIVELY), BASED ON OR RELATING TO, OR IN ANY MANNER ARISING FROM, IN WHOLE OR IN PART, THE DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP, OR OPERATION THEREOF), THE DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING EFFORTS, ANY AVOIDANCE ACTIONS, THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING SUPPORT AGREEMENT, OR ANY TRANSACTION CONTEMPLATED THEREBY, OR ANY CONTRACT, INSTRUMENT, RELEASE, OR OTHER AGREEMENT OR DOCUMENT (INCLUDING PROVIDING ANY LEGAL OPINION REQUESTED BY ANY ENTITY REGARDING ANY TRANSACTION, CONTRACT, INSTRUMENT, DOCUMENT, OR OTHER AGREEMENT CONTEMPLATED BY THE PLAN OR THE RELIANCE BY ANY RELEASED PARTY ON THE PLAN OR THE CONFIRMATION ORDER IN LIEU OF SUCH LEGAL OPINION) CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE RIGHTS OFFERING, THE DIP FACILITIES, THE DIP CREDIT AGREEMENTS, THE DEBT BACKSTOP AGREEMENT, THE EQUITY BACKSTOP AGREEMENT, THE NEW DEBT, THE NEW DEBT DOCUMENTATION, THE CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN, OR UPON ANY OTHER ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE RELATED OR RELATING TO THE FOREGOING. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE RELEASES SET FORTH ABOVE DO NOT RELEASE (A) ANY POST-EFFECTIVE DATE OBLIGATIONS OF ANY PARTY OR ENTITY UNDER THE PLAN, ANY POST-EFFECTIVE DATE TRANSACTION CONTEMPLATED BY THE RESTRUCTURING, OR ANY DOCUMENT, INSTRUMENT, OR AGREEMENT (INCLUDING THOSE SET FORTH IN THE PLAN SUPPLEMENT) EXECUTED TO


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IMPLEMENT THE PLAN, INCLUDING THE ASSUMPTION OF THE INDEMNIFICATION PROVISIONS AS SET FORTH IN THE PLAN, (B) ANY INDIVIDUAL FROM ANY CLAIM RELATED TO AN ACT OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL FRAUD OR WILLFUL MISCONDUCT, OR (C) ANY UNIMPAIRED CLAIM UNLESS AND UNTIL RELEASED PURSUANT TO ARTICLE III.C. FURTHER, NOTHING IN THE PLAN, THE CONFIRMATION ORDER, OR SECTION 1141 OF THE BANKRUPTCY CODE, WILL BE CONSTRUED AS DISCHARGING, RELEASING OR RELIEVING THE REORGANIZED DEBTORS FROM ANY LIABILITY IMPOSED UNDER ANY LAW OR LEGALLY VALID REGULATORY PROVISION WITH RESPECT TO THE HEXION INC. PENSION PLAN. NEITHER THE PENSION BENEFIT GUARANTY CORPORATION NOR HEXION INC. PENSION PLAN WILL BE ENJOINED OR PRECLUDED FROM ENFORCING SUCH LIABILITY AGAINST ANY PARTY AS A RESULT OF ANY PROVISION OF THE PLAN OR THE CONFIRMATION ORDER. SUBJECT TO ARTICLE III.C, ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THIS THIRD-PARTY RELEASE, WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS CONTAINED HEREIN, AND, FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S FINDING THAT THIS THIRD PARTY RELEASE IS: (1) CONSENSUAL; (2) ESSENTIAL TO THE CONFIRMATION OF THE PLAN; (3) GIVEN IN EXCHANGE FOR GOOD AND VALUABLE CONSIDERATION PROVIDED BY THE RELEASED PARTIES; (4) A GOOD-FAITH SETTLEMENT AND COMPROMISE OF THE CLAIMS RELEASED BY THE THIRD-PARTY RELEASE; (5) IN THE BEST INTERESTS OF THE DEBTORS AND THEIR ESTATES; (6) FAIR, EQUITABLE, AND REASONABLE; (7) GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING; AND (8) A BAR TO ANY OF THE RELEASING PARTIES ASSERTING ANY CLAIM OR CAUSE OF ACTION RELEASED PURSUANT TO THIS THIRD PARTY RELEASE.

2. Exculpation (IX.D)

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, NO EXCULPATED PARTY SHALL HAVE OR INCUR LIABILITY FOR, AND EACH EXCULPATED PARTY IS HEREBY RELEASED AND EXCULPATED FROM, ANY CAUSE OF ACTION FOR ANY CLAIM RELATED TO ANY ACT OR OMISSION IN CONNECTION WITH, RELATING TO, OR ARISING OUT OF, THE CHAPTER 11 CASES, THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING SUPPORT AGREEMENT AND RELATED PREPETITION TRANSACTIONS, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, OR ANY TRANSACTION CONTEMPLATED THEREBY, OR ANY CONTRACT, INSTRUMENT, RELEASE OR OTHER AGREEMENT OR DOCUMENT (INCLUDING PROVIDING ANY LEGAL OPINION REQUESTED BY ANY ENTITY REGARDING ANY TRANSACTION, CONTRACT, INSTRUMENT, DOCUMENT, OR OTHER AGREEMENT CONTEMPLATED BY THE PLAN OR THE RELIANCE BY ANY EXCULPATED PARTY ON THE PLAN OR THE CONFIRMATION ORDER IN LIEU OF SUCH LEGAL OPINION) CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE RIGHTS OFFERING, THE DIP FACILITIES, THE DIP CREDIT AGREEMENTS, THE DEBT BACKSTOP AGREEMENT, THE EQUITY BACKSTOP AGREEMENT, THE NEW DEBT, THE NEW DEBT DOCUMENTATION, THE CHAPTER 11 CASES, THE FILING OF


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THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN, OR UPON ANY OTHER ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE RELATED OR RELATING TO THE FOREGOING, EXCEPT FOR CLAIMS RELATED TO ANY ACT OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL FRAUD OR WILLFUL MISCONDUCT, BUT IN ALL RESPECTS SUCH ENTITIES SHALL BE ENTITLED TO REASONABLY RELY UPON THE ADVICE OF COUNSEL WITH RESPECT TO THEIR DUTIES AND RESPONSIBILITIES PURSUANT TO THE PLAN. THE EXCULPATED PARTIES HAVE, AND UPON COMPLETION OF THE PLAN SHALL BE DEEMED TO HAVE, PARTICIPATED IN GOOD FAITH AND IN COMPLIANCE WITH THE APPLICABLE LAWS WITH REGARD TO THE SOLICITATION OF, AND DISTRIBUTION OF, CONSIDERATION PURSUANT TO THE PLAN AND, THEREFORE, ARE NOT, AND ON ACCOUNT OF SUCH DISTRIBUTIONS SHALL NOT BE, LIABLE AT ANY TIME FOR THE VIOLATION OF ANY APPLICABLE LAW, RULE, OR REGULATION GOVERNING THE SOLICITATION OF ACCEPTANCES OR REJECTIONS OF THE PLAN OR SUCH DISTRIBUTIONS MADE PURSUANT TO THE PLAN.

3. Injunction (IX.E)

EXCEPT AS OTHERWISE PROVIDED IN THE PLAN OR THE CONFIRMATION ORDER (AND, FOR THE AVOIDANCE OF DOUBT, SUBJECT TO ARTICLE III.C), ALL ENTITIES WHO HAVE HELD, HOLD, OR MAY HOLD CLAIMS, INTERESTS, CAUSES OF ACTION, OR LIABILITIES THAT: (A) ARE SUBJECT TO COMPROMISE AND SETTLEMENT PURSUANT TO THE TERMS OF THE PLAN; (B) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.B OF THE PLAN; (C) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.C OF THE PLAN, (D) ARE SUBJECT TO EXCULPATION PURSUANT TO ARTICLE IX.D OF THE PLAN (BUT ONLY TO THE EXTENT OF THE EXCULPATION PROVIDED IN ARTICLE IX.D OF THE PLAN), OR (E) ARE OTHERWISE DISCHARGED, SATISFIED, STAYED OR TERMINATED PURSUANT TO THE TERMS OF THE PLAN, ARE PERMANENTLY ENJOINED AND PRECLUDED, FROM AND AFTER THE EFFECTIVE DATE, FROM COMMENCING OR CONTINUING IN ANY MANNER, ANY ACTION OR OTHER PROCEEDING, INCLUDING ON ACCOUNT OF ANY CLAIMS, INTERESTS, CAUSES OF ACTION, OR LIABILITIES THAT HAVE BEEN COMPROMISED OR SETTLED AGAINST THE DEBTORS, THE REORGANIZED DEBTORS, OR ANY ENTITY SO RELEASED OR EXCULPATED (OR THE PROPERTY OR ESTATE OF ANY ENTITY, DIRECTLY OR INDIRECTLY, SO RELEASED OR EXCULPATED) ON ACCOUNT OF, OR IN CONNECTION WITH OR WITH RESPECT TO, ANY DISCHARGED, RELEASED, SETTLED, COMPROMISED, OR EXCULPATED CLAIMS, INTERESTS, CAUSES OF ACTION, OR LIABILITIES.

4. PBGC

Nothing in the Plan, the Confirmation Order, or section 1141 of the Bankruptcy Code, will be construed as discharging, releasing or relieving the Reorganized Debtors from any liability imposed under any law or legally valid regulatory provision with respect to the Hexion Inc. Pension Plan. Neither the Pension Benefit Guaranty Corporation nor Hexion Inc. Pension Plan will be enjoined or precluded from enforcing such liability against any party as a result of any provision of the Plan or the Confirmation Order.


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VI. CAPITAL STRUCTURE AND CORPORATE GOVERNANCE OF REORGANIZED DEBTORS

A. Summary of Capital Structure of Reorganized Debtors

1. Post-Emergence Capital Structure

The following table summarizes the capital structure of the Reorganized Debtors, including the post-Effective Date financing arrangements the Reorganized Debtors expect to enter into to fund their obligations under the Plan and provide for, among other things, their post-Effective Date working capital needs. This summary of the Reorganized Debtors’ capital structure is qualified in its entirety by reference to the Plan, the New Debt Documentation, and the Settlement Note, as applicable. Instrument Amount Description New ABL Credit Facility

$350 million On the Effective Date, the Reorganized Debtors will enter into the New ABL Credit Facility.

New Long-Term Debt

$1.641 billion On the Effective Date, the Reorganized Debtors will enter into the New Long-Term Debt, the proceeds of which may be used to, among other things, repay the DIP Facilities and fund distributions under the Plan.

Settlement Note

$2.5 million On the Effective Date, the Reorganized Debtors will enter into the Settlement Note.

New Common Equity

$1.374 billion18

On the Effective Date, Reorganized Hexion will issue the New Common Equity.

2. New Debt & Settlement Note

Article IV.H of the Plan provides that the Reorganized Debtors will enter into the New ABL Credit Facility, the New Long-Term Debt, and the Settlement Note. Confirmation of the Plan shall be deemed to constitute approval by the Bankruptcy Court of the New Debt, the Settlement Note, and the New Debt Documentation (including all transactions contemplated thereby, such as any supplementation or additional syndication of the New Debt, and all actions to be taken, undertakings to be made and obligations to be incurred by the Reorganized Debtors in connection therewith, including the payment of all fees, indemnities and expenses provided for therein) and, subject to the occurrence of the Effective Date, authorization for the applicable Reorganized Debtors to enter into and perform their obligations under the Settlement Note, the New Debt Documentation and such other documents as may be reasonably required or appropriate, subject to the Definitive Document Consent Rights. For the avoidance of doubt, such approvals and authorizations shall include any portion of the New Long-Term Debt funded in accordance with the terms of the Debt Backstop Agreement. On the Effective Date, the New Debt Documentation shall constitute legal, valid, binding, and authorized obligations of the Reorganized Debtors, enforceable in accordance with their terms. The financial accommodations to be extended pursuant to the New Debt Documentation are being extended, and shall be deemed to have been extended, in good faith, for legitimate business purposes, are reasonable, shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any other applicable non-bankruptcy law. On the Effective Date, all of the Liens and security interests to be granted under the New Debt Documentation

18 Plan Equity Value.


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(1) shall be legal, binding, and enforceable Liens on, and security interests in, the collateral granted in accordance with the terms of the New Debt Documentation, (2) shall be deemed automatically perfected on the Effective Date, subject only to such Liens and security interests as may be permitted under the New Debt Documentation, and (3) shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any applicable non-bankruptcy law. The Reorganized Debtors and the Entities granted such Liens and security interests are authorized to make all filings and recordings, and to obtain all governmental approvals and consents necessary to establish and perfect such Liens and security interests under the provisions of the applicable state, provincial, federal, or other law (whether domestic or foreign) that would be applicable in the absence of the Plan and the Confirmation Order (it being understood that perfection shall occur automatically by virtue of the entry of the Confirmation Order, and any such filings, recordings, approvals, and consents shall not be required), and will thereafter cooperate to make all other filings and recordings that otherwise would be necessary under applicable law to give notice of such Liens and security interests to third parties. On the Effective Date, Reorganized Hexion will issue the $2.5 million Settlement Note to the Consenting Sponsors. The Settlement Note shall (i) mature on March 31, 2020, (ii) be payable upon any public offering or listing of New Common Equity (or any other equity interests of the Reorganized Debtors) on The Nasdaq Global Select Market, The New York Stock Exchange, or any successor national securities exchanges, on or after the Effective Date, (iii) be freely transferable by the holder, and (iv) contain other terms and conditions reasonably acceptable to the Required Consenting Parties. Also on the Effective Date, the Consenting Sponsors shall, on behalf of themselves and their affiliates, be deemed to have permanently waived any and all management, monitoring or like fees or expenses owed by any Debtor and any agreements providing for the same shall have been terminated with no liability of any Debtor other than in connection with the Consenting Sponsor Claim Settlement; provided, however, that the foregoing shall not limit, reduce, modify or impair the Debtors’ or the Reorganized Debtors’ Indemnification Provisions with respect to the Consenting Sponsors and their affiliates or the Consenting Sponsors’ or their affiliates’ rights under any of the D&O Liability Insurance Policies, which shall each be assumed and Unimpaired pursuant to Articles V.F and IV.N, respectively. The Settlement Note shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute a preferential transfer, fraudulent conveyance, or other voidable transfer under the Bankruptcy Code or any other applicable non-bankruptcy law.

3. New Common Equity and Registration Requirements

Article IV.I of the Plan provides that, on the Effective Date, Reorganized Hexion shall issue or reserve for issuance all of the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) and any New Warrants issuable in accordance with the terms of the Plan and as set forth in the Restructuring Transactions Memorandum. The issuance of the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) and any New Warrants by Reorganized Hexion for distribution pursuant to the Plan is authorized without the need for further corporate action and all of the shares of New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) shall be duly authorized, validly issued, fully paid, and non-assessable and the New Warrants and the New Warrant Agreement shall be valid and binding obligations of Reorganized Hexion, enforceable in accordance with their terms.


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On the Effective Date, Reorganized Hexion and the Holders of the New Common Equity shall be deemed to have entered into the Shareholders Agreement, if any. The Shareholders Agreement, if any, shall be deemed to be valid, binding, and enforceable in accordance with its terms, and each holder of New Common Equity shall be bound thereby, in each case without the need for execution by any party thereto other than Reorganized Hexion. On the Effective Date, Reorganized Hexion and certain Holders of the New Common Equity shall enter into the Registration Rights Agreement in substantially the form included in the Plan Supplement. The Registration Rights Agreement shall be deemed to be valid, binding, and enforceable in accordance with its terms. Before or substantially simultaneously with the solicitation of votes to accept or reject the Plan and in accordance with Article III.B of the Plan, each Holder of Allowed Notes Claims shall receive Rights to acquire its respective Pro Rata Share of the Rights Offering Equity pursuant to the terms set forth in the Rights Offering Procedures. Each Right shall represent the right to acquire one share of Rights Offering Equity for the Rights Exercise Price. The offering, issuance, and distribution of any Securities, including the New Common Equity (including any New Common Equity issuable upon the exercise of the New Warrants), the New Warrants, and the Rights, in exchange for Claims pursuant to Article III of the Plan or pursuant to the exercise of the Rights or pursuant to the Equity Backstop Premium and the Debt Backstop Premium, shall be exempt from, among other things, the registration requirements of Section 5 of the Securities Act pursuant to section 1145 of the Bankruptcy Code. Except as otherwise provided in the Plan or the governing certificates or instruments, any and all such New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants) and New Warrants so issued under the Plan will be freely tradable under the Securities Act by the recipients thereof, subject to: (1) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in Section 2(a)(11) of the Securities Act, and compliance with any applicable state or foreign securities laws, if any, and any rules and regulations of the SEC, if any, applicable at the time of any future transfer of such Securities or instruments, including any such restrictions in the Shareholders Agreement, if any; (2) the restrictions, if any, on the transferability of such Securities and instruments; and (3) any other applicable regulatory approval. Notwithstanding anything to the contrary herein, any Backstop Party (together with its Affiliates) that would otherwise be entitled to receive more than 9.9% of the aggregate amount of the New Common Equity to be issued as of the Effective Date (excluding New Common Equity to be issued to other Backstop Parties that would entitle them to receive more than 9.9% of the New Common Equity to be issued as of the Effective Date and excluding New Common Equity issued pursuant to the Management Incentive Plan) based upon (x) its holdings of 1.5 Lien Notes, First Lien Notes, Second Lien Notes, Borden 2021 Debentures, Borden 2023 Debentures as of the subscription expiration deadline for the Rights Offering (as described in the Rights Offering Procedures), (y) its participation in the Rights Offering (including oversubscription rights) and (z) any shares of New Common Stock payable to such Backstop Party as Equity Backstop Premium and the Debt Backstop Premium, may elect to receive New Warrants in lieu of such portion of New Common Equity that would otherwise be issued to such Backstop Party and its Affiliates under the Plan in excess of 9.9% of the aggregate amount of New Common Equity issued as of the Effective Date (excluding New Common Equity to be issued to other Backstop Parties that would entitle them to receive more than 9.9% of the New Common Equity to be issued as of the Effective Date and excluding New Common Equity issued pursuant to the Management Incentive Plan), provided that any Backstop Party eligible to elect to receive New Warrants under the Plan may only elect to receive New Warrants up to an equivalent of 3.5% of the New Common Equity issued as of the Effective Date (including any New Common Equity issuable upon exercise of the New Warrants but excluding New Common Equity issued pursuant to the Management Incentive Plan) and the shares of


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New Common Equity represented by New Warrants shall be shares that would have otherwise been issued under the Plan as First Lien Notes Recovery and/or in exchange for Junior Notes Claims. The offering, issuance and distribution of the New Common Equity pursuant to the Equity Backstop Agreement or the Debt Backstop Agreement (excluding payment of the Equity Backstop Premium and the Debt Backstop Premium, if so elected by any Equity Backstop Parties or any Debt Backstop Parties, respectively) shall be exempt from, among other things, the registration requirements of Section 5 of the Securities Act pursuant to Section 4(a)(2) of the Securities Act, or any other available exemption from registration under the Securities Act. Should the Reorganized Debtors elect on or after the Effective Date to reflect any ownership of the New Common Equity through the facilities of the DTC, the Reorganized Debtors need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the New Common Equity under applicable securities laws. Notwithstanding anything to the contrary in the Plan, no Entity (including, for the avoidance of doubt, DTC) shall be entitled to require a legal opinion regarding the validity of any transaction contemplated by the Plan, including, for the avoidance of doubt, whether the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants) and the New Warrants are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. DTC shall be required to accept and conclusively rely upon the Plan or Confirmation Order in lieu of a legal opinion regarding whether the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants) and the New Warrants are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services.

B. Corporate Governance and Management of the Reorganized Debtors

1. Debtors’ Organizational Matters

Article IV.C of the Plan provides that, except as otherwise provided in the Plan, each Debtor shall continue to exist as of the Effective Date as a separate corporate Entity, limited liability company, partnership, or other form, as the case may be, with all the powers of a corporation, limited liability company, partnership, or other form, as the case may be, pursuant to the applicable law in the jurisdiction in which each applicable Debtor is incorporated or formed and pursuant to the respective certificate of incorporation and bylaws (or other formation documents) in effect prior to the Effective Date, except to the extent such certificate of incorporation and bylaws (or other formation documents) are amended by the Plan, by the Debtors, with the consent of the Required Consenting Noteholders, or otherwise, and to the extent such documents are amended, such documents are deemed to be amended pursuant to the Plan and require no further action or approval.

2. Directors and Officers of the Reorganized Debtors

Article IV.M.1 of the Plan provides that, as of the Effective Date, the terms of the current members of the board of managers of Hexion shall expire and, without further order of the Bankruptcy Court, the New Board shall be approved. The New Board will initially consist of seven (7) members, which shall comprise Craig Rogerson, in his capacity as Chief Executive Officer of the Reorganized Debtors, and six (6) other directors, who shall be selected by the Board Committee in consultation with Craig Rogerson in his capacity as Chief Executive Officer; provided that if the New Board is not fully selected by the Effective Date then the members of the New Board selected as of the Effective Date shall select the remaining members in consultation with


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the Board Committee. The identities of the members of the New Board will be disclosed in the Plan Supplement to the extent known. Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will, to the extent reasonably practicable, disclose in advance of Confirmation the identity and affiliations of any person proposed to serve on the New Board. The occurrence of the Effective Date shall have no effect on the composition of the boards of directors or managers of each of the subsidiary Debtors. Article IV.M.2 of the Plan provides that the existing officers of the Debtors as of the Petition Date shall remain in their current capacities as officers of the Reorganized Debtors, subject to the ordinary rights and powers of the New Board to remove or replace them in accordance with the Debtors’ organizational documents and any applicable employment agreements that are assumed pursuant to the Plan.

3. Management Incentive Plan

Article IV.R provides that the New Board shall consider approval and implementation of the Management Incentive Plan promptly after the Effective Date. The Management Incentive Plan shall include up to 10% of the fully diluted New Common Equity issued on the Effective Date, the terms of which shall be determined by the New Board (including with respect to form, structure, allocation, participation, timing and vesting).

VII. CONFIRMATION OF THE PLAN

The Bankruptcy Court will confirm the Plan only if all of the requirements of section 1129 of the Bankruptcy Code are met. Among the requirements for confirmation are that the Plan is (A) accepted by all impaired Classes of Claims and Interests entitled to vote or, if rejected or deemed rejected by an impaired Class, that the Plan “does not discriminate unfairly” and is “fair and equitable” as to such Class; (B) in the “best interests” of the holders of Claims and Interests impaired under the Plan; and (C) feasible.

A. Confirmation Hearing

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court to hold a confirmation hearing upon appropriate notice to all required parties. The Confirmation Hearing is scheduled for June 24, 2019 at 10:00 a.m. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for the announcement of the continuation date made at the Confirmation Hearing, at any subsequent continued Confirmation Hearing, or pursuant to a notice filed on the docket for the Chapter 11 Cases. Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to the confirmation of a plan. Any objection to confirmation of the Plan must be in writing, must conform to the Bankruptcy Rules and the Local Bankruptcy Rules, must set forth the name of the objector, the nature and amount of Claims or Interests held or asserted by the objector against the Debtors’ estates or properties, the basis for the objection and the specific grounds therefore, and must be filed with the Bankruptcy Court, with a copy to the chambers of Judge Kevin Gross, together with proof of service thereof, and served upon all of the below parties.


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Debtors Counsel to the Debtors

Hexion Inc. 180 East Broad Street Columbus, Ohio 43215 Attn: Douglas Johns

Latham & Watkins LLP 885 Third Avenue New York, New York 10022 Attn: George Davis, Andrew Parlen, and Hugh Murtagh and Latham & Watkins LLP 330 North Wabash Avenue, Suite 2800, Chicago, Illinois 60611 Attn: Caroline Reckler and Jason Gott

United States Trustee Counsel to the Consenting Noteholders

Office of the United States Trustee for the District of Delaware J. Caleb Boggs Federal Building 844 North King Street, Suite 2207 Wilmington, Delaware 19801 Attn: Linda J. Casey, Esq.

Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, New York 10036 Attn: Ira S. Dizengoff, Philip C. Dublin, Daniel Fisher, and Naomi Moss and Jones Day 250 Vesey Street New York, NY 10281 Attn: Sidney P. Levinson and Jeremy D. Evans and Milbank LLP 55 Hudson Yards New York, New York 10001 Attn: Samuel A. Khalil and Matthew L. Brod

Counsel to the Creditors’ Committee Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 Attn: Ken Eckstein, Rachael Ringer, Nathaniel Allard and David Braun and Bayard, P.A. 600 N. King Street, Suite 400 Wilmington, Delaware 19801 Attn: Justin Alberto and Erin Fay

B. Confirmation

At the Confirmation Hearing, the Bankruptcy Court will determine whether the requirements of section 1129(a) of the Bankruptcy Code have been satisfied with respect to the Plan.


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1. Confirmation Requirements.

Confirmation of a chapter 11 plan under section 1129(a) of the Bankruptcy Code requires, among other things, that:

the plan complies with the applicable provisions of the Bankruptcy Code;

the proponent of the plan has complied with the applicable provisions of the Bankruptcy Code;

the plan has been proposed in good faith and not by any means forbidden by law;

any plan payment made or to be made by the proponent under the plan for services or for costs and expenses in, or in connection with, the chapter 11 case, or in connection with the plan and incident to the case, has been approved by, or is subject to the approval of, the Bankruptcy Court as reasonable;

the proponent has disclosed the identity and affiliations of any individual proposed to serve, after confirmation of the plan, as a director, officer, or voting trustee of the debtor, an affiliate of the debtor participating in the plan with the debtor, or a successor to the debtor under the plan. The appointment to, or continuance in, such office by such individual must be consistent with the interests of creditors and equity security holders and with public policy and the proponent must have disclosed the identity of any insider that the reorganized debtor will employ or retain, and the nature of any compensation for such insider;

with respect to each impaired class of claims or interests, either each holder of a claim or interest of such class has accepted the plan, or will receive or retain under the plan, on account of such claim or interest, property of a value, as of the effective date of the plan, that is not less than the amount that such holder would receive or retain if the debtor were liquidated on such date under chapter 7 of the Bankruptcy Code;

subject to the “cramdown” provisions of section 1129(b) of the Bankruptcy Code, each class of claims or interests has either accepted the plan or is not impaired under the plan;

except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that allowed administrative expenses and priority claims will be paid in full on the effective date (except that holders of priority tax claims may receive deferred Cash payments of a value, as of the effective date of the plan, equal to the allowed amounts of such claims and that holders of priority tax claims may receive on account of such claims deferred Cash payments, over a period not exceeding 5 years after the date of assessment of such claims, of a value, as of the effective date, equal to the allowed amount of such claims);

if a class of claims is impaired, at least one (1) impaired class of claims has accepted the plan, determined without including any acceptance of the plan by any insider holding a claim in such class; and

confirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan.

The Debtors believe that:


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the Plan satisfies all of the statutory requirements of chapter 11 of the Bankruptcy Code;

the Debtors, as the proponents of the Plan, have complied or will have complied with all of the

requirements of chapter 11 of the Bankruptcy Code; and

the Plan has been proposed in good faith.

Set forth below is a summary of certain relevant statutory confirmation requirements.

a. Acceptance

Claims in Classes 2 and 3 are Impaired under the Plan and are entitled to vote to accept or reject the Plan; Classes 1 and 4 are Unimpaired and are therefore conclusively deemed to accept the Plan; Classes 5 and 8 are Impaired and will receive no distributions under the Plan and therefore are conclusively deemed to reject the Plan; Classes 6 and 7 (Intercompany Claims and Intercompany Interests, respectively) will either be Unimpaired or Impaired and receive no distributions, and will be conclusively deemed to accept or to reject the Plan, as applicable.

The Debtors also will seek confirmation of the Plan over the objection of any individual holders of Claims who are members of an accepting Class. There can be no assurance, however, that the Bankruptcy Court will determine that the Plan meets the requirements of section 1129(b) of the Bankruptcy Code.

b. Unfair Discrimination and Fair and Equitable Test

To obtain nonconsensual confirmation of the Plan, it must be demonstrated to the Bankruptcy Court that the Plan “does not discriminate unfairly” and is “fair and equitable” with respect to each impaired, non-accepting Class. The Bankruptcy Code provides a non-exclusive definition of the phrase “fair and equitable” for, respectively, secured creditors, unsecured creditors and holders of equity interests. In general, section 1129(b) of the Bankruptcy Code permits confirmation notwithstanding non-acceptance by an impaired class if that class and all junior classes are treated in accordance with the “absolute priority” rule, which requires that the dissenting class be paid in full before a junior class may receive anything under the plan.

A chapter 11 plan does not “discriminate unfairly” with respect to a non-accepting class if the value of the Cash and/or securities to be distributed to the non-accepting class is equal to, or otherwise fair when compared to, the value of the distributions to other classes whose legal rights are the same as those of the non-accepting class. The Debtors believe the Plan will not discriminate unfairly against any non-accepting Class.

c. Feasibility; Financial Projections

The Bankruptcy Code permits a plan to be confirmed only if confirmation is not likely to be followed by liquidation or the need for further financial reorganization of the Debtors or any successor to the Debtors, unless such liquidation or reorganization is proposed in the Plan. For purposes of determining whether the Plan meets this requirement, the Debtors have analyzed the ability of the Reorganized Debtors to meet their obligations under the Plan and retain sufficient liquidity and capital resources to conduct their business. Under the terms of the Plan, the Allowed Claims potentially being paid in whole or in part in Cash are the General Administrative Claims, Professional Fee Claims, DIP Facility Claims, Priority Tax


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Claims, Other Priority Claims, Other Secured Claims, First Lien Notes Claims, and General Unsecured Claims.

The Debtors have estimated the total amount of these Cash payments to be approximately $1.9 billion and expect sufficient liquidity from the New Debt, the Rights Offering, and post-Effective Date operations to fund these Cash payments as and when they come due.

In connection with developing the Plan, the Debtors have prepared detailed financial projections (the “Financial Projections”), attached as Exhibit G hereto, which detail, among other things, the financial feasibility of the Plan. The Financial Projections indicate, on a pro forma basis, that the projected level of Cash flow is sufficient to satisfy all of the Reorganized Debtors’ future debt and debt related interest cost, research and development, capital expenditure and other obligations during this period. Accordingly, the Debtors believe that confirmation of the Plan is not likely to be followed by the liquidation or further reorganization of the Reorganized Debtors.

THE FINANCIAL PROJECTIONS, INCLUDING THE UNDERLYING ASSUMPTIONS, SHOULD BE CAREFULLY REVIEWED IN EVALUATING THE PLAN. WHILE MANAGEMENT BELIEVES THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS, WHEN CONSIDERED ON AN OVERALL BASIS, WERE REASONABLE WHEN PREPARED IN LIGHT OF CURRENT CIRCUMSTANCES AND EXPECTATIONS, NO ASSURANCE CAN BE GIVEN THAT THE FINANCIAL PROJECTIONS WILL BE REALIZED. THE DEBTORS MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACCURACY OF THE FINANCIAL PROJECTIONS. THE PROJECTIONS ARE SUBJECT TO A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING THOSE DESCRIBED BELOW UNDER ARTICLE IX. IN LIGHT OF THESE RISKS AND UNCERTAINTIES, ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE FINANCIAL PROJECTIONS. The Debtors prepared the Financial Projections based upon certain assumptions that they believe to be reasonable under the circumstances. The Financial Projections have not been examined or compiled by independent accountants. Moreover, such information is not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Debtors make no representation as to the accuracy of the Financial Projections or their ability to achieve the projected results. Many of the assumptions on which the Financial Projections are based are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of the Debtors and their management. Inevitably, some assumptions will not materialize and unanticipated events and circumstances may affect the actual financial results. Therefore, the actual results achieved may vary from the projected results and the variations may be material. All holders of Claims that are entitled to vote to accept or reject the Plan are urged to examine carefully all of the assumptions on which the Financial Projections are based in connection with their evaluation of the Plan.

2. Valuation of the Debtors

In conjunction with formulating the Plan, the Debtors determined it was necessary to estimate the going concern value of the Reorganized Debtors (the “Valuation Analysis”). The Valuation Analysis, performed by Moelis, the Debtors’ investment banker, is set forth in Exhibit I.

THE VALUATION ANALYSIS SET FORTH IN EXHIBIT I REPRESENTS A HYPOTHETICAL VALUATION OF THE REORGANIZED DEBTORS, WHICH ASSUMES THAT SUCH REORGANIZED DEBTORS CONTINUE AS AN OPERATING BUSINESS. THE ESTIMATED VALUE SET FORTH IN THE VALUATION ANALYSIS DOES NOT PURPORT TO


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CONSTITUTE AN APPRAISAL OR NECESSARILY REFLECT THE ACTUAL MARKET VALUE THAT MIGHT BE REALIZED THROUGH A SALE OR LIQUIDATION OF THE REORGANIZED DEBTORS, THEIR SECURITIES OR THEIR ASSETS, WHICH MAY BE MATERIALLY DIFFERENT THAN THE ESTIMATE SET FORTH IN THE VALUATION ANALYSIS. ACCORDINGLY, SUCH ESTIMATED VALUE IS NOT NECESSARILY INDICATIVE OF THE PRICES AT WHICH ANY SECURITIES OF THE REORGANIZED DEBTOR MAY TRADE AFTER GIVING EFFECT TO THE TRANSACTIONS SET FORTH IN THE PLAN. ANY SUCH PRICES MAY BE MATERIALLY DIFFERENT THAN INDICATED BY THE VALUATION ANALYSIS.

3. Best Interests Test

The “best interests” test requires that the Bankruptcy Court find either:

that all members of each impaired class have accepted the plan; or

that each holder of an allowed claim or interest in each impaired class of claims or interests will receive or retain under the plan on account of such claim or interest, property of a value, as of the effective date of the plan, that is not less than the amount such holder would receive or retain if the debtor were liquidated under chapter 7 of the Bankruptcy Code on such date.

To determine what the holders of Claims and Interests in each impaired Class would receive if the Debtors were liquidated under chapter 7 on the Confirmation Date, the Bankruptcy Court must determine the dollar amount that would have been generated from the liquidation of the Debtors’ assets and properties in a liquidation under chapter 7 of the Bankruptcy Code. The Cash that would be available for satisfaction of Claims and Interests would consist of the proceeds from the disposition of the assets and properties of the Debtors, augmented by the Cash held by the Debtors. Such Cash amount would be: (i) first, reduced by the amount of the Allowed DIP Claims and the secured portion (if any) of the Allowed Other Secured Claims, Allowed First Lien Note Claims, Allowed 1.5 Lien Note Claims, and Allowed Second Lien Note Claims; (ii) second, reduced by the costs and expenses of liquidation under chapter 7 (including the fees payable to a chapter 7 trustee and the fees payable to professionals that such trustee might engage) and such additional administrative claims that might result from the termination of the Debtors’ business; and (iii) third, reduced by the amount of the Allowed General Administrative Expense Claims, U.S. Trustee Fees, Allowed Priority Tax Claims, and Allowed Other Priority Claims. Any remaining net Cash would be allocated to creditors and stakeholders in strict order of priority contained in section 726 of the Bankruptcy Code. Additional claims would arise by reason of the breach or rejection of obligations under unexpired leases and executory contracts. To determine if the Plan is in the best interests of each impaired Class, the present value of the distributions from the proceeds of a liquidation of the Debtors’ assets and properties, after subtracting the amounts discussed above, must be compared with the value of the property offered to each such Class of Claims under the Plan. After considering the effects that a chapter 7 liquidation would have on the ultimate proceeds available for distribution to creditors, the Debtors have determined that confirmation of the Plan will provide each holder of an Allowed Claim with a recovery that is not less than such holder would have received pursuant to the liquidation of the Debtors under chapter 7. Moreover, the Debtors believe that the value of distributions to each Class of Allowed Claims in a chapter 7 case would be materially less than the value of distributions under the Plan and any distribution in a


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chapter 7 case would not occur for a substantial period of time. It is likely that a liquidation of the Debtors’ assets could take more than a year to complete, and distribution of the proceeds of the liquidation could be delayed for up to six months after the completion of such liquidation to resolve claims and prepare for distributions. In the likely event litigation was necessary to resolve claims asserted in the chapter 7 case, the delay could be prolonged. The Debtors, with the assistance of their advisors, have prepared a liquidation analysis that summarizes the Debtors’ best estimate of recoveries by Holders of Claims and Interests in the event of liquidation as of September 30, 2019 (the “Liquidation Analysis”), which is attached hereto as Exhibit H. The Liquidation Analysis provides: (a) a summary of the liquidation values of the Debtors’ assets, assuming a chapter 7 liquidation in which a trustee appointed by the Bankruptcy Court would liquidate the assets of the Debtors’ estates, and (b) the expected recoveries of Holders of Claims and Interests under the Plan. The Liquidation Analysis contains a number of estimates and assumptions that, although developed and considered reasonable by the Debtors’ management, are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of the Debtors and their management. The Liquidation Analysis also is based on assumptions with regard to liquidation decisions that are subject to change and significant economic and competitive uncertainties and contingencies beyond the control of the Debtors and their management. Accordingly, the values reflected might not be realized. The chapter 7 liquidation period is assumed to last 12 to 18 months following the appointment of a chapter 7 trustee, allowing for, among other things, the discontinuation and wind-down of operations, the sale of the operations as going concerns or as individual assets, the collection of receivables and the finalization of tax affairs. All holders of Claims that are entitled to vote to accept or reject the Plan are urged to examine carefully all of the assumptions on which the Liquidation Analysis is based in connection with their evaluation of the Plan.

B. Standards Applicable to Releases

Article IX of the Plan provides for releases of certain claims against non-Debtors in consideration of services provided to the Debtors and the contributions made by the Released Parties to the Debtors’ Chapter 11 Cases. The Released Parties, the Releasing Parties, and the releases are set forth in full at Article V.G hereof. The Debtors believe that the releases set forth in the Plan are appropriate because, among other things, the releases are expressly or impliedly consensual. Courts in the Third Circuit “have consistently held that a plan may provide for a release of third party claims against a non-debtor upon consent of the party affected.” In re Indianapolis Downs, LLC, 486 B.R. 286, 305 (Bankr. D. Del. 2013). In addition to the consent demonstrated by acceptance of the Plan by Holders entitled to vote, consent may be implied from Holders who are Unimpaired and deemed to accept the Plan. Id. at 306 (holding third-party releases are consensual as to unimpaired creditors paid in full); In re Spansion, Inc., 426 B.R. 114, 144 (Bankr. D. Del. 2010) (same). Consent is also demonstrated as to the Holders of Claims who are provided instructions on how to opt out of such releases and do not do so, either by abstaining from voting or by voting against the Plan but not opting out of the releases. Indianapolis Downs, 486 B.R. at 305 (citing In re DBSD N. Am., Inc., 419 B.R. 179, 218-19 (Bankr. S.D.N.Y. 2009); In re Conseco, Inc., 301 B.R. 525, 528 (Bankr. N.D. Ill. 2003)). Here, consistent with the above case law, the releases of Claims against non-Debtors are given upon express or implied consent either by (a) the affirmative vote by Holders entitled to vote, (b) deemed acceptance of the Plan by Unimpaired Holders; or (c) the absence of any objection from (i) Holders who vote to reject the Plan but do not opt out, (ii) Holders deemed to reject the Plan who do not opt out by


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timely objecting to confirmation of the Plan with respect to such releases, or (iii) Holders entitled to vote who abstain from voting on the Plan.

C. Classification of Claims and Interests.

The Debtors believe that the Plan complies with the classification requirements of the Bankruptcy Code, which require that a chapter 11 plan place each claim and interest into a class with other claims or interests that are “substantially similar.”

D. Consummation.

The Plan will be consummated on the Effective Date. The Effective Date will occur on the first Business Day on which the conditions precedent to the effectiveness of the Plan (see Article V.F hereof and Article VII of the Plan) have been satisfied or waived pursuant to the Plan. The Plan is to be implemented pursuant to its terms, consistent with the provisions of the Bankruptcy Code.

E. Exemption from Certain Transfer Taxes.

To the fullest extent permitted by applicable law, all sale transactions consummated by the Debtors and approved by the Bankruptcy Court on and after the Confirmation Date through and including the Effective Date, including any transfers effectuated under the Plan, the sale by the Debtors of any owned property pursuant to section 363(b) of the Bankruptcy Code, and any assumption, assignment, and/or sale by the Debtors of their interests in unexpired leases of non-residential real property or executory contracts pursuant to section 365(a) of the Bankruptcy Code, shall constitute a “transfer under a plan” within the purview of section 1146 of the Bankruptcy Code, and shall not be subject to any stamp, real estate transfer, mortgage recording, or other similar tax.

F. Retiree Benefits

On and after the Effective Date, pursuant to section 1129(a)(13) of the Bankruptcy Code, the Reorganized Debtors shall continue to pay all retiree benefits (within the meaning of, and subject to the limitations of, section 1114 of the Bankruptcy Code), if any, at the level established in accordance with section 1114 of the Bankruptcy Code, at any time prior to the Confirmation Date, for the duration of the period for which any Debtor had obligated itself to provide such benefits. Nothing herein shall: (a) restrict the Debtors’ or the Reorganized Debtors’ right to modify the terms and conditions of the retiree benefits, if any, as otherwise permitted pursuant to the terms of the applicable plans, non-bankruptcy law, or section 1114(m) of the Bankruptcy Code; or (b) be construed as an admission that any such retiree benefits are owed by the Debtors.

G. Dissolution of Creditors’ Committee

The Creditors’ Committee shall dissolve, and the current and former members of the Committee shall be released and discharged from all rights and duties arising from, or related to, the Chapter 11 Cases on the Effective Date; provided that the Committee and its professionals shall have the right to file, prosecute, review, and object to any applications for compensation and reimbursement of expenses filed in accordance with Article II.A.2 of the Plan.

H. Termination of Professionals

On the Effective Date, the engagement of each Retained Professional retained by the Debtors and the Creditors’ Committee, if any, shall be terminated without further order of the Bankruptcy Court or act of


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the parties; provided, however, such Retained Professionals shall be entitled to prosecute their respective Professional Fee Claims and represent their respective constituents with respect to applications for payment of such Professional Fee Claims and the Reorganized Debtors shall be responsible for the reasonable and documented fees, costs and expenses associated with the prosecution of such Professional Fee Claims. Nothing in the Plan shall preclude any Reorganized Debtor from engaging a former Retained Professional on and after the Effective Date in the same capacity as such Retained Professional was engaged prior to the Effective Date.

I. Amendments

Subject to the limitations contained in the Plan, the Debtors or Reorganized Debtors reserve the right to, in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support Agreement, and subject to the Definitive Document Consent Rights: (1) amend or modify the Plan prior to the entry of the Confirmation Order, including amendments or modifications to satisfy section 1129(b) of the Bankruptcy Code; (2) amend or modify the Plan after the entry of the Confirmation Order in accordance with section 1127(b) of the Bankruptcy Code and the Restructuring Support Agreement upon order of the Bankruptcy Court; and (3) remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan upon order of the Bankruptcy Court; provided, however, that the Debtors shall use commercially reasonable efforts to consult with the Committee with respect to any proposed modification or amendment to the Plan or Plan Supplement that adversely impacts the rights of unsecured creditors (including, for the avoidance of doubt, Holders of Junior Notes Claims, the Junior Notes Indenture Trustees and General Unsecured Creditors) or the proposed treatment of unsecured creditors’ claims under the Plan.

J. Revocation or Withdrawal of the Plan

The Debtors reserve the right to revoke or withdraw the Plan prior to the Effective Date. If the Debtors revoke or withdraw the Plan, in accordance with the preceding sentence, prior to the Effective Date as to any or all of the Debtors, or if confirmation or consummation as to any or all of the Debtors does not occur, then, with respect to such Debtors: (a) the Plan shall be null and void in all respects; (b) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Claim or Interest or Class of Claims or Interests), assumption or rejection of executory contracts or leases affected by the Plan, and any document or agreement executed pursuant to the Plan shall be deemed null and void; and (c) nothing contained in the Plan shall (i) constitute a waiver or release of any Claims by or against, or any Interests in, such Debtors or any other Person, (ii) prejudice in any manner the rights of such Debtors or any other Person or (iii) constitute an admission of any sort by the Debtors or any other Person.

K. Post-Confirmation Jurisdiction of the Bankruptcy Court

Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, except to the extent set forth herein, the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or related to, the Chapter 11 Cases and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction to:

allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the secured or unsecured status, priority, amount, or allowance of Claims or Interests;


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decide and resolve all matters related to the granting and denying, in whole or in part, any applications for allowance of compensation or reimbursement of expenses to Retained Professionals authorized pursuant to the Bankruptcy Code or the Plan;

resolve any matters related to: (a) the assumption, assumption and assignment, or rejection of any Executory Contract or Unexpired Lease to which a Debtor is party or with respect to which a Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Cure Costs arising therefrom, including Cure Costs pursuant to section 365 of the Bankruptcy Code; (b) any potential contractual obligation under any Executory Contract or Unexpired Lease that is assumed; and (c) any dispute regarding whether a contract or lease is or was executory or expired;

ensure that distributions to Holders of Allowed Claims are accomplished pursuant to the provisions of the Plan;

adjudicate, decide or resolve any motions, adversary proceedings, contested, or litigated matters, and any other matters, and grant or deny any applications involving a Debtor that may be pending on the Effective Date;

adjudicate, decide or resolve any and all matters related to Causes of Action, other than Causes of Action against the Debtors;

adjudicate, decide or resolve any and all matters related to section 1141 of the Bankruptcy Code;

resolve any cases, controversies, suits, or disputes that may arise in connection with General Unsecured Claims, including the establishment of any bar dates, related notices, claim objections, allowance, disallowance, estimation and distribution, other than General Unsecured Claims based on Causes of Action against any of the Debtors;

enter and implement such orders as may be necessary or appropriate to execute, implement, or consummate the provisions of the Plan and all contracts, instruments, releases, indentures, and other agreements or documents created in connection with the Plan or the Disclosure Statement, including, without limitation, the Restructuring Support Agreement, the Equity Backstop Agreement, and the Debt Backstop Agreement;

enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;

resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection with the interpretation or enforcement of the Plan or any contract, instrument, release or other agreement or document that is entered into or delivered pursuant to the Plan, including the Equity Backstop Agreement, the EBA Approval Order, the Debt Backstop Agreement, and the DBA Approval Order, or any Entity’s rights arising from or obligations incurred in connection with the Plan;

issue injunctions, enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any Entity with enforcement of the Plan;

resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the releases, injunctions, and other provisions contained in the Plan and enter such orders as may be necessary or appropriate to implement such releases, injunctions, and other provisions;


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resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the Holder of a Claim or Interest for amounts not timely repaid;

enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;

determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order, or any contract, instrument, release, indenture, or other agreement or document created in connection with the Plan or the Disclosure Statement;

enter an order or final decree concluding or closing the Chapter 11 Cases;

adjudicate any and all disputes arising from or relating to distributions under the Plan;

consider any modifications of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any Bankruptcy Court order, including the Confirmation Order;

determine requests for the payment of Claims and Interests entitled to priority pursuant to section 507 of the Bankruptcy Code;

hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan, or the Confirmation Order, including disputes arising under agreements, documents, or instruments executed in connection with the Plan (other than any dispute arising after the Effective Date under, or directly with respect to, the New Debt Documentation, which such disputes shall be adjudicated in accordance with the terms of the New Debt Documentation);

hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

hear and determine all disputes involving the existence, nature, or scope of the Debtors’ discharge, including any dispute relating to any liability arising out of the termination of employment or the termination of any employee or retiree benefit program, regardless of whether such termination occurred prior to or after the Effective Date;

hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the releases, injunctions, and exculpations provided under Article IX of the Plan;

enforce all orders previously entered by the Bankruptcy Court; and

hear any other matter not inconsistent with the Bankruptcy Code.

As of the Effective Date, notwithstanding anything in Article X of the Plan to the contrary, the New Debt Documentation shall be governed by their respective jurisdictional provisions therein.

For the avoidance of doubt, and notwithstanding the foregoing or anything else in the Plan or related documents, (x) no provision of the Plan shall diminish, enhance, or modify any applicable nonbankruptcy legal, equitable, and/or contractual rights of any Holder of a General Unsecured Claim to receive payment on account of such Claim or have such Claim allowed, liquidated, or determined by a court of competent jurisdiction (including the Bankruptcy Court), subject, however, to any applicable limitations on the allowance of such Claims under the Bankruptcy Code and to the rights of the Debtors, Reorganized


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Debtors, or any party in interest to dispute or defend such Claim in accordance with applicable nonbankruptcy law as if the Chapter 11 Cases had not been commenced and the Bankruptcy Court shall not retain exclusive jurisdiction over such disputes and (y) Causes of Action, including litigation claims, which are Unimpaired under the Plan, held by third parties against the Debtors which were pending as of the Petition Date, or subsequently asserted, shall continue to be adjudicated by the court that exercised jurisdiction over such Causes of Action prior to the Petition Date or exercises jurisdiction thereafter.

VIII. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN

The Plan reflects a consensus among the Debtors and the Consenting Parties. The Debtors have determined that the Plan is the best alternative available for their successful emergence from chapter 11. If the Plan is not confirmed and consummated, the alternatives to the Plan are (A) continuation of the Chapter 11 Cases, which could lead to the filing of an alternative plan of reorganization, (B) a liquidation under chapter 7 of the Bankruptcy Code, or (C) dismissal of the Chapter 11 Cases, leaving Holders of Claims and Interests to pursue available non-bankruptcy remedies. These alternatives to the Plan are not likely to benefit Holders of Claims and Equity Interests.

A. Continuation of Chapter 11 Cases

If the Plan is not confirmed, the Debtors (or, if the Debtors’ exclusive period in which to file a plan of reorganization has expired, any other party in interest) could attempt to formulate a different plan. Such a plan might involve either a reorganization and continuation of the Debtors’ business, or an orderly liquidation of their assets. In addition, if the Plan is not confirmed under the terms of the Restructuring Support Agreement, the Consenting Parties have the right to terminate the Restructuring Support Agreement and all obligations thereunder.

B. Liquidation under Chapter 7

If no plan can be confirmed, the Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy Code in which a trustee would be elected or appointed to liquidate the assets of the Debtors for distribution to their creditors in accordance with the priorities established by the Bankruptcy Code. The effect a chapter 7 liquidation would have on the recovery of holders of allowed Claims and Interests is set forth in the Liquidation Analysis attached hereto as Exhibit H. As demonstrated in the Liquidation Analysis, the Debtors believe that liquidation under chapter 7 would result in smaller distributions to creditors than those provided for in the Plan because of, among other things, the delay resulting from the conversion of the Chapter 11 Cases to cases under chapter 7, the additional administrative expenses associated with the appointment of a trustee and the trustee’s retention of professionals, and the loss in value attributable to an expeditious liquidation of the Debtors’ assets as required by chapter 7.

C. Dismissal of Chapter 11 Cases.

If the Chapter 11 Cases are dismissed, Holders of Claims or Interests would be free to pursue non-bankruptcy remedies in their attempts to satisfy Claims against or Interests in the Debtors. However, in that event, Holders of Claims or Interests would be faced with the costs and difficulties of attempting, each on its own, to recover from a non-operating entity. Accordingly, the Debtors believe that the Plan will enable all creditors to realize the greatest possible recovery on their respective Claims with the least delay.


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IX. FACTORS TO CONSIDER BEFORE VOTING

BEFORE VOTING TO ACCEPT OR REJECT THE PLAN, HOLDERS OF CLAIMS ENTITLED TO VOTE SHOULD READ AND CAREFULLY CONSIDER THE RISK FACTORS SET FORTH BELOW, IN ADDITION TO THE INFORMATION SET FORTH IN THIS DISCLOSURE STATEMENT TOGETHER WITH ANY ATTACHMENTS, EXHIBITS, OR DOCUMENTS INCORPORATED BY REFERENCE HERETO. THE FACTORS BELOW SHOULD NOT BE REGARDED AS THE ONLY RISKS ASSOCIATED WITH THE PLAN OR ITS IMPLEMENTATION.

A. Certain Bankruptcy Law Considerations

1. General

While the Debtors believe that the Chapter 11 Cases will be of short duration and will not be materially disruptive to their business, the Debtors cannot be certain that this will be the case. Although the Plan is designed to minimize the length of the Chapter 11 Cases, it is impossible to predict with certainty the amount of time that one or more of the Debtors may spend in bankruptcy or to assure parties in interest that the Plan will be confirmed. Even if confirmed on a timely basis, bankruptcy proceedings to confirm the Plan could have an adverse effect on the Debtors’ business. Among other things, it is possible that bankruptcy proceedings could adversely affect the Debtors’ relationships with their key customers, suppliers and employees. The process will also involve additional expense and may divert some of the attention of the Debtors’ management away from business operations.

2. Risk of Non-Confirmation of Plan

Although the Debtors believe that the Plan will satisfy all requirements necessary for confirmation by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court will reach the same conclusion or that modification to the Plan will not be required for confirmation or that such mortifications would not necessitate re-solicitation of votes. Moreover, the Debtors can make no assurances that they will receive the requisite acceptances to confirm the Plan, and even if all voting Classes voted in favor of the Plan or the requirements for “cramdown” are met with respect to any Class that rejects the Plan, the Bankruptcy Court, which may exercise substantial discretion as a court of equity, may choose not to confirm the Plan. If the Plan is not confirmed, it is unclear what distributions holders of Claims ultimately would receive with respect to their Claims in a subsequent plan of reorganization or otherwise.

3. Risk of Failing to Satisfy the Vote Requirement

In the event that the Debtors are unable to obtain sufficient votes from the Classes entitled to vote, the Debtors will seek to accomplish an alternative chapter 11 plan or seek to “cram down” (i.e., achieve non-consensual confirmation of—see note 4 below) the Plan on non-accepting Classes. There can be no assurance that the terms of any such alternative chapter 11 plan would be similar or as favorable to holders of Allowed Claims as those proposed in the Plan.

4. Non-Consensual Confirmation

If any impaired class of Claims or Interests does not accept or is deemed not to accept a plan of reorganization, a bankruptcy court may nevertheless confirm such plan at the proponent’s request if at least one impaired class has accepted the plan (with such acceptance being determined without including the vote of any “insider” in such class), and as to each impaired class that has accepted the plan, the


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bankruptcy court determines that the plan “does not discriminate unfairly” and is “fair and equitable” with respect to the dissenting impaired classes. Should any Class vote to reject the plan, then these requirements must be satisfied with respect to such rejecting Classes. The Debtors believe that the Plan satisfies these requirements.

5. Financial Projections

The Debtors have prepared financial projections on a consolidated basis with respect to the Reorganized Debtors based on certain assumptions, as set forth in Exhibit G hereto. The projections have not been compiled, audited, or examined by independent accountants, and neither the Debtors nor their advisors make any representations or warranties regarding the accuracy of the projections or the ability to achieve forecasted results.

Many of the assumptions underlying the projections are subject to significant uncertainties that are beyond the control of the Debtors or Reorganized Debtors, including the timing, confirmation, and consummation of the Plan, consumer demands for the Reorganized Debtors’ products, inflation, and other unanticipated market and economic conditions. Some assumptions may not materialize, and unanticipated events and circumstances may affect the actual results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic, and competitive risks, and the assumptions underlying the projections may be inaccurate in material respects.

6. Risks Related to Parties in Interest Objecting to the Debtors’ Classification of Claims and Interests

Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other clams or interests in such class. The Debtors believe that the classification of Claims and Interests under the Plan complies with the requirements set forth in the Bankruptcy Code. However, there can be no assurance that a party in interest will not object or that the Bankruptcy Court will approve the classifications.

7. Risks Related to Possible Objections to the Plan

There is a risk that certain parties could oppose and object to either the entirety of the Plan or specific provisions of the Plan. Although the Debtors believe that the Plan complies with all relevant Bankruptcy Code provisions, there can be no guarantee that a party in interest will not file an objection to the Plan or that the Bankruptcy Court will not sustain such an objection.

8. Releases, Injunctions, Exculpation Provisions May Not Be Approved

Article IX of the Plan provides for certain releases, injunctions, and exculpations for claims and Causes of Action that may otherwise be asserted against the Debtors, the Reorganized Debtors, the Exculpated Parties, or the Released Parties, as applicable. The releases, injunctions, and exculpations provided in the Plan are subject to objection by parties in interest and may not be approved. If the releases and exculpations are not approved, certain parties may not be considered Releasing Parties, Released Parties, or Exculpated Parties, and certain Released Parties or Exculpated Parties may withdraw their support for the Plan.

9. Risk of Non-Occurrence of Effective Date

Although the Debtors believe that the Effective Date will occur soon after the Confirmation Date, there can be no assurance as to the timing of the Effective Date. If the conditions precedent to the Effective


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Date set forth in the Plan have not occurred or have not been waived as set forth in Article VIII of the Plan, then the Confirmation Order may be vacated, in which event no distributions would be made under the Plan, the Debtors and all Holders of Claims or Interests would be restored to the status quo as of the day immediately preceding the Confirmation Date, and the Debtors’ obligations with respect to Claims and Interests would remain unchanged.

10. Risks of Termination of the Restructuring Support Agreement, the Equity Commitment Agreement, and the Debt Commitment Agreement

The Restructuring Support Agreement, the Equity Backstop Agreement, and the Debt Backstop Agreement each contain certain provisions that give the parties thereto the ability to terminate the applicable agreement upon the occurrence or non-occurrence of certain events, including failure to achieve certain milestones in these Chapter 11 Cases. Termination of the Restructuring Support Agreement, the Equity Backstop Agreement, or the Debt Backstop Agreement could result in protracted Chapter 11 Cases, which could significantly and detrimentally impact the Debtors’ relationships with vendors, suppliers, employees, and major customers.

11. Conversion into Chapter 7 Cases

If no plan of reorganization can be confirmed, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of Claims and Interests, the Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed to liquidate the Debtors’ assets for distribution in accordance with the priorities established by the Bankruptcy Code.

B. Risks Relating to the Capital Structure of the Reorganized Debtors

1. Variances from Financial Projections

The Financial Projections included as Exhibit G to this Disclosure Statement reflect numerous assumptions, which involve significant levels of judgment and estimation concerning the anticipated future performance of the Reorganized Debtors, as well as assumptions with respect to the prevailing market, economic and competitive conditions, which are beyond the control of the Reorganized Debtors, and which may not materialize, particularly given the current difficult economic environment. Any significant differences in actual future results versus estimates used to prepare the Financial Projections, such as lower sales, lower volume, lower pricing, increases in production costs, technological changes, environmental or safety issues, workforce disruptions, competition or changes in the regulatory environment, could result in significant differences from the Financial Projections. The Debtors believe that the assumptions underlying the Financial Projections are reasonable. However, unanticipated events and circumstances occurring subsequent to the preparation of the Financial Projections may affect the Debtors’ and the Reorganized Debtors’ ability to initiate the endeavors and meet the financial benchmarks contemplated by the Plan. Therefore, the actual results achieved throughout the period covered by the Financial Projections necessarily will vary from the projected results, and these variations may be material and adverse.

2. Leverage

Although the Reorganized Debtors will have less indebtedness than the Debtors, the Reorganized Debtors will still have a significant amount of secured indebtedness. On the Effective Date, after giving effect to the transactions contemplated by the Plan, in addition to payment of Claims, if any, that require payment beyond the Effective Date and ordinary course debt, the Reorganized Debtors will, have approximately $1,641 billion in secured indebtedness in addition to the $350 million New ABL Credit Facility.


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The degree to which the Reorganized Debtors will be leveraged could have important consequences because, among other things, it could affect the Reorganized Debtors’ ability to satisfy their obligations under their secured indebtedness following the Effective Date; a portion of the Reorganized Debtors’ Cash flow from operations will be used for debt service and unavailable to support operations, or for working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes; the Reorganized Debtors’ ability to obtain additional debt financing or equity financing in the future may be limited; and the Reorganized Debtors’ operational flexibility in planning for, or reacting to, changes in their businesses may be severely limited.

3. Ability to Service Debt

Although the Reorganized Debtors will have less indebtedness than the Debtors, the Reorganized Debtors will still have significant interest expense and principal repayment obligations. The Reorganized Debtors’ ability to make payments on and to refinance their debt will depend on their future financial and operating performance and their ability to generate cash in the future. This, to a certain extent, is subject to general economic, business, financial, competitive, legislative, regulatory and other factors that are beyond the control of the Reorganized Debtors. Although the Debtors believe the Plan is feasible, there can be no assurance that the Reorganized Debtors will be able to generate sufficient cash flow from operations or that sufficient future borrowings will be available to pay off the Reorganized Debtors’ debt obligations. The Reorganized Debtors may need to refinance all or a portion of their debt on or before maturity; however, there can be no assurance that the Reorganized Debtors will be able to refinance any of their debt on commercially reasonable terms or at all.

4. Obligations Under Certain Financing Agreements

The Reorganized Debtors’ obligations under the New Debt will be secured by liens on substantially all of the assets of the Reorganized Debtors (subject to certain exclusions set forth therein). If the Reorganized Debtors become insolvent or are liquidated, or if there is a default under certain financing agreements, including, but not limited to, the New Debt, and payment on any obligation thereunder is accelerated, the lenders under or holders of the New Debt would be entitled to exercise the remedies available to a secured lender under applicable law, including foreclosure on the collateral that is pledged to secure the indebtedness thereunder, and they would have a claim on the assets securing the obligations under the applicable facility that would be superior to any claim of the holders of unsecured debt.

5. Restrictive Covenants

The financing agreements governing the Reorganized Debtors’ indebtedness will contain various covenants that may limit the discretion of the Reorganized Debtors’ management by restricting the Reorganized Debtors’ ability to, among other things, incur additional indebtedness, incur liens, pay dividends or make certain restricted payments, consummate certain asset sales, enter into certain transactions with affiliates, merge, consolidate and/or sell or dispose of all or substantially all of their assets. In addition, it is expected that such agreements will require the Reorganized Debtors to meet certain financial covenants. As a result of these covenants, the Reorganized Debtors will be limited in the manner in which they conduct their business and they may be unable to engage in favorable business activities or finance future operations or capital needs. Any failure to comply with the restrictions of the financing agreements may result in an event of default. An event of default may allow the creditors to accelerate the related debt as well as any other debt to which a cross-acceleration or cross-default provision applies. If the Reorganized Debtors are unable to


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repay amounts outstanding under their financing agreements when due, the lenders thereunder could, subject to the terms of the financing agreements, seek to foreclose on the collateral that is pledged to secure the indebtedness outstanding under such facility.

6. Market for Securities

There is currently no market for the New Common Equity and there can be no assurance as to the development or liquidity of any market for such securities.19

Therefore, there can be no assurance that the securities will be tradable or liquid at any time after the Effective Date. If a trading market does not develop or is not maintained, holders of the securities may experience difficulty in reselling such securities or may be unable to sell them at all. Even if such a market were to exist, such securities could trade at prices higher or lower than the estimated value set forth in this Disclosure Statement depending upon many factors including prevailing interest rates, markets for similar securities, industry conditions, and the performance of, and investor expectations for, the Reorganized Debtors. Accordingly, holders of the securities may bear certain risks associated with holding securities for an indefinite period of time.

7. Potential Dilution

The ownership percentage represented by the New Common Equity distributed under the Plan as of the Effective Date will be subject to dilution from the equity issued in connection with the (a) Management Incentive Plan, (b) the premiums payable under the Equity Backstop Agreement and the Debt Backstop Agreement (to the extent premiums due under such agreements are elected to be received in New Common Equity) (c) any other equity that may be issued post-emergence, and (d) the conversion of any options, warrants, convertible securities, exercisable securities, or other securities that may be issued post-emergence; provided, however, that the issuance of equity described in clause (b) will not affect the value per share of New Common Equity under the Plan: Each dollar of Backstop Premium paid in New Common Equity will result in an additional dollar of cash on the balance sheet, and a corresponding additional dollar of New Common Equity value, of the Reorganized Debtors at the Effective Date. In the future, similar to all companies, additional equity financings or other equity issuances by Reorganized Hexion could adversely affect the value of the New Common Equity. The amount and dilutive effect of any of the foregoing could be material.

8. Significant Holders of New Common Equity

Certain holders of Allowed Notes Claims are expected to acquire a significant ownership interest in the New Common Equity. In addition, the Board Committee is intended to initially comprise the six (6) largest holders of New Common Equity. Such holders could be in a position to control the outcome of all

19 The Debtors and, following the Effective Date, the Reorganized Debtors will use best efforts to attempt to obtain a listing of the New Common Equity on the New York Stock Exchange or the NASDAQ on the Effective Date, or, if such a listing is not reasonably possible, on the OTCQX Premier (if the OTCQX Premier is not possible, the OTCQX, and if the OTCQX is not possible, the OTCQB) and will use best efforts to obtain a New York Stock Exchange or NASDAQ listing as soon as possible following the Effective Date; provided, however, the foregoing shall not apply to the extent (i) the board of directors of Hexion, or the New Board (on or after the Effective Date) determines that such listing is not in the best interests of the Reorganized Debtors or (ii) the holders of 73%, on a pro forma basis, of the New Common Equity (without giving effect to the Agreed Dilution), determine otherwise.


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actions of Reorganized Hexion requiring the approval of equityholders, including the election of directors or managers, without the approval of other equityholders. This concentration of ownership could also facilitate or hinder a negotiated change of control of Reorganized Hexion and, consequently, have an impact upon the value of the New Common Equity.

9. Interests Subordinated to the Reorganized Debtors’ Indebtedness

In any subsequent liquidation, dissolution, or winding up of Reorganized Hexion, the New Common Equity would rank below all debt claims against Reorganized Hexion. As a result, holders of the New Common Equity will not be entitled to receive any payment or other distribution of assets upon the liquidation, dissolution, or winding up of Reorganized Hexion until after all applicable holders of debt have been paid in full.

10. Implied Valuation of New Common Equity Not Intended to Represent the Trading Value of the New Common Equity

The estimated value of Reorganized Hexion for purposes of estimating recovery percentages under the Plan is based on the Valuation Analysis, which represents a hypothetical valuation of Reorganized Hexion and assumes that, among other things, the Reorganized Debtors continue as an operating business. The Valuation Analysis does not purport to constitute an appraisal of Reorganized Hexion or necessarily reflect the actual market value that might be realized through a sale or liquidation of Reorganized Hexion or its assets, which may be materially different than the estimate set forth in the Valuation Analysis. The valuation of Reorganized Hexion is not intended to represent the trading value of New Common Equity in public or private markets and is subject to additional uncertainties and contingencies, all of which are difficult to predict. Actual market prices of such securities at issuance will depend upon, among other things: (a) prevailing interest rates; (b) conditions in the financial markets; (c) the anticipated initial securities holdings of prepetition creditors, some of whom may prefer to liquidate their investment rather than hold it on a long-term basis; and (d) other factors that generally influence the prices of securities. The actual market price of the New Common Equity is likely to be volatile. Many factors, including factors unrelated to Reorganized Hexion’s actual operating performance and other factors not possible to predict, could cause the market price of the New Common Equity to rise and fall. Accordingly, the implied value, stated herein and in the Plan, of the securities to be issued does not necessarily reflect, and should not be construed as reflecting, values that will be attained for the New Common Equity in the public or private markets.

11. Dividends

Reorganized Hexion may not pay any dividends on the New Common Equity. In such circumstances, the success of an investment in the New Common Equity will depend entirely upon any future appreciation in the value of the New Common Equity. There is, however, no guarantee that the New Common Equity will appreciate in value or even maintain its initial value.

12. Restrictions on Ability to Resell New Common Equity

The 4(a)(2) Securities (as defined below), if any, are being issued and sold pursuant to an exemption from registration under the applicable securities laws. Accordingly, the 4(a)(2) Securities will be subject to resale restrictions and may be resold, exchanged, assigned or otherwise transferred only pursuant to registration, or an applicable exemption from registration, under the Securities Act and other applicable law. In addition, Holders of securities issued pursuant to the exemption from registration under section


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1145 of the Bankruptcy Code who are deemed to be “underwriters” under section 1145(b) of the Bankruptcy Code (“Section 1145 Underwriters”) will also be subject to resale restrictions. The Holders of 4(a)(2) Securities, and Section 1145 Underwriters, should be aware that they may be required to bear the financial risk of an investment in the affected New Common Equity for an indefinite period of time.

C. Risks Relating to the Debtors’ Business Operations and Financial Conditions

THE FOLLOWING PROVIDES A SUMMARY OF CERTAIN OF THE RISKS ASSOCIATED WITH THE DEBTORS’ BUSINESSES. HOWEVER, THIS SECTION IS NOT INTENDED TO BE EXHAUSTIVE. ADDITIONAL RISK FACTORS CONCERNING THE DEBTORS’ BUSINESSES ARE CONTAINED IN THE DEBTORS’ PREVIOUSLY-FILED ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018.

1. The Debtors’ Chapter 11 Cases May Negatively Impact Future Operations

While the Debtors believe that they will be able to emerge from chapter 11 relatively expeditiously, there can be no assurance as to timing for approval of the Plan or the Debtors’ emergence from chapter 11. Additionally, notwithstanding the support of the Consenting Parties, the Chapter 11 Cases may adversely affect the Debtors’ ability to maintain relationships with existing customers and suppliers and attract new customers.

2. Financial Conditions of the Market Could Affect Supply and Demand

The Debtors’ business operations have historically been, and the Reorganized Debtors’ business operations may in the future be, materially affected by adverse conditions in the financial markets and depressed economic conditions generally, both in the United States and elsewhere around the world.

Moreover, the Debtors’ customers and suppliers rely on access to credit to adequately fund their own operations. Disruptions in financial markets and economic slowdown may adversely impact the ability of the Reorganized Debtors’ customers to finance the purchase of their products as well as the creditworthiness of those customers. These same factors may also impact the ability and willingness of suppliers to provide the Reorganized Debtors with raw materials for their businesses.

3. Fluctuations in Raw Material Costs Could Have an Adverse Impact on the Debtors’ Business

The prices of the Debtors’ direct and indirect raw materials have been, and the Debtors’ expect they will continue to be, volatile. If the cost of direct or indirect raw materials increases significantly, the Reorganized Debtors may be unable to fully offset the increased costs with higher selling prices and profitability will decline. Increases in prices for the Reorganized Debtors’ products could also hurt the Reorganized Debtors’ ability to remain competitive and profitable in the markets in which the Debtors compete. Although some of the Debtors’ materials contracts include competitive price clauses that allow the Debtors to buy outside the contract if market pricing falls below contract pricing, and certain contracts have minimum-maximum monthly volume commitments that allow the Debtors to take advantage of spot pricing, the Reorganized Debtors may be unable to purchase raw materials at market prices. In addition, some of the Debtors’ customer contracts have fixed prices for a certain term, and as a result, the Reorganized Debtors may not be able to pass on raw material price increases to customers immediately, if at all.


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Future raw material prices may be impacted by new laws or regulations, suppliers’ allocations to other purchasers, changes in the Debtors’ supplier manufacturing processes as some of the Debtors’ products are byproducts of these processes, interruptions in production by suppliers, natural disasters, volatility in the price of crude oil and related petrochemical products and changes in exchange rates.

4. An inadequate supply of direct or indirect raw materials and intermediates products could have a material adverse effect on our business

The Debtors’ manufacturing operations require adequate supplies of raw materials and intermediate products on a timely basis. The loss of a key source or a delay in shipments could have a material adverse effect on the Reorganized Debtors’ business. Raw material availability may be subject to curtailment or change due to, among other things: new or existing laws or regulations; suppliers’ allocations to other purchasers; interruptions in production by suppliers; and natural disasters.

5. Environmental Obligations and Liabilities Could Have a Substantial Negative Impact on the Debtors’ Financial Condition

The Debtors’ operations involve the use, handling, processing, storage, transportation and disposal of hazardous materials and are subject to extensive and complex U.S. federal, state, local and non-U.S. national, provincial, and local environmental, health and safety laws and regulations. The Debtors’ products are also subject to a variety of international, national, regional, state, and provincial requirements and restrictions applicable to the manufacture, import, export or subsequent use of such products. In addition, the Debtors are required to maintain, and may be required to obtain in the future, environmental, health and safety permits, licenses, or government approvals to continue current operations at most of the Debtors’ manufacturing and research facilities throughout the world. While the Reorganized Debtors fully intend to be in compliance with all environmental obligations, compliance with environmental, health and safety laws and regulations, and maintenance of permits, can be costly and complex. If the Reorganized Debtors are unable to comply with environmental, health and safety laws and regulations, or maintain the Reorganized Debtors’ permits, the Reorganized Debtors could incur substantial costs, including fines and civil or criminal sanctions, third party property damage or personal injury claims or costs associated with upgrades to the Reorganized Debtors’ facilities or changes in the Reorganized Debtors’ manufacturing processes in order to achieve and maintain compliance, and may also be required to halt permitted activities or operations until any necessary permits can be obtained or complied with.

6. Future Chemical Regulatory Actions May Decrease Profitability

Several governmental entities have enacted, are considering or may consider in the future, regulations that may impact the Debtors’ ability to sell certain chemical products in certain geographic areas. To conduct their operations in compliance with these laws and regulations, the Reorganized Debtors must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities. The Debtors participate with other companies in trade associations and regularly contribute to the research and study of the safety and environmental impact of the Debtors’ products and raw materials. In addition, government and academic institutions periodically conduct research on potential environmental and health concerns posed by various chemical substances, including substances the Debtors manufacture


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and sell. Such research could result in future regulations restricting the manufacture or use of the Reorganized Debtors’ products, liability for adverse environmental or health effects linked to the Reorganized Debtors’ products, and/or deselection of the Reorganized Debtors’ products for specific applications. The Reorganized Debtors may incur substantial costs to maintain compliance with these existing laws and regulations. In addition, the Reorganized Debtors’ costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to their operations.

7. Manufacturing and Use of Hazardous Materials

The Debtors produce hazardous chemicals that require care in handling and use that are subject to regulation by many U.S. and non-U.S. national, state and local governmental authorities. In some circumstances, these authorities must review and, in some cases approve, the Debtors’ products and/or manufacturing processes and facilities before the Debtors may manufacture and sell some of these chemicals. To be able to manufacture and sell certain new chemical products, the Reorganized Debtors may be required, among other things, to demonstrate to the relevant authority that the product does not pose an unreasonable risk during its intended uses and/or that we are capable of manufacturing the product in compliance with current regulations. The process of seeking any necessary approvals can be costly, time consuming and subject to unanticipated and significant delays. Approvals may not be granted to the Reorganized Debtors on a timely basis, or at all. Any delay in obtaining, or any failure to obtain or maintain, these approvals would adversely affect the Reorganized Debtors’ ability to introduce new products and to generate revenue from those products.

8. Claims from Customers and Employees, Environmental Action Groups and Neighbors Living Near Production Facilities

The Debtors produce and use, and the Reorganized Debtors will continue to produce and use, hazardous chemicals that require appropriate procedures and care to be used in handling them or in using them to manufacture other products. As a result of the hazardous nature of some of the products, the Reorganized Debtors may face claims relating to incidents that involve customers’ improper handling, storage and use of the Reorganized Debtors’ products. The Debtors have historically faced lawsuits, including class action lawsuits that claim liability for death, injury or property damage caused by products that the Debtors manufactured or that contained components produced by the Debtors. Additionally, the Reorganized Debtors may face lawsuits alleging personal injury or property damage by neighbors living near production facilities. These lawsuits, and any future lawsuits, could result in substantial damage awards against the Reorganized Debtors, which in turn could encourage additional lawsuits and could cause the Reorganized Debtors to incur significant legal fees to defend such lawsuits, either of which could have a material adverse effect on the Reorganized Debtors’ business, financial condition and/or profitability. In addition, the activities of environmental action groups could result in litigation or damage to the Reorganized Debtors’ reputation.

9. Manufacturing Facilities are Subject to Disruption Due to Operating Hazards.

The storage, handling, manufacturing and transportation of chemicals at the Reorganized Debtors’ facilities and adjacent facilities could result in leaks, spills, fires or explosions, which could result in production downtime, production delays, raw material supply delays, interruptions and environmental hazards. Production interruption may also result from severe weather, particularly with respect southern U.S. operations near the Gulf Coast. Production lapses caused by any such delays can often be absorbed


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by our other manufacturing facilities, and the Reorganized Debtors will maintain insurance to cover such potential events. However, such events could negatively affect our operations.

10. Risks Associated with International Operations

The Debtors have, and the Reorganized Debtors will continue to have, significant manufacturing and other operations outside the United States. Some of these operations are in jurisdictions with unstable political or economic conditions. There are numerous inherent risks in international operations. The Reorganized Debtors’ overall success as a global business depends, in part, upon an ability to succeed under different economic, social and political conditions. The Reorganized Debtors may fail to develop and implement policies and strategies that are effective in each location where the Reorganized Debtors do business, and failure to do so could have a material adverse effect on the Reorganized Debtors’ business, financial condition and results of operations.

11. Foreign Currency Risk

In 2018, a majority of the Debtors’ net sales originated outside the United States, and the Reorganized Debtors will continue to derive substantial net sales from outside the United States. In keeping with historical practice, the Reorganized Debtors’ consolidated financial statements will translate local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period or the exchange rate at the end of that period. During times of a strengthening U.S. dollar, at a constant level of business, reported international revenues and earnings would be reduced because the local currency would translate into fewer U.S. dollars. In addition to currency translation risks, the Reorganized Debtors will incur a currency transaction risk whenever the Reorganized Debtors enter into a purchase or a sales transaction or indebtedness transaction using a different currency from the currency in which we record revenues. The Reorganized Debtors may not manage currency transaction and/or translation risks effectively, and volatility in currency exchange rates may materially adversely affect the Reorganized Debtors financial condition or results of operations.

In keeping with historical practice, the Reorganized Debtors expect to continue to enter into various hedging and other programs in an effort to protect against adverse changes in the non-U.S. exchange markets and attempt to minimize potential material adverse effects. These hedging and other programs may be unsuccessful in protecting against these risks. The Reorganized Debtors’ results of operations could be materially adversely affected if the U.S. dollar strengthens against non-U.S. currencies and the Reorganized Debtors’ protective strategies are not successful. Likewise, a strengthening U.S. dollar provides opportunities to source raw materials more cheaply from foreign countries.

12. Volatile Oil and Natural Gas Prices May Impact Profitability

Revenues and profitability of the Debtors depend in some part on oil and natural gas prices. Oil and natural gas are commodities subject to significant fluctuations in response to changes in supply and demand. Oil and natural gas prices have historically been volatile and are likely to continue to be volatile in the future. The Reorganized Debtors’ operating expenses will increase if its energy prices increase. Increased energy prices may also result in greater raw materials costs. If the Reorganized Debtors cannot pass these costs through to its customers, the Reorganized Debtors’ profitability may decline. In addition, increased energy costs may also negatively affect the Reorganized Debtors’ customers and the demand for products.


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13. Increased Competition

The markets that the Debtors operate in are intensively competitive, and this competition could harm future results of operations, Cash flows and financial condition. The Reorganized Debtors will compete with other companies that have substantial financial, technical, and personnel resources. The Reorganized Debtors may be forced to lower their selling prices based on their competitors’ pricing decisions, which would reduce profitability. In addition, the Debtors face competition from a number of products that are potential substitutes for the Debtors’ products. Growth in substitute products could adversely affect the Reorganized Debtors’ market share, net sales and profit margins. Some of the Debtor’s competitors are larger, have greater financial resources, have a lower cost structure, and/or have less debt than the Debtors do. As a result, those competitors may be better able to withstand a change in conditions within the Debtors’ industry and in the economy as a whole. The Reorganized Debtors’ inability to compete effectively with other companies could have a material adverse effect on their business activities, financial condition, and results of operations.

14. Risks Related to Intellectual Property Rights and Enforcement

The Debtors rely, and the Reorganized Debtors will continue to rely, on the patent, trademark, copyright and trade-secret laws of the United States and the countries where we do business to protect our intellectual property rights. The Reorganized Debtors may be unable to prevent third parties from using our intellectual property without our authorization. The unauthorized use of intellectual property could reduce any competitive advantage the Debtors have developed, reduce the Reorganize Debtors’ market share or otherwise harm the Reorganized Debtors business. In the event of unauthorized use of intellectual property, litigation to protect or enforce the Reorganized Debtors’ rights could be costly, and the Reorganized Debtors may not prevail.

Many of Debtors’ technologies are not covered by any patent or patent application, and the Debtors’ issued and pending U.S. and non-U.S. patents may not provide the Reorganized Debtors with any competitive advantage and could be challenged by third parties. The Reorganized Debtors’ inability to secure issuance of pending patent applications may limit the ability to protect the intellectual property rights these pending patent applications were intended to cover. The Reorganized Debtors’ competitors may attempt to design around the Reorganized Debtors’ patents to avoid liability for infringement and, if successful, such competitors could adversely affect the Reorganized Debtors’ market share. Furthermore, the expiration of patents may lead to increased competition.

The Debtors’ pending trademark applications may not be approved by the responsible governmental authorities and, even if these trademark applications are granted, third parties may seek to oppose or otherwise challenge these trademark applications. A failure to obtain trademark registrations in the United States and in other countries could limit the Reorganized Debtors’ ability to protect products and their associated trademarks and impede marketing efforts in those jurisdictions.

In addition, effective patent, trademark, copyright and trade secret protection may be unavailable or limited in some foreign countries. In some countries, the Debtors have not, and the Reorganized Debtors will not, not apply for patent, trademark or copyright protection. The Reorganized Debtors will also rely on unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets to develop and maintain their competitive position. While the Reorganized Debtors will generally enter into confidentiality agreements with employees and third parties to protect intellectual property, these confidentiality agreements are limited in duration and could be breached, and may not provide meaningful protection of trade secrets or proprietary manufacturing expertise. Adequate remedies may not be available if there is an unauthorized use or disclosure of trade secrets and manufacturing expertise.


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In addition, others may obtain knowledge about the Reorganized Debtors’ trade secrets through independent development or by legal means. The failure to protect the Reorganized Debtors’ processes, apparatuses, technology, trade secrets and proprietary manufacturing expertise, methods and compounds could have a material adverse effect on the Reorganized Debtors’ business by jeopardizing critical intellectual property.

15. Risk Related to Collective Bargaining Agreements, Works Councils, and Labor Unions

As of December 31, 2018, approximately 40% of the Debtors’ employees were unionized or represented by works councils that were covered by collective bargaining agreements. In addition, some employees reside in countries in which employment laws provide greater bargaining or other employee rights than the laws of the United States. These rights may require the Reorganized Debtors to expend more time and money altering or amending employees’ terms of employment or making staff reductions. A significant dispute could divert management’s attention and otherwise hinder the Reorganized Debtors’ ability to conduct their business or to achieve planned cost savings.

The Reorganized Debtors may be unable to timely extend or renegotiate our collective bargaining agreements as they expire. The Reorganized Debtors also may be subject to strikes or work stoppages by, or disputes with, labor unions. If the Reorganized Debtors fail to extend or renegotiate collective bargaining agreements, if disputes with works councils or unions arise, or if unionized or represented workers engage in a strike or other work stoppage, the Reorganized Debtors could incur higher labor costs or experience a significant disruption of operations, which could have a material adverse effect on their business, financial position and results of operations.

16. Risks Related to Pension Plans

The Debtors sponsor various pension and similar benefit plans worldwide. The Debtors’ U.S. and non-U.S. defined benefit pension plans were under-funded in the aggregate by $31 million and $179 million, respectively, as of December 31, 2018. The Reorganized Debtors will be legally required to make contributions to these pension plans in the future, and those contributions could be material.

17. Cyber security attacks and disruptions to information systems

In the ordinary course of business, the Debtors have relied, and the Reorganized Debtors will continue to rely, upon information systems, some of which are managed by third parties, to process, transmit and store digital information, and to manage or support a variety of business processes and activities, including supply chain, manufacturing, distribution, invoicing, and collection of payments from customers. The secure operation of such systems, and the processing and maintenance of this information is critical to business operations and strategy. Despite actions to mitigate or eliminate risk, the Reorganized Debtors’ information systems may be vulnerable to damage, disruptions or shutdowns due to the activity of hackers, employee error or malfeasance, or other disruptions including, power outages, telecommunication or utility failures, natural disasters or other catastrophic events. The occurrence of any of these events could compromise the information systems, and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, and damage the Reorganized Debtors’ reputation which could adversely affect their business, financial condition and results of operations.

In March 2019, the Debtors experienced a network security incident that prevented access to certain information technology systems and data within the Debtors’ network. The Debtors took


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immediate steps to isolate the issue and have implemented our technical recovery plan. Since the time of the incident, the Debtors’ manufacturing sites, which rely on different networks, have continued to operate safely and with limited interruption. The network security incident primarily impacted the Debtors’ corporate functions. The Debtors continue to evaluate the impact of this incident, including assessing any available insurance coverage. The Debtors are not yet able to determine the financial impact of this incident, which may be material. Any impacts from this incident may result in an adverse effect on the Reorganized Debtors’ business, financial condition and results of operations.

18. The Loss of One or More of Reorganized Hexion’s Key Personnel Could Disrupt Operations and Adversely Affect Financial Results

The Debtors are, and the Reorganized Debtors will be, highly dependent upon the availability and performance of their executive officers. Accordingly, the loss of services of any of the Debtors’ executive officers could materially adversely affect the Reorganized Debtors’ business, financial condition and operating results.

D. Additional Factors

1. Debtors Could Withdraw Plan

Subject to, and without prejudice to, the rights of any party in interest, the Plan may be revoked or withdrawn before the Confirmation Date by the Debtors.

2. Debtors Have No Duty to Update

The statements contained in this Disclosure Statement are made by the Debtors as of the date hereof, unless otherwise specified herein, and the delivery of this Disclosure Statement after that date does not imply that there has been no change in the information set forth herein since that date. Additionally, the Debtors have no duty to update this Disclosure Statement unless otherwise ordered to do so by the Bankruptcy Court.

3. No Representations Outside this Disclosure Statement Are Authorized

No representations concerning or related to the Debtors, the Chapter 11 Cases, or the Plan are authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this Disclosure Statement. Any representations or inducements made to secure your acceptance or rejection of the Plan that are other than those contained in, or included with, this Disclosure Statement should not be relied upon in making the decision to accept or reject the Plan.

4. No Legal or Tax Advice Is Provided by this Disclosure Statement

The contents of this Disclosure Statement should not be construed as legal, business, or tax advice. Each holder of a Claim or Interest should consult its own legal counsel and accountant as to legal, tax, and other matters concerning their Claim or Interest. This Disclosure Statement is not legal advice to you. This Disclosure Statement may not be relied upon for any purpose other than to determine how to vote on the Plan or object to confirmation of the Plan.


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5. Tax Consequences of Alternative Structure

As discussed in “Certain Federal Income Taxes of the Plan – Federal Income Taxes Consequences to Hexion LLC and its U.S. Subsidiaries – Alternative Structure,” if the Alternative Structure is implemented and certain elections are made, the Plan could trigger a material amount of taxable income recognition in connection with the consummation of the Plan transactions on the Effective Date, resulting in a material amount of federal, state and local income tax liabilities that will have to be satisfied by Reorganized Hexion and its Subsidiaries after the Effective Date. Although Reorganized Hexion will only elect to utilize the Alternative Structure if it expects that, among other things, the amount of such tax liabilities will not materially impact its financial condition and business operations and the benefits associated with such structure exceed any such cost, it is possible that such determination could prove to be incorrect.

6. No Admission Made

Nothing contained herein or in the Plan shall constitute an admission of, or shall be deemed evidence of, the tax or other legal effects of the Plan on the Debtors or holders of Claims or Interests.

X. RIGHTS OFFERING

A. Overview of Rights Offering20

In connection with the transactions contemplated by the Plan, Holders of Notes Claims will have the opportunity to participate in the Rights Offering, on the terms and subject to the conditions set forth in the Rights Offering Procedures, whereby Holders of First Lien Notes Claims will have the right to purchase 72.5% and Holders of Junior Notes Claims will have the right to purchase 27.5% of the New Common Equity issued by Reorganized Hexion in the Rights Offering in an aggregate amount of $300 million at a price per share of $13.00, which represents a 35% discount of the implied value of each share of $20.00. Proceeds of the Rights Offerings will be used to fund payments required under the Plan and for ordinary course operations and general corporate purposes of the Reorganized Debtors. If any shares of Rights Offering Equity remain available for subscription after giving effect to the aggregate number of shares of Rights Offering Equity duly subscribed for and purchased by the Noteholders (such number of remaining shares, the “Oversubscription Shares”), each Noteholder that has duly subscribed for and purchased one hundred percent (100%) of its Pro Rata Share of Rights Offering Equity also will be permitted to elect to subscribe for and purchase that number of Oversubscription Shares up to one hundred percent (100%) of its Pro Rata Share of Rights Offering Equity, subject to the conditions and limitations set forth in the Rights Offering Procedures.

Although the Debtors will offer all Holders of Notes Claims the opportunity to participate in the Rights Offering (in the percentages set forth above), the Debtors may be unable to obtain sufficient commitments from such Holders to purchase the full amount of the Rights Offering Equity. To guard against this possibility, the Equity Backstop Parties have agreed, pursuant to the Equity Backstop Agreement, to backstop, on a several, and not joint and several, basis, the Rights Offering and to purchase any of the Rights Offering Equity that is not subscribed for by the Holders of Notes Claims.

20 To the extent of any inconsistency between this summary and the Rights Offering Procedures or the Equity Backstop Agreement, the Rights Offering Procedures or the Equity Backstop Agreement, as applicable, shall govern. A copy of the Rights Offering Procedures is annexed hereto as Exhibit C.


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The offer and issuance of the Rights Offering Equity (other than Unsubscribed Shares) will be exempt from registration under section 5 of the Securities Act and under any State or local law requiring registration for offer or sale of a security pursuant to section 1145 of the Bankruptcy Code and, except with respect to any person that is an “underwriter” as defined in section 1145(b) of the Bankruptcy Code, the resale of the Rights Offering Equity will be exempt from registration under section 5 of the Securities Act and under any State or local law requiring registration for offer or sale of a security pursuant to section 1145 of the Bankruptcy Code.

The Debtors have designated Prime Clerk LLC as the “Subscription Agent” for the Rights Offerings.

The Rights Offering will expire on June 14, 2019 at 5:00 p.m. (Eastern time) (the “Subscription Expiration Deadline”).

B. Rights Offering Procedures

The Rights Offering Procedures and corresponding subscription agreement and subscription forms set for the specific requirements and procedures pursuant to which the Rights Offerings will be conducted.

Generally, the Rights Offering Procedures provide, among other things, that:

1. In order to facilitate the exercise of the Rights, beginning on May 22, 2019, (the “Subscription Commencement Date”), the Subscription Agent will send a subscription form (the “Beneficial Holder Subscription Form”) to each Holder of an Allowed Notes Claim as of the Record Date (each a “Noteholder”), or its nominee, as applicable, together with appropriate instructions for the proper completion, due execution and timely delivery of the Beneficial Holder Subscription Form and the payment of the applicable purchase price per share (the “Purchase Price”) multiplied by the number of shares subscribed (the “Total Purchase Price”).

2. In order to validly exercise its Rights, an eligible Holder of an Allowed Notes Claim must:

a. instruct its nominee to electronically deliver the Notes underlying the Rights that are being exercised through the DTC’s Automated Tender Offer Program (“ATOP”), such that they are received by the Subscription Expiration Deadline;

b. return a duly completed and executed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) to the Subscription Agent or such Noteholders’ nominee (as directed by its nominee) so that such documents are actually received by the Subscription Agent on or before the Subscription Expiration Deadline; and

c. (i) in the case of a Noteholder that is not an Equity Backstop Party, no later than the Subscription Expiration Deadline, pay the Total Purchase Price for all subscribed shares to the Subscription Agent by wire transfer of immediately available funds in accordance with the instructions included in the Beneficial Holder Subscription Form; and (ii) in the case of a Noteholder that is an Equity Backstop Party, no later than the deadline specified in the Funding Notice (as defined in the Equity Backstop Agreement) pay the Total Purchase Price for all subscribed shares to the Subscription Agent or to the escrow account established and maintained by a third party satisfactory to the Equity Backstop Parties and the Company by wire transfer of immediately available funds in accordance with the instructions included in the Funding Notice.


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3. In the event that funds received by the Subscription Agent in payment for a Noteholder’s Subscribed Shares are less than the Total Purchase Price for the subscribed shares of such Noteholder, the number of subscribed shares deemed to be purchased by the Noteholder will be the lesser of (i) the number of subscribed shares elected to be purchased by such Noteholder as evidenced by the relevant ATOP submission(s) and (ii) a number determined by dividing the amount of such funds received by the Purchase Price, in each case up to such Noteholder’s Pro Rata Share of Rights Offering Equity. For the avoidance of doubt, the principal amount(s) of underlying Notes held by a Noteholder that is electronically delivered through ATOP will control, regardless of the principal amount(s) reflected on the Beneficial Holder Subscription Form, for purposes of making any Rights calculations or otherwise.

4. Unless the Effective Date has occurred, the Rights Offering will be deemed automatically terminated without any action of any party upon the earliest of (i) revocation of the Plan or rejection of the Plan by all classes entitled to vote, (ii) termination of the Restructuring Support Agreement in accordance with its terms, (iii) termination of the Equity Backstop Agreement in accordance with its terms, and (iv) September 5, 2019, if the closing of the Rights Offering has not occurred on or prior to that date, which date may be extended by the Debtors with the consent of the Required Consenting Noteholders. If the Rights Offering is terminated, any cash paid will be returned, without interest, and all deposited Notes shall be released by the Subscription Agent, to the applicable Noteholder as soon as reasonably practicable thereafter, but in any event within six (6) Business Days after the date on which the Rights Offering is terminated. If the number of Oversubscription Shares issuable to the Oversubscription Participants is less than the aggregate number of Offered Shares for which Oversubscription Participants have duly subscribed, then the Purchase Price paid for Oversubscription Shares that are subscribed for but not issued will be returned, without interest, to the Oversubscription Participants as soon as reasonably practicable thereafter, but in any event within six (6) Business Days after the Effective Date.

5. The Rights will not be detachable or otherwise transferable separately from the Notes. If any Rights are transferred by a Noteholder in contravention of the foregoing, the applicable Rights will be cancelled, and neither such Noteholder nor the purported transferee will receive any Offered Shares otherwise purchasable on account of such transferred Rights. The Rights together with the underlying Notes with respect to which such Rights were allocated, will trade together as a unit, subject to such limitations, if any, that would be applicable to the transferability of the underlying Notes. Once a Noteholder has properly exercised its Rights, subject to the terms and conditions contained in the Rights Offering Procedures and the Equity Backstop Agreement in the case of any Equity Backstop Party, such exercise will be irrevocable. Moreover, following the exercise of any Rights, the Holder thereof shall be prohibited from transferring or assigning the Notes, as applicable, corresponding to such Rights until the termination of the Rights Offering.

The Debtors reserve the right to modify or adopt additional procedures consistent with the provisions of these Rights Offering Procedures to effectuate the Rights Offering and to issue the Rights Offering Equity, provided, however, that the Debtors shall provide prompt written notice to each Noteholder of any material modification to these Rights Offering Procedures made after the commencement of the Rights Offering. In so doing, the Debtors may execute and enter into agreements and take further action that the Debtors determine in good faith are necessary and appropriate to effect and implement the Rights Offering and the issuance of the Rights Offering Equity. Nothing in this paragraph shall be construed so as to permit the Debtors to modify the terms of the Subscription Agreement without the consent of the subscriber party thereto.


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C. Calculation of Total Outstanding Shares

While the total number of shares issued in connection with the Rights Offering and as distributions to Holders of First Lien Notes Claims and Junior Notes Claims has been fixed by the Debtors, the total number of shares of New Common Equity that will be issued and outstanding on the Effective Date has not yet been fixed. Such amount of total shares will be calculated shortly prior to the Effective Date and will depend on the extent, if any, to which Equity Backstop Parties and/or Debt Backstop Parties elect to receive payment of the Equity Backstop Premium or Debt Backstop Premium, as applicable, in shares of New Common Equity. Such election will not affect the value per share of New Common Equity under the Plan: Each dollar of Backstop Premium paid in New Common Equity will result in an additional dollar of cash on the balance sheet, and a corresponding additional dollar of New Common Equity value, of the Reorganized Debtors at the Effective Date.

On the Effective Date, the Reorganized Debtors will issue not less than 68,700,066 shares of new Common Equity (if all Backstop Premiums are elected to be paid in Cash) and not more than 72,669,251 shares of New Common Equity (if all Backstop Premiums are elected to be paid in New Common Equity), assuming in each case no New Warrants are issued in lieu of any such New Common Equity. In the former case, the value of the New Common Equity at the Effective Date will be the Plan Equity Value of $1.374 billion. In the latter case, the value of the New Common Equity at the Effective Date will be $1.453 billion.

XI. SECURITIES LAW MATTERS

A. Issuance & Transfer of 1145 Securities

1. Issuance

The Plan provides for the offer, issuance, sale or distribution of shares of New Common Equity and New Warrants (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) pursuant to, among other things, the First Lien Claims and Junior Notes Claims distributions, the Rights Offering, and, at the election of the recipients thereof, the Equity Backstop Premium and the Debt Backstop Premium (the “Backstop Premiums”). The Debtors believe that the offer, issuance, sale or distribution by Reorganized Hexion of the New Common Equity and New Warrants (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) as distributions on Notes Claims, as Backstop Premiums and pursuant to the Rights Offering (excluding any Unsubscribed Shares) (the “1145 Securities”) will be exempt from registration under section 5 of the Securities Act and under any state or local laws requiring registration for offer or sale of a security pursuant to section 1145(a) of the Bankruptcy Code, except with respect to an entity that is an underwriter as defined in section 1145(b) of the Bankruptcy Code (see below).

Section 1145(a)(1) of the Bankruptcy Code exempts the offer and sale of securities under a plan of reorganization from registration under section 5 of the Securities Act and state or local securities laws if three principal requirements are satisfied: (i) the securities must be offered and sold under a plan of reorganization and must be securities issued by the debtor, an affiliate participating in a joint plan with the debtor, or a successor to the debtor under the plan; (ii) the securities must be in exchange for a claim against, an interest in, or a claim for an administrative expense in the case concerning, the debtor or such affiliate; and (iii) the securities must be issued entirely in exchange for such a claim or interest , or “principally” in exchange for such claim or interest and “partly” for cash or property.


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The issuance of the New Common Equity and New Warrants (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) on account of Notes Claims and as Backstop Premiums satisfies the requirements of section 1145(a)(1) of the Bankruptcy Code. The Debtors believe that the issuance of New Common Equity upon exercise of the Rights, including the Oversubscription Shares (but not including any Unsubscribed Shares), also satisfies the requirements of section 1145(a)(1) of the Bankruptcy Code. The Debtors believe that the value of the Note Claims is substantially greater than the consideration payable upon exercise of the Rights, such that New Common Equity issuable on account of the Rights (other than Unsubscribed Shares) will be issued principally in exchange for such claims and partly for cash.

The exemptions of section 1145(a)(1) do not apply to an entity that is deemed an “underwriter” as such term is defined in section 1145(b) of the Bankruptcy Code.

Section 1145(b)(1) of the Bankruptcy Code defines four types of “underwriters”: (A) a Person who purchases a claim against, an interest in, or a claim for an administrative expense against the debtor with a view to distributing any security received in exchange for such claim or interest (“accumulators”); (B) a Person who offers to sell securities offered or sold under a plan for the holders of such securities (“distributors”); (C) a Person who offers to buy securities offered or sold under a plan from the holders of such securities, if the offer to buy is: (i) with a view to distributing such securities; and (ii) under an agreement made in connection with the plan, the consummation of the plan, or with the offer or sale of securities under the plan; and (D) a Person who is an “issuer” (as defined in section 2(a)(11) of the Securities Act) with respect to the securities.

The definition of an “issuer” for purposes of whether a person is an underwriter under section 1145(b)(1)(D) of the Bankruptcy Code, includes Persons directly or indirectly controlling, controlled by or under common control with the issuer. “Control,” as defined in Rule 405 of the Securities Act, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise. Such Persons are referred to as “affiliates” of the issuer.

Accordingly, an officer or director of a reorganized debtor or its successor under a plan of reorganization may be deemed to be an issuer for these purposes and therefore an underwriter. In addition, the legislative history of section 1145 of the Bankruptcy Code suggests that a creditor who receives ten percent or more of a class of securities of a reorganized debtor may be presumed to be in a relationship of “control” with the reorganized debtor and, therefore, an underwriter, although the staff of the Securities and Exchange Commission (the “SEC”) has not endorsed this view.

2. Subsequent Transfers

Section 1145(c) of the Bankruptcy Code provides that securities issued pursuant to section 1145(a) are deemed to have been issued in a public offering. In general, therefore, resales of and subsequent transactions in the 1145 Securities will be exempt from registration under the Securities Act pursuant to section 4(a)(1) of the Securities Act, unless the holder thereof is deemed to be an “issuer,” an “underwriter” or a “dealer” with respect to such securities. A “dealer,” as defined in section 2(a)(12) of the Securities Act, is any person who engages either for all or part of his or her time, directly or indirectly, as agent, broker or principal, in the business of offering, buying, selling or otherwise dealing or trading in securities issued by another person.

Notwithstanding the provisions of section 1145(b) regarding accumulators and distributors referred to above, the staff of the SEC has taken the position that resales of securities distributed under a plan of


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reorganization by accumulators and distributors of securities who are not affiliates of the issuer of such securities are exempt from registration under the Securities Act if effected in “ordinary trading transactions.” The staff of the SEC has indicated in this context that a transaction by such non-affiliates may be considered an “ordinary trading transaction” if it is made on a national securities exchange or in the over-the-counter market and does not involve any of the following factors:

(a) (i) concerted action by the recipients of securities issued under a plan in connection with the sale of such securities or (ii) concerted action by distributors on behalf of one or more such recipients in connection with such sales;

(b) the use of informational documents concerning the offering of the securities prepared or used to assist in the resale of such securities, other than a Bankruptcy Court-approved disclosure statement and supplements thereto, and documents filed with the SEC pursuant to the Exchange Act; or

(c) the payment of special compensation to brokers and dealers in connection with the sale of such securities designed as a special incentive to the resale of such securities (other than the compensation that would be paid pursuant to arm’s-length negotiations between a seller and a broker or dealer, each acting unilaterally, not greater than the compensation that would be paid for a routine similar-sized sale of similar securities of a similar issuer).

The staff of the SEC has not provided any guidance for privately arranged trades. The views of the staff of the SEC on these matters have not been sought by the Debtors and, therefore, no assurance can be given regarding the proper application of the “ordinary trading transaction” exemption described above. Any persons intending to rely on such exemption is urged to consult their counsel as to the applicability thereof to their circumstances.

To the extent that Persons who receive 1145 Securities pursuant to the Plan are deemed to be underwriters (and who do not qualify for the treatment of “ordinary trading transactions” described above), resales by such Persons of 1145 Securities would not be exempted from registration under the Securities Act or other applicable laws by reason of section 1145 of the Bankruptcy Code and section 4(a)(1) of the Securities Act. However, Persons deemed to be underwriters may be permitted to resell such 1145 Securities without registration pursuant to the limited safe harbor resale provisions of Rule 144 promulgated under the Securities Act or another available exemption under the Securities Act. Generally Rule 144 of the Securities Act permits the public sale of securities if certain conditions are met, including a required holding period, certain current public information regarding the issuer being available and compliance with the volume, manner of sale and notice requirements. If the issuer is not subject to the reporting requirements of section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), adequate current public information as specified under Rule 144 is available if certain company information is made publicly available, as specified in section (c)(2) of Rule 144. Reorganized Hexion will not be subject to the reporting requirements of section 13 or 15(d) of the Exchange Act. However, the Debtors currently expect that Reorganized Hexion will continue to be a voluntary filer and that current public information will be available to allow resales in accordance with Rule 144. The staff of the SEC has taken the position that Persons who are deemed to be underwriters solely because they are affiliates of a reorganized debtor are not subject to the holding period requirements of Rule 144. Accordingly, affiliates of Reorganized Hexion that receive 1145 Securities under the Plan may resell those securities following the Effective Date in reliance on Rule 144, subject to applicable volume, manner of sale and notice requirements.


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Whether or not any particular Person would be deemed to be an “underwriter” with respect to the 1145 Securities or any other security to be issued pursuant to the Plan depends upon various facts and circumstances applicable to that Person. Accordingly, the Debtors express no view as to whether any particular Person receiving 1145 Securities or any other securities under the Plan would be considered an “underwriter” under section 1145(b) of the Bankruptcy Code with respect to such securities, or whether such Person may freely resell such securities or the circumstances under which they may resell such securities. Should the Reorganized Debtors elect on or after the Effective Date to cause the New Common Equity to be eligible for book-entry treatment under the facilities of the Depository Trust Company (“DTC”), the Reorganized Debtors need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the New Common Equity under applicable securities laws. Notwithstanding anything to the contrary in the Plan, no Entity (including, for the avoidance of doubt, DTC) shall be entitled to require a legal opinion regarding the validity of any transaction contemplated by the Plan under applicable securities laws, including, for the avoidance of doubt, whether the New Common Equity is exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. DTC shall be required to accept and conclusively rely upon the Plan or Confirmation Order in lieu of a legal opinion regarding whether the New Common Equity is exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services.

B. Issuance & Transfer of New Common Equity Issued as Unsubscribed Shares

1. Issuance

Section 4(a)(2) of the Securities Act provides that certain issuance of securities by an issuer in transactions not involving a public offering are exempt from registration under the Securities Act. Regulation D is a non-exclusive safe harbor from registration promulgated by the SEC under section 4(a)(2) of the Securities Act. The Debtors believe that any New Common Equity issued as Unsubscribed Shares in the Rights Offering (the “4(a)(2) Securities”) will be exempt from registration under the Securities Act in reliance upon the exemption from registration provided under section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The 4(a)(2) Securities will be subject to resale restrictions and may be resold, exchanged, assigned or otherwise transferred only pursuant to registration, or an applicable exemption from registration, under the Securities Act and other applicable law, as described below.

2. Subsequent Transfers

The 4(a)(2) Securities will be deemed “restricted securities” (as defined by Rule 144 of the Securities Act) that may not be offered, sold, exchanged, assigned or otherwise transferred unless they are registered under the Securities Act, or an exemption from registration under the Securities Act is available. Rule 144 provides a limited safe harbor for the public resale of restricted securities if certain conditions are met. These conditions vary depending on certain circumstances, including on whether the holder of the restricted securities is an “affiliate” of the issuer. Rule 144 defines an affiliate as “a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer.” Reorganized Hexion will not be subject to the reporting requirements of section 13 or 15(d) of the Exchange Act. However, the Debtors currently expect that Reorganized Hexion will continue to be a


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voluntary filer and that current public information will be available to allow resales in accordance with Rule 144. A non-affiliate who has not been an affiliate of the issuer during the preceding three months may resell restricted securities after a six-month holding period (or a 12-month holding period if the issuer is not a reporting issuer) if at the time of the sale there is available certain current public information regarding the issuer. Adequate current public information is available for a reporting issuer if the issuer has filed all periodic reports required under section 13 or 15(d) of the Exchange Act during the twelve months preceding the sale of the restricted securities. If the issuer is a non-reporting issuer, adequate current public information is available if certain information about the issuer is made publicly available. The Debtors currently expect that Reorganized Hexion will not be subject to the reporting requirements of section 13 or 15 of the Exchange Act. However, the Debtors currently expect that Reorganized Hexion will continue to be a voluntary filer and that it will continue to be a reporting issuer and file all such required periodic reports and that current public information will be available to allow resales by non-affiliates without limitation when the one-year holding period expires (approximately one year after the Effective Date). An affiliate of an issuer that is not subject to the reporting requirements of section 13 or 15(d) of the Exchange Act may resell restricted securities after the one-year holding period if at the time of the sale certain current public information regarding the issuer is available. As noted above, the Debtors currently expect that this information requirement will be satisfied. An affiliate must also comply with the volume, manner of sale and notice requirements of Rule 144: (i) first, the volume limitation limits the number of restricted securities (plus any unrestricted securities) sold for the account of an affiliate (and related persons) in any three-month period to the greater of 1% of the outstanding securities of the same class being sold, or, if the class is listed on a stock exchange, the average weekly reported volume of trading in such securities during the four weeks preceding the filing of a notice of proposed sale on Form 144 or if no notice is required, the date of receipt of the order to execute the transaction by the broker or the date of execution of the transaction directly with a market maker; (ii) second, the manner of sale requirement provides that the restricted securities must be sold in a broker’s transaction, directly with a market maker or in a riskless principal transaction (as defined in Rule 144); and third, if the amount of securities sold under Rule 144 in any three-month period exceeds 5,000 shares or has an aggregate sale price greater than $50,000, an affiliate must file or cause to be filed with the SEC three copies of a notice of proposed sale on Form 144, and provide a copy to any national securities exchange on which the securities are admitted. The Debtors believe that the Rule 144 exemption will not be available with respect to any 4(a)(2) Securities (whether held by non-affiliates or affiliates) until at least one year after the Effective Date. Accordingly, holders of 4(a)(2) Securities will be required to hold their 4(a)(2) Securities for at least one year and, thereafter, to sell them only in accordance with the applicable requirements of Rule 144, unless such 4(a)(2) Securities are registered under the Securities Act or otherwise pursuant to an available exemption from the registration requirements of applicable securities laws. Each certificate representing, or issued in exchange for or upon the transfer, sale or assignment of, any 4(a)(2) Security shall, upon issuance, be stamped or otherwise imprinted with a restrictive legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [DATE OF ISSUANCE], HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE


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REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.”

Reorganized Hexion will reserve the right to require certification, legal opinions or other evidence of compliance with Rule 144 as a condition to the removal of such legend or to any resale of the 4(a)(2) Securities. Reorganized Hexion will also reserve the right to stop the transfer of any 4(a)(2) Securities if such transfer is not in compliance with Rule 144, pursuant to an available exemption from the registration requirements of applicable securities laws. All Persons who receive 4(a)(2) Securities will be required to acknowledge and agree that (a) they will not offer, sell or otherwise transfer any 4(a)(2) Securities except in accordance with an exemption from registration, including under Rule 144 under the Securities Act, if and when available, and (b) the 4(a)(2) Securities will be subject to the other restrictions described above.

3. Alternate Treatment

To the fullest extent the 4(a)(2) Securities may be issued in reliance on an exemption from registration under the Securities Act and any state or local laws requiring registration for the offer or sale of a security pursuant to section 1145 of the Bankruptcy Code, the 4(a)(2) Securities shall be so issued pursuant to section 1145 of the Bankruptcy Code and will be subject to the securities law treatment set forth in Article XI.B, above, rather than securities law treatment set forth in this Article XI.C.

BECAUSE OF THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A PARTICULAR PERSON MAY BE AN UNDERWRITER OR AN AFFILIATE AND THE HIGHLY FACT-SPECIFIC NATURE OF THE AVAILABILITY OF EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT, INCLUDING THE EXEMPTIONS AVAILABLE UNDER SECTION 1145 OF THE BANKRUPTCY CODE AND RULE 144 UNDER THE SECURITIES ACT, NONE OF THE DEBTORS MAKES ANY REPRESENTATION CONCERNING THE ABILITY OF ANY PERSON TO DISPOSE OF ANY SECURITIES TO BE ISSUED UNDER OR OTHERWISE ACQUIRED PURSUANT TO THE PLAN, THE RIGHTS OFFERING, THE EQUITY BACKSTOP AGREEMENT, THE DEBT BACKSTOP AGREEMENT, OR ANY OTHER AGREEMENT. THE DEBTORS RECOMMEND THAT POTENTIAL RECIPIENTS OF THE SECURITIES TO BE ISSUED UNDER OR OTHERWISE ACQUIRED PURSUANT TO THE PLAN, THE RIGHTS OFFERING, THE EQUITY BACKSTOP AGREEMENT, OR THE DEBT BACKSTOP AGREEMENT CONSULT THEIR OWN COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH SECURITIES AND THE CIRCUMSTANCES UNDER WHICH THEY MAY RESELL SUCH SECURITIES.

XII. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN

A. Introduction

The following discussion summarizes certain U.S. federal income tax consequences expected to result from the consummation of the Plan. This discussion is only for general information purposes and only describes the expected tax consequences to Hexion LLC, its U.S. subsidiaries and Holders of First Lien Notes Claims and Junior Notes Claims. It is not a complete analysis of all potential federal income tax consequences and does not address any tax consequences arising under any state, local or foreign tax laws or federal estate or gift tax laws. This discussion is based on the Internal Revenue Code of 1986, as


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amended (the “IRC” or “Tax Code”), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), all as in effect on the date of this Disclosure Statement. These authorities may change, possibly retroactively, resulting in federal income tax consequences different from those discussed below. No ruling has been or will be sought from the IRS, and no legal opinion of counsel will be rendered, with respect to the matters discussed below. There can be no assurance that the IRS will not take a contrary position regarding the federal income tax consequences resulting from the consummation of the Plan or that any contrary position would not be sustained by a court.

This discussion assumes that Holders of First Lien Notes Claims and Junior Notes Claims have held such property as “capital assets” within the meaning of IRC section 1221 (generally, property held for investment) and will hold the New Common Equity and the Rights as capital assets. This discussion also assumes that the Claims to which any of the Debtors are a party will be respected for U.S. federal income tax purposes in accordance with their form.

This discussion does not address all federal income tax considerations that may be relevant to a particular Holder in light of that Holder’s particular circumstances, including the impact of the tax on net investment income imposed by section 1411 of the Tax Code and the effects of Section 451(b) of the Tax Code conforming the timing of certain income accruals to financial statements. In addition, it does not address considerations relevant to Holders subject to special rules under the federal income tax laws, such as financial institutions, insurance companies, brokers, dealers or traders in securities, commodities or currencies, tax-exempt organizations, tax-qualified retirement plans, partnerships and other pass-through entities, Holders subject to the alternative minimum tax, Holders who utilize installment method reporting with respect to their Claims, Holders holding First Lien Notes Claims, Junior Notes Claims (collectively with the First Lien Notes Claims, the “Prepetition Debt”) or New Common Equity as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment and U.S. Holders (as defined below) who have a functional currency other than the U.S. dollar. This discussion also does not address the U.S. federal income tax consequences to Holders (a) whose Claims are Unimpaired or otherwise entitled to payment in full under the Plan, or (b) that are deemed to accept or deemed to reject the Plan. Additionally, this discussion does not address any consideration being received other than in a person’s capacity as a Holder of a Claim. This summary also does not discuss the treatment of the receipt of New Common Equity pursuant to the Management Incentive Plan.

New Warrants. The New Warrants and the New Common Equity have substantially identical economic rights and the New Warrants are exercisable into Common Equity for nominal consideration. Accordingly, the New Warrants should be treated as New Common Equity for federal income tax purposes, this tax disclosure assumes such treatment and references to “New Common Equity” include the New Warrants.

HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF THE CONSUMMATION OF THE PLAN AND THE OWNERSHIP AND DISPOSITION OF NEW COMMON EQUITY AND RIGHTS RECEIVED PURSUANT TO THE PLAN, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN TAX LAWS, OR ANY OTHER FEDERAL TAX LAWS. THE DEBTORS AND THE REORGANIZED DEBTORS SHALL NOT BE LIABLE TO ANY PERSON WITH RESPECT TO THE TAX LIABILITY OF A HOLDER OR ITS AFFILIATES.


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B. Federal Income Tax Consequences to Hexion LLC and its U.S. Subsidiaries

The tax consequences of the implementation of the Plan to the Debtors will differ depending on whether the Restructuring Transactions are implemented in a manner intended to be non-taxable to the Debtors (the “Recapitalization Structure”) or as a taxable sale (or deemed taxable sale) for federal income tax purposes of the assets and/or stock of the Debtors and certain of their Subsidiaries as described in section XII.B.3. below (the “Alternative Structure”). The Restructuring Transactions Memorandum, which will be included with a Plan Supplement, will describe the manner in which those transactions will be implemented. It is possible that the Restructuring Transactions will be implemented in a manner where the determination as to whether the Recapitalization Structure or the Alternative Structure will be implemented can be made after the Effective Date. In that case, the Board of Directors of Reorganized Hexion will determine whether or not to make certain tax elections (the “Elections”) that should result in the effective implementation of either the Recapitalization Structure or the Alternative Structure as of the Effective Date. If the Restructuring Transactions are implemented in a manner that delays the choice between the Recapitalization Structure and the Alternative Structure until after the Effective Date, there may be tax consequences to U.S. Holders of First Lien Notes Claims and Junior Notes Claims. See discussion below under “—U.S. Holders of First Lien Notes Claims and Junior Notes Claims (Classes 2 and 3)”.

The Recapitalization Structure would not be expected to result in the Debtors recognizing any taxable gain or loss. Subject to the discussion below regarding attribute reduction as a result of excluded cancellation of indebtedness (“COD”) income, the Debtors’ tax basis in their assets would remain unchanged. Further, the Debtors’ existing interest deductions suspended under section 163(j) of the Tax Code may remain available for use following the implementation of the Plan, subject to the discussion below regarding section 382 of the Tax Code. Except as otherwise noted, the discussion in sections XII.B.1 and XII.B.2 assume that the Exchanges (as defined below) will be pursuant to the Recapitalization Structure.

The decision whether to utilize the Recapitalization Structure or the Alternative Structure will depend on, among other things, whether assets being sold (or deemed to be sold) pursuant to the Alternative Structure have an aggregate fair market value in excess of their aggregate tax basis (i.e., a “built-in gain”), whether sufficient tax attributes are available to offset any such built-in gain, the present value of and ability to utilize future tax benefits associated with a step-up (if any) in the tax basis of certain of the Debtors’ assets as a result of the Alternative Structure and the tax profile of the Reorganized Debtor Group following the implementation of each of the Structures. Moreover, if a cash tax would be payable in connection with the implementation of the Alternative Structure, it might nonetheless be implemented if the projected tax savings from such an election are expected to exceed the initial tax cost.

1. Cancellation of Indebtedness and Reduction of Tax Attributes

Hexion LLC owns all of the stock of Hexion Inc. and indirectly owns equity in other U.S. and non-U.S. subsidiaries. Hexion LLC has filed an election to be classified for U.S. federal income tax purposes as a corporation, and is the parent of the Debtors’ consolidated federal income tax group (the “Hexion Group”). Hexion Inc. is the issuer of the Prepetition Debt.

Hexion Inc. generally should realize COD income to the extent the adjusted issue price of the Prepetition Debt exceeds the sum of (i) the amount of Cash paid on the Allowed First Lien Notes Claims, (ii) the fair market value of the New Common Equity received by Holders on account of their Prepetition Debt and (iii) the fair market value of the Rights received by Holders on account of their Prepetition Debt. The amount of COD income that will be realized by Hexion Inc. is uncertain because it will depend on the fair market value of the New Common Equity on the Effective Date.


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Under IRC section 108, COD income realized by a debtor will be excluded from gross income if the discharge of debt occurs in a case brought under the Bankruptcy Code, the debtor is under the court’s jurisdiction in such case and the discharge is granted by the court or is pursuant to a plan approved by the court (the “Bankruptcy Exception”). Because the Bankruptcy Exception will apply to the transactions consummated pursuant to the Plan, Hexion Inc. will be entitled to exclude from gross income any COD income realized as a result of the implementation of the Plan.

Under IRC section 108(b), a debtor that excludes COD income from gross income under the Bankruptcy Exception generally must reduce certain tax attributes by the amount of the excluded COD income. Attributes subject to reduction include net operating losses (“NOLs”), NOL carryforwards and certain other losses, credits and carryforwards, and the debtor’s tax basis in its assets (including stock of subsidiaries). The reduction in a debtor’s tax basis in its assets generally does not have to exceed the excess of (i) its tax basis in assets held immediately after the discharge of indebtedness over (ii) the amount of liabilities remaining immediately after the discharge of indebtedness (the “Liability Floor”). NOLs for the taxable year of the discharge and NOL carryovers to such year generally are the first attributes subject to reduction. However, a debtor may elect under IRC section 108(b)(5) (the “Section 108(b)(5) Election”) to reduce its basis in its depreciable property first. If a debtor makes a Section 108(b)(5) Election, the Liability Floor does not apply to the reduction in basis of depreciable property. The Hexion Group has not determined whether it will make the Section 108(b)(5) Election.

If the amount of excluded COD income exceeds the amount of tax attributes subject to reduction, Hexion LLC would be required to include such excess in taxable income up to the amount of its excess loss account (“ELA” or negative stock basis), if any, in the stock of Hexion Inc. The Debtors are continuing to evaluate whether Hexion LLC has an ELA in the stock of Hexion Inc.

For tax periods through the tax year ending December 31, 2017, the Hexion Group reported on its consolidated federal income tax return approximately $1 billion of consolidated NOLs and NOL carryforwards. The Hexion Group does not believe that it has generated additional NOLs for the tax year ending December 31, 2018, though it does believe that it generated approximately $250-280 million of interest deductions suspended under section 163(j) of the Tax Code. The amount of the Hexion Group’s NOLs are subject to audit and possible challenge by the IRS. Accordingly, the amount of the Hexion Group’s NOLs ultimately may vary from the amounts set forth above.

If the Recapitalization Structure is utilized, the Hexion Group currently anticipates that the application of IRC section 108(b) (assuming no Section 108(b)(5) Election is made) will result in a substantial reduction, and possibly the elimination, of its consolidated NOLs, but will not result in a reduction in the tax basis of any of their assets. However, the ultimate effect of the attribute reduction rules is uncertain because, among other things, it will depend on the amount of COD income realized by Hexion Inc. If the Alternative Structure is utilized, the assets of Hexion Inc. and certain of its subsidiaries would be treated as sold to Reorganized Hexion and its subsidiaries. Accordingly, although IRC section 108(b) would not be expected to reduce the basis of Reorganized Hexion and its subsidiaries in these assets, Reorganized Hexion would not succeed to any of the tax attributes of the Hexion Group, including any remaining consolidated NOLs or interest deductions suspended under IRC section 163(j).

2. Section 382 Limitation on Net Operating Losses and Built-In Losses

If the Alternative Structure is utilized, none of the Reorganized Debtors, NewCo or their affiliates would succeed to the remaining Pre-Change Tax Attributes (as defined below) of the Hexion Group. Accordingly, the remainder of the discussion in this Article XII.B.2 is limited to the Recapitalization Structure.


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The Tax Code applies certain limitations to the Reorganized Debtors’ ability to utilize the tax attributes remaining after the reduction pursuant to excluded COD income described above. Specifically, under IRC section 382, if a corporation or a consolidated group of corporations with NOLs, interest deductions suspended under section 163(j) of the Tax Code (collectively with NOLs and certain other tax attributes, the “Pre-Change Tax Attributes”) or built-in losses (a “loss corporation”) undergoes an “ownership change,” the loss corporation’s use of its Pre-Change Tax Attributes and recognized built-in losses (“RBILs”) generally will be subject to an annual limitation in the post-change period. In general, an “ownership change” occurs if the percentage of the value of the loss corporation’s stock owned by one or more direct or indirect “five percent shareholders” increases by more than fifty percentage points over the lowest percentage of value owned by the five percent shareholders at any time during the applicable testing period (an “Ownership Change”). The testing period generally is the shorter of (i) the three-year period preceding the testing date or (ii) the period of time since the most recent Ownership Change of the corporation.

Subject to the special bankruptcy rules discussed below, the amount of the annual limitation on a loss corporation’s use of its Pre-Change Tax Attributes and RBILs is generally equal to the product of the applicable long-term tax-exempt rate (as published by the IRS for the month in which the Ownership Change occurs) and the value of the loss corporation’s outstanding stock immediately before the Ownership Change (excluding certain capital contributions). If a loss corporation has a net unrealized built-in gain (“NUBIG”) immediately prior to the Ownership Change, the annual limitation may be increased as certain gains are recognized (or treated as recognized pursuant to the safe harbors provided in IRS Notice 2003-65) during the five-year period beginning on the date of the Ownership Change (the “Recognition Period”). Section 383 of the Tax Code applies a similar limitation to capital loss carryforwards and tax credits. If a loss corporation has a net unrealized built-in loss (“NUBIL”) immediately prior to the Ownership Change, certain losses recognized during the Recognition Period also would be subject to the annual limitation and thus may reduce the amount of Pre-Change Tax Attributes that could be used by the loss corporation during the Recognition Period.

A NUBIG or NUBIL is generally the difference between the fair market value of a loss corporation’s assets (or, if greater, the amount of a loss corporation’s relevant liabilities) and its tax basis in the assets, subject to a statutorily-defined threshold amount. The amount of a loss corporation’s NUBIG or NUBIL must be adjusted for built-in items of income or deduction that would be attributable to a pre- change period if recognized during the Recognition Period. The NUBIG or NUBIL of a consolidated group generally is calculated on a consolidated basis, subject to special rules.

If a loss corporation has a NUBIG immediately prior to an Ownership Change, any recognized built-in gains (“RBIGs”) will increase the annual limitation in the taxable year the RBIG is recognized. An RBIG generally is any gain (and certain income) with respect to an asset held immediately before the date of the Ownership Change that is recognized during the Recognition Period to the extent of the fair market value of the asset over its tax basis immediately prior to the Ownership Change. However, the annual limitation will not be increased to the extent that the aggregate amount of all RBIGs that are recognized during the Recognition Period exceed the NUBIG. On the other hand, if a loss corporation has a NUBIL immediately prior to an Ownership Change, any RBILs will be subject to the annual limitation in the same manner as Pre-Change Tax Attributes. An RBIL generally is any loss (and certain deductions) with respect to an asset held immediately before the date of the Ownership Change that is recognized during the Recognition Period to the extent of the excess of the tax basis of the asset over its fair market value immediately prior to the Ownership Change. However, once the aggregate amount of all RBILs that are recognized during the Recognition Period exceeds the NUBIL, such excess RBILs are not subject to the annual limitation. RBIGs and RBILs may be recognized during the Recognition Period for depreciable and amortizable assets that are not actually disposed. Hexion LLC believes that it will have a NUBIG on the Effective Date.


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The Debtors expect the consummation of the Plan will result in an Ownership Change of the Hexion Group. Because the Ownership Change will occur in a case brought under the Bankruptcy Code, one of the following two special rules should apply in determining the ability of the reorganized Hexion Group (the “Reorganized Debtor Group”) to utilize in post-Effective Date tax periods Pre-Change Tax Attributes and RBILs attributable to tax periods preceding the Effective Date provided there is no Ownership Change of the Hexion Group prior to the Effective Date.

Under IRC section 382(l)(5), an Ownership Change in bankruptcy will not result in any annual limitation on the debtor’s Pre-Change Tax Attributes and RBILs arising during the Recognition Period if the stockholders and qualified creditors of the debtor receive at least 50% of the stock (by vote and value) of the reorganized debtor in the bankruptcy reorganization as a result of being shareholders or creditors of the debtor. Instead, the debtor’s pre-change NOLs are reduced by the amount of any interest deductions with respect to debt converted into stock in the bankruptcy reorganization that were allowed in the three full taxable years preceding the taxable year in which the Ownership Change occurs and in the part of the taxable year prior to and including the date of the Ownership Change attributable to the bankruptcy reorganization (the “Plan Ownership Change”). However, if any Pre-Change Tax Attributes and built-in losses of the debtor already are subject to an annual usage limitation under IRC section 382 at the time of an Ownership Change subject to IRC section 382(l)(5), those Pre-Change Tax Attributes and built-in losses generally will continue to be subject to such limitation.

A qualified creditor is any creditor who has held the debt of the debtor continuously beginning at least eighteen months prior to the petition date through the Effective Date or who has held “ordinary course indebtedness” that has been owned at all times by such creditor. A creditor who does not become a direct or indirect five percent shareholder of the reorganized debtor generally may be treated by the debtor as having always held any debt owned immediately before the Ownership Change, unless the creditor’s participation in formulating the plan of reorganization makes evident to the debtor that the creditor has not owned the debt for the requisite period.

A debtor may elect not to apply IRC section 382(l)(5) to an Ownership Change that otherwise satisfies its requirements. This election must be made on the debtor’s federal income tax return for the taxable year in which the Ownership Change occurs. If IRC section 382(l)(5) applies to an Ownership Change (and the debtor does not elect out), any subsequent Ownership Change of the debtor within the two-year period following the date of the Plan Ownership Change will result in the debtor being unable to use any pre- change losses in any taxable year ending after such subsequent Ownership Change to offset future taxable income.

If an Ownership Change pursuant to a bankruptcy plan does not satisfy the requirements of IRC section 382(l)(5), or if a debtor elects not to apply IRC section 382(l)(5), the debtor’s use of its Pre-Change Tax Attributes and RBILs arising during the Recognition Period will be subject to an annual limitation as determined under IRC section 382(l)(6). In such case, the amount of the annual limitation generally will be equal to the product of the applicable long-term tax-exempt rate (2.20% for May 2019) and the value of the debtor’s outstanding stock immediately after the bankruptcy reorganization, provided such value may not exceed the value of the debtor’s gross assets immediately before the Ownership Change, subject to certain adjustments. However, if any Pre-Change Tax Attributes and built-in losses of the debtor already are subject to an annual limitation at the time of an Ownership Change subject to IRC section 382(l)(6), those Pre-Change Tax Attributes and built-in losses will generally be subject to the lower of the two annual limitations.

The Debtors are unable to determine whether the Ownership Change expected to result from the consummation of the Plan may satisfy the requirements of IRC section 382(l)(5), as such determination will depend on the extent to which Holders of the Prepetition Debt immediately prior to consummation of


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the Plan may be treated as qualified creditors for purposes of IRC section 382(l)(5). Even if the Plan were to satisfy the requirements of IRC section 382(l)(5), the Debtors anticipate electing out of IRC section 382(l)(5), in which case, the Hexion Group’s Pre-Change Tax Attributes remaining after reduction for excluded COD income will, pursuant to IRC section 382(l)(6), be subject to an annual limitation generally equal to the product of the long-term tax-exempt rate for the month in which the Plan Ownership Change occurs and the value of the Reorganized Debtors’ outstanding stock immediately after consummation of the Plan, increased by RBIGs recognized during the Recognition Period. Pre-Change Tax Attributes not utilized in a given year due to the annual limitation may be carried forward for use in future years. To the extent the Reorganized Debtor Group’s annual limitation exceeds its taxable income (for purposes of section 382) in a given year, the excess will increase the annual limitation in future taxable years.

3. Alternative Structure

The Debtors and the Consenting Noteholders, in consultation with the Creditors’ Committee, are evaluating the Alternative Structure, whereby the assets of Hexion Inc. and certain of its subsidiaries would be deemed transferred to Reorganized Hexion and its Subsidiaries in a transaction that would be treated as a taxable asset sale for U.S. federal income tax purposes. Hexion, Inc. and those subsidiaries also deemed to sell assets will recognize gain equal to the excess, if any, of the fair market value as of the Effective Date of their assets over the tax basis in such assets, some or all of which may be offset with the Pre-Change Tax Attributes and losses recognized in the asset sale. However, if there is an aggregate gain and such gain exceeds the amount of Pre-Change Tax Attributes available to offset it, the Hexion Group may owe a cash tax liability for the taxable year that includes the Effective Date, which may be material and could affect the values of the recoveries contemplated by the Plan and could materially impact the operations of Reorganized Hexion and its subsidiaries after the Effective Date. In the Alternative Structure, none of the Reorganized Debtors, Reorganized Hexion or their affiliates would succeed to the remaining Pre-Change Tax Attributes, but the assets of some or all of the Reorganized Debtors would have basis equal to fair market value (with some immediate expensing permitted for what would otherwise be depreciable asset basis), which would result in greater depreciation and amortization deductions than in the Recapitalization Structure. In addition, the Alternative Structure may provide other tax benefits compared to the Recapitalization Structure.

As noted above, if the Restructuring Transactions are implemented in a manner in which the determination regarding whether to implement the Recapitalization Structure or the Alternative Structure can be made after the Effective Date, the Board of Directors of Reorganized Hexion will determine after the Effective Date whether or not to make the Elections that should result in the effective implementation of either the Recapitalization Structure or the Alternative Structure, except as otherwise provided in the Plan. In determining which Structure will be pursued, the Debtors and the Consenting Noteholders will continue to evaluate prior to the Effective Date whether and the extent to which (i) a cash tax liability is likely to exist under the Alternative Structure, and (ii) the present value of any expected future tax savings to the Reorganized Debtor Group of the Alternative Structure. Any cash tax liability resulting from the implementation of the Alternative Structure will be borne by the Reorganized Debtors.

4. Uncertainty of Debtors’ Tax Treatment

The U.S. federal income tax considerations relating to the Plan are complex and subject to uncertainties. No assurance can be given that the IRS will agree with the Debtors’ interpretations of the tax rules applicable to, or tax positions taken with respect to, the transactions undertaken to effect the Plan. If the IRS were to successfully challenge any such interpretation or position, the Debtors may recognize additional taxable income for U.S. federal income tax purposes, and the Debtors may not have sufficient deductions, losses or other attributes for U.S. federal income tax purposes to fully offset such income.


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C. Federal Income Tax Consequences to Holders of Certain Claims

1. Definition of U.S. Holder and Non-U.S. Holder

A “U.S. Holder” is a beneficial owner of the Prepetition Debt, New Common Equity or Rights that, for U.S. federal income tax purposes, is or is treated as:

an individual who is a citizen or resident of the United States;

a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;

an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of section 7701(a)(30) of the Tax Code), or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.

A “Non-U.S. Holder” means a beneficial owner of the Prepetition Debt, New Common Equity or Rights that is not a U.S. Holder and is, for U.S. federal income tax purposes, an individual, corporation (or other entity classified as a corporation for U.S. federal income tax purposes), estate or trust.

If a partnership or other entity or arrangement classified as a partnership for U.S. federal income tax purposes holds Prepetition Debt, New Common Equity or Rights, the tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. Beneficial owners of the Prepetition Debt, New Common Equity and/or Rights who are partners in a partnership holding any of such instruments should consult their tax advisors.

2. U.S. Holders of First Lien Notes Claims and Junior Notes Claims (Classes 2 and 3)

a. Exchanges of Prepetition Debt for New Common Equity, Rights and Cash

(1) Treatment of Exchanges

The treatment of (i) the exchange of the Allowed First Lien Notes Claims for New Common Equity, Rights and Cash and (ii) the exchange of the Allowed Junior Notes Claims for New Common Equity and Rights, as well as, in each case, any other consideration received on account of such Claims (collectively, the “Exchanges”) will depend, in part, on the Restructuring Transaction steps and, if relevant, whether the Elections are made. If the Alternative Structure is implemented, the Debtors intend to take the position that the Exchanges are taxable exchanges under Section 1001 of the Tax Code. See discussion below under “—Taxable Exchange”. In addition, in some circumstances, the Recapitalization Structure may be implemented in a manner whereby the Exchanges would be treated as taxable exchanges with respect to U.S. Holders of Allowed Claims.

If, however, the Recapitalization Structure is implemented in a manner intended to qualify as a “reorganization” for U.S. federal income tax purposes (a “Reorganization”), the treatment of U.S. Holders will depend upon whether their Allowed First Lien Notes Claims and/or Allowed Junior Notes Claims are considered to be “securities” within the meaning of the provisions of the Tax Code governing


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reorganizations. Neither the Tax Code nor the Treasury Regulations define the term “security,” and it has not been clearly defined by judicial decisions. Whether a debt instrument is a security is determined based on all of the facts and circumstances. Factors evaluated include whether the Holder of such debt instrument is subject to a material level of entrepreneurial risk and the Holder’s degree of participation and continuing interest in the debtor’s business, but most authorities conclude that the term to maturity of the debt instrument is one of the most significant factors. In this regard, debt instruments with a term of ten years or more generally have qualified as securities, whereas debt instruments with a term of less than five years generally have not qualified as securities. Accordingly, the determination of whether or not their claims constitute securities may vary among U.S. Holders of Allowed First Lien Notes Claims and among U.S. Holders of Allowed Junior Notes Claims depending upon the debt instruments underlying such claims. In this regard, it appears that the Second Lien Notes and the Borden Debentures should be treated as “securities” for U.S. federal income tax purposes, while it is unclear whether any of the First Lien Notes and the 1.5 Lien Notes qualify as “securities.”

If the Restructuring Transactions constitute a Reorganization but a U.S. Holder’s claim does not constitute a security, the Exchanges will be a taxable exchange to that U.S. Holder, with the attendant consequences discussed below under “—Taxable Exchange”. However, if the Restructuring Transactions constitute a Reorganization and the U.S. Holder’s claim does constitute a security, the U.S. Holder may not recognize some or all of its gain or loss, as described below under “—Non-Taxable Exchange”.

(2) Taxable Exchange

Recognition of Gain or Loss. To the extent that the Exchanges are treated as taxable exchanges (because the Recapitalization Structure is implemented in a manner that does not constitute a Reorganization, the U.S. Holder’s Allowed Claim does not constitute a security, or the Alternative Structure is implemented), the U.S. Holder is expected to recognize gain or loss equal to the difference between (i) the sum of the fair market value of New Common Equity and Rights and the amount of Cash received by the U.S. Holder in the Exchanges (other than the amount of New Common Equity, Rights or Cash, if any, allocable to accrued interest, discussed below under “—Accrued but Untaxed Interest”) and (ii) the U.S. Holder’s adjusted tax basis in the Prepetition Debt surrendered. The character of such gain or loss as capital or ordinary will be determined by a number of factors, including (but not limited to) the tax status of the U.S. Holder, whether the Prepetition Debt constitutes a capital asset in the U.S. Holder’s hands, whether the Prepetition Debt has been held for more than one year, whether the Prepetition Debt has bond premium or market discount, and whether and to what extent the U.S. Holder previously claimed a bad debt deduction with respect to the Prepetition Debt. Gain or loss realized must be calculated separately for each identifiable block of Prepetition Debt surrendered in the Exchanges, and the deductibility of capital losses is subject to limitations. A U.S. Holder’s tax basis in New Common Equity and Rights (other than New Common Equity and Rights, if any, allocable to accrued interest) should equal the fair market value of New Common Equity and Rights on the Effective Date. A U.S. Holder’s holding period for the New Common Equity should begin on the day following the Effective Date.

The exercise of a Right pursuant to the Plan will not be a taxable event to the U.S. Holder of the Right. Upon such exercise, the U.S. Holder’s tax basis in the New Common Equity obtained should be equal to the sum of the U.S. Holder’s basis in the Right and its exercise price. The U.S. Holder’s holding period with respect to the New Common Equity obtained will commence on the date that the Right is deemed to be exercised for U.S. federal income tax purposes. A U.S. Holder who elects not to exercise all or a portion of the Rights received pursuant to the Plan should be entitled to a capital loss in an amount equal to its basis in such Rights.

Accrued but Untaxed Interest. To the extent a Holder of a Claim receives consideration that is attributable to unpaid accrued interest on the Claim, the Holder may be required to treat such consideration as a


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payment of interest. In this regard, the Plan provides that distributions in full or partial satisfaction of Allowed Claims shall be allocated first to the principal amount (as determined for U.S. federal income tax purposes) of Allowed Claims, with any excess allocated to unpaid interest that accrued on such Claims. Notwithstanding this Plan provision, there is general uncertainty regarding the extent to which the receipt of cash or other property should be treated as attributable to unpaid accrued interest. Certain legislative history indicates that an allocation of consideration as between principal and interest provided in a chapter 11 plan of reorganization is binding for U.S. federal income tax purposes, while certain Treasury Regulations treat payments as allocated first to any accrued but untaxed interest. To the extent any property received pursuant to the Plan is considered attributable to unpaid accrued interest, a Holder will recognize ordinary income to the extent the value of the property exceeds the amount of unpaid accrued interest previously included in gross income by the Holder. A Holder’s tax basis in such property should be equal to the amount of interest income treated as satisfied by the receipt of the property, and its holding period in the property should begin on the day after the Effective Date. A Holder generally will be entitled to recognize a loss to the extent any accrued interest previously included in its gross income is not paid in full. Although not entirely clear, such a loss may be treated as an ordinary loss rather than a capital loss.

HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE EXTENT TO WHICH CONSIDERATION RECEIVED UNDER THE PLAN SHOULD BE TREATED AS ATTRIBUTABLE TO UNPAID ACCRUED INTEREST.

Market Discount. Under the “market discount” provisions of the IRC, some or all of any gain realized by a U.S. Holder in the Exchanges may be treated as ordinary income (instead of capital gain), to the extent of the amount of “market discount” on such U.S. Holder’s Prepetition Debt. In general, a debt instrument is considered to have been acquired with “market discount” if it is acquired other than on original issue and if the U.S. Holder’s initial tax basis in the debt instrument is less than (i) the sum of all remaining payments to be made on the debt instrument, excluding “qualified stated interest” or (ii) in the case of a debt instrument issued with original issue discount (“OID”), its adjusted issue price, in each case, by at least a de minimis amount (equal to 0.25% of the sum of all remaining payments to be made on the debt instrument, excluding qualified stated interest, multiplied by the number of remaining whole years to maturity).

Any gain recognized by a U.S. Holder on the disposition of an Allowed Claim that was acquired with market discount should be treated as ordinary income to the extent of the market discount that accrued thereon while such Claim was considered to be held by the U.S. Holder (unless the U.S. Holder elected to include market discount in income as it accrued).

(3) Non-Taxable Exchange

Recognition of Gain or Loss. If the Recapitalization Structure is implemented in a manner that qualifies as a Reorganization and a U.S. Holder’s claim constitutes a security, a U.S. Holder should not recognize income, gain or loss in the Exchanges except (i) a U.S. Holder should recognize interest income to the extent that New Common Equity, Rights or Cash, if any, is allocable to accrued interest (discussed below under “—Accrued but Untaxed Interest”) and (ii) a U.S. Holder will recognize gain (but not loss) to the extent of the lesser of Cash received and the amount of gain, if any, realized in the Exchanges (the consequences of which are discussed above under “—Taxable Exchange—Recognition of Gain or Loss”). A U.S. Holder’s aggregate tax basis in New Common Equity and Rights (other than New Common Equity and Rights, if any, allocable to accrued interest) should generally be equal to the U.S. Holder’s tax basis in the Prepetition Debt surrendered in the non-taxable exchange, increased by any gain recognized on the exchange and decreased by Cash received, if any. The U.S. Holder must allocate this aggregate tax basis between the New Common Equity and the Rights depending on their fair market value on the


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Effective Date. A U.S. Holder’s holding period for the New Common Equity will include the holding period of the Prepetition Debt surrendered in exchange.

The exercise of a Right pursuant to the Plan will not be a taxable event to the U.S. Holder of the Right. Upon such exercise, the U.S. Holder’s tax basis in the New Common Equity obtained should be equal to the sum of the U.S. Holder’s basis in the Right and its exercise price. The U.S. Holder’s holding period with respect to the New Common Equity obtained will commence on the date that the Right is deemed to be exercised for U.S. federal income tax purposes. A U.S. Holder who elects not to exercise all or a portion of the Rights received pursuant to the Plan should be entitled to a capital loss in an amount equal to its basis in such Rights.

Accrued but Untaxed Interest. To the extent a U.S. Holder of a Claim receives consideration that is attributable to unpaid accrued interest on the Claim in a non-taxable exchange, the tax consequences should be identical to those for the taxable exchange. See “—Taxable Exchange—Accrued but Untaxed Interest” above.

HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE EXTENT TO WHICH CONSIDERATION RECEIVED UNDER THE PLAN SHOULD BE TREATED AS ATTRIBUTABLE TO UNPAID ACCRUED INTEREST.

Market Discount. In general, a debt instrument is considered to have been acquired with “market discount” if it is acquired other than on original issue and if the U.S. Holder’s initial tax basis in the debt instrument is less than (i) the sum of all remaining payments to be made on the debt instrument, excluding “qualified stated interest” or (ii) in the case of a debt instrument issued with OID, its adjusted issue price, in each case, by at least a de minimis amount (equal to 0.25% of the sum of all remaining payments to be made on the debt instrument, excluding qualified stated interest, multiplied by the number of remaining whole years to maturity).

Any gain recognized by a U.S. Holder on the disposition of an Allowed Claim that was acquired with market discount should be treated as ordinary income to the extent of the market discount that accrued thereon while such Claim was considered to be held by the U.S. Holder (unless the U.S. Holder elected to include market discount in income as it accrued). Any accrued but unrecognized market discount on the Prepetition Debt after the application of the prior sentence will not have to be recognized as income at the time of the Exchanges. However, the gain recognized on a subsequent taxable disposition of the New Common Equity received by the U.S. Holder in the Exchanges (and New Common Equity received upon an exercise of Rights received in the Exchanges) may have to be treated as ordinary income to the extent of such accrued but unrecognized market discount (other rules might apply if at the time of the Exchanges the accrued market discount on the Prepetition Debt exceeds the U.S. Holder’s total unrecognized gain).

b. Consequences to U.S. Holders Regarding Owning and Disposing of New Common Equity

Distributions. A U.S. Holder of New Common Equity generally will be required to include in gross income as ordinary dividend income the amount of any distributions paid on the New Common Equity to the extent such distributions are paid out of the Reorganized Debtor Group’s current or accumulated earnings and profits as determined for federal income tax purposes. “Qualified dividend income” received by a non-corporate U.S. Holder is subject to preferential tax rates. Distributions not treated as dividends for federal income tax purposes will constitute a return of capital and will first be applied against and reduce a U.S. Holder’s adjusted tax basis in the New Common Equity, but not below zero. Any excess amount will be treated as gain from a sale or exchange of the New Common Equity. U.S. Holders that are


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treated as corporations for federal income tax purposes may be entitled to a dividends received deduction with respect to distributions out of the Reorganized Debtor Group’s earnings and profits.

Sale or Other Taxable Disposition. A U.S. Holder of New Common Equity will recognize gain or loss upon the sale or other taxable disposition of New Common Equity equal to the difference between the amount realized upon the disposition and the U.S. Holder’s adjusted tax basis in the New Common Equity. Subject to the recapture rules under IRC section 108(e)(7), any such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder has held the New Common Equity for more than one year as of the date of disposition. Under the IRC section 108(e)(7) recapture rules, if the Restructuring Transactions are treated as a Reorganization, a U.S. Holder may be required to treat gain recognized on the taxable disposition of New Common Equity as ordinary income if the U.S. Holder took a bad debt deduction with respect to the Prepetition Debt. U.S. Holders should consult their tax advisors regarding the applicable tax rates and netting rules for capital gains and losses. There are limitations on the deduction of capital losses by both corporate and noncorporate taxpayers.

3. Non U.S. Holders

The rules governing U.S. federal income taxation of a Non-U.S. Holder are complex. The following discussion includes only certain U.S. federal income tax consequences of the Plan to Non-U.S. Holders. The discussion does not include any non-U.S. tax considerations. Non-U.S. Holders should consult with their own tax advisors to determine the effect of U.S. federal, state, and local tax laws, as well as any other applicable non-U.S. tax laws and/or treaties, with regard to their participation in the transactions contemplated by the Plan, their ownership of Claims and the ownership, exercise and disposition of New Common Equity and Rights, as applicable.

a. Distributions on New Common Equity

Any distributions made with respect to New Common Equity will constitute dividends for federal income tax purposes to the extent such distributions are paid out of the Reorganized Debtor Group’s current or accumulated earnings and profits as determined for federal income tax purposes. Except as described below, dividends paid with respect to New Common Equity held by a Non-U.S. Holder that are not effectively connected with such Non-U.S. Holder’s conduct of a U.S. trade or business (and if an income tax treaty applies, are not attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States) will be subject to federal withholding tax at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty). A Non-U.S. Holder generally will be required to satisfy certain IRS certification requirements in order to claim a reduction of or exemption from withholding under a tax treaty by filing IRS Form W-8BEN or W-8BEN-E, as applicable (or a successor form), or other applicable IRS Form W-8, upon which the Non-U.S. Holder certifies, under penalties of perjury, its status as a non-U.S. person and its entitlement to the lower treaty rate or exemption from tax with respect to such payments. Dividends paid with respect to New Common Equity held by a Non-U.S. Holder that are effectively connected with a Non-U.S. Holder’s conduct of a U.S. trade or business (and if required by an applicable income tax treaty, are attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States) generally will not be subject to withholding tax, provided the Non-U.S. Holder provides a properly executed IRS Form W-8ECI (or a successor form). However, such dividends generally will be subject to U.S. federal income tax in the same manner as a U.S. Holder, and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.


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b. Gain Recognition in Exchange or Resulting from Sale, Redemption or Repurchase of New Common Equity

Whether a Non-U.S. Holder realizes gain or loss on an exchange and the amount of such gain or loss is determined in the same manner as set forth above in connection with U.S. Holders. Subject to the discussions below regarding FATCA (as defined below) and backup withholding, any gain recognized by a Non-U.S. Holder on the Exchanges (as described above in “—U.S. Holders of First Lien Notes Claims and Junior Notes Claims (Classes 2 and 3)—Exchanges of Prepetition Debt for New Common Equity, Rights and Cash”) or a subsequent sale or other taxable disposition of New Common Equity (as described above in “—U.S. Holders of First Lien Notes Claims and Junior Notes Claims (Classes 2 and 3)—Consequences to U.S. Holders Regarding Owning and Disposing of New Common Equity—Sale or Other Taxable Disposition”) generally will not be subject to U.S. federal income taxation unless (a) the Non-U.S. Holder is an individual who was present in the United States for 183 days or more during the taxable year in which the relevant sale, exchange or other taxable disposition occurs and certain other conditions are met, (b) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States (and if required by an applicable income tax treaty, such gain is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States) or (c) solely with respect to New Common Equity, the issuer of such equity is or has been during a specified testing period a “U.S. real property holding corporation” (a “USRPHC”) as defined in section 897 of the Tax Code.

If the first exception applies, to the extent that any gain is recognized, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty) on the amount by which such Non-U.S. Holder’s capital gains allocable to U.S. sources exceed its capital losses allocable to U.S. sources during the taxable year of the exchange. If the second exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax with respect to any gain recognized in the same manner as a U.S. Holder. Such gain generally will not be subject to withholding tax, provided the Non-U.S. Holder provides a properly executed IRS Form W-8ECI (or a successor form). In addition, if such Non-U.S. Holder is a corporation for U.S. federal income tax purposes, it may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.

With respect to the third exception above, Hexion LLC does not believe that it has been or currently is, and does not expect Reorganized Hexion to become, a USRPHC. Because the determination of whether Hexion LLC and/or Reorganized Hexion is a USRPHC depends, however, on the fair market value of its “U.S. real property interests” relative to the fair market value of its non-U.S. real property interests and its other business assets, there can be no assurance that Hexion LLC has not been and currently is not a USRPHC or that Reorganized Hexion will not become one in the future. If Reorganized Hexion becomes a USRPHC, gain arising from the sale or other taxable disposition by a Non-U.S. Holder of New Common Equity will not be subject to U.S. federal income tax if such equity is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, and such Non-U.S. Holder owned, actually and constructively, 5% or less of New Common Equity throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S. Holder’s holding period. However, at this time, it is not yet known whether the “regularly traded” exception would be available to Non-U.S. Holders with respect to the New Common Equity.


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c. Additional Withholding Tax on Payments Made to Foreign Accounts

Withholding taxes may be imposed under sections 1471 to 1474 of the Tax Code (such sections commonly referred to as the Foreign Account Tax Compliance Act, or “FATCA”) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on New Common Equity paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Tax Code), unless (1) the foreign financial institution undertakes certain diligence, reporting and withholding obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Tax Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence, reporting and withholding requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each as defined in the Tax Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

Prior to the issuance of recently proposed Treasury Regulations, withholding under FATCA would have also applied to payments of gross proceeds from the sale or other disposition of New Common Equity on or after January 1, 2019. However, the proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.

4. Information Reporting and Backup Withholding

The Debtors and applicable withholding agents will withhold all amounts required by law to be withheld from payments of interest and dividends, whether in connection with distributions under the Plan or in connection with payments made on account of consideration received pursuant to the Plan, and will comply with all applicable information reporting requirements. The IRS may make the information returns reporting such interest and dividends and withholding available to the tax authorities in the country in which a Non-U.S. Holder is resident. In general, information reporting requirements may apply to distributions or payments under the Plan. Additionally, under the backup withholding rules, a Holder may be subject to backup withholding (currently at a rate of 24%) with respect to distributions or payments made pursuant to the Plan unless that Holder: (a) comes within certain exempt categories (which generally include corporations) and, when required, demonstrates that fact; or (b) timely provides a correct taxpayer identification number and certifies under penalty of perjury that the taxpayer identification number is correct and that the Holder is not subject to backup withholding (generally in the form of a properly executed IRS Form W-9 for a U.S. Holder, and, for a Non-U.S. Holder, in the form of a properly executed applicable IRS Form W-8 (or otherwise establishes such Non-U.S. Holder’s eligibility for an exemption). Backup withholding is not an additional tax but is, instead, an advance payment that may be refunded to the extent it results in an overpayment of tax; provided that the required information is timely provided to the IRS.

In addition, from an information reporting perspective, Treasury Regulations generally require disclosure by a taxpayer on its U.S. federal income tax return of certain types of transactions in which the taxpayer participated, including, among other types of transactions, certain transactions that result in the taxpayer’s claiming a loss in excess of specified thresholds. Holders are urged to consult their tax advisors regarding


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these regulations and whether the transactions contemplated by the Plan would be subject to these regulations and require disclosure on the Holders’ tax returns.

THE FOREGOING DISCUSSION OF FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PLAN DESCRIBED HEREIN. NEITHER THE PROPONENTS NOR THEIR PROFESSIONALS WILL HAVE ANY LIABILITY TO ANY PERSON OR HOLDER ARISING FROM OR RELATED TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PLAN OR THE FOREGOING DISCUSSION. . .


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XIII. CONCLUSION AND RECOMMENDATION

The Debtors believe the Plan is in the best interests of all stakeholders and urge the holders of Claims in Classes 2 and 3 to vote in favor thereof.

Respectfully submitted, as of the date first set forth above,

Hexion Holdings LLC (on behalf of itself and all other Debtors)

By: /s/ George F. Knight, III Name: George F. Knight, III Title: Executive Vice President and Chief Financial Officer


EXHIBIT A

Case 19-10684-KG Doc 447-1 Filed 05/23/19 Page 1 of 72


IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: HEXION HOLDINGS LLC, et al.,1 Debtors.

x : : : : : x

Chapter 11 Case No. 19-10684 (KG) Jointly Administered

SECOND AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF HEXION HOLDINGS LLC AND ITS

DEBTOR AFFILIATES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

George A. Davis (admitted pro hac vice) Andrew M. Parlen (admitted pro hac vice) Hugh Murtagh (admitted pro hac vice) LATHAM & WATKINS LLP 885 Third Avenue New York, New York 10022 Telephone: (212) 906-1200 Facsimile: (212) 751-4864 Email: [email protected] [email protected] [email protected] - and -

Caroline A. Reckler (admitted pro hac vice) Jason B. Gott (admitted pro hac vice) LATHAM & WATKINS LLP 330 North Wabash Avenue, Suite 2800 Chicago, Illinois 60611 Telephone: (312) 876-7700 Facsimile: (312) 993-9767 Email: [email protected] [email protected]

Mark D. Collins (No. 2981) Michael J. Merchant (No. 3854) Amanda R. Steele (No. 5530) Brendan J. Schlauch (No. 6115) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Fax: (302) 651-7701 Email: [email protected] [email protected] [email protected] [email protected]

Counsel to the Debtors and Debtors in Possession

Dated: May 23, 2019

1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are Hexion Holdings LLC

(6842); Hexion LLC (8090); Hexion Inc. (1250); Lawter International Inc. (0818); Hexion CI Holding Company (China) LLC (7441); Hexion Nimbus Inc. (4409); Hexion Nimbus Asset Holdings LLC (4409); Hexion Deer Park LLC (8302); Hexion VAD LLC (6340); Hexion 2 U.S. Finance Corp. (2643); Hexion HSM Holdings LLC (7131); Hexion Investments Inc. (0359); Hexion International Inc. (3048); North American Sugar Industries Incorporated (9735); Cuban-American Mercantile Corporation (9734); The West India Company (2288); NL Coop Holdings LLC (0696); and Hexion Nova Scotia Finance, ULC (N/A). The address of the Debtors’ corporate headquarters is 180 East Broad Street, Columbus, Ohio 43215.

RLF1 21302594v.1


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TABLE OF CONTENTS

Page

Article I. DEFINED TERMS AND RULES OF INTERPRETATION......................................................................... 1 A. Defined Terms .................................................................................................................................. 1 B. Rules of Interpretation .................................................................................................................... 20

Article II. ADMINISTRATIVE CLAIMS, DIP FACILITY CLAIMS, PRIORITY TAX CLAIMS, OTHER PRIORITY CLAIMS AND UNITED STATES TRUSTEE STATUTORY FEES ........................ 21 A. Administrative Claims .................................................................................................................... 21 B. DIP Facility Claims ......................................................................................................................... 23 C. Priority Tax Claims ......................................................................................................................... 23 D. Other Priority Claims ...................................................................................................................... 24 E. United States Trustee Statutory Fees .............................................................................................. 24

Article III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS ........................................... 24 A. Classification of Claims .................................................................................................................. 24 B. Treatment of Claims and Interests .................................................................................................. 25 C. Special Provision Governing Unimpaired Claims .......................................................................... 28 D. Acceptance or Rejection of the Plan ............................................................................................... 28 E. Nonconsensual Confirmation .......................................................................................................... 29 F. Subordinated Claims ....................................................................................................................... 29 G. Elimination of Vacant Classes ........................................................................................................ 29 H. Intercompany Interests and Intercompany Claims .......................................................................... 29

Article IV. MEANS FOR IMPLEMENTATION OF THE PLAN .............................................................................. 30 A. General Settlement of Claims and Interests .................................................................................... 30 B. Restructuring Transactions ............................................................................................................. 30 C. Corporate Existence ........................................................................................................................ 31 D. Vesting of Assets in the Reorganized Debtors ................................................................................ 31 E. Indemnification Provisions in Organizational Documents .............................................................. 32 F. Cancellation of Agreements and Equity Interests ........................................................................... 32 G. Sources for Plan Distributions and Transfers of Funds Among Debtors ........................................ 34 H. New Debt, Approval of New Debt Documentation, and the Settlement Note ................................ 34 I. Reorganized Debtors’ Ownership ................................................................................................... 35 J. Exemption from Registration Requirements ................................................................................... 36 K. Organizational Documents .............................................................................................................. 37 L. Exemption from Certain Transfer Taxes and Recording Fees ........................................................ 37 M. Other Tax Matters ........................................................................................................................... 37 N. Directors and Officers of the Reorganized Debtors ........................................................................ 38 O. Directors and Officers Insurance Policies ....................................................................................... 38 P. Preservation of Rights of Action ..................................................................................................... 39 Q. Corporate Action ............................................................................................................................. 39 R. Effectuating Documents; Further Transactions ............................................................................... 40 S. Management Incentive Plan ............................................................................................................ 40 T. Company Status Upon Emergence .................................................................................................. 40 U. Payment of Fees and Expenses of the Consenting Noteholders ...................................................... 40 V. Payment of Trustee Fees ................................................................................................................. 40

Article V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES; EMPLOYEE BENEFITS; AND INSURANCE POLICIES ............................................................................................... 41 A. Assumption and Rejection of Executory Contracts and Unexpired Leases .................................... 41 B. Cure of Defaults for Assumed Executory Contracts and Unexpired Leases ................................... 42 C. Claims Based on Rejection of Executory Contracts and Unexpired Leases ................................... 42 D. Contracts and Leases Entered into After the Petition Date ............................................................. 43


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E. Reservation of Rights ...................................................................................................................... 43 F. Indemnification Provisions and Reimbursement Obligations ......................................................... 43 G. Employee Compensation and Benefits ........................................................................................... 43 H. Insurance Contracts ......................................................................................................................... 44

Article VI. PROVISIONS GOVERNING DISTRIBUTIONS .................................................................................... 45 A. Distribution on Account of Claims and Interests Allowed as of the Effective Date ....................... 45 B. Distributions on Account of Claims and Interests Allowed After the Effective Date ..................... 45 C. Timing and Calculation of Amounts to Be Distributed .................................................................. 46 D. Delivery of Distributions ................................................................................................................ 46 E. Compliance with Tax Requirements/Allocations ............................................................................ 49 F. Surrender of Canceled Instruments or Securities ............................................................................ 50 G. Claims Paid or Payable by Third Parties. ........................................................................................ 50

Article VII. PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS ........................................................................................................... 50 A. No Filing of Proofs of Claim or Equity Interests ............................................................................ 50 B. Prosecution of Objections to Claims ............................................................................................... 51 C. Estimation of Claims and Interests.................................................................................................. 51 D. No Distributions Pending Allowance .............................................................................................. 51 E. Time to File Objections to Claims .................................................................................................. 52

Article VIII. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE ............................................................... 52 A. Conditions Precedent to the Effective Date .................................................................................... 52 B. Waiver of Conditions ...................................................................................................................... 53 C. Effect of Non-Occurrence of Conditions to the Effective Date ...................................................... 53

Article IX. RELEASE, INJUNCTION, AND RELATED PROVISIONS .................................................................. 54 A. Discharge of Claims and Termination of Equity Interests; Compromise and Settlement of

Claims, Equity Interests, and Controversies. .................................................................................. 54 B. Releases by the Debtors ................................................................................................................ 54 C. Releases by Holders of Claims and Equity Interests .................................................................. 56 D. Exculpation .................................................................................................................................... 57 E. Injunction....................................................................................................................................... 58 F. Setoffs and Recoupment ................................................................................................................. 58 G. Release of Liens .............................................................................................................................. 58

Article X. RETENTION OF JURISDICTION ............................................................................................................ 59

Article XI. MODIFICATION, REVOCATION, OR WITHDRAWAL OF PLAN .................................................... 61 A. Modification of Plan ....................................................................................................................... 61 B. Effect of Confirmation on Modifications ........................................................................................ 62 C. Revocation of Plan; Reservation of Rights if Effective Date Does Not Occur ............................... 62

Article XII. MISCELLANEOUS PROVISIONS ........................................................................................................ 62 A. Immediate Binding Effect ............................................................................................................... 62 B. Additional Documents .................................................................................................................... 62 C. Payment of Statutory Fees .............................................................................................................. 62 D. Reservation of Rights ...................................................................................................................... 63 E. Successors and Assigns ................................................................................................................... 63 F. Service of Documents ..................................................................................................................... 63 G. Term of Injunctions or Stays ........................................................................................................... 65 H. Entire Agreement ............................................................................................................................ 65 I. Governing Law ............................................................................................................................... 65 J. Exhibits ........................................................................................................................................... 65 K. Nonseverability of Plan Provisions upon Confirmation .................................................................. 65


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L. Closing of Chapter 11 Cases ........................................................................................................... 66 M. Conflicts .......................................................................................................................................... 66 N. Dissolution of the Committee ......................................................................................................... 66 O. Section 1125(e) Good Faith Compliance ........................................................................................ 66

Exhibits


SECOND AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF HEXION HOLDINGS LLC AND ITS

DEBTOR AFFILIATES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

Hexion Holdings LLC, Hexion LLC, Hexion Inc., Lawter International Inc., Hexion CI Holding Company (China) LLC, Hexion Nimbus Inc., Hexion Nimbus Asset Holdings LLC, Hexion Deer Park LLC, Hexion VAD LLC, Hexion 2 U.S. Finance Corp., Hexion HSM Holdings LLC, Hexion Investments Inc., Hexion International Inc., North American Sugar Industries Incorporated, Cuban-American Mercantile Corporation, The West India Company, NL Coop Holdings LLC, and Hexion Nova Scotia Finance, ULC (each a “Debtor” and, collectively, the “Debtors”), propose this second amended joint plan of reorganization (the “Plan”) for the resolution of the outstanding Claims against, and Equity Interests in, the Debtors. Capitalized terms used in the Plan and not otherwise defined have the meanings ascribed to such terms in Article I.A of the Plan.

Although proposed jointly for administrative purposes, the Plan constitutes a separate Plan for each Debtor for the resolution of outstanding Claims and Interests pursuant to the Bankruptcy Code. The Debtors seek to consummate the Restructuring Transactions on the Effective Date of the Plan. Each Debtor is a proponent of the Plan within the meaning of section 1129 of the Bankruptcy Code. The classifications of Claims and Interests set forth in Article III of the Plan shall be deemed to apply separately with respect to each Plan proposed by each Debtor, as applicable. The Plan does not contemplate substantive consolidation of any of the Debtors.

Reference is made to the Disclosure Statement, filed contemporaneously with the Plan, for a discussion of the Debtors’ history, businesses, results of operations, historical financial information, projections, and future operations, as well as a summary and analysis of the Plan and certain related matters, including distributions to be made under the Plan.

ALL HOLDERS OF CLAIMS AND INTERESTS ENTITLED TO VOTE ON THE PLAN ARE ENCOURAGED TO READ THE PLAN AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.

Article I.

DEFINED TERMS AND RULES OF INTERPRETATION

A. Defined Terms

The following terms shall have the following meanings when used in capitalized form herein:

1. “1.5 Lien Notes” means the 13.750% notes due 2022 issued under the 1.5 Lien Notes Indenture.

2. “1.5 Lien Notes Claim” means any Claim arising under or based upon the 1.5 Lien Notes or the 1.5 Lien Notes Indenture.

3. “1.5 Lien Notes Documents” means the 1.5 Lien Notes Indenture and all agreements and documents related to the 1.5 Lien Notes Indenture or the 1.5 Lien Notes.

4. “1.5 Lien Notes Indenture” means that certain Indenture, dated as of February 8, 2017, by and among Hexion Inc., as issuer, certain of the other Debtors, as guarantors, and the 1.5 Lien Notes Indenture Trustee (as modified, amended, or supplemented from time to time).


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5. “1.5 Lien Notes Indenture Trustee” means Wilmington Savings Fund Society, FSB, as successor trustee under the 1.5 Lien Notes Indenture.

6. “6.625% First Lien Notes” means the 6.625% notes due 2020 issued under the 6.625% First Lien Notes Indenture.

7. “6.625% First Lien Notes Claim” means any Claim arising under or based upon the 6.625% First Lien Notes or the 6.625% First Lien Notes Indenture.

8. “6.625% First Lien Notes Documents” means the 6.625% First Lien Notes Indenture and all agreements and documents related to the 6.625% First Lien Notes Indenture and the 6.625% First Lien Notes.

9. “6.625% First Lien Notes Indenture” means that certain Indenture, dated as of March 14, 2012, by and among Hexion Inc., as issuer, certain of the other Debtors, as guarantors, and the 6.625% First Lien Notes Indenture Trustee (as modified, amended, or supplemented from time to time).

10. “6.625% First Lien Notes Indenture Trustee” means U.S. Bank, National Association, as successor trustee, paying agent, registrar, notes custodian, collateral agent and senior priority agent under the 6.625% First Lien Notes Documents.

11. “6.625% First Lien Notes Ration” means the percentage of the First Lien Notes Recovery to be distributed to the Holders of Allowed 6.625% First Lien Notes Claims calculated in accordance with the First Lien Notes Distribution Allocation.




15. “10.000% First Lien Notes Indenture” means that certain Indenture, dated as of April 15, 2015, by and among Hexion Inc., as issuer, certain of the other Debtors, as guarantors, and the 10.000% First Lien Notes Indenture Trustee (as modified, amended, or supplemented from time to time).

16. “10.000% First Lien Notes Indenture Trustee” means U.S. Bank, National Association, as successor trustee, paying agent, registrar, notes custodian, collateral agent and senior priority agent under the 10.000% First Lien Notes Documents.





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21. “10.375% First Lien Notes Indenture” means that certain Indenture, dated as of February 8, 2017, by and among Hexion Inc., as issuer, certain of the other Debtors, as guarantors, and the 10.375% First Lien Notes Indenture Trustee (as modified, amended, or supplemented from time to time).

22. “10.375% First Lien Notes Indenture Trustee” means U.S. Bank, National Association, as successor, paying agent, registrar, notes custodian, collateral agent and senior priority agent trustee under the 10.375% First Lien Notes Documents.


24. “Additional Debt Backstop Premium” means a premium equal to 1.5% of the aggregate amount of the backstop commitments of the Debt Backstop Parties under the Debt Backstop Agreement, which shall be fully earned and nonrefundable upon entry of the DBA Approval Order, payable free and clear of and without withholding on account of any taxes, treated as an Allowed Administrative Claim against each of the Estates, and payable in Cash upon the closing of the New Long-Term Debt or otherwise as set forth in the Debt Backstop Agreement, and subject to the terms and conditions of the Debt Backstop Agreement.

25. “Adequate Protection Payments” means the aggregate of all adequate protection payments representing interest made with respect to the First Lien Notes pursuant to paragraph 16(c) of the Final DIP Order.

26. “Administrative Claim” means a Claim (other than any DIP Facility Claim or Intercompany Claim) for costs and expenses of administration under sections 503(b), 507(b), or 1114(e)(2) of the Bankruptcy Code, including: (a) the actual and necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the Estates and operating the businesses of the Debtors; (b) Professional Fee Claims (to the extent Allowed by the Bankruptcy Court); (c) the Equity Backstop Premium, the Debt Backstop Premium and the Additional Debt Backstop Premium; and (d) all fees and charges assessed against the Estates under chapter 123 of title 28 United States Code, 28 U.S.C. §§ 1911-1930.

27. “Administrative Claims Bar Date” means the date that is the 30th day after the Effective Date.

28. “Aggregate Fully Diluted Common Shares” means the total number of shares of New Common Equity outstanding as of the Effective Date (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) after giving effect to the Plan (but prior to any New Common Equity issued or issuable under the Management Incentive Plan, the Equity Backstop Premium, and the Debt Backstop Premium).

29. “Agreed Dilution” means dilution of the New Common Equity on account of the additional New Common Equity issued pursuant to (a) the Rights Offering, (b) the Management Incentive Plan, and (c) to the extent paid in New Common Equity, the Equity Backstop Agreement and the Debt Backstop Agreement (including, respectively, as payment of the Equity Backstop Premium, and the Debt Backstop Premium).


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30. “Affiliate” means an affiliate as defined in section 101(2) of the Bankruptcy Code.

31. “Allowed” means, with respect to any Claim or Interest, except as otherwise provided herein, a Claim or Interest allowed under the Plan, under the Bankruptcy Code, as applicable, or by a Final Order.

32. “Avoidance Actions” means any and all avoidance, recovery, subordination, or other claims, actions, or remedies that may be brought by or on behalf of the Debtors or their Estates or other authorized parties in interest under the Bankruptcy Code or applicable non-bankruptcy law, including actions or remedies under sections 502, 510, 542, 544, 545, 547 through 553, and 724(a) of the Bankruptcy Code or under similar or related state or federal statutes and common law, including fraudulent transfer laws.

33. “Backstop Agreements” means the Debt Backstop Agreement and the Equity Backstop Agreement.

34. “Ballot” means the ballots accompanying the Disclosure Statement upon which certain Holders of Impaired Claims entitled to vote shall, among other things, indicate their acceptance or rejection of the Plan in accordance with the Plan and the procedures governing the solicitation process.

35. “Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§ 101-1532.

36. “Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware or such other court having jurisdiction over the Chapter 11 Cases.

37. “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, 28 U.S.C. § 2075, as applicable to the Chapter 11 Cases, and the general, local, and chambers rules of the Bankruptcy Court.

38. “Board Committee” means Cyrus Capital Partners, L.P.; Monarch Alternative Capital LP; GoldenTree Asset Management; GSO Capital Partners; Brigade Capital Management; and Davidson Kempner Capital Management LP; provided, that, (x) if a party represented on the Board Committee determines to give up its position on the Board Committee, the next largest pro forma holder of New Common Equity willing to serve will replace such resigning holder and (y) if any holder of New Common Equity represented on the Board Committee sells Claims and, after such sale, such holder is not then one of the six (6) largest holders of New Common Equity, on a pro forma basis (without giving effect to the Agreed Dilution), the other members of the Board Committee shall determine whether to request such selling member resign from the Board Committee and be replaced by the next largest pro forma holder of New Common Equity willing to serve.

39. “Borden 2021 Debentures” means the 9.200% unsecured debentures due 2021 issued by Borden Inc., predecessor-in-interest to Hexion Inc., pursuant to the Borden Debentures Indenture.

40. “Borden 2021 Debentures Claim” means any Claim arising under or based upon the Borden 2021 Debentures or the Borden Debentures Indenture.

41. “Borden 2023 Debentures” means the 7.875% unsecured debentures due 2023 issued by Borden Inc., predecessor-in-interest to Hexion Inc., pursuant to the Borden Debentures Indenture.

42. “Borden 2023 Debentures Claim” means any Claim arising under or based upon the Borden 2023 Debentures or the Borden Debentures Indenture.


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43. “Borden Debentures Claims” means, collectively, the Borden 2021 Debentures Claims and the Borden 2023 Debentures Claims.

44. “Borden Debentures Indenture” means that certain Indenture, dated December 15, 1987, by and between Borden, Inc. (predecessor to Hexion Inc.) and the Borden Debentures Trustee (as modified, amended, or supplemented from time to time).

45. “Borden Debentures Trustee” means The Bank of New York, in its capacity as trustee under the Borden Debentures Indenture.

46. “Business Day” means any day, other than a Saturday, Sunday or “legal holiday” (as that term is defined in Bankruptcy Rule 9006(a)).

47. “Cash” means the legal tender of the United States of America or the equivalent thereof.

48. “Causes of Action” means any claims, interests, damages, remedies, causes of action, demands, rights, actions, suits, obligations, liabilities, accounts, defenses, offsets, powers, privileges, licenses, liens, indemnities, guaranties, and franchises of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, contingent or non-contingent, liquidated or unliquidated, secured or unsecured, assertable, directly or derivatively, matured or unmatured, suspected or unsuspected, in contract, tort, law, equity, or otherwise. Causes of Action also include: (a) all rights of setoff, counterclaim, or recoupment and claims under contracts or for breaches of duties imposed by law; (b) the right to object to or otherwise contest Claims or Interests; (c) Avoidance Actions; and (d) such claims and defenses as fraud, mistake, duress, and usury, and any other defenses set forth in section 558 of the Bankruptcy Code.

49. “Chapter 11 Cases” means (a) when used with reference to a particular Debtor, the chapter 11 case filed for that Debtor under chapter 11 of the Bankruptcy Code in the Bankruptcy Court and (b) when used with reference to all Debtors, the jointly administered chapter 11 cases for all of the Debtors.

50. “Claim” means any claim, as defined in section 101(5) of the Bankruptcy Code, against any of the Debtors.

51. “Claims Objection Deadline” means the deadline for objecting to a Claim, which shall be on the date that is the later of (a)(i) with respect to Administrative Claims, 120 days after the Administrative Claims Bar Date or (ii) with respect to all other Claims, 180 days after the Effective Date and (b) such other deadline as may be specifically fixed by the Debtors or the Reorganized Debtors, as applicable, or by an order of the Bankruptcy Court for objecting to such Claims. For the avoidance of doubt, no Claims Objection Deadline shall apply as to Claims in Class 1 or Class 4, as to which the Debtors and the Reorganized Debtors (as applicable) shall retain all applicable rights, defenses, and counterclaims.

52. “Claims Register” means the official register of Claims and Equity Interests maintained by the Notice and Claims Agent.

53. “Class” means a category of Claims or Equity Interests as set forth in Article III of the Plan pursuant to section 1122(a) of the Bankruptcy Code.

54. “Committee” means the statutory committee of unsecured creditors appointed in the Chapter 11 Cases pursuant to section 1102 of the Bankruptcy Code by the United States Trustee, pursuant to the Notice of Appointment of Official Committee of Unsecured Creditors [Docket No. 148] on April 10,


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2019, and as such has been or may be reconstituted from time to time, including pursuant to Docket Nos. 190 and 226.

55. “Compensation and Benefits Programs” means all employment, confidentiality, and non-competition agreements, bonus, gainshare, and incentive programs (other than awards of Equity Interests, stock options, restricted stock, restricted stock units, warrants, rights, convertible, exercisable, or exchangeable securities, stock appreciation rights, phantom stock rights, redemption rights, profits interests, equity-based awards, or contractual rights to purchase or acquire equity interest at any time and all rights arising with respect thereto), vacation, holiday pay, severance, retirement, supplemental retirement, executive retirement, pension, deferred compensation, medical, dental, vision, life and disability insurance, flexible spending account, and other health and welfare benefit plans, employee expense reimbursement, and other benefit obligations of the Debtors, and all amendments and modifications thereto, applicable to the Debtors’ employees, former employees, retirees, and non-employee directors and the employees, former employees and retirees of their subsidiaries.

56. “Confirmation” means the entry of the Confirmation Order by the Bankruptcy Court on the docket of the Chapter 11 Cases.

57. “Confirmation Date” means the date upon which Confirmation occurs.

58. “Confirmation Hearing” means the hearing conducted by the Bankruptcy Court pursuant to section 1128(a) of the Bankruptcy Code to consider confirmation of the Plan, as such hearing may be adjourned or continued from time to time.

59. “Confirmation Order” means the order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code.

60. “Consenting Noteholders” means the holders of Notes Claims that are or become party to the Restructuring Support Agreement in accordance with the terms thereof.

61. “Consenting Parties” means the Consenting Noteholders and the Consenting Sponsors.

62. “Consenting Sponsors” means the holders of Equity Interests in Hexion Holdings LLC that are or become party to the Restructuring Support Agreement in accordance with the terms thereof.

63. “Consenting Sponsor Claim Settlement” means the agreement by the Consenting Sponsors to receive the Settlement Note on the Effective Date, in full satisfaction, compromise, and discharge of any General Unsecured Claims held by such Consenting Sponsors as of the Effective Date, other than any Claims arising under or related to the Debtors’ Indemnification Provisions or the D&O Liability Insurance Policies.

64. “Cure Cost” means all amounts, including an amount of $0.00, required to cure any monetary defaults under any Executory Contract or Unexpired Lease (or such lesser amount as may be agreed upon by the parties under an Executory Contract or Unexpired Lease) that is to be assumed by the Debtors pursuant to sections 365 or 1123 of the Bankruptcy Code.

65. “D&O Liability Insurance Policies” means, collectively, all insurance policies (including any “tail policy” and all agreements, documents, or instruments related thereto) issued at any time to or providing coverage to of any of the Debtors for current or former directors’, managers’, and officers’ liability.


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66. “DBA Approval Order” means the Order Authorizing and Approving Debtors’ (A) Entry into and Performance Under Debt Backstop Agreement, (B) Payment of Related Fees and Expenses, and (C) Incurrence of Indemnity Obligations [Docket No. 368].

67. “Debt Backstop Agreement” means that certain Debt Backstop Commitment Agreement, among the Debtors and the Debt Backstop Parties (including all exhibits, schedules, attachments and/or addendum thereto), pursuant to which the Debt Backstop Parties have agreed to backstop the New Long-Term Debt.

68. “Debt Backstop Parties” means the Consenting Noteholders that have executed the Debt Backstop Agreement.

69. “Debt Backstop Premium” means a premium equal to 3.375% of the aggregate amount of the backstop commitments of the Debt Backstop Parties under the Debt Backstop Agreement, which shall be fully earned and nonrefundable upon entry of the DBA Approval Order, payable free and clear of and without withholding on account of any taxes, treated as an Allowed Administrative Claim against each of the Estates, and payable in Cash (or, at the option of each Debt Backstop Party, in shares of New Common Equity at the Plan Equity Value, which shares shall be incremental to the Aggregate Fully Diluted Common Shares) as set forth in the Debt Backstop Agreement and subject to the terms and conditions of the Debt Backstop Agreement.

70. “Debtor Release” means the releases set forth in Article IX.B of the Plan.


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71. “Definitive Document Consent Rights” means, as to each document made subject thereto under the Restructuring Support Agreement or the Plan, the requirement that such document be consistent with the Restructuring Support Agreement and otherwise in form and substance reasonably acceptable to the Debtors and the Required Consenting Noteholders (and consistent with the Order Authorizing Assumption of Restructuring Support Agreement [Docket No. 366], the Debtors shall use commercially reasonable efforts to consult with the Committee with respect to any proposed modification or amendment to the Plan that adversely impacts the rights of unsecured creditors (including, for the avoidance of doubt, Holders of Junior Notes Claims, the Junior Notes Indenture Trustees and General Unsecured Claims) thereunder or the proposed treatment of unsecured creditors’ claims under the Plan), provided, however, that notwithstanding the foregoing, the New Organizational Documents shall be acceptable only to the Debtors and the Board Committee; provided, further, that the New Organizational Documents shall contain customary minority protections reasonably acceptable to the Required Consenting Noteholders, and there shall be a single class of stock of Reorganized Hexion on the Effective Date; provided, further, as to any inconsistencies between the applicable document and the Restructuring Support Agreement, that (a) the economic treatment provided under the applicable document (including, without limitation, any term or condition affecting or relating to any economic rights or obligations of any Consenting Noteholders in connection with the Restructuring) shall be acceptable to the Debtors, on the one hand, and the Required Consenting Noteholders and/or the Consenting Sponsors (solely as to the respective treatment provided to each of the foregoing), as applicable, and (b) any release, exculpation and injunction provisions under the Plan shall be acceptable to the Required Consenting Parties; and provided, further, that any document referred to in the Plan as subject to the Definitive Document Consent Rights (and any amendments, modifications, supplements or waivers to such document) that (x) affects the release, exculpation, injunction, indemnification or insurance provisions related to the Consenting Sponsors, (y) adversely affects the rights or obligations of the Consenting Sponsors pursuant to or identified in the Restructuring Support Agreement and to be implemented pursuant to the Plan, or (z) relates to the Settlement Note, in each case shall be reasonably acceptable to the Consenting Sponsors. For the avoidance of doubt, nothing in the Plan shall alter any rights of the Debtors or the Consenting Parties under the Restructuring Support Agreement.

72. “DIP ABL Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent, collateral agent, swingline lender and initial issuing bank under the DIP ABL Facility.

73. “DIP ABL Agreement” means that certain Amended and Restated Senior Secured Debtor-in-Possession Asset-Based Revolving Credit Agreement, as amended, supplemented, or modified from time to time, among Hexion LLC as holdings, Hexion Inc., Hexion Canada Inc., Hexion B.V., Hexion UK Limited, Borden Chemical U.K. Limited, and Hexion GmbH as borrowers, the guarantors party thereto, the lenders party thereto, and the DIP ABL Agent.

74. “DIP ABL Arrangers” means JPMorgan Chase Bank, N.A., Credit Suisse Loan Funding and Citibank, N.A., in their respective capacities as joint lead arrangers and joint bookrunners under the DIP ABL Facility.

75. “DIP ABL Facility” means the debtor-in-possession asset-based revolving credit facility provided by the DIP ABL Agreement, as approved by the DIP Orders and as it may be amended, modified, ratified, extended, renewed, restated or replaced from time to time in accordance with the DIP ABL Agreement and the DIP Orders.

76. “DIP Agents” means the DIP ABL Agent and the DIP Term Loan Agent.

77. “DIP Arrangers” means the DIP ABL Arrangers and the DIP Term Loan Arrangers.


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78. “DIP Credit Agreements” means the DIP ABL Agreement and the DIP Term Loan Agreement.

79. “DIP Facilities” means the DIP ABL Facility and the DIP Term Loan Facility.

80. “DIP Facility Claim” means any Claim held by the DIP Agents or DIP Lenders derived from or based upon the DIP Facilities or the DIP Orders, including claims for all principal amounts outstanding, interest, fees, expenses, costs, indemnification and other charges arising under or related to the DIP Facilities.

81. “DIP Intercompany Loan” means that certain intercompany loan made by Hexion International Holdings B.V. to Hexion Inc. pursuant to the terms of the DIP Orders.

82. “DIP Lenders” means the banks, financial institutions, and other lenders party to the DIP Facilities from time to time.

83. “DIP Orders” means, collectively, the Interim DIP Order and the Final DIP Order.

84. “DIP Term Loan Agent” means JPMorgan Chase Bank, N.A., as in its capacity as administrative agent under the DIP Term Loan Facility.

85. “DIP Term Loan Agreement” means that certain Senior Secured Term Loan Agreement, as amended, supplemented, or modified from time to time, among Hexion LLC, Hexion Inc., Hexion International Holdings B.V. as borrower, the guarantors party thereto, the lenders party thereto, and the DIP Term Loan Agent.

86. “DIP Term Loan Arrangers” means Credit Suisse Loan Funding and JPMorgan Chase Bank, N.A., in their respective capacities as joint lead arrangers and joint bookrunners under the DIP Term Loan Agreement.

87. “DIP Term Loan Facility” means the debtor-in-possession term loan credit facility provided by the DIP Term Loan Agreement, as approved by the DIP Orders and as it may be amended, modified, ratified, extended, renewed, restated or replaced from time to time in accordance with the DIP Term Loan Agreement and the DIP Orders

88. “Disclosure Statement” means the disclosure statement for the Plan, including all exhibits and schedules thereto, as amended, supplemented, or modified from time to time, that is prepared and distributed in accordance with sections 1125, 1126(b), and 1145 of the Bankruptcy Code, Bankruptcy Rule 3018, and other applicable law, subject to the Definitive Document Consent Rights.

89. “Disclosure Statement Order” means the order of the Bankruptcy Court approving the Disclosure Statement.

90. “Disputed” means, with respect to any Claim or Equity Interest, except as otherwise provided herein, a Claim or Equity Interest that is not Allowed and not disallowed under the Plan, the Bankruptcy Code, or a Final Order.

91. “Distribution Agent” means the Debtors or any Entity or Entities chosen by the Debtors, which Entities may include the Notice and Claims Agent, the subscription agent for the Rights Offering, and the Indenture Trustees, to make or to facilitate distributions required by the Plan.

92. “Distribution Record Date” means the date for determining which Holders of Claims (other than Holders of Notes Claims) are eligible to receive initial distributions under the Plan, which date shall be the Confirmation Date.


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93. “DTC” means The Depository Trust Company or any successor thereto.

94. “EBA Approval Order” means the Order Authorizing and Approving Debtors’ (A) Entry into and Performance Under Equity Backstop Agreement, (B) Payment of Fees and Expenses, and (C) Incurrence of Indemnity Obligations [Docket No. 367].

95. “Effective Date” means the date on which: (a) no stay of the Confirmation Order is in effect; and (b) all conditions specified in Article VIII.A of the Plan have been (i) satisfied or (ii) waived pursuant to Article VIII.A of the Plan.

96. “Entity” means an entity as defined in section 101(15) of the Bankruptcy Code.

97. “Equity Backstop Agreement” means that certain Equity Backstop Commitment Agreement, among the Debtors and the Equity Backstop Parties (including all exhibits, schedules, attachments and/or addendum thereto), pursuant to which the Equity Backstop Parties have agreed to backstop the Rights Offering.

98. “Equity Backstop Parties” means the Consenting Noteholders that have executed the Equity Backstop Agreement.

99. “Equity Backstop Premium” means a premium equal to 8% of the aggregate amount of obligations backstopped by the Equity Backstop Parties under the Equity Backstop Agreement and which was fully earned and nonrefundable upon entry of the EBA Approval Order, payable free and clear of and without withholding on account of any taxes, treated as an Allowed Administrative Claim against each of the Estates, and paid in Cash (or, at the option of each Equity Backstop Party, in shares of New Common Equity at the Plan Equity Value, which shares shall be incremental to the Aggregate Fully Diluted Common Shares) upon closing of the Rights Offering or otherwise as set forth in the Equity Backstop Agreement, and subject to the terms and conditions of the Equity Backstop Agreement (including, without limitation, the provisions of the Equity Backstop Agreement providing for a reduction in the aggregate Equity Backstop Premium under certain circumstances set forth therein).

100. “Equity Interest” means any issued, unissued, authorized, or outstanding shares of common stock, preferred stock, or other instrument evidencing an ownership interest in a Debtor, whether or not transferable, together with any warrants, equity-based awards, or contractual rights to purchase or acquire such equity interests at any time and all rights arising with respect thereto that existed immediately before the Effective Date; provided that Equity Interest does not include any Intercompany Interest.

101. “Estate” means, as to each Debtor, the estate created for such Debtor in its Chapter 11 Case pursuant to sections 301 and 541 of the Bankruptcy Code.

102. “Exchange Act” means the Securities Exchange Act of 1934, as now in effect or hereafter amended, or any regulations promulgated thereunder.

103. “Exculpated Party” means each of the following, solely in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the Consenting Noteholders; (d) the Equity Backstop Parties; (e) the Debt Backstop Parties; (f) the New Lenders; (g) the New Debt Agents; (h) the New Debt Arrangers; (i) the DIP Lenders; (j) the DIP Agents; (k) the DIP Arrangers; (l) the Consenting Sponsors; (m) the Committee and its current and former members; (n) each of the First Lien Notes Indenture Trustees and the Junior Notes Indenture Trustees; and (o) with respect to each of the foregoing Entities in clauses (a) through (n), each such Entities’ predecessors, successors and assigns, subsidiaries, Affiliates, managed accounts or funds, current and former officers, directors, managers, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys,


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accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such Entities’ respective heirs, executors, estate, and nominees.

104. “Executory Contract” means a contract to which one or more of the Debtors is a party that is subject to assumption or rejection under sections 365 or 1123 of the Bankruptcy Code.

105. “Final DIP Order” means the Final Order Under 11 U.S.C. §§ 105, 361, 362, 363(c), 363(d), 364(c), 364(d), 364(e) and 507 and Bankruptcy Rules 2002, 4001 and 9014 (i) Authorizing the Debtors to Obtain Postpetition Financing, (ii) Authorizing the Debtors to Use Cash Collateral and (iii) Granting Adequate Protection to Prepetition Secured Lenders [Docket No. 294].

106. “Final Order” means an order or judgment of the Bankruptcy Court or other court of competent jurisdiction with respect to the relevant subject matter that has not been reversed, stayed, modified, or amended, and as to which the time to appeal, seek reconsideration under Rule 59(b) or 59(e) of the Federal Rules of Civil Procedure, seek a new trial, reargument, or rehearing and, where applicable, petition for certiorari has expired and no appeal, motion for reconsideration under Rule 59(b) or 59(e) of the Federal Rules of Civil Procedure, motion for a new trial, reargument or rehearing or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought, or as to which any motion for reconsideration that has been filed pursuant to Rule 59(b) or 59(e) of the Federal Rules of Civil Procedure or any motion for a new trial, reargument, or rehearing shall have been denied, resulted in no modification of such order, or has otherwise been dismissed with prejudice; provided that the possibility that a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024, or any analogous rule, may be filed relating to such order or judgment shall not cause such order or judgment not to be a Final Order.

107. “First Lien ABL Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent and collateral agent under the First Lien ABL Credit Agreement.

108. “First Lien ABL Credit Agreement” means that certain Amended and Restated Asset-Based Revolving Credit Agreement, dated as of December 21, 2016, among Hexion Inc., as borrower, Hexion, as holdings, and certain of the other Debtors, as guarantors, the First Lien ABL Agent, and other lenders party thereto (as modified, amended, or supplemented from time to time).

109. “First Lien ABL Lenders” means the banks, financial institutions and other lenders party to the First Lien ABL Credit Agreement from time to time.

110. “First Lien Notes” means, collectively, the 6.625% First Lien Notes, the 10.000% First Lien Notes, and the 10.375% First Lien Notes.

111. “First Lien Notes Claims” means, collectively, the 6.625% First Lien Notes Claims, the 10.000% First Lien Notes Claims, and the 10.375% First Lien Notes Claims.

112. “First Lien Notes Documents” means, collectively, the 6.625% First Lien Notes Documents, the 10.000% First Lien Notes Documents, and the 10.375% First Lien Notes Documents.

113. “First Lien Notes Distribution Allocation” means the allocation of the First Lien Notes Recovery in accordance with Section 2.05(b)(D) of the First Lien Intercreditor Agreement (as defined in the Final DIP Order) and Section 4.01 of the Collateral Agreement (as defined in the Final DIP Order) based on (a) the outstanding amount of principal and accrued interest (as if the Chapter 11 Cases had not been commenced) on the 6.625% First Lien Notes, the 10.000% First Lien Notes and the 10.375% First Lien Notes, respectively, as of the Effective Date less (b) in each case, the amount of Adequate Protection


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Payments made on the 6.625% First Lien Notes, 10.000% First Lien Notes and 10.375% First Lien Notes, respectively.

114. “First Lien Notes Indentures” means, collectively, the 6.625% First Lien Notes Indenture, the 10.000% First Lien Notes Indenture, and the 10.375% First Lien Notes Indenture.

115. “First Lien Notes Indenture Trustees” means, collectively, the 6.625% First Lien Notes Indenture Trustee, the 10.000% First Lien Notes Indenture Trustee, and the 10.375% First Lien Notes Indenture Trustee.

116. “First Lien Notes Recovery” means, collectively, (i) Cash in the amount of $1,450,000,000 less the aggregate amount of Adequate Protection Payments made to the Holders of First Lien Notes Claims during the Chapter 11 Cases, (ii) 72.5% of New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) (subject to the Agreed Dilution), a portion of which may be in the form of New Warrants to the extent permitted by the Plan, and (iii) 72.5% of the Rights.

117. “First Lien Notes Trustee Fees” means, collectively, to the extent not previously paid in connection with the Chapter 11 Cases, all outstanding reasonable and documented compensation, fees and expenses, whether prior to or after the Effective Date, of (a) the First Lien Notes Indenture Trustees, (b) Kelley Drye & Warren, LLP, (c) one local counsel, and (d) any other advisors to the First Lien Notes Indenture Trustee to the extent provided under the First Lien Notes Documents.

118. “General Administrative Claim” means any Administrative Claim, other than a Professional Fee Claim or a Claim for fees and charges assessed against the Estates under chapter 123 of title 28 United States Code, 28 U.S.C. §§ 1911-1930.

119. “General Unsecured Claim” means any unsecured Claim (other than an Administrative Claim, a Priority Tax Claim, an Other Priority Claim, an Intercompany Claim, or a Notes Claim) including without limitation (a) Claims arising from the rejection of Unexpired Leases or Executory Contracts, and (b) Claims arising from any litigation or other court, administrative or regulatory proceeding, including damages or judgments entered against, or settlement amounts owing by a Debtor in connection therewith.

120. “Governmental Unit” means a governmental unit as defined in section 101(27) of the Bankruptcy Code.

121. “Hexion” means Hexion Holdings LLC.

122. “Holder” means an Entity holding a Claim or Interest.

123. “Impaired” means “impaired” within the meaning of section 1124 of the Bankruptcy Code.

124. “Indemnification Provisions” means each of the Debtors’ indemnification provisions in effect as of the Petition Date, whether in the Debtors’ bylaws, certificates of incorporation, other formation documents, board resolutions, management or indemnification agreements, employment contracts, or otherwise providing a basis for any obligation of a Debtor to indemnify, defend, reimburse, or limit the liability of, or to advances fees and expenses to, any of the Debtors’ current and former directors, officers, equity holders, managers, members, employees, accountants, investment bankers, attorneys, other professionals, and professionals of the Debtors, and such current and former directors’, officers’, and managers’ respective Affiliates, each of the foregoing solely in their capacity as such.


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125. “Initial Distribution Date” means the date that is on or as soon as practicable after the Effective Date when distributions under the Plan shall commence for each Class entitled to receive distributions.

126. “Insurance Contract” means all insurance policies that have been issued at any time to or provide coverage to any of the Debtors and all agreements, documents or instruments relating thereto, including but not limited to, D&O Liability Insurance Policies.

127. “Insurer” means any company or other entity that issued an Insurance Contract, any third party administrator, and any respective predecessors and/or affiliates thereof.

128. “Intercompany Claims” means, collectively, any Claim held by a Debtor against another Debtor.

129. “Intercompany Interest” means an Equity Interest in a Debtor held by another Debtor.

130. “Interests” means, collectively, Equity Interests and Intercompany Interests.

131. “Interim DIP Order” means the Interim Order Under 11 U.S.C. §§ 105, 361, 362, 363(c), 363(d), 364(c), 364(d), 364(e) and 507 and Bankruptcy Rules 2002, 4001 and 9014 (i) Authorizing the Debtors to Obtain Postpetition Financing, (ii) Authorizing the Debtors to Use Cash Collateral, (iii) Granting Adequate Protection to Prepetition Secured Lenders and (iv) Scheduling a Final Hearing Pursuant to Bankruptcy Rules 4001(b) and 4001(c) [Docket No. 103].

132. “Junior Notes Claims” means, collectively, the 1.5 Lien Notes Claims, the Second Lien Notes Claims, and the Borden Debentures Claims.

133. “Junior Notes Indentures” means, collectively, the 1.5 Lien Notes Indenture, the Second Lien Notes Indenture, and the Borden Debentures Indenture.

134. “Junior Notes Indenture Trustees” means, collectively, the 1.5 Lien Notes Indenture Trustee, the Second Lien Notes Indenture Trustee, and the Borden Debentures Trustee.

135. “Junior Notes Trustee Professional Fees” means, collectively, to the extent not previously paid in connection with the Chapter 11 Cases, all outstanding reasonable and documented fees and expenses of (a)(i) Arnold & Porter Kaye Scholer LLP as counsel for the 1.5 Lien Notes Indenture Trustee, and (ii) one local counsel, (b)(i) Reed Smith, counsel for the Second Lien Notes Indenture Trustee, and (ii) one local counsel, (c)(i) Emmet Marvin, counsel for the Borden Debenture Trustee, and (ii) one local counsel, and (d) advisors to the 1.5 Lien Notes Indenture Trustee, the Second Lien Notes Indenture Trustee, and the Borden Debentures Trustee to the extent required by the applicable 1.5 Lien Notes Indenture, Second Lien Notes Indenture, or Borden Debentures Indenture.

136. “Lien” means a lien as defined in section 101(37) of the Bankruptcy Code.

137. “Local Bankruptcy Rules” means the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware.

138. “Management Incentive Plan” means the management incentive plan of the Reorganized Debtors, which shall include up to 10% of the fully diluted New Common Equity issued on the Effective Date (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants), the terms of which shall be determined by the New Board (including with respect to form, structure, allocation,


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participation, timing, vesting and structure of issuance thereunder), subject, prior to the Effective Date, to the Definitive Document Consent Rights.

139. “New ABL Agent” means the administrative agent, collateral agent, swingline lender and initial issuing bank, in its capacity as such, under the New ABL Credit Facility.

140. “New ABL Arranger” means any lead arranger and/or bookrunner, in its capacity as such, under the New ABL Credit Facility.

141. “New ABL Credit Facility” means the asset-based revolving credit facility to be entered into by the Reorganized Debtors on the Effective Date.

142. “New ABL Lenders” means the banks, financial institutions and other lenders party to the New ABL Credit Facility from time to time.

143. “New Board” means the initial board of managers or similar governing body of Reorganized Hexion.

144. “New Common Equity” means the common equity in Reorganized Hexion to be authorized, issued, or reserved on the Effective Date pursuant to the Plan or to be issued upon exercise of the New Warrants.

145. “New Debt” means the New ABL Credit Facility and the New Long-Term Debt.

146. “New Debt Agents” means, collectively, the New ABL Agent and the New Term Agent.

147. “New Debt Arrangers” means, collectively, any New ABL Arranger and any New Term Arranger.

148. “New Debt Documentation” means the credit agreements, indentures, escrow agreements and other documents governing the New Debt, substantially final forms of which will be filed with the Plan Supplement.

149. “New Lenders” means, collectively, the New ABL Lenders and the New Term Loan Lenders.

150. “New Long-Term Debt” means the term loan credit facility (or facilities) to be entered into by the Reorganized Debtors (and other entities party thereto) on the Effective Date, and/or the secured notes to be issued (or guaranteed) by certain of the Reorganized Debtors (and other entities party thereto) on the Effective Date, including, for the avoidance of doubt, any portion of such financing extended pursuant to the commitments provided under the Debt Backstop Agreement.

151. “New Organizational Documents” means such certificates or articles of incorporation, bylaws, or other applicable formation documents of each of the Reorganized Debtors and NewCo, as applicable, containing customary minority protections reasonably acceptable to the Required Consenting Noteholders, the forms of which shall be included in the Plan Supplement, including the Shareholders Agreement (if any), the Registration Rights Agreement, the form of the New Warrants, and the New Warrant Agreement; provided that the New Organizational Documents shall provide for a single class of New Common Equity.

152. “New Term Agent” means the administrative agent or indenture trustee (as applicable), in its capacity as such, under the New Long-Term Debt.


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153. “New Term Arranger” means any lead arranger and/or bookrunner, it its capacity as such, under the New Long-Term Debt.

154. “New Term Loan Lenders” means the banks, financial institutions and other lenders party to the New Long-Term Debt from time to time.

155. “New Warrant Agreement” means the agreement governing the New Warrants to be effective on the Effective Date, which shall be included in the Plan Supplement and subject to the Definitive Document Consent Rights.

156. “New Warrants” means a perpetual warrant issued by Reorganized Hexion, with a nominal exercise price, to purchase a number of shares of New Common Equity equal to the number of shares that a Holder entitled to receive New Common Equity under the Plan would otherwise have received had it not elected to receive New Warrants in lieu thereof, subject to the limitations set forth in the Plan. The New Warrants will provide that unless the Holder thereof shall have provided Reorganized Hexion with at least 65 days prior written notice of its waiver of the following provision, in no event shall any Holder have the right to exercise the New Warrants to subscribe for and purchase from Reorganized Hexion, nor shall Reorganized Hexion issue to any such Holder, shares of New Common Equity to the extent that such exercise or issuance would result in any such Holder, its Affiliates and any other members of a “group” (as defined in Rule 13d-5 under the Exchange Act) of which such Holder is a member together beneficially owning more than 9.9% of the then issued and outstanding shares of New Common Equity (excluding New Common Equity to be issued to other Backstop Parties that would entitle them to receive more than 9.9% of the New Common Equity to be issued as of the Effective Date and excluding New Common Equity issued pursuant to the Management Incentive Plan) (subject to certain exceptions to be set forth in the New Warrant Agreement).

157. “NewCo” means a new entity to be organized or incorporated by the Debtors, with the consent of the Required Consenting Parties, on or before the Effective Date.

158. “Notes Claims” means, collectively, the First Lien Notes Claims and the Junior Notes Claims.

159. “Notice and Claims Agent” means Omni Management Group, Inc., in its capacity as noticing, claims, and solicitation agent for the Debtors, pursuant to the order of the Bankruptcy Court.

160. “Ordinary Course Professionals Order” means any order of the Bankruptcy Court permitting the Debtors to retain certain professionals in the ordinary course of their businesses.

161. “Other Priority Claim” means any Claim accorded priority in right of payment under section 507(a) of the Bankruptcy Code, other than a Priority Tax Claim or Claims entitled to administrative expense priority pursuant to section 503(b)(9) of the Bankruptcy Code.

162. “Other Secured Claim” means any Secured Claim other than the DIP Facility Claims, the First Lien Notes Claims, the 1.5 Lien Notes Claims, or the Second Lien Notes Claims.

163. “Periodic Distribution Date” means the first Business Day that is as soon as reasonably practicable occurring approximately sixty (60) days after the immediately preceding Periodic Distribution Date.

164. “Petition Date” means the date on which each of the Debtors commenced the Chapter 11 Cases.


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165. “Plan” means this joint plan of reorganization under chapter 11 of the Bankruptcy Code, either in its present form or as it may be altered, amended, modified, or supplemented from time to time in accordance with the Bankruptcy Code, the Bankruptcy Rules, or the terms hereof, as the case may be, and the Plan Supplement, which is incorporated herein by reference, including all exhibits and schedules hereto and thereto, subject to the Definitive Document Consent Rights.

166. “Plan Equity Value” means the aggregate value of the Aggregate Fully Diluted Common Shares immediately after the Effective Date, which, for purposes of the Plan, shall be $1,374,000,000.

167. “Plan Supplement” means the compilation of documents and forms of documents, schedules, and exhibits, in each case subject to the terms and provisions of the Restructuring Support Agreement (including any applicable Definitive Document Consent Rights), to be filed on the Plan Supplement Filing Date, as amended, modified or supplemented from time to time in accordance with the terms hereof and in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support Agreement (including any applicable Definitive Document Consent Rights), including the following documents: (a) the New Organizational Documents; (b) the Rejected Executory Contract/Unexpired Lease List; (c) a list of retained Causes of Action; (d) to the extent known, the identity of the members of the New Board; (e) the New Debt Documentation; (f) the Restructuring Transactions Memorandum; (g) the Settlement Note; (h) the form of the New Warrants; and (i) the form of the New Warrant Agreement.

168. “Plan Supplement Filing Date” means the date that is at least five (5) Business Days prior to the date on which objections to Confirmation are due pursuant to the Disclosure Statement Order.

169. “Priority Tax Claim” means a Claim of a Governmental Unit of the kind specified in section 507(a)(8) of the Bankruptcy Code.

170. “Pro Rata Share” means, with respect to any distribution on account of an Allowed Claim, a distribution equal in amount to the ratio (expressed as a percentage) that the amount of such Allowed Claim bears to the aggregate amount of all Allowed Claims in its Class.

171. “Professional Fee Claim” means a Claim by a Retained Professional seeking an award by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Confirmation Date under sections 330, 331, 503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy Code.

172. “Proof of Claim” means a proof of Claim filed against any Debtor in the Chapter 11 Cases.

173. “Registration Rights Agreement” means the registration rights agreement with respect to the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) contemplated by the Equity Commitment Agreement to be effective on the Effective Date, which shall be included in the Plan Supplement and subject to the Definitive Document Consent Rights.

174. “Reinstatement” means, with respect to Claims and Interests, that the Claim or Interest shall be rendered Unimpaired in accordance with section 1124 of the Bankruptcy Code.

175. “Rejected Executory Contract/Unexpired Lease List” means the list (as determined by the Debtors and as reasonably acceptable to the Required Consenting Noteholders), of Executory Contracts and/or Unexpired Leases (including any amendments or modifications thereto), if any, that will be rejected pursuant to the Plan.


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176. “Released Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors; (b) the Reorganized Debtors, and (c) with respect to each of the foregoing parties in clauses (i)(a) and (i)(b), each of such Entity’s current and former Affiliates, and such Entities’ and their current and former Affiliates’ current and former directors, managers, officers, principals, members, employees, predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, and such Entities’ respective heirs, executors, Estate, and nominees; and (ii)(a) the Consenting Noteholders, (b) the Consenting Sponsors (c) the Equity Backstop Parties, (d) the Debt Backstop Parties, (e) the New Lenders, (f) the New Debt Agents, (g) the New Debt Arrangers, (h) the DIP Lenders, (i) the DIP Agents; (j) the DIP Arrangers, (k) the First Lien ABL Agent, (l) the First Lien ABL Lenders, (m) the 6.625% First Lien Notes Indenture Trustee, (n) the 10.00% First Lien Notes Indenture Trustee, (o) the 10.375% First Lien Notes Indenture Trustee, (p) the 1.5 Lien Notes Indenture Trustee, (q) the Second Lien Notes Indenture Trustee, (r) the Borden Debentures Trustee, (s) Wilmington Trust, National Association in its capacity as former trustee under the 1.5 Lien Notes Indenture, (t) the Committee and its current and former members, and (u) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(t), each of such Entity’s current and former Affiliates, and such Entities’ and their current and former Affiliates’ current and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, managed accounts or funds, fund advisors, management companies, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, and such Entities’ respective heirs, executors, estate, and nominees; provided, that, any Holder of a Claim or Interest that validly opts out of or objects to the releases contained in the Plan, such that it is not a Releasing Party, shall not be a “Released Party.”

177. “Releasing Party” means each of the following, solely in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors, (c) the Consenting Noteholders, (d) the Consenting Sponsors, (e) the Equity Backstop Parties, (f) the Debt Backstop Parties, (g) the New Lenders, (h) the New Debt Agents, (i) the New Debt Arrangers, (j) the DIP Lenders, (k) the DIP Agents, (l) the DIP Arrangers, (m) the First Lien ABL Agent, (n) the First Lien ABL Lenders, (o) all Holders of Claims that are presumed to accept the Plan; (p) all Holders of Claims who vote to accept the Plan; (q) all Holders of Claims or Interests who are entitled to vote on the Plan and (i) abstain from voting on the Plan or vote to reject the Plan and (ii) do not opt out of the releases provided by the Plan; (r) all Holders of Claims or Interests who are deemed to reject the Plan and do not timely object to confirmation of the Plan with respect to the releases; and (s) with respect to the foregoing clauses (a) through (r), each such Entity and its current and former Affiliates, and such Entities’ and their current and former Affiliates’ current and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, managed accounts or funds, fund advisors, management companies, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals; provided that each such Entity that validly objects to or validly opts out of the releases contained in the Plan, such that it is not a Releasing Party in its capacity as a Holder of an impaired Claim or Interest, shall be bound by such releases in any other capacity to the extent it would be a Releasing Party in such other capacity.


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178. “Reorganized Debtors” means, on or after the Effective Date, (a) the Debtors, as reorganized pursuant to and under the Plan, or any successor thereto, by merger, consolidation, or otherwise, and (b) to the extent not already encompassed by clause (a), Reorganized Hexion and any newly formed subsidiaries thereof.

179. “Reorganized Hexion” means either (a) Hexion LLC or any successor thereto, by merger, consolidation, or otherwise, as reorganized pursuant to and under the Plan, or (b) NewCo, in each case, on or after the Effective Date.

180. “Required Consenting 1.5L Noteholders” has the meaning ascribed to such term in the Restructuring Support Agreement.

181. “Required Consenting Crossholder Noteholders” has the meaning ascribed to such term in the Restructuring Support Agreement.

182. “Required Consenting First Lien Noteholders” has the meaning ascribed to such term in the Restructuring Support Agreement.

183. “Required Consenting Noteholders” means, collectively, the Required Consenting First Lien Noteholders, the Required Consenting 1.5L Noteholders, and the Required Consenting Crossholder Noteholders.

184. “Required Consenting Parties” means the Required Consenting Noteholders, the Consenting Sponsors, and the Debtors.

185. “Restructuring” means the Restructuring Transactions contemplated by and to be consummated in accordance with the Plan.

186. “Restructuring Support Agreement” means that certain Restructuring Support Agreement entered into on April 1, 2019 by and among the Debtors, the Consenting Noteholders, and the Consenting Sponsors (as such may be amended, modified or supplemented in accordance with its terms).

187. “Restructuring Transactions” means the transactions described in Article IV.B of the Plan.

188. “Restructuring Transactions Memorandum” means a document, in form and substance acceptable to the Debtors and the Required Consenting Noteholders, to be included in the Plan Supplement that will set forth the material components of the Restructuring Transactions, including the identity of the issuer or issuers of the New Common Equity and the New Warrants and any elections that must be made with respect to the receipt of the New Common Equity and the New Warrants.

189. “Retained Professional” means an Entity: (a) employed in the Chapter 11 Cases pursuant to a Final Order in accordance with sections 327 and 1103 of the Bankruptcy Code and to be compensated for services rendered prior to the Effective Date, pursuant to sections 327, 328, 329, 330, or 331 of the Bankruptcy Code; or (b) for which compensation and reimbursement has been allowed by the Bankruptcy Court pursuant to section 503(b)(4) of the Bankruptcy Code.


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190. “Rights” means the non-certificated subscription rights to purchase shares of Rights Offering Equity in connection with the Rights Offering on the terms and subject to the conditions set forth in the Plan and the Rights Offering Procedures.

191. “Rights Exercise Price” means the purchase price for each share of Rights Offering Equity.

192. “Rights Offering” means the offering of the Rights to purchase the Rights Offering Equity at the Rights Exercise Price, for an aggregate purchase price of the Rights Offering Amount, to be conducted in accordance with the Rights Offering Procedures and in reliance upon the exemption from registration under the Securities Act provided in section 1145 of the Bankruptcy Code, which will provide Holders of Allowed Notes Claims with the right to purchase for Cash their Pro Rata Share of $300,000,000 of New Common Equity issued on the Effective Date at a 35% discount to the Plan Equity Value.

193. “Rights Offering Amount” means $300,000,000.

194. “Rights Offering Equity” means shares of New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) issued pursuant to the Rights Offering, including shares issued on account of the backstop commitments provided under the Equity Backstop Agreement and the Debt Backstop Agreement.

195. “Rights Offering Procedures” means the procedures pursuant to which the Rights Offering will be conducted, subject to the Definitive Document Consent Rights.

196. “RSA Approval Order” means the Order Authorizing Assumption of Restructuring Support Agreement [Docket No. 366].

197. “SEC” means the Securities and Exchange Commission.

198. “Second Lien Notes” means the 9.000% notes due 2020 issued under the Second Lien Notes Indenture.

199. “Second Lien Notes Claim” means any Claim arising under or based upon the Second Lien Notes or the Second Lien Notes Indenture.

200. “Second Lien Notes Documents” means the Second Lien Notes Indenture and all agreements and documents related to the Second Lien Notes Indenture and the Second Lien Notes.

201. “Second Lien Notes Indenture” means that certain Indenture, dated as of November 5, 2010, by and among Hexion Inc., as co-issuer, Hexion Nova Scotia Finance, ULC, as co-issuer, certain of the other Debtors, as guarantors, and the Second Lien Notes Indenture Trustee (as modified, amended, or supplemented from time to time).

202. “Second Lien Notes Indenture Trustee” means Wilmington Trust Company, as trustee under the Second Lien Notes Indenture.

203. “Secured Claim” means a Claim: (a) secured by a Lien on property in which the Estate has an interest, which Lien is valid, perfected, and enforceable pursuant to applicable law or by reason of a Bankruptcy Court order, or that is subject to setoff pursuant to section 553 of the Bankruptcy Code, to the extent of the value of the creditor’s interest in the Estate’s interest in such property or to the extent of


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the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code or (b) otherwise Allowed pursuant to the Plan or order of the Bankruptcy Court as a secured claim.

204. “Securities” means any instruments that qualify under Section 2(a)(1) of the Securities Act, including the New Common Equity and the New Warrants.

205. “Securities Act” means the Securities Act of 1933, as now in effect or hereafter amended, or any regulations promulgated thereunder.

206. “Settlement Note” means the $2.5 million senior unsecured note to be issued by Reorganized Hexion on the Effective Date to the Consenting Sponsors, which shall (i) mature on March 31, 2020, (ii) be payable upon any public offering or listing of New Common Equity (or any other equity interests of the Reorganized Debtors) on The Nasdaq Global Select Market, The New York Stock Exchange, or any successor national securities exchanges, on or after the Effective Date, (iii) be freely transferrable by the holder, and (iv) contain other terms and conditions reasonably acceptable to the Required Consenting Parties.

207. “Shareholders Agreement” means the shareholders agreement, if any, which may be included in the Plan Supplement.

208. “Subordinated Securities Claims” means any Claim against a Debtor arising from the rescission of a purchase or sale of a security of a Debtor or an Affiliate of a Debtor (other than an Equity Interest) for damages arising from the purchase or sale of such a security or for reimbursement or contribution allowed under section 502 of the Bankruptcy Code on account of such a Claim; provided that a Subordinated Securities Claim shall not include any Claim subject to subordination under section 510 of the Bankruptcy Code arising from or related to an Equity Interest (which, for the avoidance of doubt, shall be treated as an Equity Interest for the purposes of the Plan).

209. “Third-Party Release” means the releases set forth in Article IX.C of the Plan.

210. “Unexpired Lease” means a lease to which one or more of the Debtors is a party that is subject to assumption or rejection under section 365 or 1123 of the Bankruptcy Code.

211. “Unimpaired” means, with respect to a Claim, Equity Interest, or Class of Claims or Equity Interests, not “impaired” within the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code.

212. “United States Trustee” means the Office of the United States Trustee for the District of Delaware.

213. “Unsubscribed Shares” means shares of Rights Offering Equity that are not timely, duly, and validly subscribed and paid for by the holders of Allowed Notes Claims in accordance with the applicable Rights Offering Procedures.

214. “Voting Deadline” means the date and time set forth in the Disclosure Statement Order.

215. “Voting Record Date” means the date established as the voting record date pursuant to the Disclosure Statement Order.

B. Rules of Interpretation

1. For purposes herein: (a) in the appropriate context, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine, and the neuter gender; (b) unless


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otherwise specified, any reference herein to a contract, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or substantially on those terms and conditions; (c) unless otherwise specified, any reference herein to an existing document or exhibit having been filed or to be filed shall mean that document or exhibit, as it may thereafter be amended, modified, or supplemented; (d) unless otherwise specified, all references herein to “Articles” are references to Articles of the Plan; (e) the words ‘‘herein,’’ “hereof,” and ‘‘hereto’’ refer to the Plan in its entirety rather than to a particular portion of the Plan; (f) the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, and shall be deemed to be followed by the words “without limitation”; (g) references to “shareholders,” “directors,” and/or “officers” shall also include “members” and/or “managers,” as applicable, as such terms are defined under the applicable state limited liability company laws; (h) references to “Proofs of Claim,” “Holders of Claims,” “Disputed Claims,” and the like shall include “Proofs of Equity Interests,” “Holders of Interests,” “Disputed Interests,” and the like, as applicable; (i) captions and headings to Articles and subdivisions thereof are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation hereof; (j) unless otherwise specified herein, the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; (k) any term used in capitalized form herein that is not otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be; (l) any effectuating provisions may be interpreted by the Reorganized Debtors in such a manner that is consistent with the overall purpose and intent of the Plan all without further notice to or action, order, or approval of the Bankruptcy Court or any other Entity, and such interpretation shall control; and (m) references to docket numbers are references to the docket numbers of documents filed in the Chapter 11 Cases under the Bankruptcy Court’s CM/ECF system.

2. The provisions of Bankruptcy Rule 9006(a) shall apply in computing any period of time prescribed or allowed herein. Unless otherwise specified herein, any references to the Effective Date shall mean the Effective Date or as soon as reasonably practicable thereafter.

3. All references in the Plan to monetary figures refer to currency of the United States of America, unless otherwise expressly provided.

4. Except as otherwise specifically provided in the Plan to the contrary, references in the Plan to the Debtors or to the Reorganized Debtors mean the Debtors and the Reorganized Debtors, as applicable, to the extent the context requires.

Article II.

ADMINISTRATIVE CLAIMS, DIP FACILITY CLAIMS, PRIORITY TAX CLAIMS, OTHER PRIORITY CLAIMS AND UNITED STATES TRUSTEE STATUTORY FEES

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, DIP Facility Claims, Priority Tax Claims, and Other Priority Claims have not been classified and thus are excluded from the Classes of Claims and Interests set forth in Article III.

A. Administrative Claims

1. General Administrative Claims

Subject to the provisions of sections 328, 330(a), and 331 of the Bankruptcy Code, except to the extent that a Holder of an Allowed General Administrative Claim and the applicable Debtor(s) (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) agree to less favorable treatment with respect to such Allowed General Administrative Claim, each Holder of an Allowed


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General Administrative Claim will be paid the full unpaid amount of such Allowed General Administrative Claim in Cash: (a) on the Effective Date or as soon as reasonably practicable thereafter or, if not then due, when such Allowed General Administrative Claim is due or as soon as reasonably practicable thereafter; (b) if a General Administrative Claim is Allowed after the Effective Date, on the date such General Administrative Claim is Allowed or as soon as reasonably practicable thereafter or, if not then due, when such Allowed General Administrative Claim is due or as soon as reasonably practicable thereafter; (c) at such time and upon such terms as may be agreed upon by such Holder and the Debtors (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) or the Reorganized Debtors, as the case may be; or (d) at such time and upon such terms as set forth in an order of the Bankruptcy Court; provided that Allowed General Administrative Claims that arise in the ordinary course of the Debtors’ business during the Chapter 11 Cases shall be paid in full in Cash in the ordinary course of business in accordance with the terms and conditions of any controlling agreements, course of dealing, course of business, or industry practice.

2. Professional Fee Claims

On or immediately prior to the Effective Date, the Debtors shall pay all amounts owing to the Retained Professionals for all unpaid Professional Fee Claims relating to prior periods and for the period ending on the Effective Date. The Retained Professionals shall estimate Professional Fee Claims due for periods that have not been billed as of the Effective Date, which amounts, for the avoidance of doubt, shall be paid on or immediately prior to the Effective Date. On or prior to forty-five (45) days after the Effective Date, each Retained Professional shall file with the Bankruptcy Court its final fee application seeking final approval of all fees and expenses from the Petition Date through the Effective Date; provided that the Debtors may pay Retained Professionals or other Entities in the ordinary course of business after the Effective Date, without further Bankruptcy Court order; and provided, further, that any Retained Professional who may receive compensation or reimbursement of expenses pursuant to the Ordinary Course Professionals Order may continue to receive such compensation or reimbursement of expenses for services rendered before the Effective Date, without further Bankruptcy Court order, pursuant to the Ordinary Course Professionals Order. Objections to any Professional Fee Claim must be filed and served on the Debtors and the requesting party no later than twenty (20) days after such Professional Fee Claim is filed with the Bankruptcy Court. To the extent necessary, the Plan and the Confirmation Order shall amend and supersede any previously entered order regarding the payment of Professional Fee Claims. Within ten (10) days after entry of a Final Order with respect to its final fee application, each Retained Professional shall remit any overpayment to the Debtors and the Debtors shall pay any unpaid amounts to each Retained Professional.

3. Administrative Claims Bar Date

All requests for payment of an Administrative Claim (other than DIP Facility Claims, Cure Costs, Professional Fee Claims, the Equity Backstop Premium, the Debt Backstop Premium and the Additional Debt Backstop Premium, or U.S. Trustee quarterly fees payable pursuant to Article II.E below) that accrued on or before the Effective Date that were not otherwise accrued in the ordinary course of business must be filed with the Bankruptcy Court and served on the Debtors no later than the Administrative Claims Bar Date. If a Holder of an Administrative Claim (other than DIP Facility Claims, Cure Costs, Professional Fee Claims, the Equity Backstop Premium, the Debt Backstop Premium and the Additional Debt Backstop Premium, or U.S. Trustee quarterly fees payable pursuant to Article II.E below) that is required to, but does not, file and serve a request for payment of such Administrative Claim by the Administrative Claims Bar Date, such Administrative Claim shall be considered Allowed only if and to the extent that no objection to the allowance thereof has been interposed within three months following the filing and service of such request or as otherwise set by the Bankruptcy Court or such an objection is so interposed and the Claim has been Allowed by a Final Order; provided that any Claim filed after entry


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of a decree closing the Debtors’ Chapter 11 Cases shall not be Allowed unless the Holder of such Claim obtains an order of the Bankruptcy Court allowing such Claim.

The Reorganized Debtors, in their sole and absolute discretion, may settle Administrative Claims in the ordinary course of business without further Bankruptcy Court approval. The Debtors or the Reorganized Debtors, as applicable, may also choose to object to any Administrative Claim no later than the Claims Objection Deadline, subject to extensions by the Bankruptcy Court, agreement in writing of the parties, or on motion of a party in interest approved by the Bankruptcy Court. Unless the Debtors or the Reorganized Debtors (or other party with standing) object to a timely-filed and properly served Administrative Claim, such Administrative Claim will be deemed Allowed in the amount requested. In the event that the Debtors or the Reorganized Debtors object to an Administrative Claim, the parties may confer to try to reach a settlement and, failing that, the Bankruptcy Court will determine whether such Administrative Claim should be allowed and, if so, in what amount.

B. DIP Facility Claims

The DIP Facility Claims shall be deemed to be Allowed under the Plan. Notwithstanding anything to the contrary herein, in full and final satisfaction, settlement, release and discharge of and in exchange for release of all Allowed DIP Facility Claims, on the Effective Date, the Allowed DIP Facility Claims shall be paid indefeasibly in Cash in full (including, in the case of DIP Facility Claims arising under the DIP Term Loan Facility, by the repayment in Cash in full of the DIP Intercompany Loan by Hexion Inc. to Hexion International Holdings B.V. and the immediate repayment in Cash in full of the DIP Facility Claims arising under the DIP Term Loan Facility by Hexion International Holdings B.V.), or receive such other treatment as agreed by the Debtors (with the consent of the Required Consenting Noteholders not to be unreasonably withheld), the applicable Holder of an Allowed DIP Facility Claim and, as applicable, the applicable DIP Agent. All of the Debtors’ contingent and unliquidated obligations under the DIP Credit Agreements, including, without limitation, the DIP Agents’ and the DIP Lenders’ rights to indemnification from the Debtors, to the extent any such obligation has not been paid in Cash in full on the Effective Date, shall survive the Effective Date and shall not be released or discharged pursuant to the Plan or Confirmation Order, notwithstanding any provision hereof or thereof to the contrary.

C. Priority Tax Claims

Except to the extent that a Holder of an Allowed Priority Tax Claim and the Debtor(s) against which such Allowed Priority Tax Claim is asserted agree (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) to a less favorable treatment, in exchange for full and final satisfaction, settlement, release, and discharge of each Allowed Priority Tax Claim, each Holder of an Allowed Priority Tax Claim due and payable on or prior to the Effective Date shall receive, as soon as reasonably practicable after the Effective Date, on account of such Claim: (1) Cash in an amount equal to the amount of such Allowed Priority Tax Claim; (2) Cash in an amount agreed to by the applicable Debtor or Reorganized Debtor, as applicable, and such Holder; provided that such parties may further agree for the payment of such Allowed Priority Tax Claim at a later date; or (3) at the option of the Debtors, Cash in an aggregate amount of such Allowed Priority Claim payable in installment payments over a period not more than five years after the Petition Date, pursuant to section 1129(a)(9)(C) of the Bankruptcy Code. To the extent any Allowed Priority Tax Claim is not due and owing on or before the Effective Date, such Claim shall be paid in full in Cash in accordance with the terms of any agreement between the Debtors and such Holder, or as may be due and payable under applicable non-bankruptcy law or in the ordinary course of business.


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D. Other Priority Claims

Except to the extent that a Holder of an Allowed Other Priority Claim and the Debtor against which such Allowed Other Priority Claim is asserted agree (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) to less favorable treatment for such Holder, in full satisfaction of each Allowed Other Priority Claim, each Holder thereof shall receive payment in full in Cash or other treatment, rendering such Claim Unimpaired.

E. United States Trustee Statutory Fees

The Debtors and the Reorganized Debtors, as applicable, shall pay all quarterly fees due to the United States Trustee under 28 U.S.C § 1930(a)(6), plus any interest due and payable under 31 U.S.C. § 3717 on all disbursements, including Plan payments and disbursements in and outside the ordinary course of the Debtors’ or Reorganized Debtors’ business (or such amount agreed to with the United States Trustee or ordered by the Bankruptcy Court), for each quarter (including any fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever occurs first.

Article III.

CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS

A. Classification of Claims

The Plan constitutes a separate chapter 11 plan of reorganization for each Debtor. Except for the Claims addressed in Article II above (or as otherwise set forth herein), all Claims and Interests are placed in Classes for each of the applicable Debtors. In accordance with section 1123(a)(1) of the Bankruptcy Code, the Debtors have not classified Administrative Claims, DIP Facility Claims, Priority Tax Claims, and Other Priority Claims as described in Article II.

The categories of Claims and Interests listed below classify Claims and Interests for all purposes, including voting, Confirmation and distribution pursuant hereto and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. The Plan deems a Claim or Interest to be classified in a particular Class only to the extent that the Claim or Interest qualifies within the description of that Class and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Interest qualifies within the description of such different Class. A Claim or an Interest is in a particular Class only to the extent that any such Claim or Interest is Allowed in that Class and has not been paid or otherwise settled prior to the Effective Date.

Summary of Classification and Treatment of Claims and Interests

Class Claim Status Voting Rights 1 Other Secured Claims Unimpaired Presumed to Accept 2 First Lien Notes Claims Impaired Entitled to Vote 3 Junior Notes Claims Impaired Entitled to Vote 4 General Unsecured Claims Unimpaired Presumed to Accept 5 Subordinated Securities Claims Impaired Deemed to Reject

6 Intercompany Claims Unimpaired or Impaired

Presumed to Accept or Deemed to Reject

7 Intercompany Interests Unimpaired or Impaired

Presumed to Accept or Deemed to Reject

8 Equity Interests Impaired Deemed to Reject


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B. Treatment of Claims and Interests

1. Class 1 — Other Secured Claims

a. Classification: Class 1 consists of all Other Secured Claims.

b. Treatment: Except to the extent that a Holder of an Allowed Other Secured Claim agrees to less favorable treatment, in exchange for full and final satisfaction, settlement, release, and discharge of each Allowed Other Secured Claim, each Holder of an Allowed Other Secured Claim, at the option of the applicable Debtor with the reasonable consent of the Required Consenting Noteholders, shall (i) be paid in full in Cash including the payment of any interest required to be paid under section 506(b) of the Bankruptcy Code, (ii) receive the collateral securing its Allowed Other Secured Claim, (iii) receive any other treatment that would render such Claim Unimpaired.

c. Voting: Class 1 is Unimpaired and Holders of Class 1 Other Secured Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, Holders of Class 1 Other Secured Claims are not entitled to vote to accept or reject the Plan.

2. Class 2 — First Lien Notes Claims

a. Classification: Class 2 consists of First Lien Notes Claims.

b. Allowance: On the Effective Date, the First Lien Notes Claims shall be deemed Allowed in the aggregate principal amount of $2,425,000,000 as follows: (i) 6.625% First Lien Notes Claims shall be Allowed in the aggregate principal amount of $1,550,000,000, (ii) 10.000% First Lien Notes Claims shall be Allowed in the aggregate principal amount of $315,000,000, and (iii) 10.375% First Lien Notes Claims shall be Allowed in the aggregate principal amount of $560,000,000, plus, in each case, all interest (including any payment-in-kind interest), fees, and other expenses payable under the respective First Lien Notes Indenture as of the Petition Date. The Allowed amount of each of the First Lien Notes Claims shall be reduced by the amount of Adequate Protection Payments received by the Holders of such Claims.

c. Treatment: Except to the extent that a Holder of an Allowed First Lien Notes Claim agrees to less favorable treatment (with the consent of the Required Consenting Noteholders not to be unreasonably withheld), in exchange for full and final satisfaction, settlement, release, and discharge of each First Lien Notes Claim, (x) each Holder of an Allowed First Lien Notes Claim shall receive its Pro Rata Share of the 6.625% First Lien Notes Ration, the 10.000% First Lien Notes Ration or the 10.375% First Lien Notes Ration, as applicable, of the First Lien Notes Recovery, and (y) on the Effective Date, the Debtors or the Reorganized Debtors, as applicable, shall pay in full in Cash, all outstanding First Lien Notes Trustee Fees.

d. Voting: Class 2 is Impaired and Holders of Class 2 First Lien Notes Claims are entitled to vote to accept or reject the Plan.


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3. Class 3 — Junior Notes Claims

a. Classification: Class 3 consists of Junior Notes Claims.

b. Allowance: On the Effective Date, the Junior Notes Claims shall be Allowed in the aggregate principal amount of $1,061,383,000 as follows: (i) 1.5 Lien Notes Claims shall be Allowed in the aggregate principal amount of $225,000,000, (ii) Second Lien Notes Claims shall be Allowed in the aggregate principal amount of $574,016,000, and (iii) Borden Debentures Claims shall be Allowed in the aggregate principal amount of $262,367,000, plus, in each case, all interest, fees, and other expenses due under the respective Junior Notes Indentures as of the Petition Date.

c. Treatment: Except to the extent that a Holder of an Allowed Junior Notes Claim agrees to less favorable treatment (with the consent of the Required Consenting Noteholders not to be unreasonably withheld), in exchange for full and final satisfaction, settlement, release, and discharge of each Junior Notes Claim, (x) each Holder of an Allowed Junior Notes Claim shall receive its Pro Rata Share of (i) 27.5% of New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants), subject to the Agreed Dilution, and (ii) 27.5% of the Rights, and (y) on the Effective Date, the Debtors or the Reorganized Debtors, as applicable, shall pay in full in Cash, all outstanding Junior Notes Trustee Professional Fees.

d. Voting: Class 3 is Impaired and Holders of Class 3 Junior Notes Claims are entitled to vote to accept or reject the Plan.

4. Class 4 — General Unsecured Claims

a. Classification: Class 4 consists of General Unsecured Claims.

b. Treatment: Except to the extent that a Holder of an Allowed General Unsecured Claim agrees to less favorable treatment (including, without limitation, with respect to the Consenting Sponsor Claim Settlement), in exchange for full and final satisfaction, settlement, release, and discharge of each Allowed General Unsecured Claim (subject to Article III.C), on the later of (i) the Effective Date (or as soon as practicable thereafter) or (ii) the date such General Unsecured Claim becomes due and payable, each Holder of an Allowed General Unsecured Claim shall receive payment in full in Cash in an amount equal to such Allowed General Unsecured Claim, or such other treatment that will render such Claim Unimpaired, including, but not limited to, Reinstatement of such Allowed General Unsecured Claim pursuant to section 1124 of the Bankruptcy Code. For the avoidance of doubt, no provision of the Plan shall diminish, enhance, or modify any applicable nonbankruptcy legal, equitable, and/or contractual rights of any Holder of a General Unsecured Claim to receive payment on account of such Claim, subject, however, to any applicable limitations on the allowance of such Claims under the Bankruptcy Code and to the rights of the Debtors, Reorganized Debtors, or any party in interest to dispute or defend such Claim in accordance with applicable nonbankruptcy law as if the Chapter 11 Cases had not been commenced.


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c. Voting: Class 4 is Unimpaired and Holders of Class 4 General Unsecured Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, Holders of Class 4 General Unsecured Claims are not entitled to vote to accept or reject the Plan.

5. Class 5 — Subordinated Securities Claims

a. Classification: Class 5 consists of all Subordinated Securities Claims.

b. Treatment: Subordinated Securities Claims shall be discharged, cancelled, released and extinguished on the Effective Date. Each Holder of Subordinated Securities Claims shall receive no recovery or distribution on account of such Subordinated Securities Claims.

c. Voting: Class 5 is Impaired and Holders of Class 5 Subordinated Securities Claims are deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, Holders of Class 5 Subordinated Securities Claims are not entitled to vote to accept or reject the Plan.

6. Class 6 — Intercompany Claims

a. Classification: Class 6 consists of all Intercompany Claims.

b. Treatment: No property will be distributed to the Holders of Allowed Intercompany Claims. Unless otherwise provided for under the Plan, each Intercompany Claim will either be Reinstated or canceled and released at the option of the Debtors with the consent of the Required Consenting Noteholders.

c. Voting: Class 6 is either (i) Unimpaired and Holders of Class 6 Intercompany Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code or (ii) Impaired and not receiving any distribution under the Plan and are deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, in each case, Holders of Class 6 Intercompany Claims are not entitled to vote to accept or reject the Plan.

7. Class 7 — Intercompany Interests

a. Classification: Class 7 consists of all Intercompany Interests.

b. Treatment: Intercompany Interests shall receive no recovery or distribution and be Reinstated solely to the extent necessary to maintain the Debtors’ corporate structure.

c. Voting: Class 7 is either (i) Unimpaired and Holders of Class 7 Intercompany Interests are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code or (ii) Impaired and not receiving any distribution under the Plan and are deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, in each case, Holders of Class 7 Intercompany Interests are not entitled to vote to accept or reject the Plan.

8. Class 8 — Equity Interests

a. Classification: Class 8 consists of all Equity Interests.


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b. Treatment: Holders of Equity Interests shall receive no distribution on account of their Equity Interests. On the Effective Date, all Equity Interests will be canceled, released, and extinguished, and will be of no further force or effect.

c. Voting: Class 8 is Impaired and Holders of Class 8 Equity Interests are deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, Holders of Class 8 Equity Interests are not entitled to vote to accept or reject the Plan.

C. Special Provision Governing Unimpaired Claims

Except as otherwise provided in the Plan, nothing under the Plan shall affect the Debtors’ or the Reorganized Debtors’ rights in respect of any Unimpaired Claim, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claim; provided, for the avoidance of doubt, notwithstanding anything to the contrary in the Plan or the Confirmation Order or any related documents, until an Allowed Claim in Class 4 of the Plan has been (x) paid in full in accordance with applicable law, or on terms agreed to between the holder of such Claim and the Debtors or Reorganized Debtors, or in accordance with the terms and conditions of the particular transaction giving rise to such Claim, or received such other treatment that will render such Claim Unimpaired, including, but not limited to, Reinstatement of such Allowed General Unsecured Claim pursuant to section 1124 of the Bankruptcy Code, or (y) otherwise satisfied or disposed of as determined by a court of competent jurisdiction, (a) the provisions of Articles IX.A, IX.C, and IX.E of the Plan shall not apply with respect to such Allowed Unimpaired Claim, (b) such Allowed Unimpaired Claim shall not be deemed settled, satisfied, resolved, released, discharged, barred or enjoined by any provision of the Plan or the Definitive Documents, and (c) the property of each Debtor’s Estate that vests in the applicable Reorganized Debtor pursuant to Articles IV.D and IV.O of the Plan shall not be free and clear of such Claims to the extent Allowed. For the further avoidance of doubt, Holder of Class 4 Claims shall not be required to file a Proof of Claim with the Bankruptcy Court and, subject to Article X of the Plan, shall retain all of their rights under applicable nonbankruptcy law to pursue their claims in any forum with jurisdiction over the parties. The Debtors, the Reorganized Debtors and any other person or entity shall retain all rights, defenses, counterclaims, rights of setoff, and rights of recoupment as to Class 4 Claims to the extent such rights, defenses, counterclaims, rights of setoff and rights of recoupment exist under applicable law, including any applicable provisions of the Bankruptcy Code.

D. Acceptance or Rejection of the Plan

1. Presumed Acceptance of Plan

Claims and Interests in Classes 1 and 4 are Unimpaired under the Plan and are, therefore, their Holders are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, Holders of Claims and Interests in Classes 1 and 4 are not entitled to vote on the Plan and the votes of such Holders shall not be solicited.

2. Voting Classes

Claims in Classes 2 and 3 are Impaired under the Plan and the Holders of Allowed Claims in Classes 2 and 3 are entitled to vote to accept or reject the Plan.

3. Deemed Rejection of the Plan

Claims and Interests in Classes 5 and 8 are Impaired under the Plan and their Holders shall receive no distributions under the Plan on account of their Claims or Interests (as applicable) and are deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore,


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Holders of Claims and Interests in Classes 5 and 8 are not entitled to vote on the Plan and the votes of such Holders shall not be solicited.

4. Presumed Acceptance of the Plan or Deemed Rejection of the Plan

Holders of Claims and Interests in Classes 6 and 7 are either (a) Unimpaired and are, therefore, conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code, or (b) Impaired and shall receive no distributions under the Plan and are, therefore, deemed to have rejected the Plan pursuant to Section 1126(g) of the Bankruptcy Code. Therefore, holders of Claims and Interests in Classes 6 and 7 are not entitled to vote on the Plan and votes of such Holders shall not be solicited.

5. Controversy Concerning Impairment

If a controversy arises as to whether any Claim or Interest, or any Class thereof, is Impaired, the Bankruptcy Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date.

E. Nonconsensual Confirmation

Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for purposes of Confirmation by acceptance of the Plan by an Impaired Class of Claims. The Debtors shall seek Confirmation pursuant to section 1129(b) of the Bankruptcy Code with respect to any rejecting Class of Claims or Interests.

F. Subordinated Claims

The allowance, classification, and treatment of all Allowed Claims and Interests, and the respective distributions and treatments under the Plan, shall take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510 of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy Code, except where otherwise provided herein, the Reorganized Debtors, with the reasonable consent of the Required Consenting Noteholders and the Consenting Sponsors (but, with respect to the Consenting Sponsors, only to the extent such re-classification (i) affects the release, exculpation, injunction, indemnification, or insurance provisions related to the Consenting Sponsors, (ii) adversely affects the rights or obligations of the Consenting Sponsors under the terms of the Plan or (iii) relates to the Settlement Note), reserve the right to re-classify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination rights relating thereto.

G. Elimination of Vacant Classes

Any Class of Claims that is not occupied as of the date of commencement of the Confirmation Hearing by the Holder of an Allowed Claim or a Claim temporarily Allowed under Bankruptcy Rule 3018 (i.e., no Ballots are cast in a Class entitled to vote on the Plan) shall be deemed eliminated from the Plan for purposes of voting to accept or reject the Plan and for purposes of determining acceptances or rejection of the Plan by such Class pursuant to section 1129(a)(8) of the Bankruptcy Code.

H. Intercompany Interests and Intercompany Claims

To the extent Reinstated under the Plan, distributions on account of Intercompany Interests and Intercompany Claims are not being received by Holders of such Intercompany Interests or Intercompany Interests on account of their Intercompany Interests or Intercompany Claims but for the purposes of administrative convenience and due to the importance of maintaining the corporate structure given the various foreign affiliate-subsidiaries of the Debtors, for the ultimate benefit of the Holders of New


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Common Equity, to preserve ordinary course intercompany operations and in exchange for the Debtors’ and Reorganized Debtors’ agreement under the Plan to make certain distributions to the Holders of Allowed Claims.

Article IV.

MEANS FOR IMPLEMENTATION OF THE PLAN

A. General Settlement of Claims and Interests

Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under the Plan, on the Effective Date, the provisions of the Plan shall constitute a good-faith compromise and settlement of all Claims, Interests, Causes of Action and controversies resolved pursuant to the Plan. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such Claims, Interests, Causes of Action and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates and Holders of Claims and Interests is fair, equitable and is within the range of reasonableness. Distributions made to Holders of Allowed Claims are intended to be indefeasible.

B. Restructuring Transactions

1. Restructuring Transactions Generally

On the Effective Date or as soon as reasonably practicable thereafter, the Reorganized Debtors may, with the reasonable consent of the Required Consenting Noteholders and the Consenting Sponsors and in consultation with the Committee (but, (x) with respect to the Consenting Sponsors, only to the extent such actions (i) affect the release, exculpation, injunction, indemnification, or insurance provisions related to the Consenting Sponsors, (ii) adversely affect the rights or obligations of the Consenting Sponsors under the terms of the Plan or (iii) relate to the Settlement Note, and (y) with respect to the Committee, only to the extent such actions affect the treatment of General Unsecured Creditors) consistent with the terms of the Restructuring Support Agreement, take all actions as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by or necessary to effectuate the Plan, and as set forth in the Restructuring Transactions Memorandum, including: (a) the execution and delivery of appropriate agreements or other documents of merger, consolidation, or reorganization containing terms that are consistent with the terms of the Plan and that satisfy the requirements of applicable law; (b) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any property, right, liability, duty, or obligation on terms consistent with the terms of the Plan; (c) the filing of appropriate certificates of incorporation, merger, migration, consolidation, or other organizational documents with the appropriate governmental authorities pursuant to applicable law; and (d) all other actions that the Reorganized Debtors determine are necessary or appropriate.

The Confirmation Order shall and shall be deemed to, pursuant to both section 1123 and section 363 of the Bankruptcy Code, authorize, among other things, all actions as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan.

2. New Debt

On the Effective Date, the Reorganized Debtors specified in the New Debt Documentation will incur the New Debt as provided in the New Debt Documentation.


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3. New Common Equity and New Warrants

On the Effective Date, Reorganized Hexion will issue the New Common Equity and, to the extent applicable, New Warrants, to Holders of Allowed Claims as provided in the Plan.

4. Rights Offering

Following approval by the Bankruptcy Court of the Rights Offering Procedures, the Rights Offering shall be conducted pursuant to the Rights Offering Procedures before or substantially simultaneously with the solicitation of votes to accept or reject the Plan.

5. Consenting Sponsor Claim Settlement

On the Effective Date, the Consenting Sponsors shall, on behalf of themselves and their affiliates, be deemed to have permanently waived any and all management, monitoring or like fees or expenses owed by any Debtor and any agreements providing for the same shall have been terminated with no liability of any Debtor other than in connection with the Consenting Sponsor Claim Settlement; provided, however, that the foregoing shall not limit, reduce, modify or impair the Debtors’ or the Reorganized Debtors’ Indemnification Provisions with respect to the Consenting Sponsors and their affiliates or the Consenting Sponsors’ or their affiliates’ rights under any of the D&O Liability Insurance Policies, which shall each be assumed and Unimpaired pursuant to Articles V.F and IV.N, respectively. The Settlement Note shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute a preferential transfer, fraudulent conveyance, or other voidable transfer under the Bankruptcy Code or any other applicable non-bankruptcy law.

C. Corporate Existence

Except as otherwise provided in the Plan, each Debtor shall continue to exist after the Effective Date as a separate corporate Entity, limited liability company, partnership, or other form, as the case may be, with all the powers of a corporation, limited liability company, partnership, or other form, as the case may be, pursuant to the applicable law in the jurisdiction in which each Debtor is incorporated or formed and pursuant to the respective certificate of incorporation and bylaws (or other formation documents) in effect prior to the Effective Date, except to the extent such certificate of incorporation and bylaws (or other formation documents) are amended by the Plan, by the Debtors, with the consent of the Required Consenting Noteholders, or otherwise, and to the extent such documents are amended, such documents are deemed to be amended pursuant to the Plan and require no further action or approval.

D. Vesting of Assets in the Reorganized Debtors

Except as otherwise provided in the Plan (including in Article III.C) or any agreement, instrument, or other document incorporated herein, including the Restructuring Transactions Memorandum, on the Effective Date, all property of each Estate, including all Causes of Action, and any property acquired by any of the Debtors pursuant to the Plan shall vest in each respective Reorganized Debtor, free and clear of all Liens, Claims, charges, or other encumbrances; provided that, in accordance with Article IV.P, on the Effective Date, the Debtors and the Reorganized Debtors shall forever waive, relinquish, and release any and all Causes of Action the Debtors and their Estates had, have, or may have had under section 547 of the Bankruptcy Code and analogous non-bankruptcy law against any Entity whose Claim is Unimpaired under the Plan and any Entity with whom the Debtors are conducting, and the Reorganized Debtors will continue to conduct business on and after the Effective Date. On and after the Effective Date, except as otherwise provided in the Plan, each Reorganized Debtor may operate its business and may use, acquire, or dispose of property and compromise or settle any Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and free of any restrictions of


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the Bankruptcy Code or Bankruptcy Rules, including for the avoidance of doubt any restrictions on the use, acquisition, sale, lease, or disposal of property under section 363 of the Bankruptcy Code.

E. Indemnification Provisions in Organizational Documents

As of the Effective Date, each Reorganized Debtor’s bylaws and other New Organizational Documents shall, to the fullest extent permitted by applicable law, provide for the indemnification, defense, reimbursement, exculpation, and/or limitation of liability of, and advancement of fees and expenses to, current and former managers, directors, officers, equity holders, members, employees, accountants, investment bankers, attorneys, other professionals, or agents of the Debtors and such current and former managers’, directors’, officers’, equity holders’, members’, employees’, accountants’, investment bankers’, attorneys’, other professionals’ and agents’ respective Affiliates at least to the same extent as set forth in the Indemnification Provisions, against any claims or causes of action whether direct or derivative, liquidated or unliquidated, fixed, or contingent, disputed or undisputed, matured or unmatured, known or unknown, foreseen or unforeseen, asserted or unasserted. None of the Reorganized Debtors shall amend and/or restate its certificate of incorporation, bylaws, or similar organizational document after the Effective Date to terminate or adversely affect (1) any of the Indemnification Provisions or (2) the rights of such current and former managers, directors, officers, equity holders, members, employees, or agents of the Debtors and such current and former managers’, directors’, officers’, equity holders’, members’, employees’, and agents’ respective Affiliates referred to in the immediately preceding sentence.

F. Cancellation of Agreements and Equity Interests

Except as otherwise provided for in the Plan, on the later of the Effective Date and the date on which the relevant distributions are made pursuant to Article VI: (a) (i) the obligations of the Debtors under the DIP Credit Agreements, the First Lien ABL Credit Agreement, the First Lien Notes Documents, the 1.5 Lien Notes Indenture, the Second Lien Notes Indenture, and the Borden Debentures Indenture, and any other note, bond, indenture, or other instrument or document directly or indirectly evidencing or creating any indebtedness of the Debtors, (ii) any certificate, equity security, share, purchase right, option, warrant, or other instrument or document directly or indirectly evidencing or creating an ownership interest in the Debtors (except, in each case, such certificates, notes or other instruments or documents evidencing indebtedness or obligation of or ownership interest in the Debtors that are Reinstated pursuant to the Plan), shall be cancelled solely as to the Debtors and their Affiliates, and the Reorganized Debtors and their Affiliates shall not have any continuing obligations thereunder; and (b) the obligations of the Debtors and their Affiliates pursuant, relating or pertaining to any agreements, indentures, certificates of designation, bylaws or certificate or articles of incorporation or similar documents governing the shares, certificates, notes, bonds, indentures, purchase rights, options, or other instruments or documents evidencing or creating any indebtedness or obligation of or ownership interest in the Debtors (except such agreements, certificates, notes or other instruments evidencing indebtedness or obligation of or ownership interest in the Debtors that are specifically reinstated or entered into pursuant to the Plan) shall be released and discharged; except that:

1. the DIP Facilities shall continue in effect solely for the purpose of: (a) allowing the DIP Agents to receive distributions from the Debtors under the Plan and to make further distributions to the Holders of the DIP Facility Claims on account of such Claims, as set forth in Article VI of the Plan; (b) preserving the DIP Agents and the DIP Lenders’ right to all amounts due under the DIP Credit Agreements and DIP Orders; and (c) preserving the DIP Agents’ and the DIP Lenders’ right to indemnification from the Debtors pursuant and subject to the terms of the DIP Facilities;


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2. the First Lien Notes Documents shall continue in effect solely for the purpose of: (a) allowing the First Lien Notes Indenture Trustees to receive distributions from the Debtors under the Plan and to make or direct the making of further distributions to the Holders of Allowed Claims in Class 2 on account of such Claims, as set forth in Article VI of the Plan; (b) preserving the First Lien Notes Indenture Trustees’ rights to payment of their First Lien Notes Trustee Fees, and allowing the First Lien Notes Indenture Trustees to exercise their charging Liens for the payment of their respective First Lien Notes Trustee Fees and for indemnification, pursuant to the terms of the First Lien Notes Documents; and (c) preserving the right of the First Lien Notes Indenture Trustees to indemnification from the Debtors pursuant and subject to the respective terms of the First Lien Notes Documents;

3. the 1.5 Lien Notes Indenture shall continue in effect solely for the purpose of: (a) allowing the 1.5 Lien Notes Indenture Trustee to receive distributions from the Debtors under the Plan and to make further distributions to the Holders of Allowed Claims in Class 3 on account of such Claims, as set forth in Article VI of the Plan; (b) preserving the 1.5 Lien Notes Indenture Trustee’s right to payment of their fees and expenses, and allowing the 1.5 Lien Notes Indenture Trustee to exercise its charging Lien for the payment of their respective fees and expenses and for indemnification, pursuant to the terms of the 1.5 Lien Notes Documents; and (c) preserving the right of the 1.5 Lien Notes Indenture Trustee to indemnification from the Debtors pursuant and subject to the terms of the 1.5 Lien Notes Documents;

4. the Second Lien Notes Indenture shall continue in effect solely for the purpose of: (a) allowing the Second Lien Notes Indenture Trustee to receive distributions from the Debtors under the Plan and to make further distributions to the Holders of Allowed Claims in Class 3 on account of such Claims, as set forth in Article VI of the Plan; (b) preserving the Second Lien Notes Indenture Trustee’s right to payment of their fees and expenses, and allowing the Second Lien Notes Indenture Trustee to exercise its charging Lien for the payment of their respective fees and expenses and for indemnification, pursuant to the terms of the Second Lien Notes Documents; and (c) preserving the right of the Second Lien Notes Indenture Trustee to indemnification from the Debtors pursuant and subject to the terms of the Second Lien Notes Documents;

5. the Borden Debentures Indenture shall continue in effect solely for the purpose of: (a) allowing the Borden Debentures Trustee to receive distributions from the Debtors under the Plan and to make further distributions to the Holders of Allowed Claims in Class 3 on account of such Claims, as set forth in Article VI of the Plan; (b) preserving the Borden Debentures Trustee’s right to payment of their fees and expenses, and allowing the Borden Debentures Trustee to exercise their charging Liens for the payment of their respective fees and expenses and for indemnification, pursuant to the terms of the Borden Debentures Indenture; and (c) preserving the right of the Borden Debentures Trustee to indemnification from the Debtors pursuant and subject to the terms of the Borden Debentures Indenture; and

6. the foregoing shall not affect the cancellation of shares and/or Equity Interests pursuant to the Plan nor any Intercompany Interests.


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G. Sources for Plan Distributions and Transfers of Funds Among Debtors

The Debtors shall fund Cash distributions under the Plan with: (1) Cash on hand, including Cash from operations and the proceeds of the DIP Facilities, (2) the proceeds of the New Debt, and (3) the proceeds of the Rights Offering. Cash payments to be made pursuant to the Plan will be made by the Reorganized Debtors or the Distribution Agent in accordance with Article VI. Subject to any applicable limitations set forth in any post-Effective Date agreement (including the New Debt Documentation and the New Organizational Documents), the Reorganized Debtors will be entitled to transfer funds between and among themselves as they determine to be necessary or appropriate to enable the Reorganized Debtors to satisfy their obligations under the Plan. Except as set forth herein, any changes in intercompany account balances resulting from such transfers will be accounted for and settled in accordance with the Debtors’ historical intercompany account settlement practices and will not violate the terms of the Plan.

From and after the Effective Date, the Reorganized Debtors, subject to any applicable limitations set forth in any post-Effective Date agreement (including the New Debt Documentation and the New Organizational Documents), shall have the right and authority without further order of the Bankruptcy Court to raise additional capital and obtain additional financing as the boards of directors of the applicable Reorganized Debtors deem appropriate.

H. New Debt, Approval of New Debt Documentation, and the Settlement Note

Confirmation of the Plan shall be deemed to constitute approval by the Bankruptcy Court of the New Debt, the Settlement Note, and the New Debt Documentation (including all transactions contemplated thereby, such as any supplementation or additional syndication of the New Debt, and all actions to be taken, undertakings to be made and obligations to be incurred by the Reorganized Debtors in connection therewith, including the payment of all fees, indemnities and expenses provided for therein) and, subject to the occurrence of the Effective Date, authorization for the applicable Reorganized Debtors to enter into and perform their obligations under the Settlement Note, the New Debt Documentation and such other documents as may be reasonably required or appropriate, subject to the Definitive Document Consent Rights. For the avoidance of doubt, such approvals and authorizations shall include the New Long-Term Debt (if any) funded in accordance with the terms of the Debt Backstop Agreement.

On the Effective Date, the New Debt Documentation shall constitute legal, valid, binding, and authorized obligations of the Reorganized Debtors, enforceable in accordance with their terms. The financial accommodations to be extended pursuant to the New Debt Documentation and the Debt Backstop Agreement are being extended, and shall be deemed to have been extended, in good faith, for legitimate business purposes, are reasonable, shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any other applicable non-bankruptcy law. On the Effective Date, all of the Liens and security interests to be granted under the New Debt Documentation (1) shall be legal, binding, and enforceable Liens on, and security interests in, the collateral granted in accordance with the terms of the New Debt Documentation, (2) shall be deemed automatically perfected on the Effective Date, subject only to such Liens and security interests as may be permitted under the New Debt Documentation, and (3) shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any applicable non-bankruptcy law. The Reorganized Debtors and the Entities granted such Liens and security interests are authorized to make all filings and recordings, and to obtain all governmental approvals and consents necessary to establish and perfect such Liens and security interests under the provisions of the applicable state, provincial, federal, or other law (whether domestic or foreign) that would be applicable in the absence of the Plan and the Confirmation


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Order (it being understood that perfection shall occur automatically by virtue of the entry of the Confirmation Order, and any such filings, recordings, approvals, and consents shall not be required), and will thereafter cooperate to make all other filings and recordings that otherwise would be necessary under applicable law to give notice of such Liens and security interests to third parties.

On the Effective Date, the Settlement Note shall constitute a legal, valid, binding, and authorized obligation of Reorganized Hexion, enforceable in accordance with its terms. The financial accommodations to be extended pursuant to the Settlement Note are being extended, and shall be deemed to have been extended, in good faith, for legitimate business purposes, are reasonable, shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any other applicable non-bankruptcy law.

I. Reorganized Debtors’ Ownership

1. New Common Equity and New Warrants

On the Effective Date, Reorganized Hexion shall issue or reserve for issuance all of the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) and any New Warrants issuable in accordance with the terms of the Plan and as set forth in the Restructuring Transactions Memorandum. The issuance of the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) and any New Warrants by Reorganized Hexion for distribution pursuant to the Plan is authorized without the need for further corporate action and all of the shares of New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants as of the Effective Date, without regard to any limitations on the exercise of the New Warrants) issued or issuable pursuant to the Plan shall be duly authorized, validly issued, fully paid, and non-assessable and the New Warrants and the New Warrant Agreement shall be valid and binding obligations of Reorganized Hexion, enforceable in accordance with their terms.

2. Shareholders Agreement

On the Effective Date, Reorganized Hexion and the Holders of the New Common Equity shall be deemed to have entered into the Shareholders Agreement, if any. The Shareholders Agreement, if any, shall be deemed to be valid, binding, and enforceable in accordance with its terms, and each holder of New Common Equity shall be bound thereby, in each case without the need for execution by any party thereto other than Reorganized Hexion.

3. Registration Rights Agreement

On the Effective Date, Reorganized Hexion and certain Holders of the New Common Equity shall enter into the Registration Rights Agreement in substantially the form included in the Plan Supplement. The Registration Rights Agreement shall be deemed to be valid, binding, and enforceable in accordance with its terms.

4. Rights Offering

Before or substantially simultaneously with the solicitation of votes to accept or reject the Plan and in accordance with Article III.B hereof, each Holder of Allowed Notes Claims shall receive Rights to acquire its respective Pro Rata Share of the Rights Offering Equity pursuant to the terms set forth in the Rights Offering Procedures. Each Right shall represent the right to acquire one share of Rights Offering Equity for the Rights Exercise Price.


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J. Exemption from Registration Requirements

The offering, issuance, and distribution of any Securities, including the New Common Equity (including any New Common Equity issuable upon the exercise of the New Warrants), the New Warrants, and the Rights, in exchange for Claims pursuant to Article III of the Plan or pursuant to the exercise of the Rights or pursuant to the Equity Backstop Premium and the Debt Backstop Premium, shall be exempt from, among other things, the registration requirements of Section 5 of the Securities Act pursuant to section 1145 of the Bankruptcy Code. Except as otherwise provided in the Plan or the governing certificates or instruments, any and all such New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants) and New Warrants so issued under the Plan will be freely tradable under the Securities Act by the recipients thereof, subject to: (1) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in Section 2(a)(11) of the Securities Act, and compliance with any applicable state or foreign securities laws, if any, and any rules and regulations of the SEC, if any, applicable at the time of any future transfer of such Securities or instruments, including any such restrictions in the Shareholders Agreement, if any; (2) the restrictions, if any, on the transferability of such Securities and instruments; and (3) any other applicable regulatory approval.

Notwithstanding anything to the contrary herein, any Backstop Party (together with its Affiliates) that would otherwise be entitled to receive more than 9.9% of the aggregate amount of the New Common Equity to be issued as of the Effective Date (excluding New Common Equity to be issued to other Backstop Parties that would entitle them to receive more than 9.9% of the New Common Equity to be issued as of the Effective Date and excluding New Common Equity issued pursuant to the Management Incentive Plan) based upon (x) its holdings of 1.5 Lien Notes, First Lien Notes, Second Lien Notes, Borden 2021 Debentures, Borden 2023 Debentures as of the subscription expiration deadline for the Rights Offering (as described in the Rights Offering Procedures), (y) its participation in the Rights Offering (including oversubscription rights) and (z) any shares of New Common Equity payable to such Backstop Party as Equity Backstop Premium and the Debt Backstop Premium, may elect to receive New Warrants in lieu of such portion of New Common Equity that would otherwise be issued to such Backstop Party and its Affiliates under the Plan in excess of 9.9% of the aggregate amount of New Common Equity issued as of the Effective Date (excluding New Common Equity to be issued to other Backstop Parties that would entitle them to receive more than 9.9% of the New Common Equity to be issued as of the Effective Date and excluding New Common Equity issued pursuant to the Management Incentive Plan), provided, that, any Backstop Party eligible to elect to receive New Warrants under the Plan may only elect to receive New Warrants up to an equivalent of 3.5% of the New Common Equity issued as of the Effective Date (including any New Common Equity issuable upon exercise of the New Warrants but excluding New Common Equity issued pursuant to the Management Incentive Plan) and the shares of New Common Equity represented by New Warrants shall be shares that would have otherwise been issued under the Plan as First Lien Notes Recovery and/or in exchange for Junior Notes Claims.

The offering, issuance and distribution of the New Common Equity pursuant to the Equity Backstop Agreement or the Debt Backstop Agreement (excluding payment of the Equity Backstop Premium and the Debt Backstop Premium, if so elected by any Equity Backstop Parties or any Debt Backstop Parties, respectively) shall be exempt from, among other things, the registration requirements of Section 5 of the Securities Act pursuant to Section 4(a)(2) of the Securities Act, or any other available exemption from registration under the Securities Act.

Should the Reorganized Debtors elect on or after the Effective Date to reflect any ownership of the New Common Equity through the facilities of the DTC, the Reorganized Debtors need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the New Common Equity under applicable securities laws.


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Notwithstanding anything to the contrary in the Plan, no Entity (including, for the avoidance of doubt, DTC) shall be entitled to require a legal opinion regarding the validity of any transaction contemplated by the Plan, including, for the avoidance of doubt, whether the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants) and the New Warrants are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. DTC shall be required to accept and conclusively rely upon the Plan or Confirmation Order in lieu of a legal opinion regarding whether the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants) and the New Warrants are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services.

K. Organizational Documents

Subject to Articles IV.E and IV.F of the Plan, the Reorganized Debtors shall enter into such agreements and amend their corporate governance documents to the extent necessary to implement the terms and provisions of the Plan, subject to the Definitive Document Consent Rights. Without limiting the generality of the foregoing, as of the Effective Date, Reorganized Hexion shall be governed by the New Organizational Documents applicable to it. From and after the Effective Date, the organizational documents of each of the Reorganized Debtors will comply with section 1123(a)(6) of the Bankruptcy Code, as applicable.

L. Exemption from Certain Transfer Taxes and Recording Fees

To the fullest extent permitted by section 1146(a) of the Bankruptcy Code, any transfer from a Debtor to a Reorganized Debtor or to any Entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to: (1) the issuance, distribution, transfer, or exchange of any debt, securities, or other interest in the Debtors or the Reorganized Debtors; (2) the creation, modification, consolidation, or recording of any mortgage, deed of trust or other security interest, or the securing of additional indebtedness by such or other means; (3) the making, assignment, or recording of any lease or sublease; or (4) the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including any deeds, bills of sale, assignments, or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to the Plan, shall not be subject to any U.S. federal, state or local document recording tax, stamp tax, conveyance fee, intangibles, or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, or other similar tax or governmental assessment, and the appropriate U.S. state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.

M. Other Tax Matters

From and after the Effective Date, the Reorganized Debtors, including Reorganized Hexion, shall be authorized to make and to instruct any of their wholly-owned subsidiaries to make any elections available to them under applicable law with respect to the tax treatment of the Restructuring Transactions as specified in the Restructuring Transactions Memorandum. From and after the Effective Date, to the extent applicable, Hexion LLC and any subsidiary thereof shall make any such election solely at the request of NewCo or any of its wholly-owned subsidiaries.


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N. Directors and Officers of the Reorganized Debtors

1. The New Board

As of the Effective Date, the terms of the current members of the board of managers of Hexion shall expire and, without further order of the Bankruptcy Court or other corporate action by the Debtors or the Reorganized Debtors, the New Board shall be approved.

The New Board will initially consist of seven (7) members, which shall be comprised of Craig Rogerson, in his capacity as Chief Executive Officer of the Reorganized Debtors, and six (6) other directors, which shall be selected by the Board Committee in consultation with Craig Rogerson in his capacity as Chief Executive Officer; provided that if the New Board is not fully selected by the Effective Date then the members of the New Board selected as of the Effective Date shall select the remaining members in consultation with the Board Committee. Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will, to the extent reasonably practicable, disclose in advance of Confirmation the identity and affiliations of any person proposed to serve on the New Board. The occurrence of the Effective Date shall have no effect on the composition of the board of directors or managers of each of the subsidiary Debtors.

2. Senior Management

The existing officers of the Debtors as of the Effective Date shall remain in their current capacities as officers of the Reorganized Debtors, subject to the ordinary rights and powers of the New Board to remove or replace them in accordance with the New Organizational Documents and any applicable employment agreements that are assumed pursuant to the Plan with the reasonable consent of the Required Consenting Noteholders.

O. Directors and Officers Insurance Policies

In accordance with and without altering Article V.H of the Plan, (i) on the Effective Date the Reorganized Debtors shall be deemed to have assumed all of the Debtors’ D&O Liability Insurance Policies (including, without limitation, any “tail policy” and all agreements, documents, or instruments related thereto) in effect prior to the Effective Date pursuant to sections 105 and 365(a) of the Bankruptcy Code, without the need for any further notice to or action, order, or approval of the Bankruptcy Court; (ii) confirmation of the Plan shall not discharge, impair, or otherwise modify any indemnity obligations assumed by the foregoing assumption of the D&O Liability Insurance Policies, and each such indemnity obligation will be deemed and treated as an Executory Contract that has been assumed by the Debtors under the Plan as to which no Proof of Claim need be filed; (iii) the Debtors and, after the Effective Date, the Reorganized Debtors shall retain the ability to supplement such D&O Liability Insurance Policies as the Debtors or Reorganized Debtors, as applicable, may deem necessary on terms and at an expense reasonably acceptable to the Consenting Noteholders and the Consenting Sponsors (but only to the extent such supplement relates to, or affects the rights of, the Consenting Sponsors); and (iv) for the avoidance of doubt, entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of the Reorganized Debtors’ foregoing assumption of each of the unexpired D&O Liability Insurance Policies.

In addition, on or after the Effective Date, none of the Reorganized Debtors shall terminate or otherwise reduce the coverage under any D&O Liability Insurance Policies (including, without limitation, any “tail policy” and all agreements, documents, or instruments related thereto) in effect on or prior to the Effective Date, with respect to conduct occurring prior thereto, and all current and former directors, officers, and managers of the Debtors who served in such capacity at any time prior to the Effective Date shall be entitled to the full benefits of any such policies for the full term of such policies regardless of whether such current and former directors, officers, and managers remain in such positions after the


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Effective Date, all in accordance with the terms and conditions of the D&O Liability Insurance Policies, which shall not be altered.

P. Preservation of Rights of Action

In accordance with section 1123(b) of the Bankruptcy Code, but subject to the releases set forth in this section and in Article IX below, all Causes of Action that a Debtor may hold against any Entity shall vest in the applicable Reorganized Debtor on the Effective Date. Thereafter, the Reorganized Debtors shall have the exclusive right, authority, and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such Causes of Action, whether arising before or after the Petition Date, and to decline to do any of the foregoing without the consent or approval of any third party or further notice to or action, order, or approval of the Bankruptcy Court. No Entity may rely on the absence of a specific reference in the Plan, the Plan Supplement, or the Disclosure Statement to any specific Cause of Action as any indication that the Debtors or Reorganized Debtors will not pursue any and all available Causes of Action. The Debtors and Reorganized Debtors expressly reserve all rights to prosecute any and all Causes of Action against any Entity, except as otherwise expressly provided in the Plan, and, therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable or otherwise) or laches, shall apply to any Cause of Action upon, after, or as a consequence of the Confirmation or the occurrence of the Effective Date.

Notwithstanding any provision in the Plan or any order entered in these Chapter 11 Cases, the Debtors and Reorganized Debtors forever waive, relinquish, and release any and all Causes of Action the Debtors and their Estates had, have, or may have (a) against any Released Party, or (b) that arise under section 547 of the Bankruptcy Code (and analogous non-bankruptcy law) with respect to any Claim that is being rendered Unimpaired under the Plan and any Entity with whom the Debtors are conducting, and the Reorganized Debtors will continue to conduct, business on and after the Effective Date.

Q. Corporate Action

Subject to the Restructuring Support Agreement, upon the Effective Date, all actions contemplated by the Plan shall be deemed authorized, approved, and, to the extent taken prior to the Effective Date, ratified without any requirement for further action by Holders of Claims or Interests, directors, managers, or officers of the Debtors, the Reorganized Debtors, or any other Entity, including: (1) rejection or assumption, as applicable, of Executory Contracts and Unexpired Leases; (2) selection of the directors, managers, and officers for the Reorganized Debtors; (3) the execution of the New Debt Documentation, the Settlement Note, and the New Organizational Documents; (4) the issuance and distribution of the New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants), the New Warrants, and the Rights as provided herein; and (5) all other acts or actions contemplated, or reasonably necessary or appropriate to promptly consummate the transactions contemplated by the Plan (whether to occur before, on, or after the Effective Date). All matters provided for in the Plan involving the company structure of the Debtors, and any company action required by the Debtors in connection therewith, shall be deemed to have occurred on, and shall be in effect as of, the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons, or officers of the Debtors.

On or prior to the Effective Date, the appropriate officers, directors, managers, or authorized persons of the Debtors (including any president, vice-president, chief executive officer, treasurer, general counsel, or chief financial officer thereof) shall be authorized and directed to issue, execute and deliver the agreements, documents, securities, certificates of incorporation, certificates of formation, bylaws, operating agreements, and instruments contemplated by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf of the applicable Debtors or


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applicable Reorganized Debtors including (x) the New Debt Documentation, the Settlement Note, and the New Organizational Documents and (y) any and all other agreements, documents, securities, and instruments relating to the foregoing. The authorizations and approvals contemplated by this Article IV.Q shall be effective notwithstanding any requirements under non-bankruptcy law.

R. Effectuating Documents; Further Transactions

Prior to, on, and after the Effective Date, the Debtors and Reorganized Debtors and the directors, managers, officers, authorized persons, and members of the boards of directors or managers and directors thereof, are authorized to and may issue, execute, deliver, file, or record such contracts, securities, notes, instruments, certificates, releases, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence the terms and provisions of the Plan, the New Debt Documentation, the New Organizational Documents, and any Securities issued pursuant to the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any approvals, authorizations, actions, or consents except for those expressly required pursuant to the Plan or the Restructuring Support Agreement.

S. Management Incentive Plan

The New Board shall determine the terms and conditions and consider approval and implementation of the Management Incentive Plan promptly after the Effective Date.

T. Company Status Upon Emergence

The Debtors and, following the Effective Date, the Reorganized Debtors will use best efforts to attempt to obtain a listing of the New Common Equity on the New York Stock Exchange or the NASDAQ on the Effective Date, or, if such a listing is not reasonably possible, on the OTCQX Premier (if the OTCQX Premier is not possible, the OTCQX, and if the OTCQX is not possible, the OTCQB) and will use best efforts to obtain a New York Stock Exchange or NASDAQ listing as soon as possible following the Effective Date; provided, however, the foregoing covenant shall not apply to the extent (i) the board of directors of Hexion, or the New Board (on or after the Effective Date) determines that such listing is not in the best interests of the Reorganized Debtors or (ii) the holders of 73%, on a pro forma basis, of the New Common Equity (without giving effect to the Agreed Dilution), determine otherwise.

U. Payment of Fees and Expenses of the Consenting Noteholders

On and after the Effective Date, the Reorganized Debtors shall pay in Cash all unpaid reasonable and documented fees, costs and expenses (regardless of whether such fees, costs and expenses were incurred before or after the Petition Date) of the Consenting Noteholders, including the reasonable and documented fees, costs and expenses of attorneys, advisors, consultants or other professionals, without application by such parties to the Bankruptcy Court and without notice and a hearing pursuant to section 1129(a)(4) of the Bankruptcy Code or otherwise. Notwithstanding anything to the contrary in the Plan, the fees, costs and expenses described in this paragraph shall not be subject to the Administrative Claims Bar Date.

V. Payment of Trustee Fees

On the Effective Date, the Reorganized Debtors shall pay in cash all unpaid First Lien Notes Trustee Fees and all unpaid Junior Notes Trustee Professional Fees, regardless of whether such fees and expenses were incurred before or after the Petition Date, without application by any party to the Bankruptcy Court and without notice and a hearing pursuant to section 1129(a)(4) of the Bankruptcy Code or otherwise. Notwithstanding anything to the contrary in the Plan, the First Lien Notes Trustee Fees and the Junior Notes Trustee Professional Fees shall not be subject to the Administrative Claims Bar


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Date. The payment of the First Lien Notes Trustee Fees and the Junior Notes Trustee Professional Fees are part of the economic bargain between the beneficial Holders of First Lien Notes Claims and beneficial Holders of Junior Notes Claims and the Debtors and the Consenting Parties, and the payment of the First Lien Notes Trustee Fees and the Junior Notes Trustee Professional Fees (including attorneys’ fees and expenses) under the First Lien Notes Documents and the indentures relating to the Junior Notes Claims shall be part of the distribution on account of the First Lien Notes Claims and Junior Notes Claims, as applicable (and such fees and expenses are not being paid as administrative expenses).

Article V.

TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES; EMPLOYEE BENEFITS; AND INSURANCE POLICIES

A. Assumption and Rejection of Executory Contracts and Unexpired Leases

On the Effective Date, except as otherwise provided herein, each of the Executory Contracts and Unexpired Leases not previously assumed or rejected pursuant to an order of the Bankruptcy Court will be deemed assumed as of the Effective Date pursuant to sections 365 and 1123 of the Bankruptcy Code except any Executory Contract or Unexpired Lease (1) identified on the Rejected Executory Contract/Unexpired Lease List (which shall initially be filed with the Bankruptcy Court on the Plan Supplement Filing Date), (2) that is the subject of a separate motion or notice to reject pending as of the Effective Date, or (3) that previously expired or terminated pursuant to its own terms (disregarding any terms the effect of which is invalidated by the Bankruptcy Code).

Entry of the Confirmation Order by the Bankruptcy Court shall constitute an order approving the assumptions or rejections of the Executory Contracts and Unexpired Leases pursuant to sections 365(a) and 1123 of the Bankruptcy Code and effective on the occurrence of the Effective Date. Each Executory Contract and Unexpired Lease assumed pursuant to the Plan or by Bankruptcy Court order, and not assigned to a third party on or prior to the Effective Date, shall re-vest in and be fully enforceable by the applicable Reorganized Debtor in accordance with its terms, except as such terms may have been modified by order of the Bankruptcy Court. To the maximum extent permitted by law, to the extent any provision in any Executory Contract or Unexpired Lease assumed pursuant to the Plan restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the assumption of such Executory Contract or Unexpired Lease or the execution of any other Restructuring Transaction (including any “change of control” provision), then such provision shall be deemed modified such that the transactions contemplated by the Plan shall not entitle the non-Debtor party thereto to terminate such Executory Contract or Unexpired Lease or to exercise any other default-related rights with respect thereto. For the avoidance of doubt, consummation of the Restructuring Transactions shall not be deemed an assignment of any Executory Contract or Unexpired Lease of the Debtors, notwithstanding any change in name, organizational form, or jurisdiction of organization of any Debtor in connection with the occurrence of the Effective Date.

Notwithstanding anything to the contrary in the Plan, the Debtors or Reorganized Debtors, as applicable, subject to the Definitive Document Consent Rights, reserve the right to amend or supplement the Rejected Executory Contract/Unexpired Lease List in their discretion prior to the Effective Date (or such later date as may be permitted by Article V.B or Article V.E below), provided that the Debtors shall give prompt notice of any such amendment or supplement to any affected counterparty and such counterparty shall have a reasonable opportunity to object thereto on any grounds.


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B. Cure of Defaults for Assumed Executory Contracts and Unexpired Leases

Any monetary defaults under each Executory Contract and Unexpired Lease to be assumed pursuant to the Plan shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the Cure Cost in Cash on the Effective Date or as soon as reasonably practicable, subject to the limitation described below, or on such other terms as the parties to such Executory Contract or Unexpired Lease may otherwise agree. No later than the Plan Supplement Filing Date, to the extent not previously filed with the Bankruptcy Court and served on affected counterparties, the Debtors shall provide notices of the proposed assumption and proposed Cure Costs to be sent to applicable counterparties, together with procedures for objecting thereto and for resolution of disputes by the Bankruptcy Court. Any objection by a contract or lease counterparty to a proposed assumption or related Cure Cost must be filed, served, and actually received by the Debtors by the date on which objections to confirmation are due (or such other date as may be provided in the applicable assumption notice).

Any counterparty to an Executory Contract or Unexpired Lease that fails to object timely to the proposed assumption or Cure Cost will be deemed to have assented to such assumption and Cure Cost. Any timely objection to a proposed assumption or Cure Cost will be scheduled to be heard by the Bankruptcy Court at the Reorganized Debtors’ first scheduled omnibus hearing after the date that is 10 days after the date on which such objection is filed. In the event of a dispute regarding (1) the amount of any Cure Cost, (2) the ability of the Reorganized Debtors or any assignee to provide “adequate assurance of future performance” within the meaning of section 365(b) of the Bankruptcy Code under any Executory Contract or the Unexpired Lease, and/or (3) any other matter pertaining to assumption and/or assignment, then such dispute shall be resolved by a Final Order; provided that the Debtors (with the consent of the Required Consenting Noteholders not to be unreasonably withheld) or Reorganized Debtors may settle any such dispute and shall pay any agreed upon Cure Cost without any further notice to any party or any action, order, or approval of the Bankruptcy Court; provided, further, that notwithstanding anything to the contrary herein, the Reorganized Debtors reserve the right to reject any Executory Contract or Unexpired Lease previously designated for assumption within 45 days after the entry of a Final Order resolving an objection to the assumption or to the proposed Cure Cost.

Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise shall result in the full release and satisfaction of any Claims and defaults, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, under any assumed Executory Contract or Unexpired Lease arising at any time prior to the effective date of assumption. Notwithstanding the foregoing, the Debtors and the Reorganized Debtors, as applicable, will continue to honor all postpetition and post-Effective Date obligations under any assumed Executory Contracts and Unexpired Leases in accordance with their terms, regardless of whether such obligations are listed as a Cure Cost, and whether such obligations accrued prior to or after the Effective Date, and neither the payment of Cure Costs nor entry of the Confirmation Order shall be deemed to release the Debtors or the Reorganized Debtors, as applicable, from such obligations.

C. Claims Based on Rejection of Executory Contracts and Unexpired Leases

Unless otherwise provided by a Bankruptcy Court order, any Proofs of Claim asserting Claims arising from the rejection of the Executory Contracts and Unexpired Leases pursuant to the Plan or otherwise must be filed with the Notice and Claims Agent within thirty (30) days after the date of entry of an order of the Bankruptcy Court (including the Confirmation Order) approving such rejection. Any Proofs of Claim arising from the rejection of the Executory Contracts and Unexpired Leases that are not timely filed shall be subject to disallowance by further order of the Court upon objection on such grounds. All Allowed Claims arising from the rejection of the Executory Contracts and Unexpired


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Leases shall constitute General Unsecured Claims and shall be treated in accordance with Article III.B of the Plan.

D. Contracts and Leases Entered into After the Petition Date

Contracts and leases entered into after the Petition Date by any Debtor, including any Executory Contracts and Unexpired Leases assumed by any Debtor, will be performed by the Debtor or Reorganized Debtor, as applicable, liable thereunder in the ordinary course of its business. Accordingly, such contracts and leases (including any Assumed Executory Contracts and Unexpired Leases) that have not been rejected as of the Effective Date will survive and remain unaffected by entry of the Confirmation Order.

E. Reservation of Rights

Neither the exclusion nor inclusion of any contract or lease in the Executory Contract/Unexpired Lease List, nor anything contained in the Plan, nor the Debtors’ delivery of a notice of proposed assumption and proposed Cure Cost to any contract and lease counterparties, shall constitute an admission by the Debtors that any such contract or lease is in fact an Executory Contract or Unexpired Lease or that any Reorganized Debtor has any liability thereunder. If there is a dispute regarding whether a contract or lease is or was executory or unexpired at the time of assumption or rejection, the Debtors or Reorganized Debtors, as applicable, shall have thirty (30) days following entry of a Final Order resolving such dispute to alter their treatment of such contract or lease. If there is a dispute regarding a Debtor’s or Reorganized Debtor’s liability under an assumed Executory Contract or Unexpired Lease, the Reorganized Debtors shall be authorized to move to have such dispute heard by the Bankruptcy Court pursuant to Article X.C of the Plan.

F. Indemnification Provisions and Reimbursement Obligations

On and as of the Effective Date, and except as prohibited by applicable law or subject to the limitations set forth herein, the Indemnification Provisions will be assumed and irrevocable and will survive the effectiveness of the Plan, and the New Organizational Documents will provide to the fullest extent provided by law for the indemnification, defense, reimbursement, exculpation, and/or limitation of liability of, and advancement of fees and expenses to the Debtors’ and the Reorganized Debtors’ current and former directors, officers, equity holders, managers, members, employees, accountants, investment bankers, attorneys, other professionals, agents of the Debtors, and such current and former directors’, officers’, equity holders’, managers’, members’ and employees’ respective Affiliates (each of the foregoing solely in their capacity as such) at least to the same extent as the Indemnification Provisions, against any Claims or Causes of Action whether direct or derivative, liquidated or unliquidated, fixed or contingent, disputed or undisputed, matured or unmatured, known or unknown, foreseen or unforeseen, asserted or unasserted, and, notwithstanding anything in the Plan to the contrary, none of the Reorganized Debtors will amend and/or restate the New Organizational Documents before or after the Effective Date to terminate or adversely affect any of the Indemnification Provisions.

G. Employee Compensation and Benefits

1. Compensation and Benefit Programs

Subject to the provisions of the Plan, all Compensation and Benefits Programs shall be treated as Executory Contracts under the Plan and deemed assumed on the Effective Date pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code, so long as current and future liabilities associated with such programs have previously been provided or made available to the advisors to the Consenting Noteholders. All Proofs of Claim filed for amounts due under any Compensation and Benefits Program shall be considered satisfied by the applicable agreement and/or program and agreement to assume and


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cure in the ordinary course as provided in the Plan. All collective bargaining agreements to which any Debtor is a party, and all Compensation and Benefit Programs which are maintained pursuant to such collective bargaining agreements or to which contributions are made or benefits provided pursuant to a current or past collective bargaining agreement, will be deemed assumed on the Effective Date pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code and the Reorganized Debtors reserve all of their rights under such agreements.

None of the Restructuring, the Restructuring Transactions, or any assumption of Compensation and Benefits Programs pursuant to the terms herein shall be deemed to trigger any applicable change of control, vesting, termination, acceleration or similar provisions therein. No counterparty shall have rights under a Compensation and Benefits Program assumed pursuant to the Plan other than those applicable immediately prior to such assumption.

2. Workers’ Compensation Programs

As of the Effective Date, except as set forth in the Plan Supplement, the Debtors and the Reorganized Debtors shall continue to honor their obligations under: (1) all applicable state workers’ compensation laws; and (2) the Debtors’ written contracts, agreements, agreements of indemnity, self-insured workers’ compensation bonds, policies, programs, and plans for workers’ compensation and workers’ compensation Insurance Contracts (collectively, the “Workers’ Compensation Contracts”). All Proofs of Claims on account of workers’ compensation shall be deemed withdrawn automatically and without any further notice to or action, order, or approval of the Bankruptcy Court; provided that nothing in the Plan shall limit, diminish, or otherwise alter the Debtors’ or Reorganized Debtors’ defenses, Causes of Action, or other rights under applicable non-bankruptcy law with respect to the Workers’ Compensation Contracts; provided, further, that nothing herein shall be deemed to impose any obligations on the Debtors in addition to what is provided for under applicable state law and/or the Workers’ Compensation Contracts.

H. Insurance Contracts

Notwithstanding anything to the contrary in the Disclosure Statement, the Plan, the Plan Supplement, the Confirmation Order, any bar date notice or claim objection, any other document related to any of the foregoing or any other order of the Bankruptcy Court (including, without limitation, any other provision that purports to be preemptory or supervening, confers Bankruptcy Court jurisdiction, grants an injunction or release, or requires a party to opt out of any releases): (a) on the Effective Date, the applicable Reorganized Debtors shall assume the Insurance Contracts in their entirety pursuant to sections 105 and 365 of the Bankruptcy Code and the parties to the Insurance Contracts shall remain liable for all of the obligations thereunder (including any obligations of the Debtors), regardless of when they arise; (b) nothing shall alter, modify, amend, affect, impair or prejudice the legal, equitable or contractual rights, obligations, and defenses of the Insurers, the Debtors (or, after the Effective Date, the Reorganized Debtors), or any other individual or entity, as applicable, under any Insurance Contracts; any such rights and obligations shall be determined under the Insurance Contracts and applicable non-bankruptcy law as if the Chapter 11 Cases had not occurred; (c) nothing alters or modifies the duty, if any, that Insurers have to pay claims covered by the Insurance Contracts and the Insurers’ right to seek payment or reimbursement from the Debtors (or after the Effective Date, the Reorganized Debtors) or draw on any collateral or security therefor; (d) the Allowed Claims of the Insurers arising (whether before or after the Effective Date) under the Insurance Contracts (i) shall be paid in full in the ordinary course of business regardless of whether such amounts are or shall become liquidated, due or paid before or after the Petition Date or the Effective Date, and (ii) shall not be discharged or released by the Plan or the Confirmation Order or any other order of the Bankruptcy Court; (e) the Insurers shall not need to or be required to file or serve any objection to a proposed cure amount or a request, application, claim, proof or motion for payment or allowance of any Administrative Claim and shall not be subject to any bar date or


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similar deadline governing cure amounts or Administrative Claims; and (f) the automatic stay of section 362(a) of the Bankruptcy Code and the injunctions set forth in Article IX of the Plan, if and to the extent applicable, shall be deemed modified without further order of this Court, solely to permit: (I) claimants with valid workers’ compensation claims or direct action claims against an Insurer under applicable non-bankruptcy law to proceed with their claims; (II) the Insurers to administer, handle, defend, settle, and/or pay, in the ordinary course of business and without further order of this Bankruptcy Court, (A) workers’ compensation claims, (B) claims where a claimant asserts a direct claim against any Insurer under applicable non-bankruptcy law, or an order has been entered by this Court granting a claimant relief from the automatic stay to proceed with its claim, and (C) all costs in relation to each of the foregoing; (III) the Insurers to collect from any or all of the collateral or security provided by or on behalf of the Debtors (or the Reorganized Debtors, as applicable) at any time and to hold the proceeds thereof as security for the obligations of the Debtors (and the Reorganized Debtors, as applicable) and/or apply such proceeds to the obligations of the Debtors (and the Reorganized Debtors, as applicable) under the applicable Insurance Contracts, in such order as the applicable Insurer may determine; and (IV) the Insurers to cancel any Insurance Contracts, and take other actions relating thereto, to the extent permissible under applicable non-bankruptcy law, and in accordance with the terms of the Insurance Contracts.

Article VI.

PROVISIONS GOVERNING DISTRIBUTIONS

A. Distribution on Account of Claims and Interests Allowed as of the Effective Date

Except as otherwise provided in the Plan or a Final Order, or as agreed to by the relevant parties, distributions under the Plan on account of Claims Allowed on or before the Effective Date shall be made on the Initial Distribution Date; provided that (1) Allowed Administrative Claims with respect to liabilities incurred by the Debtors in the ordinary course of business shall be paid or performed in the ordinary course of business in accordance with the terms and conditions of any controlling agreements, course of dealing, course of business or industry practice, (2) Allowed Priority Tax Claims shall be satisfied in accordance with Article II.C herein, and (3) Allowed General Unsecured Claims that would not be paid in the ordinary course of the Debtors’ business until after the Initial Distribution Date shall be paid by the Reorganized Debtors in the ordinary course of business.

B. Distributions on Account of Claims and Interests Allowed After the Effective Date

1. Payments and Distributions on Disputed Claims

Except as otherwise provided in the Plan, a Final Order, or as agreed to by the relevant parties, distributions on account of Disputed Claims that become Allowed after the Effective Date shall be made on the next Periodic Distribution Date that is at least thirty (30) days after the Disputed Claim becomes an Allowed Claim; provided that (a) Disputed Administrative Claims with respect to liabilities incurred by the Debtors in the ordinary course of business that become Allowed after the Effective Date shall be paid or performed in the ordinary course of business in accordance with the terms and conditions of any controlling agreements, course of dealing, course of business, or industry practice and (b) Disputed Priority Tax Claims that become Allowed Priority Tax Claims after the Effective Date shall be treated as Allowed Priority Tax Claims in accordance with Article II.C of the Plan.

2. Special Rules for Distributions to Holders of Disputed Claims

Notwithstanding any provision otherwise in the Plan and except as otherwise agreed to by the relevant parties no partial payments and no partial distributions shall be made with respect to a Disputed


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Claim until all such disputes in connection with such Disputed Claim have been resolved by settlement or Final Order.

C. Timing and Calculation of Amounts to Be Distributed

Except as otherwise provided herein, on the Initial Distribution Date each Holder of an Allowed Claim shall receive the full amount of the distributions that the Plan provides for Allowed Claims in the applicable Class. If and to the extent that any Disputed Claims exist, distributions on account of such Disputed Claims shall be made pursuant to Article VI.B and Article VII of the Plan. Except as otherwise provided in the Plan, Holders of Claims shall not be entitled to interest, dividends, or accruals on the distributions provided for in the Plan, regardless of whether such distributions are delivered on or at any time after the Effective Date.

D. Delivery of Distributions

1. Record Date for Distributions

For purposes of making distributions on the Initial Distribution Date only, the Distribution Agent shall be authorized and entitled to recognize only those Holders of Claims reflected in the Debtors’ books and records as of the close of business on the Distribution Record Date. If a Claim, other than one based on a publicly traded security, is transferred (a) twenty-one (21) or more days before the Distribution Record Date and reasonably satisfactory documentation evidencing such transfer is Filed with the Court, the Distribution Agent shall make the applicable distributions to the applicable transferee, or (b) twenty (20) or fewer days before the Distribution Record Date, the Distribution Agent shall make distributions to the transferee only to the extent practical and, in any event, only if the relevant transfer form is Filed with the Court and contains an unconditional and explicit certification and waiver of any objection to the transfer by the transferor.

2. Delivery of Distributions in General

Except as otherwise provided in the Plan, the Distribution Agent shall make distributions to Holders of Allowed Claims at the address for each such Holder as indicated in the Debtors’ records as of the date of any such distribution, including the address set forth in any Proof of Claim filed by that Holder; provided that the manner of such distributions shall be determined at the discretion of the Reorganized Debtors.

3. Delivery of Distributions on First Lien Notes Claims

The First Lien Notes Indenture Trustees shall be deemed to be the Holders of all applicable Allowed Class 2 First Lien Notes Claims for purposes of distributions to be made hereunder, and all distributions on account of such Allowed Claims shall be made to (or to the applicable Holders of Allowed Class 2 Claims at the direction of) the applicable First Lien Notes Indenture Trustee. As soon as practicable following the Effective Date, the First Lien Notes Indenture Trustees shall arrange to deliver or direct the delivery of such distributions to or on behalf of the applicable Holders of Allowed Class 2 Claims in accordance with the terms of the applicable First Lien Notes Documents and the Plan. Notwithstanding anything in the Plan to the contrary, and without limiting the exculpation and release provisions of the Plan, the First Lien Notes Indenture Trustees shall not have any liability to any Entity with respect to distributions made or directed to be made by the First Lien Notes Indenture Trustees, nor shall the First Lien Indenture Trustees have any obligation to make any distribution that is not delivered to them in a form that is distributable through the facilities of DTC. For the avoidance of doubt, the Debtors or Reorganized Debtors, as applicable, shall pay all reasonably and documented fees and


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expenses incurred by the First Lien Indenture Trustees in making or directing the making of distributions to Holders of Allowed First Lien Notes Claims under the Plan.

4. Delivery of Distributions on Junior Notes Claims

The 1.5 Lien Notes Indenture Trustee shall be deemed to be the Holder of all Allowed 1.5 Lien Notes Claims in Class 3 for purposes of distributions to be made hereunder, and all distributions on account of such Allowed Claims shall be made to the 1.5 Lien Notes Indenture Trustee or, with the written consent of the 1.5 Lien Notes Indenture Trustee, a third party disbursing agent. As soon as practicable following the Effective Date, the 1.5 Lien Notes Indenture Trustee shall arrange to deliver or direct the delivery of such distributions to or on behalf of the Holders of Allowed 1.5 Lien Notes Claims in Class 3 in accordance with the terms of the 1.5 Lien Notes Indenture and the Plan. Notwithstanding anything in the Plan to the contrary, and without limiting the exculpation and release provisions of the Plan, the 1.5 Lien Notes Indenture Trustee shall not have any liability to any Entity with respect to distributions made or directed to be made by the 1.5 Lien Notes Indenture Trustee.

The Second Lien Notes Indenture Trustee shall be deemed to be the Holder of all Allowed Second Lien Notes Claims in Class 3 for purposes of distributions to be made hereunder, and all distributions on account of such Allowed Claims shall be made to the Second Lien Notes Indenture Trustee or, with the written consent of the Second Lien Notes Indenture Trustee, a third party disbursing agent. As soon as practicable following the Effective Date, the Second Lien Notes Indenture Trustee shall arrange to deliver or direct the delivery of such distributions to or on behalf of the Holders of Allowed Second Lien Notes Claims in Class 3 in accordance with the terms of the Second Lien Notes Indenture and the Plan. Notwithstanding anything in the Plan to the contrary, and without limiting the exculpation and release provisions of the Plan, the Second Lien Notes Indenture Trustee shall not have any liability to any Entity with respect to distributions made or directed to be made by the Second Lien Notes Indenture Trustee.

The Borden Debentures Trustee shall be deemed to be the Holder of all Allowed Borden Debentures Claims in Class 3 for purposes of distributions to be made hereunder, and all distributions on account of such Allowed Claims shall be made to the Borden Debentures Trustee or, with the written consent of the Borden Debentures Trustee, a third party disbursing agent. As soon as practicable following the Effective Date, the Borden Debentures Trustee shall arrange to deliver or direct the delivery of such distributions to or on behalf of the Holders of Allowed Borden Debentures Claims in Class 3 in accordance with the terms of the Borden Debentures Indenture and the Plan. Notwithstanding anything in the Plan to the contrary, and without limiting the exculpation and release provisions of the Plan, the Borden Debentures Trustee shall not have any liability to any Entity with respect to distributions made or directed to be made by the Borden Debenture Trustee.

5. Delivery of Distributions on DIP Facility Claims

The DIP Agents shall be deemed to be the Holders of all applicable DIP Facility Claims for purposes of distributions to be made hereunder, and all distributions on account of such DIP Facility Claims shall be made to the DIP Agents. As soon as practicable following the Effective Date, the DIP Agents shall arrange to deliver or direct the delivery of such distributions to or on behalf of the applicable Holders of DIP Facility Claims in accordance with the terms of the DIP Facilities, subject to any modifications to such distributions in accordance with the terms of the Plan. Notwithstanding anything in the Plan to the contrary, and without limiting the exculpation and release provisions of the Plan, the DIP Agents shall not have any liability to any Entity with respect to distributions made or directed to be made by the DIP Agents.


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6. Distributions by Distribution Agents

The Debtors and the Reorganized Debtors, as applicable, shall have the authority to enter into agreements with one or more Distribution Agents to facilitate the distributions required hereunder. To the extent the Debtors and the Reorganized Debtors, as applicable, determine to utilize a Distribution Agent to facilitate the distributions under the Plan to Holders of Allowed Claims, any such Distribution Agent would first be required to: (a) affirm its obligation to facilitate the prompt distribution of any documents; (b) affirm its obligation to facilitate the prompt distribution of any recoveries or distributions required under the Plan; (c) waive any right or ability to setoff, deduct from or assert any lien or encumbrance against the distributions required under the Plan to be distributed by such Distribution Agent; and (d) post a bond, obtain a surety or provide some other form of security for the performance of its duties, the costs and expenses of procuring which shall be borne by the Debtors or the Reorganized Debtors, as applicable.

The Debtors or the Reorganized Debtors, as applicable, shall pay to the Distribution Agents all reasonable and documented fees and expenses of the Distribution Agents without the need for any approvals, authorizations, actions, or consents. The Distribution Agents shall submit detailed invoices to the Debtors or the Reorganized Debtors, as applicable, for all fees and expenses for which the Distribution Agent seeks reimbursement and the Debtors or the Reorganized Debtors, as applicable, shall pay those amounts that they, in their sole discretion, deem reasonable, and shall object in writing to those fees and expenses, if any, that the Debtors or the Reorganized Debtors, as applicable, deem to be unreasonable. In the event that the Debtors or the Reorganized Debtors, as applicable, object to all or any portion of the amounts requested to be reimbursed in a Distribution Agent’s invoice, the Debtors or the Reorganized Debtors, as applicable, and such Distribution Agent shall endeavor, in good faith, to reach mutual agreement on the amount of the appropriate payment of such disputed fees and/or expenses. In the event that the Debtors or the Reorganized Debtors, as applicable, and a Distribution Agent are unable to resolve any differences regarding disputed fees or expenses, either party shall be authorized to move to have such dispute heard by the Bankruptcy Court.

7. Minimum Distributions

Notwithstanding anything herein to the contrary, other than on account of Claims in Class 1 and Class 4, the Reorganized Debtors and the Distribution Agents shall not be required to make distributions or payments of less than $100 (whether Cash or otherwise) and shall not be required to make partial distributions or payments of fractions of dollars. Whenever any payment or distribution of a fraction of a dollar or fractional share of New Common Equity or a fractional New Warrant or Right under the Plan would otherwise be called for, the actual payment or distribution will reflect a rounding down of such fraction to the nearest whole dollar or share of New Common Equity or New Warrant or Right.

8. Undeliverable Distributions

a. Holding of Certain Undeliverable Distributions

Undeliverable distributions shall remain in the possession of the Reorganized Debtors, subject to Article VI.D.8.b of the Plan, until such time as any such distributions become deliverable. Undeliverable distributions shall not be entitled to any additional interest, dividends, or other accruals of any kind on account of their distribution being undeliverable.

b. Failure to Claim Undeliverable Distributions

No later than 60 days after an initial distribution has been made to each Class entitled to receive a distribution under the Plan, the Reorganized Debtors shall file with the Bankruptcy Court a list of the Holders of undeliverable distributions. This list shall be maintained and updated periodically in the sole


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discretion of the Reorganized Debtors for as long as the Chapter 11 Cases stay open. Any Holder of an Allowed Claim, irrespective of when such Claim becomes an Allowed Claim, that does not notify the Reorganized Debtors of such Holder’s then current address in accordance herewith within 60 days after the filing of the list of Holders of undeliverable distributions shall have its Claim for such undeliverable distribution discharged and shall be forever barred, estopped and enjoined from asserting any such Claim against the Reorganized Debtors or their property.

Within 90 days after the mailing or other delivery of any such distribution checks, notwithstanding applicable escheatment laws, all such distributions shall revert to the Reorganized Debtors. Nothing contained herein shall require the Reorganized Debtors to attempt to locate any Holder of an Allowed Claim.

c. Failure to Present Checks

Checks issued by the Reorganized Debtors (or their Distribution Agent) on account of Allowed Claims shall be null and void if not negotiated within 90 days after the issuance of such check. In an effort to ensure that all Holders of Allowed Claims receive their allocated distributions, the Reorganized Debtors shall file with the Bankruptcy Court a list of the Holders of any un-negotiated checks no later than 70 days after the issuance of such checks. This list shall be maintained and updated periodically in the sole discretion of the Reorganized Debtors for as long as the Chapter 11 Cases stay open. Requests for reissuance of any check shall be made directly to the Distribution Agent by the Holder of the relevant Allowed Claim with respect to which such check originally was issued.

Any Holder of an Allowed Claim holding an un-negotiated check that does not request reissuance of such un-negotiated check within 180 days after the date of mailing or other delivery of such check shall have its Claim for such un-negotiated check discharged and be discharged and forever barred, estopped and enjoined from asserting any such Claim against the Reorganized Debtors or their property.

Within 90 days after the mailing or other delivery of any such distribution checks, notwithstanding applicable escheatment laws, all such distributions shall revert to the Reorganized Debtors. Nothing contained herein shall require the Reorganized Debtors to attempt to locate any Holder of an Allowed Claim.

E. Compliance with Tax Requirements/Allocations

In connection with the Plan, to the extent applicable, the Reorganized Debtors shall comply with all tax withholding and reporting requirements imposed on them by any Governmental Unit, and all distributions pursuant hereto shall be subject to such withholding and reporting requirements. Notwithstanding any provision in the Plan to the contrary, the Reorganized Debtors and the Distribution Agent shall be authorized to take all actions necessary or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes, withholding distributions pending receipt of information necessary to facilitate such distributions or establishing any other mechanisms they believe are reasonable and appropriate, including requiring as a condition to the receipt of a distribution, that the Holders of an Allowed Claim complete an IRS Form W-8 or W-9, as applicable. The Reorganized Debtors reserve the right to allocate all distributions made under the Plan in compliance with all applicable wage garnishments, alimony, child support and other spousal awards, liens and encumbrances. For tax purposes, distributions in full or partial satisfaction of Allowed Claims shall be allocated first to the principal amount (as determined for U.S. federal income tax purposes) of Allowed Claims, with any excess allocated to unpaid interest that accrued on such Claims.


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F. Surrender of Canceled Instruments or Securities

On the Effective Date or as soon as reasonably practicable thereafter, each Holder of a certificate or instrument evidencing a Claim or an Equity Interest shall be deemed to have surrendered such certificate or instrument to the Distribution Agent. Such surrendered certificate or instrument shall be cancelled solely with respect to the Debtors, and except as provided otherwise under the Plan, including the Debtor Release and the Third Party Release, such cancellation shall not alter the obligations or rights of any non-Debtor third parties vis-à-vis one another with respect to such certificate or instrument, including with respect to any indenture or agreement that governs the rights of the Holder of a Claim or Equity Interest, which shall continue in effect for purposes of allowing Holders to receive distributions under the Plan and allowing indenture trustees to exercise charging liens, priorities of payment, and indemnification rights. Notwithstanding anything to the contrary herein, this paragraph shall not apply to certificates or instruments evidencing Claims that are Unimpaired under the Plan.

G. Claims Paid or Payable by Third Parties.

1. Claims Payable by Insurance

No distributions under the Plan shall be made on account of an Allowed Claim that is payable pursuant to one of the Debtors’ insurance policies until the Holder of such Allowed Claim has exhausted all remedies with respect to such Insurance Contract, provided that the foregoing shall not apply to Allowed Claims asserting liability related to an asbestos-related disease and/or for asbestos premises liability.

2. Applicability of Insurance Policies

Except as otherwise provided in the Plan, distributions to Holders of Allowed Claims shall be in accordance with the provisions of any applicable Insurance Contract. Nothing contained in the Plan shall constitute or be deemed a waiver of any Cause of Action that the Debtors or any Entity may hold against any other Entity, including Insurers under any Insurance Contracts, nor shall anything contained herein constitute or be deemed a waiver by such Insurers of any rights or defenses, including coverage defenses, held by such Insurers under the Insurance Contracts.

Article VII.

PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS

A. No Filing of Proofs of Claim or Equity Interests

All Claims shall be deemed Allowed, subject to any applicable provisions of the Bankruptcy Code (including, without limitation, section 502(b) of the Bankruptcy Code). If a dispute regarding the amount or liability (including the Allowed amount) of any Claim should arise, the Debtors and Reorganized Debtors intend to attempt to resolve any such disputes consensually or through judicial means outside the Bankruptcy Court. Nevertheless, the Debtors or Reorganized Debtors may, in their discretion, File with the Bankruptcy Court (or any other court of competent jurisdiction) an objection to the allowance of any Claim or any other appropriate motion or adversary proceeding with respect thereto. All such objections will be litigated to Final Order; provided, however, that the Debtors or Reorganized Debtors may compromise, settle, withdraw or resolve by any other method approved by the Bankruptcy Court any objections to Claims.


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Except as otherwise provided in the Plan, including with respect to Administrative Claims and any Claims on account of the Debtors’ rejection of the Debtors’ Executory Contracts and Unexpired Leases, Holders of Claims shall not be required to File a Proof of Claim, and no parties should File a Proof of Claim. Instead, the Debtors intend to make distributions, as required by the Plan, in accordance with their books and records. Except as to Proofs of Claim filed for Administrative Claims and any Claims on account of the Debtors’ rejection of the Debtors’ Executory Contracts and Unexpired Leases, all Proofs of Claim shall be considered objected to and Disputed without further action by the Debtors. Upon the Effective Date, all other Proofs of Claim filed against the Debtors, regardless of the timing of their filing and including any filed after the Effective Date, shall be deemed withdrawn and expunged, except for Proofs of Claim for Administrative Claims and any Claims on account of the Debtors’ rejection of the Debtors’ Executory Contracts and Unexpired Leases. Notwithstanding anything in the foregoing or otherwise in the Plan to the contrary: (1) all Claims against the Debtors that result from the Debtors’ rejection of an Executory Contract or Unexpired Lease; (2) disputes regarding the amount of any Cure Cost pursuant to section 365 of the Bankruptcy Code; and (3) Claims that the Debtors seek to have determined by the Bankruptcy Court shall, in all cases, be determined by the Bankruptcy Court. B. Prosecution of Objections to Claims

Except as otherwise specifically provided in the Plan, the Reorganized Debtors shall have the sole authority: (1) to file, withdraw, or litigate to judgment objections to Claims; (2) to settle or compromise any Disputed Claim without any further notice to or action, order, or approval by the Bankruptcy Court; and (3) to administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court.

C. Estimation of Claims and Interests

Before or after the Effective Date, the Debtors or Reorganized Debtors, as applicable, may (but are not required to) at any time request that the Bankruptcy Court estimate any Disputed Claim that is contingent or unliquidated pursuant to section 502(c) of the Bankruptcy Code for any reason, regardless of whether any party previously has objected to such Claim or whether the Bankruptcy Court has ruled on any such objection; and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim or Interest, including during the litigation of any objection to any Claim or during the appeal relating to such objection; provided that if the Bankruptcy Court resolves the Allowed amount of a Claim, the Debtors and Reorganized Debtors, as applicable, shall not be permitted to seek an estimation of such Claim). Notwithstanding any provision otherwise in the Plan, a Claim that has been expunged from the Claims Register, but that either is subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars, unless otherwise ordered by the Bankruptcy Court. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim, that estimated amount shall constitute a maximum limitation on such Claim for all purposes under the Plan (including for purposes of distributions), and the relevant Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate distribution on such Claim subject to applicable law. For the avoidance of doubt, this section shall not apply to the liquidation of the amount of an Allowed Claim in Class 4.

D. No Distributions Pending Allowance

If any portion of a Claim is Disputed, no payment or distribution provided hereunder shall be made on account of such Claim unless and until such Claim becomes an Allowed Claim; provided that if only the Allowed amount of a Claim is Disputed, such Claim shall be deemed Allowed in the amount not Disputed and payment or distribution shall be made on account of such undisputed amount.


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E. Time to File Objections to Claims

Any objections to Claims shall be Filed on or before the Claims Objection Deadline, subject to any extensions thereof approved by the Bankruptcy Court.

Article VIII.

CONDITIONS PRECEDENT TO THE EFFECTIVE DATE

A. Conditions Precedent to the Effective Date

The following are conditions precedent to the Effective Date that must be satisfied or waived:

1. The Bankruptcy Court shall have approved the Disclosure Statement as containing adequate information with respect to the Plan within the meaning of section 1125 of the Bankruptcy Code and the Disclosure Statement shall comply with the Definitive Document Consent Rights.

2. The Confirmation Order shall have been entered, shall be in full force and effect, and shall comply with the Definitive Document Consent Rights.

3. The Bankruptcy Court shall have entered the RSA Approval Order, DBA Approval Order, and the EBA Approval Order, and each such order (i) shall be in full force and effect, (ii) shall be a Final Order, and (iii) shall comply with the Definitive Document Consent Rights.

4. All conditions precedent to the incurrence of the New Debt shall have been satisfied or waived pursuant to the terms of the New Debt Documentation (which may occur substantially concurrently with the occurrence of the Effective Date) and such New Debt and the New Debt Documentation shall comply with the Definitive Document Consent Rights.

5. The Rights Offering shall have been conducted in accordance with the Rights Offering Procedures and shall comply with the Definitive Document Consent Rights.

6. All documents and agreements necessary to implement the Plan (including any documents contained in the Plan Supplement), shall comply with the Definitive Document Consent Rights, and shall have been executed and tendered for delivery. All conditions precedent to the effectiveness of such documents and agreements shall have been satisfied or waived pursuant to the terms thereof (which may occur substantially concurrently with the occurrence of the Effective Date).

7. All actions, documents, certificates, and agreements necessary to implement the Plan (including any documents contained in the Plan Supplement) shall have been effected or executed and delivered to the required parties and, to the extent required, filed with the applicable Governmental Units in accordance with applicable laws and shall comply with the Definitive Document Consent Rights.

8. All authorizations, consents, regulatory approvals, rulings, or documents that are necessary to implement and effectuate the Plan and the transactions contemplated herein shall have been obtained and shall comply with the Definitive Document Consent Rights.

9. All fees, including for the avoidance of doubt all premiums due to the Backstop Parties, expenses and other amounts payable to or on behalf of the Consenting Noteholders, the Debt Backstop Parties and the Equity Backstop Parties, as applicable, including counsel and financial advisors to each of the Ad Hoc Groups (as defined in the Restructuring Support Agreement) pursuant to the Restructuring Support Agreement, the Equity Backstop Agreement and the Debt Backstop Agreement shall have been


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paid in full in Cash or in New Common Equity (including any New Common Equity issuable upon exercise of the New Warrants), as applicable.

10. The First Lien Notes Trustee Fees and the Junior Notes Trustee Professional Fees shall have been paid in full in Cash.

11. The Restructuring Support Agreement, the Equity Backstop Agreement, and the Debt Backstop Agreement shall not have been terminated in accordance with their terms and remain in full force and effect and the parties thereto shall be in compliance therewith.

12. The Consenting Sponsors, on behalf of themselves and their affiliates, shall have permanently waived any and all management, monitoring or like fees or expenses owed by any Debtor and any agreements providing for the same shall have been terminated with no liability of any Debtor other than in connection with the Consenting Sponsor Claim Settlement; provided, however, that if the conditions precedent in (1) through (11) are satisfied, all such fees and expenses shall be deemed waived and all such agreements shall be deemed terminated with no liability of any Debtor other than in connection with the Consenting Sponsor Claim Settlement; provided, further, that the foregoing shall not limit, reduce, modify or impair the Debtors’ or the Reorganized Debtors’ Indemnification Provisions with respect to the Consenting Sponsors and their affiliates or the Consenting Sponsors’ or their affiliates’ rights under any of the D&O Liability Insurance Policies, which shall each be assumed and Unimpaired pursuant to Articles V.F and IV.N, respectively.

B. Waiver of Conditions

The Debtors or the Reorganized Debtors, as applicable, with the consent of the Required Consenting Noteholders and the Consenting Sponsors (but, with respect to the Consenting Sponsors, only to the extent such waiver (i) affects the release, exculpation, injunction, indemnification, or insurance provisions related to the Consenting Sponsors, (ii) adversely affects the rights or obligations of the Consenting Sponsors pursuant to or identified in the Restructuring Support Agreement or under the terms of the Plan or (iii) relates to the Settlement Note) (such consent not to be unreasonably withheld, conditioned, or delayed), may waive any of the conditions to the Effective Date set forth above at any time, without any notice to parties in interest (other than any notice required to be provided by the Committee pursuant to Article XI) and without any further notice to or action, order, or approval of the Bankruptcy Court, and without any formal action other than a proceeding to confirm the Plan.

C. Effect of Non-Occurrence of Conditions to the Effective Date

If the Effective Date does not occur on or before the termination of the Restructuring Support Agreement, then: (1) the Plan shall be null and void in all respects; (2) any settlement or compromise embodied in the Plan, assumption or rejection of Executory Contracts or Unexpired Leases effected under the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void; and (3) nothing contained in the Plan, the Confirmation Order, or the Disclosure Statement shall: (a) constitute a waiver or release of any Claims, Interests, or Causes of Action; (b) prejudice in any manner the rights of the Debtors or any other Entity; or (c) constitute an admission, acknowledgement, offer, or undertaking of any sort by the Debtors or any other Entity.


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Article IX.

RELEASE, INJUNCTION, AND RELATED PROVISIONS

A. Discharge of Claims and Termination of Equity Interests; Compromise and Settlement of Claims, Equity Interests, and Controversies.

Pursuant to and to the fullest extent permitted by section 1141(d) of the Bankruptcy Code, and except as otherwise specifically provided in the Plan (including, for the avoidance of doubt, Article III.C), the distributions, rights, and treatment that are provided in the Plan shall be in full and final satisfaction, settlement, release, and discharge, effective as of the Effective Date, of all Equity Interests and Claims of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against the Debtors, the Reorganized Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan on account of such Claims or Equity Interests, including demands, liabilities, and Causes of Action that arose before the Effective Date, any contingent or non-contingent liability on account of representations or warranties issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not: (1) a Proof of Claim is filed or deemed filed pursuant to section 501 of the Bankruptcy Code; (2) a Claim is Allowed; or (3) the Holder of such Claim or Equity Interest has accepted the Plan. Except as otherwise provided herein, any default by the Debtors with respect to any Claim that existed immediately prior to or on account of the filing of the Chapter 11 Cases shall be deemed cured on the Effective Date. The Confirmation Order shall be a judicial determination of the discharge of all Claims and Interests subject to the Effective Date occurring, except as otherwise expressly provided in the Plan. For the avoidance of doubt, nothing in this Article IX.A shall affect the rights of Holders of Claims to seek to enforce the Plan, including the distributions to which Holders of Allowed Claims and Interests are entitled under the Plan.

Pursuant to Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan shall constitute a good faith compromise of all Claims, Interests, and controversies relating to the contractual, legal, and subordination rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Interest, or any distribution to be made on account of such Allowed Claim or Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such Claims, Interests, and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates, and Holders of Claims and Interests and is fair, equitable, and reasonable. In accordance with the provisions of the Plan, pursuant to Bankruptcy Rule 9019, without any further notice to or action, order, or approval of the Bankruptcy Court, after the Effective Date, the Reorganized Debtors may compromise and settle any Claims against the Debtors and their Estates, as well as claims and Causes of Action against other Entities.

B. Releases by the Debtors

NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY, PURSUANT TO SECTION 1123(B) OF THE BANKRUPTCY CODE, FOR GOOD AND VALUABLE CONSIDERATION, ON AND AFTER THE EFFECTIVE DATE, EACH RELEASED PARTY IS DEEMED RELEASED AND DISCHARGED BY THE DEBTORS, THE REORGANIZED DEBTORS, AND THEIR ESTATES FROM ANY AND ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR UNKNOWN, INCLUDING ANY DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS THAT THE DEBTORS, THE REORGANIZED DEBTORS, OR THEIR ESTATES WOULD HAVE BEEN LEGALLY ENTITLED TO ASSERT IN THEIR OWN RIGHT (WHETHER INDIVIDUALLY OR


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COLLECTIVELY) OR ON BEHALF OF THE HOLDER OF ANY CLAIM OR INTEREST, BASED ON OR RELATING TO, OR IN ANY MANNER ARISING FROM, IN WHOLE OR IN PART, THE DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP OR OPERATION THEREOF), THE DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING EFFORTS, ANY AVOIDANCE ACTIONS (BUT EXCLUDING AVOIDANCE ACTION BROUGHT AS COUNTERCLAIMS OR DEFENSES TO CLAIMS ASSERTED AGAINST THE DEBTORS), THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING SUPPORT AGREEMENT, OR ANY TRANSACTION CONTEMPLATED THEREBY, OR ANY CONTRACT, INSTRUMENT, RELEASE, OR OTHER AGREEMENT OR DOCUMENT (INCLUDING PROVIDING ANY LEGAL OPINION REQUESTED BY ANY ENTITY REGARDING ANY TRANSACTION, CONTRACT, INSTRUMENT, DOCUMENT, OR OTHER AGREEMENT CONTEMPLATED BY THE PLAN OR THE RELIANCE BY ANY RELEASED PARTY ON THE PLAN OR THE CONFIRMATION ORDER IN LIEU OF SUCH LEGAL OPINION) CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE RIGHTS OFFERING, THE DIP FACILITIES, THE DIP CREDIT AGREEMENTS, THE DEBT BACKSTOP AGREEMENT, THE EQUITY BACKSTOP AGREEMENT, THE NEW DEBT, THE NEW DEBT DOCUMENTATION, THE CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN, OR UPON ANY OTHER ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE RELATED OR RELATING TO THE FOREGOING. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE RELEASES SET FORTH ABOVE DO NOT RELEASE (A) ANY POST-EFFECTIVE DATE OBLIGATIONS OF ANY PARTY OR ENTITY UNDER THE PLAN, ANY POST-EFFECTIVE DATE TRANSACTION CONTEMPLATED BY THE RESTRUCTURING, OR ANY DOCUMENT, INSTRUMENT, OR AGREEMENT (INCLUDING THOSE SET FORTH IN THE PLAN SUPPLEMENT) EXECUTED TO IMPLEMENT THE PLAN, INCLUDING THE ASSUMPTION OF THE INDEMNIFICATION PROVISIONS AS SET FORTH IN THE PLAN OR (B) ANY INDIVIDUAL FROM ANY CLAIM RELATED TO AN ACT OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL FRAUD OR WILLFUL MISCONDUCT.

ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE

BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THE DEBTOR RELEASE, WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS CONTAINED IN THE PLAN, AND FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S FINDING THAT THE DEBTOR RELEASE IS: (1) IN EXCHANGE FOR GOOD AND VALUABLE CONSIDERATION PROVIDED BY THE RELEASED PARTIES; (2) A GOOD FAITH SETTLEMENT AND COMPROMISE OF THE CLAIMS RELEASED BY THE DEBTOR RELEASE; (3) IN THE BEST INTERESTS OF THE DEBTORS AND ALL HOLDERS OF CLAIMS AND INTERESTS; (4) FAIR, EQUITABLE, AND REASONABLE; (5) GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING; AND (6) A BAR TO ANY OF THE DEBTORS, THE REORGANIZED DEBTORS, OR THE DEBTORS’ ESTATES ASSERTING ANY CLAIM OR CAUSE OF ACTION RELEASED PURSUANT TO THE DEBTOR RELEASE.


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C. Releases by Holders of Claims and Equity Interests

NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY, AS OF THE EFFECTIVE DATE (OR SUCH LATER DATE AS PROVIDED FOR IN ARTICLE III.C), EACH RELEASING PARTY IS DEEMED TO HAVE RELEASED AND DISCHARGED EACH DEBTOR, REORGANIZED DEBTOR, AND RELEASED PARTY FROM ANY AND ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR UNKNOWN, INCLUDING ANY DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS THAT SUCH ENTITY WOULD HAVE BEEN LEGALLY ENTITLED TO ASSERT (WHETHER INDIVIDUALLY OR COLLECTIVELY), BASED ON OR RELATING TO, OR IN ANY MANNER ARISING FROM, IN WHOLE OR IN PART, THE DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP, OR OPERATION THEREOF), THE DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING EFFORTS, ANY AVOIDANCE ACTIONS, THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING SUPPORT AGREEMENT, OR ANY TRANSACTION CONTEMPLATED THEREBY, OR ANY CONTRACT, INSTRUMENT, RELEASE, OR OTHER AGREEMENT OR DOCUMENT (INCLUDING PROVIDING ANY LEGAL OPINION REQUESTED BY ANY ENTITY REGARDING ANY TRANSACTION, CONTRACT, INSTRUMENT, DOCUMENT, OR OTHER AGREEMENT CONTEMPLATED BY THE PLAN OR THE RELIANCE BY ANY RELEASED PARTY ON THE PLAN OR THE CONFIRMATION ORDER IN LIEU OF SUCH LEGAL OPINION) CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE RIGHTS OFFERING, THE DIP FACILITIES, THE DIP CREDIT AGREEMENTS, THE DEBT BACKSTOP AGREEMENT, THE EQUITY BACKSTOP AGREEMENT, THE NEW DEBT, THE NEW DEBT DOCUMENTATION, THE CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN, OR UPON ANY OTHER ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE RELATED OR RELATING TO THE FOREGOING. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE RELEASES SET FORTH ABOVE DO NOT RELEASE (A) ANY POST-EFFECTIVE DATE OBLIGATIONS OF ANY PARTY OR ENTITY UNDER THE PLAN, ANY POST-EFFECTIVE DATE TRANSACTION CONTEMPLATED BY THE RESTRUCTURING, OR ANY DOCUMENT, INSTRUMENT, OR AGREEMENT (INCLUDING THOSE SET FORTH IN THE PLAN SUPPLEMENT) EXECUTED TO IMPLEMENT THE PLAN, INCLUDING THE ASSUMPTION OF THE INDEMNIFICATION PROVISIONS AS SET FORTH IN THE PLAN, (B) ANY INDIVIDUAL FROM ANY CLAIM RELATED TO AN ACT OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL FRAUD OR WILLFUL MISCONDUCT, OR (C) ANY UNIMPAIRED CLAIM UNLESS AND UNTIL RELEASED PURSUANT TO ARTICLE III.C. FURTHER, NOTHING IN THE PLAN, THE CONFIRMATION ORDER, OR SECTION 1141 OF THE BANKRUPTCY CODE, WILL BE CONSTRUED AS DISCHARGING, RELEASING OR RELIEVING THE REORGANIZED DEBTORS FROM ANY LIABILITY IMPOSED UNDER ANY LAW OR LEGALLY VALID REGULATORY PROVISION WITH RESPECT TO THE HEXION INC. PENSION PLAN. NEITHER THE PENSION BENEFIT GUARANTY CORPORATION NOR HEXION INC. PENSION PLAN WILL BE ENJOINED OR PRECLUDED FROM ENFORCING SUCH LIABILITY AGAINST ANY PARTY AS A RESULT OF ANY PROVISION OF THE PLAN OR THE CONFIRMATION ORDER.


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SUBJECT TO ARTICLE III.C, ENTRY OF THE CONFIRMATION ORDER SHALL

CONSTITUTE THE BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THIS THIRD-PARTY RELEASE, WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS CONTAINED HEREIN, AND, FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S FINDING THAT THIS THIRD PARTY RELEASE IS: (1) CONSENSUAL; (2) ESSENTIAL TO THE CONFIRMATION OF THE PLAN; (3) GIVEN IN EXCHANGE FOR GOOD AND VALUABLE CONSIDERATION PROVIDED BY THE RELEASED PARTIES; (4) A GOOD-FAITH SETTLEMENT AND COMPROMISE OF THE CLAIMS RELEASED BY THE THIRD-PARTY RELEASE; (5) IN THE BEST INTERESTS OF THE DEBTORS AND THEIR ESTATES; (6) FAIR, EQUITABLE, AND REASONABLE; (7) GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING; AND (8) A BAR TO ANY OF THE RELEASING PARTIES ASSERTING ANY CLAIM OR CAUSE OF ACTION RELEASED PURSUANT TO THIS THIRD PARTY RELEASE. D. Exculpation

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, NO EXCULPATED PARTY SHALL HAVE OR INCUR LIABILITY FOR, AND EACH EXCULPATED PARTY IS HEREBY RELEASED AND EXCULPATED FROM, ANY CAUSE OF ACTION FOR ANY CLAIM RELATED TO ANY ACT OR OMISSION IN CONNECTION WITH, RELATING TO, OR ARISING OUT OF, THE CHAPTER 11 CASES, THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING SUPPORT AGREEMENT AND RELATED PREPETITION TRANSACTIONS, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, OR ANY TRANSACTION CONTEMPLATED THEREBY, OR ANY CONTRACT, INSTRUMENT, RELEASE OR OTHER AGREEMENT OR DOCUMENT (INCLUDING PROVIDING ANY LEGAL OPINION REQUESTED BY ANY ENTITY REGARDING ANY TRANSACTION, CONTRACT, INSTRUMENT, DOCUMENT, OR OTHER AGREEMENT CONTEMPLATED BY THE PLAN OR THE RELIANCE BY ANY EXCULPATED PARTY ON THE PLAN OR THE CONFIRMATION ORDER IN LIEU OF SUCH LEGAL OPINION) CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE RIGHTS OFFERING, THE DIP FACILITIES, THE DIP CREDIT AGREEMENTS, THE DEBT BACKSTOP AGREEMENT, THE EQUITY BACKSTOP AGREEMENT, THE NEW DEBT, THE NEW DEBT DOCUMENTATION, THE CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN, OR UPON ANY OTHER ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE RELATED OR RELATING TO THE FOREGOING, EXCEPT FOR CLAIMS RELATED TO ANY ACT OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL FRAUD OR WILLFUL MISCONDUCT, BUT IN ALL RESPECTS SUCH ENTITIES SHALL BE ENTITLED TO REASONABLY RELY UPON THE ADVICE OF COUNSEL WITH RESPECT TO THEIR DUTIES AND RESPONSIBILITIES PURSUANT TO THE PLAN. THE EXCULPATED PARTIES HAVE, AND UPON COMPLETION OF THE PLAN SHALL BE DEEMED TO HAVE, PARTICIPATED IN GOOD FAITH AND IN COMPLIANCE WITH THE APPLICABLE LAWS WITH REGARD TO


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THE SOLICITATION OF, AND DISTRIBUTION OF, CONSIDERATION PURSUANT TO THE PLAN AND, THEREFORE, ARE NOT, AND ON ACCOUNT OF SUCH DISTRIBUTIONS SHALL NOT BE, LIABLE AT ANY TIME FOR THE VIOLATION OF ANY APPLICABLE LAW, RULE, OR REGULATION GOVERNING THE SOLICITATION OF ACCEPTANCES OR REJECTIONS OF THE PLAN OR SUCH DISTRIBUTIONS MADE PURSUANT TO THE PLAN.

E. Injunction

EXCEPT AS OTHERWISE PROVIDED IN THE PLAN OR THE CONFIRMATION ORDER (AND, FOR THE AVOIDANCE OF DOUBT, SUBJECT TO ARTICLE III.C), ALL ENTITIES WHO HAVE HELD, HOLD, OR MAY HOLD CLAIMS, INTERESTS, CAUSES OF ACTION, OR LIABILITIES THAT: (A) ARE SUBJECT TO COMPROMISE AND SETTLEMENT PURSUANT TO THE TERMS OF THE PLAN; (B) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.B OF THE PLAN; (C) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.C OF THE PLAN, (D) ARE SUBJECT TO EXCULPATION PURSUANT TO ARTICLE IX.D OF THE PLAN (BUT ONLY TO THE EXTENT OF THE EXCULPATION PROVIDED IN ARTICLE IX.D OF THE PLAN), OR (E) ARE OTHERWISE DISCHARGED, SATISFIED, STAYED OR TERMINATED PURSUANT TO THE TERMS OF THE PLAN, ARE PERMANENTLY ENJOINED AND PRECLUDED, FROM AND AFTER THE EFFECTIVE DATE, FROM COMMENCING OR CONTINUING IN ANY MANNER, ANY ACTION OR OTHER PROCEEDING, INCLUDING ON ACCOUNT OF ANY CLAIMS, INTERESTS, CAUSES OF ACTION, OR LIABILITIES THAT HAVE BEEN COMPROMISED OR SETTLED AGAINST THE DEBTORS, THE REORGANIZED DEBTORS, OR ANY ENTITY SO RELEASED OR EXCULPATED (OR THE PROPERTY OR ESTATE OF ANY ENTITY, DIRECTLY OR INDIRECTLY, SO RELEASED OR EXCULPATED) ON ACCOUNT OF, OR IN CONNECTION WITH OR WITH RESPECT TO, ANY DISCHARGED, RELEASED, SETTLED, COMPROMISED, OR EXCULPATED CLAIMS, INTERESTS, CAUSES OF ACTION, OR LIABILITIES.

F. Setoffs and Recoupment

Except as otherwise provided herein, each Reorganized Debtor pursuant to the Bankruptcy Code (including section 553 of the Bankruptcy Code), applicable bankruptcy or non-bankruptcy law, or as may be agreed to by the Holder of an Allowed Claim, may set off or recoup against any Allowed Claim and the distributions to be made pursuant to the Plan on account of such Allowed Claim, any Claims, rights, and Causes of Action of any nature that the applicable Debtor or Reorganized Debtor may hold against the Holder of such Allowed Claim, to the extent such Claims, rights, or Causes of Action have not been otherwise compromised or settled on or prior to the Effective Date (whether pursuant to the Plan, a Final Order or otherwise); provided that neither the failure to effect such a setoff or recoupment nor the allowance of any Claim pursuant to the Plan shall constitute a waiver or release by such Reorganized Debtor of any such Claims, rights, and Causes of Action.

G. Release of Liens

Except as otherwise provided herein or in any contract, instrument, release, or other agreement or document created pursuant to the Plan, on the Effective Date and concurrently with the applicable distributions made pursuant to the Plan, all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates shall be fully released and discharged, and all of the right, title, and interest of any Holder of such mortgages, deeds of trust, Liens, pledges, or other security interests shall revert to the applicable Reorganized Debtor and its successors and assigns.


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To the extent that any Holder of a Secured Claim that has been satisfied or discharged in full pursuant to the Plan, or any agent for such Holder, has filed or recorded publicly any Liens and/or security interests to secure such Holder’s Secured Claim, then as soon as practicable on or after the Effective Date, such Holder (or the agent for such Holder) shall take any and all steps requested by the Debtors, the Reorganized Debtors, or any administrative agent or collateral agent under the New Debt Documentation (at the expense of the Debtors or Reorganized Debtors, as applicable) that are necessary or desirable to record or effectuate the cancellation and/or extinguishment of such Liens and/or security interests, including the making of Uniform Commercial Code termination statements, deposit account control agreement terminations, and any other applicable filings or recordings, and the Reorganized Debtors shall be entitled to file Uniform Commercial Code terminations or to make any other such filings or recordings on such Holder’s behalf.

Article X.

RETENTION OF JURISDICTION

Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, except to the extent set forth herein, the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or related to, the Chapter 11 Cases and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction to:

A. allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the secured or unsecured status, priority, amount, or allowance of Claims or Interests;

B. decide and resolve all matters related to the granting and denying, in whole or in part, any applications for allowance of compensation or reimbursement of expenses to Retained Professionals authorized pursuant to the Bankruptcy Code or the Plan;

C. resolve any matters related to: (1) the assumption, assumption and assignment, or rejection of any Executory Contract or Unexpired Lease to which a Debtor is party o with respect to which a Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Cure Costs arising therefrom, including Cure Costs pursuant to section 365 of the Bankruptcy Code; (2) any potential contractual obligation under any Executory Contract or Unexpired Lease that is assumed; and (3) any dispute regarding whether a contract or lease is or was executory or expired;

D. ensure that distributions to Holders of Allowed Claims are accomplished pursuant to the provisions of the Plan;

E. adjudicate, decide or resolve any motions, adversary proceedings, contested, or litigated matters, and any other matters, and grant or deny any applications involving a Debtor that may be pending on the Effective Date;

F. adjudicate, decide or resolve any and all matters related to Causes of Action, other than Causes of Action against the Debtors;

G. adjudicate, decide or resolve any and all matters related to section 1141 of the Bankruptcy Code;

H. resolve any cases, controversies, suits, or disputes that may arise in connection with General Unsecured Claims, including the establishment of any bar dates, related notices, claim objections,


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allowance, disallowance, estimation and distribution, other than General Unsecured Claims based on Causes of Action against any of the Debtors;

I. enter and implement such orders as may be necessary or appropriate to execute, implement, or consummate the provisions of the Plan and all contracts, instruments, releases, indentures, and other agreements or documents created in connection with the Plan or the Disclosure Statement, including, without limitation, the Restructuring Support Agreement, the Equity Backstop Agreement, and the Debt Backstop Agreement;

J. enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;

K. resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection with the interpretation or enforcement of the Plan or any contract, instrument, release or other agreement or document that is entered into or delivered pursuant to the Plan, including the Equity Backstop Agreement, the EBA Approval Order, the Debt Backstop Agreement, and the DBA Approval Order, or any Entity’s rights arising from or obligations incurred in connection with the Plan;

L. issue injunctions, enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any Entity with enforcement of the Plan;

M. resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the releases, injunctions, and other provisions contained in the Plan and enter such orders as may be necessary or appropriate to implement such releases, injunctions, and other provisions;

N. resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the Holder of a Claim or Interest for amounts not timely repaid;

O. enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;

P. determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order, or any contract, instrument, release, indenture, or other agreement or document created in connection with the Plan or the Disclosure Statement;

Q. enter an order or final decree concluding or closing the Chapter 11 Cases;

R. adjudicate any and all disputes arising from or relating to distributions under the Plan;

S. consider any modification of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any Bankruptcy Court order, including the Confirmation Order;

T. determine requests for payment of Claims and Interests entitled to priority pursuant to section 507 of the Bankruptcy Code;

U. hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan, or the Confirmation Order, including disputes arising under agreements, documents, or instruments executed in connection with the Plan (other than any dispute arising after the Effective Date under, or directly with respect to, the New Debt Documentation, which such disputes shall be adjudicated in accordance with the terms of the New Debt Documentation);


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V. hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

W. hear and determine all disputes involving the existence, nature, or scope of the Debtors’ discharge, including any dispute relating to any liability arising out of the termination of employment or the termination of any employee or retiree benefit program, regardless of whether such termination occurred prior to or after the Effective Date;

X. hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the releases, injunctions, and exculpations provided under Article IX of the Plan;

Y. enforce all orders previously entered by the Bankruptcy Court; and

Z. hear any other matter not inconsistent with the Bankruptcy Code.

As of the Effective Date, notwithstanding anything in this Article X to the contrary, the New Debt Documentation shall be governed by their respective jurisdictional provisions therein.

For the avoidance of doubt, and notwithstanding the foregoing or anything else in the Plan or related documents, (x) no provision of the Plan shall diminish, enhance, or modify any applicable nonbankruptcy legal, equitable, and/or contractual rights of any Holder of a General Unsecured Claim to receive payment on account of such Claim or have such Claim allowed, liquidated, or determined by a court of competent jurisdiction (including the Bankruptcy Court), subject, however, to any applicable limitations on the allowance of such Claims under the Bankruptcy Code and to the rights of the Debtors, Reorganized Debtors, or any party in interest to dispute or defend such Claim in accordance with applicable nonbankruptcy law as if the Chapter 11 Cases had not been commenced and the Bankruptcy Court shall not retain exclusive jurisdiction over such disputes and (y) Causes of Action, including litigation claims, which are Unimpaired under this Plan, held by third parties against the Debtors which were pending as of the Petition Date, or subsequently asserted, shall continue to be adjudicated by the court that exercised jurisdiction over such Causes of Action prior to the Petition Date or exercises jurisdiction thereafter.

Article XI.

MODIFICATION, REVOCATION, OR WITHDRAWAL OF PLAN

A. Modification of Plan

Subject to the limitations contained in the Plan, the Debtors or Reorganized Debtors reserve the right to, in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support Agreement, and subject to the Definitive Document Consent Rights: (1) amend or modify the Plan prior to the entry of the Confirmation Order, including amendments or modifications to satisfy section 1129(b) of the Bankruptcy Code; (2) amend or modify the Plan after the entry of the Confirmation Order in accordance with section 1127(b) of the Bankruptcy Code and the Restructuring Support Agreement upon order of the Bankruptcy Court; and (3) remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan upon order of the Bankruptcy Court; provided, however, that the Debtors shall use commercially reasonable efforts to consult with the Committee with respect to any proposed modification or amendment to the Plan or Plan Supplement that adversely impacts the rights of unsecured creditors (including, for the avoidance of doubt, Holders of Junior Notes Claims, the Junior Notes Indenture Trustees and General Unsecured Creditors) or the proposed treatment of unsecured creditors’ Claims under the Plan.


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B. Effect of Confirmation on Modifications

Entry of the Confirmation Order shall mean that all modifications or amendments to the Plan since the solicitation thereof are approved pursuant to section 1127(a) of the Bankruptcy Code and do not require additional disclosure or re-solicitation under Bankruptcy Rule 3019.

C. Revocation of Plan; Reservation of Rights if Effective Date Does Not Occur

Subject to the conditions to the Effective Date, the Debtors reserve the right, subject to the terms of the Restructuring Support Agreement, the Equity Backstop Agreement, and the Debt Backstop Agreement, to revoke or withdraw the Plan prior to the entry of the Confirmation Order and to file subsequent plans of reorganization. If the Debtors revoke or withdraw the Plan with the prior reasonable consent of the Required Consenting Parties, or if entry of the Confirmation Order or the Effective Date does not occur, or if the Restructuring Support Agreement terminates in accordance with its terms, then: (1) the Plan shall be null and void in all respects; (2) any settlement or compromise embodied in the Plan, assumption or rejection of executory contracts or leases effected by the Plan, and any document or agreement executed pursuant hereto shall be deemed null and void; and (3) nothing contained in the Plan shall: (a) constitute a waiver or release of any claims by or against, or any Equity Interests in, such Debtor or any other Entity; (b) prejudice in any manner the rights of the Debtors or any other Entity; or (c) constitute an admission of any sort by the Debtors or any other Entity.

Article XII.

MISCELLANEOUS PROVISIONS

A. Immediate Binding Effect

Notwithstanding Bankruptcy Rules 3020(e), 6004(g), or 7062 or otherwise, upon the occurrence of the Effective Date, the terms of the Plan and the documents and instruments contained in the Plan Supplement shall be immediately effective and enforceable and deemed binding upon the Debtors, the Reorganized Debtors, and any and all Holders of Claims and Interests (irrespective of whether Holders of such Claims or Interests are deemed to have accepted the Plan), all Entities that are parties to or are subject to the settlements, compromises, releases, discharges, and injunctions described in the Plan, each Entity acquiring property under the Plan and any and all non-Debtor parties to Executory Contracts and Unexpired Leases. The Confirmation Order shall contain a waiver of any stay of enforcement otherwise applicable, including pursuant to Bankruptcy Rule 3020(e) and 7062.

B. Additional Documents

On or before the Effective Date, the Debtors, with the reasonable consent of the Required Consenting Noteholders, may file with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Debtors or Reorganized Debtors, as applicable, and all Holders of Claims receiving distributions pursuant to the Plan and all other parties in interest shall, from time to time, prepare, execute, and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan or the Confirmation Order.

C. Payment of Statutory Fees

All fees payable pursuant to section 1930(a) of the Judicial Code, as determined by the Bankruptcy Court at a hearing pursuant to section 1128 of the Bankruptcy Code or as agreed to by the United States Trustee and Reorganized Hexion, shall be paid for each quarter (including any fraction thereof) until the Chapter 11 Cases are converted, dismissed or closed, whichever occurs first.


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D. Reservation of Rights

The Plan shall have no force or effect unless and until the Bankruptcy Court enters the Confirmation Order. None of the filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by any Debtor with respect to the Plan, the Disclosure Statement, or the Plan Supplement shall be or shall be deemed to be an admission or waiver of any rights of any Debtor with respect to the Holders of Claims or Interests prior to the Effective Date.

E. Successors and Assigns

The rights, benefits, and obligations of any Entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor or assign, affiliate, officer, director, agent, representative, attorney, beneficiaries or guardian, if any, of each Entity.

F. Service of Documents

After the Effective Date, any pleading, notice, or other document required by the Plan to be served on or delivered to the Reorganized Debtors shall also be served on:

Debtors Counsel to the Debtors

Hexion Inc. 180 East Broad Street Columbus, Ohio 43215 Attn: Douglas Johns

Latham & Watkins LLP 885 Third Avenue New York, New York 10022 Attn: George Davis, Andrew Parlen, and Hugh Murtagh

and

Latham & Watkins LLP 330 North Wabash Avenue, Suite 2800, Chicago, Illinois 60611 Attn: Caroline Reckler and Jason Gott


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United States Trustee Counsel to the Consenting Noteholders

Office of the United States Trustee for the District of Delaware J. Caleb Boggs Federal Building 844 North King Street, Suite 2207 Wilmington, Delaware 19801 Attn: Linda J. Casey, Esq.

Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, New York 10036 Attn: Ira S. Dizengoff, Philip C. Dublin, Daniel Fisher, and Naomi Moss

and

Jones Day 250 Vesey Street New York, NY 10281 Attn: Sidney P. Levinson and Jeremy D. Evans

and

Milbank LLP 55 Hudson Yards New York, New York 10001 Attn: Samuel A. Khalil and Matthew L. Brod

Counsel to the Committee

Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 Attn: Kenneth H. Eckstein, Rachael L. Ringer, Nathaniel Allard and David Z. Braun

After the Effective Date, the Reorganized Debtors have authority to send a notice to Entities that,

to continue to receive documents pursuant to Bankruptcy Rule 2002, they must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Debtors are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have filed such renewed requests.

In accordance with Bankruptcy Rules 2002 and 3020(c), within ten (10) Business Days of the date of entry of the Confirmation Order, the Debtors shall serve the Notice of Confirmation by United States mail, first class postage prepaid, by hand, or by overnight courier service to all parties served with the Confirmation Hearing Notice; provided that no notice or service of any kind shall be required to be mailed or made upon any Entity to whom the Debtors mailed a Confirmation Hearing Notice, but received such notice returned marked “undeliverable as addressed,” “moved, left no forwarding address” or “forwarding order expired,” or similar reason, unless the Debtors have been informed in writing by such Entity, or are otherwise aware, of that Entity’s new address. To supplement the notice described in the preceding sentence, within twenty days of the date of the Confirmation Order the Debtors shall publish the Notice of Confirmation once in The Wall Street Journal (national edition). Mailing and publication of the Notice of Confirmation in the time and manner set forth in the this paragraph shall be good and sufficient notice under the particular circumstances and in accordance with the requirements of Bankruptcy Rules 2002 and 3020(c), and no further notice is necessary.


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G. Term of Injunctions or Stays

Unless otherwise provided in the Plan or in the Confirmation Order, all injunctions or stays in effect in the Chapter 11 Cases pursuant to sections 105 or 362 of the Bankruptcy Code or any order of the Bankruptcy Court, and extant on the Confirmation Date (excluding any injunctions or stays contained in the Plan or the Confirmation Order) shall remain in full force and effect until the Effective Date. All injunctions or stays contained in the Plan or the Confirmation Order shall remain in full force and effect in accordance with their terms.

H. Entire Agreement

On the Effective Date, the Plan and the Plan Supplement supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into the Plan.

I. Governing Law

Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules) or unless otherwise specifically stated, the laws of the State of New York, without giving effect to the principles of conflict of laws, shall govern the rights, obligations, construction, and implementation of the Plan, any agreements, documents, instruments, or contracts executed or entered into in connection with the Plan (except as otherwise set forth in those agreements, in which case the governing law of such agreement shall control), and corporate governance matters; provided that corporate governance matters relating to Debtors or Reorganized Debtors, as applicable, not incorporated in New York shall be governed by the laws of the state of incorporation of the applicable Debtor or Reorganized Debtor, as applicable.

J. Exhibits

All exhibits and documents included in the Plan Supplement are incorporated into and are a part of the Plan as if set forth in full in the Plan. Except as otherwise provided in the Plan, such exhibits and documents included in the Plan Supplement shall initially be filed with the Bankruptcy Court on or before the Plan Supplement Filing Date. After the exhibits and documents are filed, copies of such exhibits and documents shall have been available upon written request to the Debtors’ counsel at the address above or by downloading such exhibits and documents from the Debtors’ restructuring website at www.omnimgt.com/HexionHoldings or the Bankruptcy Court’s website at www.deb.uscourts.gov. To the extent any exhibit or document is inconsistent with the terms of the Plan, unless otherwise ordered by the Bankruptcy Court, the non-exhibit or non-document portion of the Plan shall control.

K. Nonseverability of Plan Provisions upon Confirmation

If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted; provided that, any such alteration or interpretation shall be acceptable to the Debtors, the Required Consenting Noteholders, and the Consenting Sponsors (but only to the extent such alteration or interpretation (i) affects the release, exculpation, injunction, indemnification, or insurance provisions related to the Consenting Sponsors, (ii) adversely affects the rights or obligations of the Consenting Sponsors pursuant to or identified in the Restructuring Support Agreement or under the terms of the Plan or (iii) relates to the Settlement Note). Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired, or invalidated by


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such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is: (1) valid and enforceable pursuant to its terms; (2) integral to the Plan and may not be deleted or modified without the consent of the Debtors; and (3) nonseverable and mutually dependent.

L. Closing of Chapter 11 Cases

The Reorganized Debtors shall, promptly after the full administration of the Chapter 11 Cases, file with the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close the Chapter 11 Cases.

M. Conflicts

To the extent that any provision of the Disclosure Statement, or any order entered prior to Confirmation (for avoidance of doubt, not including the Confirmation Order) referenced in the Plan (or any exhibits, appendices, supplements, or amendments to any of the foregoing), conflict with or are in any way inconsistent with any provision of the Plan, the Plan shall govern and control. To the extent that any provision of the Plan conflicts with or is in any way inconsistent with any provision of the Confirmation Order, the Confirmation Order shall govern and control.

N. Dissolution of the Committee

The Committee shall dissolve, and the current and former members of the Committee shall be released and discharged from all rights and duties arising from, or related to, the Chapter 11 Cases on the Effective Date; provided that the Committee and its professionals shall have the right to file, prosecute, review, and object to any applications for compensation and reimbursement of expenses filed in accordance with Article II.A.2 hereof.

O. Section 1125(e) Good Faith Compliance

The Debtors, the Reorganized Debtors, the Consenting Parties, and each of their respective current and former officers, directors, members (including ex officio members), managers, employees, partners, advisors, attorneys, professionals, accountants, investment bankers, investment advisors, actuaries, Affiliates, financial advisors, consultants, agents, and other representatives of each of the foregoing Entities (whether current or former, in each case in his, her or its capacity as such), shall be deemed to have acted in “good faith” under section 1125(e) of the Bankruptcy Code.


[Signature Page to Plan]

Respectfully submitted, as of the date first set forth above,

Hexion Holdings LLC (on behalf of itself and all other Debtors)

By: /s/ George F. Knight, III Name: George F. Knight, III Title: Executive Vice President and Chief Financial Officer


EXHIBIT B


EXECUTION VERSION

RESTRUCTURING SUPPORT AGREEMENT

This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented, or

otherwise modified from time to time in accordance with the terms hereof, this “RSA” and,

together with the Term Sheet (as defined below), this “Agreement”), dated as of April 1, 2019, is

entered into by and among the following parties:

(i) Hexion Holdings LLC (“Hexion”), Hexion LLC, Hexion Inc., Lawter International Inc.,

Hexion CI Holding Company (China) LLC, Hexion Nimbus Inc., Hexion Nimbus Asset Holdings

LLC, Hexion Deer Park LLC, Hexion VAD LLC, Hexion 2 U.S. Finance Corp., Hexion HSM

Holdings LLC, Hexion Investments Inc., Hexion International Inc., North American Sugar

Industries Incorporated, Cuban-American Mercantile Corporation, The West India Company, NL

Coop Holdings LLC, and Hexion Nova Scotia Finance, ULC (each, together with Hexion, a

“Company Entity,” and collectively, and together with Hexion, the “Company”);

(ii) the undersigned beneficial holders, or investment managers, advisors, or subadvisors

to beneficial holders (together with their respective successors and permitted assigns, the

“Consenting Creditors”), of those certain: (a) 6.625% first lien notes due 2020 issued by Hexion

Inc. (the “6.625% Notes”); (b) 10.00% first lien notes due 2020 issued by Hexion Inc. (the “10%

Notes”); (c) 10.375% first lien notes due 2022 issued by Hexion Inc. (the “10.375% Notes” and,

collectively with the 6.625% Notes and 10% Notes, the “1L Notes”); (d) 13.750% 1.5 lien notes

due 2022 issued by Hexion Inc. (the “1.5L Notes”), (e) 9.00% second lien notes due 2020 issued

by Hexion Inc. (the “2L Notes”), (f) 9.20% Debentures due 2021 and/or 7.875% Debentures due

2023 issued by Borden, Inc. (the “Unsecured Notes”); and

(iii) AIF Hexion Holdings, LP, AP Momentive Holdings, LLC, Apollo Investment Fund

VI, L.P., and AIF Hexion Holdings II, L.P., each in its capacity as holder of outstanding common

equity of Hexion (collectively the “Consenting Sponsors,” and collectively with the Consenting

Creditors, the “Consenting Parties”).

Each of the Company Entities and the Consenting Parties are referred to as the “Parties”

and individually as a “Party.”

WHEREAS, the Parties have in good faith and at arm’s length negotiated and agreed to

the terms of a “pre-arranged” chapter 11 plan of reorganization as set forth on the term sheet

attached hereto as Exhibit A (the “Term Sheet” and, the chapter 11 plan based thereon, together

with all exhibits, annexes, and schedules thereto, as each may be amended, restated, amended and

restated, supplemented, or otherwise modified in accordance with its terms and this Agreement,

the “Plan”) intended to be consummated through voluntary reorganization cases (the “Chapter 11

Cases”) under chapter 11 of title 11 of the Bankruptcy Code (defined below) in the United States

Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) on the terms set forth in

this Agreement;

WHEREAS, as of the date hereof, the Consenting Creditors hold, in the aggregate, more

than 50.1 percent of the aggregate outstanding principal amount of each of the 1L Notes, 1.5L

Notes, 2L Notes, and Unsecured Notes;


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WHEREAS, as of the date hereof, the Consenting Sponsors hold, in the aggregate,

approximately 90 percent of the outstanding common equity of Hexion; and

WHEREAS, the Parties desire to express to each other their mutual support and

commitment in respect of the matters discussed in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and

agreements set forth herein, and for other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as

follows:

1. Certain Definitions.

Capitalized terms used but not defined in this Agreement have the meanings ascribed to

them in the Term Sheet. As used in this Agreement, the following terms have the following

meanings:

a. “1.5 Lien Ad Hoc Group” means the ad hoc group of holders of 1.5L Notes

represented by Jones Day (“Jones Day”) and Perella Weinberg Partners.

b. “1.5 Lien Noteholders” means those beneficial holders, or investment managers,

advisors, or subadvisors to beneficial holders of 1.5L Notes.

c. “Ad Hoc Groups” means the First Lien Ad Hoc Group, the 1.5 Lien Ad Hoc Group

and the Crossholder Ad Hoc Group.

d. “Agreement Effective Date” means the date on which counterpart signature pages

to this Agreement shall have been executed and delivered by (i) each Company Entity,

(ii) Consenting Creditors holding at least 50.1% in aggregate principal amount outstanding of the

1L Notes, 1.5L Notes, 2L Notes and Unsecured Notes, and (iii) the Consenting Sponsors.

e. “Alternative Transaction” means any dissolution, winding up, liquidation,

reorganization, assignment for the benefit of creditors, merger, transaction, consolidation, business

combination, joint venture, partnership, sale of assets, financing (debt or equity), restructuring or

similar transaction of or by any of the Company Entities, other than the transactions contemplated

by and in accordance with this Agreement.

f. “Bankruptcy Code” means title 11 of the United States Code.

g. “Claim” has the meaning ascribed to such term under section 101(5) of the

Bankruptcy Code.

h. “Consenting 1.5L Noteholders” means certain holders, permitted successors, and

assigns of the 1.5L Notes (constituting at least two thirds in amount of the outstanding 1.5L Notes)

listed on the signature pages attached to this Agreement that, in each case, are members of the First

Lien Ad Hoc Group or the 1.5 Lien Ad Hoc Group.


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i. “Consenting Crossholder Noteholders” means certain holders, permitted

successors, and assigns of the 1L Notes, 1.5L Notes, 2L Notes and Unsecured Notes listed on the

signatures pages attached to this Agreement that, in each case, are members of the Crossholder Ad

Hoc Group.

j. “Consenting First Lien Noteholders” means certain holders, permitted successors,

and assigns of the 1L Notes (constituting at least two thirds in amount of the outstanding 1L Notes)

listed on the signature pages attached to this Agreement that, in each case, are members of the First

Lien Ad Hoc Group or the 1.5 Lien Ad Hoc Group.

k. “Crossholder Ad Hoc Group” means the ad hoc group of holders of the 1L Notes,

1.5L Notes, 2L Notes and Unsecured Notes represented by Milbank LLP and Houlihan Lokey

Capital, Inc.

l. “Effective Date” means the date on which the Plan becomes effective in accordance

with its terms.

m. “Exit Facilities” means, collectively, the Exit Facility and the Exit ABL Facility.

n. “First Lien Ad Hoc Group” means the ad hoc group of holders of 1L Notes

represented by Akin Gump Strauss Hauer & Feld LLP and Evercore LLC.

o. “First Lien Noteholders” means those beneficial holders, or investment managers,

advisors, or subadvisors to beneficial holders of 1L Notes.

p. “Interest” means an equity interest.

q. “Joinder Agreement” means the form of joinder agreement attached hereto as

Exhibit B.

r. “Person” means an individual, firm, corporation (including any non-profit

corporation), partnership, limited partnership, limited liability company, joint venture, association,

trust, governmental entity, or other entity or organization.

s. “Representatives” means, with respect to any Person, such Person’s affiliates and

its and their directors, officers, members, partners, managers, employees, agents, investment

bankers, attorneys, accountants, advisors, and other representatives.

t. “Required Consenting 1.5L Noteholders” means those Consenting 1.5 Lien

Noteholders holding at least a majority in principal amount of the 1.5L Notes held by 1.5 Lien

Noteholders party to this Agreement that are members of the 1.5 Lien Ad Hoc Group.

u. “Required Consenting Crossholder Noteholders” means those Consenting

Crossholder Noteholders holding at least 60% in aggregate principal amount of the 1L Notes, 1.5L

Notes, 2L Notes and Unsecured Notes held by members of the Crossholder Ad Hoc Group that

are Parties to this Agreement.


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v. “Required Consenting First Lien Noteholders” means Consenting First Lien

Noteholders that are members of the First Lien Ad Hoc Group holding at least a majority in

principal amount of the 1L Notes held by the First Lien Noteholders party to this Agreement that

are members of the First Lien Ad Hoc Group.

w. “Required Consenting Parties” means the Required Consenting First Lien

Noteholders, the Required Consenting 1.5L Noteholders, the Required Consenting Crossholder

Noteholders, the Consenting Sponsors and the Company.

x. “Support Period” means, with respect to any Party, the period commencing on the

Agreement Effective Date and ending on the earlier of (i) the date on which this Agreement is

terminated by or with respect to such Party in accordance with Section 7 hereof and (ii) the

Effective Date.

The following terms are defined in the sections of this Agreement indicated in the table

below:

Defined Term Section

Agreement Preamble

Bankruptcy Court Recitals

beneficial ownership 4(b)

Chapter 11 Cases Recitals

Company Preamble

Company Entity Preamble

Company Termination Event 7(b)

Confidentiality Agreement 3(b)(iii)

Confirmation Order 2

Consenting Creditors Preamble

Consenting Creditor Termination Event 7(a)

Consenting Parties Preamble

Consenting Sponsors Preamble

Consenting Sponsor Termination Event 7(c)

Definitive Documents 2

DIP Credit Agreement 2

DIP Motion 2

Disclosure Statement Motion 2

Disclosure Statement Order 2

Exit Facilities Documents 2

Final DIP Order 2

Hexion Preamble

Interim DIP Order 2

Mutual Termination Event 7(d)

Party(ies) Preamble

Permitted Transfer 4(b)

Permitted Transferee 4(b)

Plan Recitals


5

Defined Term Section

Plan Supplement 2

Qualified Marketmaker 4(b)

Repo Agreement 9(b)

Repo Securities 9(b)

Term Sheet Recitals

Termination Events 7(f)

Transfer 4(b)

2. Definitive Documents.

The definitive documents (the “Definitive Documents”) with respect to the Restructuring

shall include all documents (including1 any related orders, agreements, instruments, schedules, or

exhibits) that are contemplated by this Agreement and that are otherwise necessary or desirable to

implement, or otherwise relate to the Restructuring, including (as applicable): (a) the Plan; (b) the

related disclosure statement (such disclosure statement, together with any exhibits, schedules,

attachments or appendices thereto, in each case as may be amended, supplemented or otherwise

modified from time to time in accordance with the terms herein and therein, the “Disclosure

Statement”); (c) any other documents and/or agreements relating to the Plan and/or the Disclosure

Statement, including a motion seeking approval of the Disclosure Statement, the procedures for

the solicitation of votes in connection with the Plan pursuant to sections 1125 and 1126 of the

Bankruptcy Code (the “Solicitation”) and the forms of ballots and notices and related relief (such

motion, together with all exhibits, appendices, supplements, and related documents, the

“Disclosure Statement Motion”), (d) the documents to be filed in the supplement to the Plan

(collectively, the “Plan Supplement”); (e) the order approving the Disclosure Statement (the

“Disclosure Statement Order”); (f) the order confirming the Plan (the “Confirmation Order”); (g)

the motion seeking approval of the Company’s incurrence of postpetition debt financing (the “DIP

Motion”) and the credit agreement with respect thereto (the “DIP Credit Agreement”); (h) the

interim and final orders granting the DIP Motion (the “Interim DIP Order” and “Final DIP

Order”, respectively, and collectively, the “DIP Orders”); (i) a motion seeking the assumption of

this Agreement pursuant to section 365 of the Bankruptcy Code authorizing, among other things,

the payment of certain fees, expenses and other amounts hereunder, and granting related relief (the

“RSA Assumption Motion”), and an order approving the RSA Assumption Motion (the “RSA

Order”); (j) the Plan Supplement documentation with respect to a management incentive plan of

the Company (the “MIP”) and any documentation with respect to any key employee retention

plan, key employee incentive plan or other similar plan or program; (k) the agreement with respect

to the Exit Facilities, and any agreements, commitment letters, documents, or instruments related

thereto (the “Exit Facilities Documents”); (l) the Equity Backstop Commitment Agreement, the

BCA Approval Order, the documentation memorializing the Debt Backstop Commitments (the

“Debt Backstop Documents”), and any order approving the Debt Backstop Documents (the “Debt

Backstop Order”); (m) any organizational documents, operating agreements, management

services agreements, shareholder and member-related agreements, registration rights agreements

or other governance documents for the reorganized Company Entities (collectively, the

1 For the avoidance of doubt, the terms “includes” and “including” as used herein shall not be construed to be

limiting.


6

“Governance Documents”); and (m) such other documents, pleadings, agreements, or

supplements as may be reasonably necessary or advisable to implement the Restructuring. Each

Definitive Document shall be consistent with this Agreement and otherwise reasonably acceptable

to the Company, the Required Consenting First Lien Noteholders, the Required Consenting 1.5L

Noteholders and the Required Consenting Crossholder Noteholders, provided, however, that

notwithstanding the foregoing, the Governance Documents shall be acceptable only to the

Company and the Board Committee; provided further that the Governance Documents shall

contain customary minority protections reasonably acceptable to the Required Consenting First

Lien Noteholders, the Required Consenting 1.5L Noteholders and the Required Consenting

Crossholder Noteholders and there shall be a single class of stock, and, as to any inconsistencies

between the Definitive Documents and this Agreement, (1) the economic treatment provided under

the Definitive Documents (including, without limitation, any term or condition affecting or relating

to any economic rights or obligations of any Consenting Creditors in connection with the

Restructuring) shall be acceptable to the Company, on the one hand, and the Required Consenting

First Lien Noteholders, the Required Consenting 1.5L Noteholders, the Required Consenting

Crossholder Noteholders and/or the Consenting Sponsors (solely as to the respective treatment

provided to each of the foregoing), as applicable; and (2) any release, exculpation and injunction

provisions under the Plan shall be acceptable to the Required Consenting Parties. In addition to

the foregoing, any Definitive Document (and any amendments, modifications, supplements or

waivers to such Definitive Document) that (X) affects the release, exculpation, injunction,

indemnification or insurance provisions related to the Consenting Sponsors, (Y) adversely affects

the rights or obligations of the Consenting Sponsors pursuant to or identified in this Agreement

and to be implemented pursuant to the Plan, or (Z) relate to the Settlement Note, in each case shall

be reasonably acceptable to the Consenting Sponsors.

3. Milestones.

During the Support Period, the Company shall use commercially reasonable efforts to

implement the Restructuring in accordance with the following milestones (the “Milestones”), as

applicable, unless extended or waived in writing (with email from counsel being sufficient) by the

Required Consenting First Lien Noteholders, the Required Consenting 1.5L Noteholders and the

Required Consenting Crossholder Noteholders:2

a. no later than 11:59 p.m. (prevailing Eastern Time) on April 1, 2019, the

Company Entities shall have commenced the Chapter 11 Cases in the Bankruptcy Court

(the “Petition Date”);

b. as soon as reasonably practicable, but in no event later than the date that is

three (3) calendar days after the Petition Date, the Bankruptcy Court shall have entered the Interim

DIP Order;

2 The date of each Milestone provided for in this Section 3 shall be calculated in accordance with Rule 9006 of the

Federal Rules of Bankruptcy Procedure.


7

c. as soon as reasonably practicable, but in no event later than the date that is

forty-five (45) calendar days after the Petition Date, the Bankruptcy Court shall have entered the

Final DIP Order;

d. as soon as reasonably practicable, but in no event later than the date that is

sixty (60) calendar days after the Petition Date, the Bankruptcy Court shall have entered the RSA

Order, the BCA Approval Order and the Debt Backstop Order;

e. as soon as reasonably practicable, but in no event later than the date that is

ninety (90) calendar days after the Petition Date, the Bankruptcy Court shall have entered the

Disclosure Statement Order;

f. as soon as reasonably practicable, but in no event later than the date that is

one hundred and twenty-five (125) calendar days after the Petition Date, the hearing to consider

confirmation of the Plan shall have begun; and

g. as soon as reasonably practicable, but in no event later than the date that is

one hundred and fifty (150) calendar days after the Petition Date, the Effective Date shall occur;

provided that, the Milestones set forth in Sections (3)(e), (3)(f) and (3)(g) shall be extended by the

number of days (not to exceed thirty-five (35) days for purposes of this clause) by which the

deadline to file schedules of assets and liabilities and statements of financial affairs is extended

beyond forty-five (45) calendar days, in the event the Company receives such an extension.

4. Agreements of the Consenting Parties.

a. Restructuring Support. During the Support Period, subject to the terms and

conditions hereof, each Consenting Party agrees, severally and not jointly, that it shall use

commercially reasonable efforts to:

(i) negotiate in good faith, execute, perform its obligations under, and

consummate the transactions contemplated by, the Definitive Documents to which it is (or will be)

a party, at such times as are contemplated herein;

(ii) support the Plan and the transactions contemplated by this

Agreement, the Term Sheet and the Definitive Documents and take all reasonable actions

necessary or reasonably requested by the Company to effectuate the Plan and the transactions

contemplated by this Agreement, the Term Sheet and the Definitive Documents, in a manner

consistent with this Agreement, including the timelines set forth herein;

(iii) not, directly or indirectly, seek, solicit, support, encourage, propose,

assist, consent to, vote for, or enter or participate in any discussions or any agreement with any

non-Party regarding, any Alternative Transaction;

(iv) support and take all reasonable actions reasonably requested by the

Company to facilitate entry of the DIP Orders (including adequate protection terms contained


8

therein), the Disclosure Statement Order, and the Confirmation Order, including consenting to the

Company’s use of cash collateral, incurrence of obligations and granting of liens as set forth in the

DIP Orders (which consent is deemed to have been given by such Consenting Party’s signature to

this Agreement);

(v) not, directly or indirectly, or encourage any other Person to, directly

or indirectly, (A) object to, delay, postpone, challenge, oppose, impede, or take any other action

or any inaction to interfere with or delay the acceptance, implementation, or consummation of the

Plan on the terms set forth in this Agreement, the Term Sheet and any applicable Definitive

Document, including, without limitation, commencing or joining with any Person in commencing

any litigation or involuntary case for relief under the Bankruptcy Code against any Company

Entity or any subsidiary thereof; (B) solicit, negotiate, propose, file, support, enter into,

consummate, file with the Bankruptcy Court, vote for, or otherwise knowingly take any other

action in furtherance of any restructuring, workout, plan of arrangement, or plan of reorganization

for the Company that is inconsistent with this Agreement; (C) exercise any right or remedy for the

enforcement, collection, or recovery of any claim against the Company or any direct or indirect

subsidiaries of the Company that do not file for chapter 11 relief under the Bankruptcy Code,

except in a manner consistent with this Agreement; or (D) object to or oppose, or support any other

Person’s efforts to object to or oppose, any motions filed by the Company that are consistent with

this Agreement;

(vi) subject to the receipt of the Disclosure Statement and related

materials, it shall (A) timely vote or cause to be voted any Claims it holds to accept the Plan (to

the extent permitted to vote) by delivering its duly executed and completed ballot or ballots, as

applicable, accepting the Plan on a timely basis following commencement of the solicitation of

acceptances of the Plan in accordance with sections 1125(g) and 1126 of the Bankruptcy Code,

provided, that, with respect to any Repo Securities (as defined below), the Consenting Party agrees

to use its commercially reasonable efforts to cause such Repo Securities to be voted in accordance

with the terms of this Section 4(a)(vi); (B) not change or withdraw such vote or the elections

described below (or cause or direct such vote or elections to be changed or withdrawn) during the

Support Period; provided, however, that nothing in this Agreement shall prevent any Party from

changing, withholding, amending, or revoking (or causing the same) its timely election or vote

with respect to the Plan if this Agreement has been duly-terminated with respect to such Party; and

(C) to the extent it is permitted to elect whether to opt into or opt out of the releases set forth in the

Plan, elect to opt into or not elect to opt out of the releases, as applicable, set forth in the Plan by

timely delivering its duly executed and completed ballot or ballots indicating such election;

(vii) support and take all commercially reasonable actions reasonably

requested by the Company to facilitate the implementation and, if applicable, approval of the

Disclosure Statement and confirmation and consummation of the Plan;

(viii) not direct any administrative agent, collateral agent or indenture

trustee (as applicable) to take any action inconsistent with such Consenting Creditor’s obligations

under this Agreement, and, if any applicable administrative agent, collateral agent or indenture

trustee (as applicable) takes any action inconsistent with such Consenting Creditor’s obligations

under this Agreement, such Consenting Creditor shall use its commercially reasonable efforts


9

(which shall exclude the provision of any indemnity) to direct such administrative agent, collateral

agent or indenture trustee (as applicable) to cease and refrain from taking any such action; and

(ix) to the extent any legal or structural impediment arises that would

prevent, hinder or delay the consummation of the Plan, negotiate with the Consenting Parties in

good faith appropriate additional or alternative provisions to address any such impediment;

provided that the economic outcome for the Consenting Creditors and other materials terms of this

Agreement must be substantially preserved in such alternate provisions.

Notwithstanding the foregoing, nothing in this Agreement shall prohibit any Consenting Party

from (1) appearing as a party-in-interest in any matter arising in the Chapter 11 Cases or

(2) enforcing any right, remedy, condition, consent, or approval requirement under this Agreement

or any Definitive Documents, provided that, in each case, any such action is not inconsistent with

such Consenting Party’s obligations hereunder.

The Parties agree that this Agreement does not constitute a commitment to, nor shall it obligate

any of the Parties to, provide any new financing or credit support except as contemplated by the

Term Sheet.

b. Transfers. During the Support Period, each Consenting Party agrees, solely

with respect to itself, that it shall not sell, pledge, assign, transfer, permit the participation in, or

otherwise dispose of (each, a “Transfer,” provided, however, that any pledge, lien, security

interest, or other encumbrance in favor of a bank or broker dealer at which a Consenting Party

maintains an account, where such bank or broker dealer holds a security interest in or other

encumbrances over property in the account generally shall not be deemed a “Transfer” for any

purposes hereunder) any ownership (including any beneficial ownership)3 in its Claims against or

Interests in any Company Entity, or any option thereon or any right or interest therein (including

by granting any proxies or depositing any interests in such Claims or Interests into a voting trust

or by entering into a voting agreement with respect to such Claims or Interests), unless the intended

transferee (1) is another Consenting Party, (2) as of the date of such Transfer, the Consenting Party

controls, is controlled by, or is under common control with such transferee or is an affiliate,

affiliated fund, or affiliated entity with a common investment advisor or (3) executes and delivers

to counsel to the Company an executed Joinder Agreement before such Transfer is effective (it

being understood that any Transfer shall not be effective as against the Company until notification

of such Transfer and a copy of the executed Joinder Agreement (if applicable) is received by

counsel to the Company, in each case, on the terms set forth herein) (such transfer, a “Permitted

Transfer” and such party to such Permitted Transfer, a “Permitted Transferee”). Upon

satisfaction of the foregoing requirements in this Section 4(b), (i) the Permitted Transferee shall

be deemed to be a Consenting Party hereunder and shall be deemed to be a Consenting Creditor

or Consenting Sponsor, or both, as applicable, and, for the avoidance of doubt, a Permitted

Transferee is bound as a Consenting Party under this Agreement with respect to any and all Claims

against, or Interests in, any of the Company Entities, whether held at the time such Permitted

Transferee becomes a Party or later acquired by such Permitted Transferee and is deemed to make

3 As used herein, the term “beneficial ownership” means the direct or indirect economic ownership of, and/or the

power, whether by contract or otherwise, to direct the exercise of the voting rights and the disposition of, the

applicable Claims or Interests or the right to acquire such Claims or Interests.


10

all of the representations and warranties of a Consenting Party set forth in this Agreement and be

entitled to the applicable rights of a Consenting Party hereunder, and (ii) the transferor shall be

deemed to relinquish its rights (and be released from its obligations) under this Agreement to the

extent of such transferred rights and obligations.

(i) This Agreement shall in no way be construed to preclude the

Consenting Parties from acquiring additional Claims against or Interests in any Company Entity;

provided, that (A) if any Consenting Party acquires additional Claims against or Interests in any

Company Entity during the Support Period, such Consenting Party shall report its updated holdings

to the legal advisors to the Ad Hoc Groups (on a professional eyes only basis) and the Company

within five (5) business days of such acquisition, which notice may be deemed to be provided by

the filing of a statement with the Bankruptcy Court as required by Rule 2019 of the Federal Rules

of Bankruptcy Procedures, including revised holdings information for such Consenting Party, and

(B) any acquired Claims or Interests shall automatically and immediately upon acquisition by a

Consenting Party be deemed subject to the terms of this Agreement (regardless of when or whether

notice of such acquisition is given); provided further that the acquisition of additional Claims by a

Consenting Creditor shall in no way affect or dilute (A) the recoveries of other Consenting

Creditors contemplated under the Plan or (B) any rights and/or premiums contemplated by this

Agreement or the Term Sheet.

(ii) This Section 4(b) shall not impose any obligation on the Company

to issue any “cleansing letter” or otherwise publicly disclose information for the purpose of

enabling a Consenting Party to Transfer any Claims or Interests. Notwithstanding anything to the

contrary herein, to the extent the Company and another Party have entered into a separate

agreement with respect to the issuance of a “cleansing letter” or other public disclosure of

information (each such executed agreement, a “Confidentiality Agreement”), the terms of such

Confidentiality Agreement shall continue to apply and remain in full force and effect according to

its terms.

(iii) Any Transfer made in violation of this Section 4(b) shall be void ab

initio.

c. Marketmaking.

(i) Notwithstanding anything to the contrary herein, a Consenting Party

may Transfer any ownership in its Claims against or Interests in any Company Entity,

or any option thereon or any right or interest therein, to a Qualified Marketmaker (as

defined below) that acquires Claims against or Interests in any Company Entity with the

purpose and intent of acting as a Qualified Marketmaker for such Claims or Interests,

and such Qualified Marketmaker shall not be required to execute and deliver to counsel

to any Party a Joinder Agreement in respect of such Claims or Interests if (A) such

Qualified Marketmaker subsequently Transfers such Claims or Interests within ten (10)

business days of its acquisition to an entity that is not an affiliate, affiliated fund, or

affiliated entity with a common investment advisor of such Qualified Marketmaker, (B)

the transferee otherwise is a Permitted Transferee (including any requirement hereunder

that such transferee execute a Joinder Agreement), and (C) the Transfer otherwise is a

Permitted Transfer. To the extent that a Consenting Party is acting in its capacity as a


11

Qualified Marketmaker, it may Transfer any right, title, or interest in any Claims against

or Interests in any Company Entity that such Consenting Party acquires in its capacity

as a Qualified Marketmaker from a holder of such Claims or Interests who is not a

Consenting Party without regard to the requirements set forth in Section 4(b) hereof. As

used herein, the term “Qualified Marketmaker” means an entity that (a) holds itself out

to the public or the applicable private markets as standing ready in the ordinary course

of business to purchase from customers and sell to customers claims against the

Company Entities (or enter with customers into long and short positions in claims

against the Company Entities), in its capacity as a dealer or market maker in claims

against the Company and (b) is, in fact, regularly in the business of making a market in

claims against issuers or borrowers (including debt securities or other debt).

(ii) The Company understands that the Consenting Creditors are

engaged in a wide range of financial services and businesses. In furtherance of the

foregoing, the Company acknowledges and agrees that, to the extent a Consenting

Creditor expressly indicates on its signature page hereto that it is executing this

Agreement on behalf of specific trading desk(s) and/or business group(s) of the

Consenting Creditor that principally manage and/or supervise the Consenting Creditor’s

investment in the Company, the obligations set forth in this Agreement shall only apply

to such trading desk(s) and/or business group(s) and shall not apply to any other trading

desk or business group of the Consenting Creditor so long as they are not acting at the

direction or for the benefit of such Consenting Creditor or such Consenting Creditor’s

investment in the Company; provided that the foregoing shall not diminish or otherwise

affect the obligations and liability therefor of any legal entity that executes this

Agreement.

(iii) Further, notwithstanding anything in this Agreement to the contrary,

the Parties agree that, in connection with the delivery of signature pages to this

Agreement by a Consenting Creditor that is a Qualified Marketmaker before the

occurrence of conditions giving rise to the effective date for the obligations and the

support hereunder, such Consenting Creditor shall be a Consenting Creditor hereunder

solely with respect to the Claims listed on such signature pages and shall not be required

to comply with this Agreement for any other Claims it may hold from time to time in its

role as a Qualified Marketmaker.

d. Ad Hoc Group Composition. On or before the 1st day of each month of the

Support Period, counsel to each Ad Hoc Group shall provide counsel to the Company, on a

professionals’ eyes only basis, with a list of each member of such counsel’s respective ad hoc

group and such member’s holdings of 1L Notes, 1.5L Notes, 2L Notes, and Unsecured Notes.

e. Tax Matters. During the Support Period, the Consenting Sponsors will not

Transfer any equity of Hexion Holdings LLC if it would be reasonably expected to result in an

“ownership change” of Hexion Holdings LLC for purposes of Section 382 of the Internal Revenue

Code of 1986, as amended.


12

5. Additional Provisions Regarding Consenting Party Commitments.

Notwithstanding anything to the contrary herein, nothing in this Agreement shall:

a. affect the ability of any Consenting Party to consult with any other

Consenting Party, the Company Entities, or any other party in interest in the Chapter 11 Cases

(including any official committee or the United States Trustee);

b. impair or waive the rights of any Consenting Party to assert or raise any

objection permitted under this Agreement in connection with the Restructuring;

c. prevent any Consenting Party from enforcing this Agreement or any other

Definitive Document, or from contesting whether any matter, fact, or thing is a breach of, or is

inconsistent with, such documents; or

d. prevent any Consenting Party from taking any customary perfection step or

other action as is necessary to preserve or defend the validity or existence of its Company Claims

and Interests (including, without limitation, the filing of proofs of claim).

6. Agreements of the Company.

a. Restructuring Support. During the Support Period, subject to the terms and

conditions hereof (including, without limitation, Section 10), and except as expressly waived by

the Required Consenting Parties in writing from time to time, the Company agrees that it shall use

commercially reasonable efforts, and shall use commercially reasonable efforts to cause each of

its subsidiaries to, without limitation:

(i) implement the Restructuring in accordance with the terms and

conditions set forth herein;

(ii) implement and consummate the Plan in a timely manner and take

any and all commercially reasonable and appropriate actions in furtherance of the Plan, as

contemplated under this Agreement;

(iii) upon reasonable request, inform the legal and financial advisors to

the Ad Hoc Groups as to: (A) the material business and financial (including liquidity) performance

of the Company Entities; (B) the status and progress of the negotiations of the Definitive

Documents; and (C) the status of obtaining any necessary or desirable authorizations (including

consents) from any competent judicial body, governmental authority, banking, taxation,

supervisory, or regulatory body or any stock exchange;

(iv) (A) support and take all commercially reasonable actions necessary

to facilitate the solicitation, confirmation, and consummation of the Plan, as applicable, and the

transactions contemplated thereby, (B) not take any action directly or indirectly that is materially

inconsistent with, or that would reasonably be expected to prevent, interfere with, delay, or impede

the confirmation and consummation of the Plan, and (C) not, nor encourage any other person to,

take any action which would, or would reasonably be expected to, breach or be inconsistent with


13

this Agreement or delay, impede, appeal, or take any other negative action, directly or indirectly,

to interfere with the acceptance or implementation of the Plan;

(v) maintain good standing under the laws of the state in which each

Company Entity is incorporated or organized;

(vi) if the Company knows of a material breach by any Consenting Party

of such Consenting Party’s representations or warranties set forth in this Agreement or of a breach

by any Consenting Party of such Consenting Party’s obligations or covenants set forth in this

Agreement, furnish prompt written notice (and in any event within three business days of such

actual knowledge) to counsel to the Ad Hoc Groups;

(vii) to the extent any legal or structural impediment arises that would

prevent, hinder, or delay the consummation of the Restructuring contemplated herein, support and

take all steps reasonably necessary and desirable to address any such impediment;

(viii) prepare or cause to be prepared the Definitive Documents

(including, without limitation, all relevant motions, applications, orders, agreements and other

documents), each of which, for the avoidance of doubt, shall contain terms and conditions

consistent with this Agreement, and use good faith efforts to provide draft copies of all Definitive

Documents at least two (2) business days prior to the date when the Company intends to file or

execute such document and shall consult in good faith with such parties regarding the form and

substance of such Definitive Document or any such proposed filing with the Bankruptcy Court.

The Company will provide draft copies of all other material pleadings the Company intends to file

with the Bankruptcy Court to counsel to the Ad Hoc Groups, no later than two (2) business days

prior to filing such pleading to the extent reasonably practicable and shall consult in good faith

with such counsel regarding the form and substance of any such proposed pleading;

(ix) file such “first day” motions and pleadings determined by the

Company to be necessary, in form and substance reasonably acceptable to the Required

Consenting First Lien Noteholders, the Required Consenting 1.5L Noteholders and the Required

Consenting Crossholder Noteholders, and to seek interim and final (to the extent necessary) orders,

in form and substance reasonably acceptable to the Required Consenting First Lien Noteholders,

the Required Consenting 1.5L Noteholders and the Required Consenting Crossholder Noteholders,

from the Bankruptcy Court approving the relief requested in such “first day” motions;

(x) timely file a formal objection, in form and substance reasonably

acceptable to the Required Consenting First Lien Noteholders, the Required Consenting 1.5L

Noteholders and the Required Consenting Crossholder Noteholders, to any motion filed with the

Bankruptcy Court by a third party seeking the entry of an order (A) directing the appointment of a

trustee or examiner (with expanded powers beyond those set forth in sections 1106(a)(3) and (4)

of the Bankruptcy Code), (B) converting the Chapter 11 Cases to cases under chapter 7 of the

Bankruptcy Code, or (C) dismissing the Chapter 11 Cases;

(xi) not seek or solicit any Alternative Transaction;


14

(xii) support and complete the Restructuring and all other actions

contemplated in connection therewith and under the Definitive Documents, including support and

take all actions as are reasonably necessary and appropriate to obtain any and all required

regulatory and/or third-party approvals to consummate the Restructuring;

(xiii) timely file a formal objection, in form and substance reasonably

acceptable to the Required Consenting First Lien Noteholders, the Required Consenting 1.5L

Noteholders and the Required Consenting Crossholder Noteholders, to any motion filed with the

Bankruptcy Court by a third party seeking the entry of an order modifying or terminating the

Company’s exclusive right to file and/or solicit acceptances of a plan reorganization, as applicable;

and

(xiv) (A) operate the business of the Company and its direct and indirect

subsidiaries in the ordinary course in a manner that is consistent with this Agreement, past

practices, and to preserve intact the Company’s business organization and relationships with third

parties (including lessors, licensors, suppliers, distributors and customers) and employees, (B)

subject to applicable non-disclosure agreements and the terms thereof, keep advisors to the Ad

Hoc Groups reasonably informed about the operations of the Company and its direct and indirect

subsidiaries, and (C) promptly notify advisors to the Ad Hoc Groups of any material governmental

or third party complaints, litigations, investigations or hearings; and

(xv) provide prompt written notice to counsel to the Ad Hoc Groups

between the date hereof and the Effective Date of (A) the occurrence of a Termination Event;

(B) any matter or circumstance which the Company knows, or suspects is likely, to be a material

impediment to the implementation or consummation of the Restructuring; or (C) if any Person has

challenged the validity or priority of, or has sought to avoid, any lien securing the 1L Notes, the

1.5L Notes or the 2L Notes pursuant to a pleading filed with the Bankruptcy Court.

b. Negative Covenants. The Company agrees that, for the duration of the

Support Period, the Company shall not take any action materially inconsistent with, or omit to take

any action required by, this Agreement, the Plan (if applicable), or any of the other Definitive

Documents.

7. Termination of Agreement.

a. Consenting Creditor Termination Events. This Agreement may be

terminated by the Required Consenting First Lien Noteholders, the Required Consenting 1.5L

Noteholders, or the Required Consenting Crossholder Noteholders, by the delivery to the

Company and the other Consenting Parties of a written notice in accordance with Section 22

hereof, solely as to the Consenting Creditors delivering such notice, upon the occurrence and

continuation of any of the following events (each, a “Consenting Creditor Termination Event”):

(i) the breach by any Company Entity or any Consenting Party of (A)

any affirmative or negative covenant contained in this Agreement or (B) any other obligations of

such breaching Party set forth in this Agreement, in each case, in any material respect and which

breach remains uncured (to the extent curable) for a period of ten (10) business days following the


15

Company’s or the Consenting Party’s (as applicable) receipt of notice pursuant to Section 22

hereof.

(ii) any representation or warranty in this Agreement made by any

Company Entity or any Consenting Party shall have been untrue in any material respect when

made or shall have become untrue in any material respect, and such breach remains uncured (to

the extent curable) for a period of ten (10) business days following the Company’s or the

Consenting Party’s (as applicable) receipt of notice pursuant to Section 22 hereof;

(iii) any Company Entity or any Consenting Party files any motion,

pleading, or related document with the Bankruptcy Court that is materially inconsistent with this

Agreement, the Term Sheet, or the Definitive Documents, and such motion, pleading, or related

document has not been withdrawn ten (10) business days of the Company or such Consenting

Party receiving written notice in accordance with Section 22 that such motion, pleading, or related

document is materially inconsistent with this Agreement;

(iv) the issuance by any governmental authority, including any

regulatory authority or court of competent jurisdiction, of any ruling, judgment, or order enjoining

the consummation of any material portion of the Restructuring or rendering illegal the Plan or any

material portion thereof, and either (A) such ruling, judgment, or order has been issued at the

request of or with the acquiescence of any Company Entity or any Consenting Party, or (B) in all

other circumstances, such ruling, judgment, or order has not been reversed or vacated within thirty

(30) calendar days after such issuance;

(v) the Bankruptcy Court (or other court of competent jurisdiction)

enters an order (A) directing the appointment of an examiner with expanded powers or a trustee in

any of the Chapter 11 Cases, (B) converting any of the Chapter 11 Cases to cases under chapter 7

of the Bankruptcy Code, (C) dismissing any of the Chapter 11 Cases, or (D) the effect of which

would render the Plan incapable of consummation on the terms set forth in this Agreement;

(vi) any Company Entity or any Consenting Party files or supports (or

fails to timely object to) another party in filing (A) a motion or pleading challenging the amount,

validity, or priority of any Claims held by any Consenting Creditor against the Company (or any

liens securing such Claims), (B) any plan of reorganization, liquidation, or sale of all or

substantially all of the Company’s assets other than the Plan, or (C) a motion or pleading asserting

(or seeking standing to assert) any purported claims or causes of action against any of the

Consenting Creditors, which event remains uncured for a period of ten (10) business days

following the Company’s or Consenting Party’s (as applicable) receipt of notice pursuant to

Section 22 hereof;

(vii) the Bankruptcy Court enters an order providing relief against any

Consenting Creditor with respect to any of the causes of action or proceedings specified in

Section 7(a)(vi)(A) or (C);

(viii) (A) any Definitive Document filed by the Company or any

Consenting Party, or any related order entered by the Bankruptcy Court, in the Chapter 11 Cases,

is inconsistent with the terms and conditions set forth in this Agreement or is otherwise not in


16

accordance with this Agreement, or (B) any of the terms or conditions of any of the Definitive

Documents is waived, amended, supplemented, or otherwise modified in any material respect

without the prior written consent of the Required Consenting First Lien Noteholders, the Required

Consenting 1.5L Noteholders and the Required Consenting Crossholder Noteholders (or such

parties as may be required by the terms of such Definitive Document, if then effective), in each

case, which remains uncured for ten (10) Business Days after the receipt by the Company of

written notice delivered in accordance herewith;

(ix) any of the Milestones have not been achieved, extended, or waived

within three (3) business days after such Milestone;

(x) any termination or acceleration of the DIP Facility;

(xi) any termination event in favor of the Required Consenting First Lien

Noteholders, the Required Consenting 1.5L Noteholders, or the Required Consenting Crossholder

Noteholders, or event of default by the Company under the RSA Order, the Equity Backstop

Commitment Agreement, the BCA Approval Order, the Debt Backstop Documents, or the Debt

Backstop Order, as applicable, that has not been waived or cured (to the extent curable) prior to

the expiration of any applicable grace periods thereunder;

(xii) if any Company Entity (A) withdraws the Plan, (B) publicly

announces its intention not to support the Plan, (C) files a motion with the Bankruptcy Court

seeking the approval of an Alternative Transaction, or (D) agrees to pursue (including, for the

avoidance of doubt, as may be evidenced by a term sheet, letter of intent, or similar document

executed by a Company Entity) or publicly announces its intent to pursue an Alternative

Transaction;

(xiii) the Company files or announces that it will file any motion or

application seeking authority to sell any material assets without the prior written consent of the


Required Consenting Crossholder Noteholders;

(xiv) the Company terminates any of its obligations under and in

accordance with Sections 7(b) or (d), as applicable, of this Agreement;

(xv) the Required Consenting First Lien Noteholders, the Required

Consenting 1.5L Noteholders or the Required Consenting Crossholder Noteholders terminate any

of their respective obligations under and in accordance with this Section 7(a) or (d), as applicable;

(xvi) the Bankruptcy Court enters an order, or the Company files a motion

seeking an order (without the prior written consent of the Required Consenting First Lien

Noteholders, the Required Consenting 1.5L Noteholders and the Required Consenting Crossholder

Noteholders), (i) converting one or more of the Chapter 11 Cases to a case under chapter 7 of the

Bankruptcy Code, (ii) appointing an examiner with expanded powers beyond those set forth in

sections 1106(a)(3) and (4) of the Bankruptcy Code or a trustee in one or more of the Chapter 11

Cases, (iii) denying the entry of the RSA Order, the BCA Approval Order, or the Debt Backstop


17

Order, or (iv) making a finding of fraud, dishonesty or misconduct by any executive, officer or

director of the Company, regarding or relating to the Company;

(xvii) the issuance by any governmental authority, including the

Bankruptcy Court, any regulatory authority or any other court of competent jurisdiction, of any

ruling or order enjoining the consummation of the Plan; provided, however, that the Company

shall have five (5) business days after the issuance of such ruling or order to obtain relief that

would allow consummation of the Plan in a manner that (A) does not prevent or diminish in a

material way compliance with the terms of this Agreement, and (B) is reasonably acceptable to the


Required Consenting Crossholder Noteholders;

(xviii) without the prior consent of the Required Consenting First Lien

Noteholders, the Required Consenting 1.5L Noteholders, and the Required Consenting

Crossholder Noteholders, the Company or any of the Company’s foreign subsidiaries or affiliates

(A) voluntarily commences any case or files any petition seeking bankruptcy, winding up,

dissolution, liquidation, administration, moratorium, reorganization or other relief under any

federal, state, or foreign bankruptcy, insolvency, administrative receivership or similar law now or

hereafter in effect except as provided in this Agreement, (B) consents to the institution of, or fails

to contest in a timely and appropriate manner, any involuntary proceeding or petition described

above, (C) files an answer admitting the material allegations of a petition filed against it in any

such proceeding, (D) applies for or consents to the appointment of a receiver, administrator,

administrative receiver, trustee, custodian, sequestrator, conservator or similar official, (E) makes

a general assignment or arrangement for the benefit of creditors or (F) takes any corporate action

for the purpose of authorizing any of the foregoing;

(xix) the Bankruptcy Court enters an order terminating any Company

Entity’s exclusive right to file and/or solicit acceptances of a plan of reorganization (including the

Plan);

(xx) the Company exercises its fiduciary out in accordance with

Section 7(b) hereof;

(xxi) the Bankruptcy Court enters an order denying confirmation of the

Plan;

(xxii) an order confirming the Plan is reversed or vacated;

(xxiii) any court of competent jurisdiction has entered a final, non-

appealable judgment or order declaring this Agreement to be unenforceable;

(xxiv) an order is entered by the Bankruptcy Court granting relief from the

automatic stay to the holder or holders of any security interest to permit foreclosure (or the granting

of a deed in lieu of foreclosure on the same) on any of the Company’s assets (other than in respect

of insurance proceeds or with respect to assets having a fair market value of less than $15,000,000

in the aggregate); or


18

(xxv) the failure of the Consenting Creditors to hold, in the aggregate, at

least: (A) 66 2/3% of the aggregate principal amount outstanding of the 1L Notes; (B) 66 2/3% of

the aggregate principal amount outstanding of the 1.5L Notes; and (C) 66 2/3% of the aggregate

principal amount outstanding of the 2L Notes and the Unsecured Notes, in each case, at any time

after April 5, 2019.

Notwithstanding the foregoing, if any Consenting Creditor Termination Event is caused by any

Consenting Party, this Agreement shall be terminable solely with respect to that Consenting Party.

b. Company Termination Events. This Agreement may be terminated by the

Company by the delivery to counsel to the Consenting Parties of a written notice in accordance

with Section 22 hereof, upon the occurrence and continuation of any of the following events (each,

a “Company Termination Event”):

(i) the breach in any material respect by Consenting Creditors holding

(A) an amount of 1L Notes that would result in non-breaching Consenting Creditors holding less

than 66 2/3% in aggregate principal amount outstanding of the 1L Notes, (B) an amount of 1.5L

Notes that would result in non-breaching Consenting Creditors holding less than 66 2/3% in

aggregate principal amount outstanding of the 1.5L Notes, or (C) an amount of 2L Notes and

Unsecured Notes that would result in non-breaching Consenting Creditors holding less than 66

2/3% in aggregate principal amount outstanding of 2L Notes and Unsecured Notes, in each case

with respect to any of the representations, warranties, or covenants of such Consenting Creditors

set forth in this Agreement and which breach remains uncured for a period of ten (10) business

days after the receipt by the applicable Consenting Creditor from the Company of written notice

of such breach, which written notice will set forth in detail the alleged breach;

(ii) the issuance by any governmental authority, including any


the consummation of or rendering illegal the Plan or any material portion thereof, and either

(A) such ruling, judgment, or order has been issued at the request of (or agreement by) the

Consenting Parties, or (B) in all other circumstances, such ruling, judgment, or order has not been

reversed or vacated within thirty (30) calendar days after such issuance;

(iii) the failure of the Consenting Creditors to hold, in the aggregate, at


the aggregate principal amount outstanding of the 1.5L Notes; (C) 66 2/3% of the aggregate


after April 5, 2019;

(iv) the failure of the Consenting Creditors (as a group, which is not

required to include each Consenting Creditor) to execute commitment agreements in respect of the

entire amount of the Rights Offering and the Exit Facility (each as defined in the Term Sheet) on

or before April 15, 2019;

(v) any termination event in favor of the Company or event of default

by a party other than the Company under the RSA Order, the Equity Backstop Commitment

Agreement, the BCA Approval Order, the Debt Backstop Documents, or the Debt Backstop Order,


19

as applicable, that has not been waived or cured (to the extent curable) prior to the expiration of

any applicable grace periods thereunder;

(vi) the Bankruptcy Court (or other court of competent jurisdiction)





(vii) the board of directors or managers or similar governing body, as

applicable, of any Company Entity determines that continued performance under this Agreement

(including taking any action or refraining from taking any action) would be inconsistent with the

exercise of its fiduciary duties under applicable law (as reasonably determined by such board or

body in good faith after consultation with legal counsel);

(viii) the Bankruptcy Court enters an order denying confirmation of the

Plan;

(ix) an order confirming the Plan is reversed or vacated; or

(x) any court of competent jurisdiction has entered a final, non-

appealable judgment or order declaring this Agreement to be unenforceable.

c. Consenting Sponsor Termination Events. This Agreement may be

terminated by the Consenting Sponsors, solely as to the Consenting Sponsors, by the delivery to

counsel to the Company and the Consenting Parties of a written notice in accordance with

Section 22 hereof, upon the occurrence and continuation of any of the following events (each, a

“Consenting Sponsor Termination Event”):

(i) the breach in any material respect by Consenting Creditors holding

(A) an amount of 1L Notes that would result in non-breaching Consenting Creditors holding less

than 66 2/3% in aggregate principal amount outstanding of the 1L Notes, (B) an amount of 1.5L

Notes that would result in non-breaching Consenting Creditors holding less than 66 2/3% in

aggregate principal amount outstanding of the 1.5L Notes, or (C) an amount of 2L Notes and

Unsecured Notes that would result in non-breaching Consenting Creditors holding less than

66 2/3% in aggregate principal amount outstanding of 2L Notes and Unsecured Notes, in each case

with respect to any of the representations, warranties, or covenants of such Consenting Creditors

set forth in this Agreement and which breach remains uncured for a period of ten (10) business

days after the receipt by the applicable Consenting Creditor from the Consenting Sponsors of

written notice of such breach, which written notice will set forth in detail the alleged breach;

(ii) the issuance by any governmental authority, including any


the consummation of or rendering illegal the Plan or any material portion thereof, and either

(A) such ruling, judgment, or order has been issued at the request of (or agreement by) the

Consenting Creditors, or (B) in all other circumstances, such ruling, judgment, or order has not

been reversed or vacated within thirty (30) calendar days after such issuance;


20

(iii) the failure of the Consenting Creditors to hold, in the aggregate, at


the aggregate principal amount outstanding of the 1.5L Notes; and (C) 66 2/3% of the aggregate


after April 5, 2019;

(iv) the Bankruptcy Court (or other court of competent jurisdiction)





(v) (A) any Definitive Document filed by the Company or any

Consenting Party, or any related order entered by the Bankruptcy Court, in the Chapter 11 Cases,

is inconsistent with the terms and conditions set forth in this Agreement or is otherwise not in

accordance with this Agreement, or (B) any of the terms or conditions of any of the Definitive

Documents is waived, amended, supplemented, or otherwise modified in any material respect

without the prior written consent of the Consenting Sponsors (or such parties as may be required

by the terms of such Definitive Document, if then effective), in each case, which remains uncured

for five (5) Business Days after the receipt by the Company of written notice delivered in

accordance herewith;

(vi) the Company terminates any of its obligations under and in

accordance with Sections 7(b) or (d), as applicable, of this Agreement;

(vii) the Required Consenting First Lien Noteholders, the Required

Consenting 1.5L Noteholders or the Required Consenting Crossholder Noteholders terminate any

of their respective obligations under and in accordance with this Section 7(a) or (d), as applicable;

(viii) the Bankruptcy Court enters an order denying confirmation of the

Plan;

(ix) an order confirming the Plan is reversed or vacated; or

(x) any court of competent jurisdiction has entered a final, non-

appealable judgment or order declaring this Agreement to be unenforceable.

d. Mutual Termination. This Agreement may be terminated in writing by

mutual agreement of the Company Entities, the Required Consenting First Lien Noteholders, the

Required Consenting 1.5L Noteholders, the Required Consenting Crossholder Noteholders and

the Consenting Sponsors (a “Mutual Termination Event”).

e. Individual Termination. Any individual Consenting Party may terminate

this Agreement, as to itself only, by the delivery to counsel to the Company and the Consenting

Parties of a written notice in accordance with Section 22, upon the occurrence and continuation of

any of the following events (each, an “Individual Termination Event”):


21

(i) this Agreement is amended without its consent in such a way as to

alter any of the economic terms thereof in a manner that is disproportionately adverse

to such Consenting Party as compared to similarly situated Consenting Parties; or

(ii) the Effective Date shall not have occurred by the date that is 270

calendar days after the Petition Date.

f. Automatic Termination. This Agreement shall terminate automatically

without any further required action or notice upon the occurrence of the Effective Date

(collectively with the Consenting Creditor Termination Events, the Company Termination Events,

the Consenting Sponsor Termination Events, the Mutual Termination Event, and the Individual

Termination Event, the “Termination Events”).

g. Effect of Termination. Upon any termination of this Agreement that is not

limited in its effectiveness to an individual Party or Parties in accordance with Section 7, this

Agreement shall forthwith become null and void and of no further force or effect as to any Party,

and each Party shall, except as provided otherwise in this Agreement, be immediately released

from its liabilities, obligations, commitments, undertakings, and agreements under or related to

this Agreement and shall have all the rights and remedies that it would have had and shall be

entitled to take all actions, whether with respect to the Plan or otherwise, that it would have been

entitled to take had it not entered into this Agreement; provided that in no event shall any such

termination relieve a Party from liability for its breach or non-performance of its obligations

hereunder that arose prior to the date of such termination or any obligations hereunder that

expressly survive termination of this Agreement under Section 16 hereof, provided further,

however, that notwithstanding anything to the contrary herein, the right to terminate this

Agreement under this Section 7 shall not be available to any Party whose failure to fulfill any

material obligation under this Agreement has been the cause of, or resulted in, the occurrence of

the applicable Termination Event. Upon the occurrence of a validly-exercised Termination Event

prior to entry of the Confirmation Order by the Bankruptcy Court, any and all consents or ballots

tendered by the terminated Party shall be deemed, for all purposes, to be null and void ab initio

and shall not be considered or otherwise used in any manner by any Party in connection with the

Restructuring, this Agreement, or otherwise. Upon the termination of this Agreement that is

limited in its effectiveness as to an individual Party or Parties in accordance with Section 7: (i) this

Agreement shall become null and void and of no further force or effect with respect to the

terminated Party or Parties, who shall be immediately released from its or their liabilities,

obligations, commitments, undertakings, and agreements under or related to this Agreement and

shall have all the rights and remedies that it or they would have had and such Party or Parties shall

be entitled to take all actions, whether with respect to the Plan or otherwise, that it or they would

have been entitled to take had it or they not entered into this Agreement; provided, the terminated

Party or Parties shall not be relieved of any liability for breach or non-performance of its or their

obligations hereunder that arose prior to the date of such termination or any obligations hereunder

that expressly survive termination of this Agreement under Section 16 hereof; and (ii) this

Agreement shall remain in full force and effect with respect to all Parties other than the terminated

Party or Parties.

h. Automatic Stay. The Company Entities acknowledge that, after the

commencement of the Chapter 11 Cases, the giving of notice of default or termination by any other


22

Party pursuant to this Agreement shall not be a violation of the automatic stay under section 362

of the Bankruptcy Code, and the Company Entities hereby waive, to the fullest extent permitted

by law, the applicability of the automatic stay as it relates to any such notice being provided;

provided that nothing herein shall prejudice any Party’s rights to argue that the giving of notice of

default or termination was not proper under the terms of this Agreement.

8. Definitive Documents; Good Faith Cooperation; Further Assurances.

a. Subject to the terms and conditions described herein, during the Support

Period, each Party, severally and not jointly, hereby covenants and agrees to reasonably cooperate

with each other in good faith in connection with the negotiation, drafting, execution (to the extent

such Party is a party thereto), and delivery of the Definitive Documents. Furthermore, subject to

the terms and conditions hereof, each of the Parties shall take such action as may be reasonably

necessary or reasonably requested by the other Parties to carry out the purposes and intent of this

Agreement, including making and filing any required regulatory filings (provided that no

Consenting Party shall be required to incur any cost, expense, or liability in connection therewith

unless such Consenting Party shall have received an assurance of reimbursement satisfactory to

it).

b. Each Consenting Creditor that is a Backstop Party entitled to receive a

Structuring Premium and the Company hereby agree to work in good faith to negotiate and execute

the Equity Backstop Agreement and the Debt Backstop Agreement as promptly as practicable after

the date of this Agreement, with each such agreement to be in customary form for agreements of

such type. The Consenting Creditors and the Company hereby acknowledge and agree that the

economic terms regarding the Equity Backstop Agreement and the Debt Backstop Agreement,

including the associated fees and structuring premiums, shall be as described in the Term Sheet.

In the event that any Backstop Party does not execute and deliver the Equity Backstop Agreement

and/or the Debt Backstop Agreement after such agreements have been negotiated pursuant to the

terms of this Agreement and the Term Sheet, any such non-executing Backstop Party shall not be

entitled to receive any fees or structuring premiums pursuant to such agreements and (i) all

commitments (along with all associated fees and premiums) allocable to any such non-executing

Backstop Party under the Equity Backstop Agreement and/or the Debt Backstop Agreement, as

applicable, will be offered on a pro rata basis (based on the pro forma equity splits among the

Backstop Parties as described in the Term Sheet), to the other Equity Backstop Parties and/or Debt

Backstop Parties, as applicable, and, if not fully subscribed after being offered to the other Equity

Backstop Parties and/or Debt Backstop Parties, will be offered to on a pro rata basis to all

Consenting Creditors (based on the pro forma equity splits among the Consenting Creditors as

described in the Term Sheet) (ii) all structuring premiums allocable to any such non-executing

Backstop Party under the Equity Backstop Agreement and/or the Debt Backstop Agreement, as

applicable, will be allocated on a pro rata basis (based upon the percentages of the applicable

structuring premium to be received by the Backstop Parties other than any non-executing Backstop

Party) to the other Backstop Parties entitled to receive Equity Backstop Premium and/or Debt

Backstop Obligation Premium, as applicable, as provided in the Term Sheet. The Company and

each Consenting Creditor shall be entitled to all of their rights and remedies hereunder in the event

that any Backstop Party breaches its obligations under this Section 8(b).


23

9. Representations and Warranties.

a. Each Party, severally and not jointly, represents and warrants to the other

Parties that the following statements are true, correct, and complete as of the date hereof (or as of

the date a Consenting Party becomes a party hereto):

(i) such Party is validly existing and in good standing under the laws of

its jurisdiction of incorporation or organization, and has all requisite corporate, partnership, limited

liability company, or similar authority to enter into this Agreement and carry out the transactions

contemplated hereby and perform its obligations contemplated hereunder; and the execution and

delivery of this Agreement and the performance of such Party’s obligations hereunder have been

duly authorized by all necessary corporate, limited liability company, partnership, or other similar

action on its part;

(ii) the execution, delivery, and performance by such Party of this

Agreement does not and will not (A) violate any provision of law, rule, or regulation applicable to

it, its charter, or bylaws (or other similar governing documents), or (B) conflict with, result in a

breach of, or constitute a default under any material contractual obligation to which it is a party

(provided, however, that with respect to the Company, it is understood that commencing the

Chapter 11 Cases may result in a breach of or constitute a default under such obligations);

(iii) the execution, delivery, and performance by such Party of this

Agreement does not and will not require any registration or filing with, consent, or approval of, or

notice to, or other action, with or by, any federal, state, or governmental authority or regulatory

body, except such filings as may be necessary and/or required by the Bankruptcy Court; and

(iv) this Agreement is the legally valid and binding obligation of such

Party, enforceable against it in accordance with its terms, except as enforcement may be limited

by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or limiting

creditors’ rights generally or by equitable principles relating to enforceability or a ruling of the

Bankruptcy Court.

b. Each Consenting Party severally (and not jointly), represents and warrants

to the Company that, as of the date hereof (or as of the date such Consenting Party becomes a party

hereto), such Consenting Party (i) is the beneficial owner of (or investment manager, advisor, or

subadvisor to one or more beneficial owners of) the aggregate principal amount of Claims and/or

Interests set forth below its name on the signature page hereto (or below its name on the signature

page of a Joinder Agreement for any Consenting Party that becomes a Party hereto after the date

hereof), (ii) has, except in the case of Consenting Parties with Repo Securities, with respect to the

beneficial owners of such Claims or Interests (as may be set forth on a schedule to such Consenting

Party’s signature page hereto), (A) sole investment or voting discretion with respect to such Claims

or Interests, (B) full power and authority to vote on and consent to matters concerning such Claims

or Interests, or to exchange, assign, and transfer such Claims or Interests, and (C) full power and

authority to bind or act on the behalf of, such beneficial owners, (iii) other than pursuant to this

Agreement or with respect to Repo Securities, such Claims or Interests are free and clear of any

pledge, lien, security interest, charge, claim, equity, option, proxy, voting restriction, right of first

refusal, or other limitation on disposition or encumbrance of any kind, that would prevent in any


24

way such Consenting Party’s performance of its obligations contained in this Agreement at the

time such obligations are required to be performed, and (iv) such Consenting Party is not the

beneficial owner of (or investment manager, advisor, or subadvisor to one or more beneficial

owners of) any other Claims against and/or Interests in any Company Entity. “Repo Securities”

means, with respect to a Consenting Creditor, Claims or Interests that are, on the date hereof,

subject to the terms and conditions of a repurchase agreement, sell/buyback agreement or similar

arrangement (each, a “Repo Agreement”) entered into between, on the one hand, such Consenting

Creditor (or one or more funds which the Consenting Creditor is the discretionary investment

manager, advisor or sub-advisor of) and, on the other hand, a third-party. For the avoidance of

doubt, it is acknowledged and agreed that Repo Securities shall constitute Claims for all purposes

under this Agreement.

10. Additional Provisions Regarding Company Entities’ Commitments.

a. Nothing in this Agreement shall require any director or officer of any

Company Entity to violate their fiduciary duties to such Company Entity. No action or inaction

on the part of any director or officer of any Company Entity that such directors or officers

reasonably believe is required by their fiduciary duties to such Company Entity shall be limited or

precluded by this Agreement; provided, however, that no such action or inaction shall be deemed

to prevent any of the Consenting Parties from taking actions that they are permitted to take as a

result of such actions or inactions, including terminating their obligations hereunder.

b. Notwithstanding anything to the contrary in this Agreement, the Company

Entities shall not, and shall instruct and direct their respective Representatives not to, seek or solicit

any discussions or negotiations with respect to, any Alternative Transaction; provided, however,

that nothing in this Section 10(b) shall limit the Parties’ ability to engage in marketing efforts,

discussions, and/or negotiations with any party regarding refinancing of the Exit Facilities to be

consummated following the Effective Date; provided, further, that (a) if any of the Company

Entities receive a proposal or expression of interest regarding any Alternative Transaction, the

Company Entities shall be permitted to discuss or negotiate the terms of such proposal or

expression of interest and shall promptly notify counsel to the Ad Hoc Group, orally and in writing,

of any such proposal or expression of interest, with such notice to include the material terms

thereof, including (unless prohibited by a separate agreement) the identity of the person or group

of persons involved, and (b) the Company Entities shall promptly furnish counsel to the Ad Hoc

Group with copies of any written offer, oral offer, or any other information that they receive

relating to the foregoing and shall promptly inform counsel to the Ad Hoc Group of any material

changes to such proposals.

c. Notwithstanding anything to the contrary herein, nothing in this Agreement

shall create any additional fiduciary obligations on the part of the Company, or the Consenting

Creditors, or any members, partners, managers, managing members, officers, directors,

employees, advisors, principals, attorneys, professionals, accountants, investment bankers,

consultants, agents or other representatives of the same or their respective affiliated entities, in

such person’s capacity as a member, partner, manager, managing member, officer, director,

employee, advisor, principal, attorney, professional, accountant, investment banker, consultant,

agent or other representative of such Party or its affiliated entities, that such entities did not have

prior to the execution of this Agreement.


25

d. Nothing in this Agreement shall: (i) impair or waive the rights of any

Company Entity to assert or raise any objection permitted under this Agreement in connection

with the Restructuring, or (ii) prevent any Company Entity from enforcing this Agreement or

contesting whether any matter, fact, or thing is a breach of, or is inconsistent with, this Agreement.

11. Filings and Public Statements.

a. The Company shall submit drafts to counsel to the Consenting Parties of

any press releases, public documents, and any and all filings with the SEC, the Bankruptcy Court,

or otherwise that constitute disclosure of the existence or terms of this Agreement or any

amendment to the terms of this Agreement at least forty-eight hours prior to making any such

disclosure, and shall afford them a reasonable opportunity under the circumstances to comment on

such documents and disclosures and shall consider any such comments in good faith. Except as

required by law or otherwise permitted under the terms of any other agreement between the

Company on the one hand, and any Consenting Party, on the other hand, no Party or its advisors

(including counsel to any Party) shall disclose to any person (including other Consenting Parties),

other than the Company’s advisors, the principal amount or percentage of any Claims or Interests

or any other securities of the Company held by any other Party, in each case, without such Party’s

prior written consent; provided that (i) if such disclosure is required by law, subpoena, or other

legal process or regulation, the disclosing Party shall afford the relevant Party a reasonable

opportunity to review and comment in advance of such disclosure and shall take all reasonable

measures to limit such disclosure (including by way of a protective order) (the expense of which,

if any, shall be borne by the relevant disclosing Party) and (ii) the foregoing shall not prohibit the

disclosure of the aggregate percentage or aggregate principal amount of Claims or Interests held

by all the Consenting Parties collectively. Any public filing of this Agreement, with the

Bankruptcy Court, the SEC or otherwise, shall not include the executed signature pages to this

Agreement. Nothing contained herein shall be deemed to waive, amend or modify the terms of

any confidentiality or non-disclosure agreement between the Company and any Consenting

Creditor.

12. Amendments and Waivers.

During the Support Period, this Agreement, including any exhibits or schedules hereto,

may not be waived, modified, amended, or supplemented except in a writing signed by the

Company Entities, the Required Consenting First Lien Noteholders, the Required Consenting 1.5L

Noteholders, the Required Consenting Crossholder Noteholders and the Consenting Sponsors (as

applicable and to the extent required herein); provided that: (i) any waiver, modification,

amendment, or supplement to Section 7(e) or this Section 12 shall require the prior written consent

of each Party; (ii) any waiver, modification, amendment, or supplement to the definition of

Required Consenting First Lien Noteholders, Required Consenting 1.5L Noteholders or Required

Consenting Crossholder Noteholders shall require the prior written consent of each applicable

Consenting Creditor that is a member of the Ad Hoc Groups; (iii) any waiver, modification,

amendment or supplement to Section 4(c)(ii) of this Agreement or the last paragraph in the section

of the Term Sheet entitled “Equity Backstop Commitment” shall require the consent of each

Consenting Creditor and (iv) any waiver, modification, amendment, or supplement that

disproportionately and adversely affects the economic recoveries or treatment of any Consenting

Party compared to the economic recoveries or treatment set forth in the Term Sheet hereto may


26

not be made without the prior written consent of such Consenting Party. Amendments to any

Definitive Document shall be governed as set forth in such Definitive Document. Any consent

required to be provided pursuant to this Section 12 may be delivered by email from counsel.

13. Effectiveness.

This Agreement shall become effective and binding on the Parties on the Agreement

Effective Date, and not before such date; provided that signature pages executed by Consenting

Parties shall be delivered to (a) the Company, other Consenting Parties, and counsel to other

Consenting Parties (if applicable) in a redacted form that removes such Consenting Parties’

holdings of Claims and any schedules to such Consenting Parties’ holdings (if applicable) and

(b) the legal and financial advisors to the Company and the Ad Hoc Groups, respectively, in an

unredacted form.

14. Governing Law; Jurisdiction; Waiver of Jury Trial.

a. This Agreement shall be construed and enforced in accordance with, and

the rights of the parties shall be governed by, the law of the State of New York, without giving

effect to the conflicts of law principles thereof.

b. Each of the Parties irrevocably agrees that any legal action, suit, or

proceeding arising out of or relating to this Agreement brought by any party or its successors or

assigns shall be brought and determined in (a) the Bankruptcy Court, for so long as the Chapter 11

Cases are pending, and (b) otherwise, any federal or state court in the Borough of Manhattan, the

City of New York, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction

of the aforesaid courts for itself and with respect to its property, generally and unconditionally,

with regard to any such proceeding arising out of or relating to this Agreement. Each of the Parties

agrees not to commence any proceeding relating hereto or thereto except in the courts described

above, other than proceedings in any court of competent jurisdiction to enforce any judgment,

decree, or award rendered by any such court as described herein. Each of the Parties further agrees

that notice as provided herein shall constitute sufficient service of process and the Parties further

waive any argument that such service is insufficient. Subject to the foregoing, each of the Parties

hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a

defense, counterclaim, or otherwise, in any proceeding arising out of or relating to this Agreement,

(i) any claim that it is not personally subject to the jurisdiction of the courts as described herein for

any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or

from any legal process commenced in such courts (whether through service of notice, attachment

prior to judgment, attachment in aid of execution of judgment, execution of judgment, or

otherwise) and (iii) that (A) the proceeding in any such court is brought in an inconvenient forum,

(B) the venue of such proceeding is improper, or (C) this Agreement, or the subject matter hereof,

may not be enforced in or by such courts.

c. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT

PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY

IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR

RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED

HEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH


27

PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY

OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH

OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE

FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES

HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER

THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

15. Specific Performance/Remedies.

a. The Parties agree that irreparable damage would occur if any provision of

this Agreement were not performed in accordance with the terms hereof and that the Parties shall

be entitled to an injunction or injunctions without the necessity of posting a bond to prevent

breaches of this Agreement or to enforce specifically the performance of the terms and provisions

hereof, in addition to any other remedy to which they are entitled at law or in equity. Unless

otherwise expressly stated in this Agreement, no right or remedy described or provided in this

Agreement is intended to be exclusive or to preclude a Party from pursuing other rights and

remedies to the extent available under this Agreement, at law, or in equity.

b. Notwithstanding anything to the contrary in this Agreement, none of the

Parties will be liable for, and none of the Parties shall claim or seek to recover, any punitive,

special, indirect or consequential damages or damages for lost profits.

16. Survival.

Notwithstanding the termination of this Agreement pursuant to Section 7 hereof, the

agreements and obligations of the Parties set forth in the following Sections: 7(g), 14, 15, 16, 17,

18, 19, 20, 21, 22, 23, 24, 25, and 27 hereof (and any defined terms used in any such Sections)

shall survive such termination and shall continue in full force and effect for the benefit of the

Parties in accordance with the terms hereof; provided that any liability of a Party for failure to

comply with the terms of this Agreement shall survive such termination.

17. Headings.

The headings of the sections, paragraphs, and subsections of this Agreement are inserted

for convenience only and shall not affect the interpretation hereof or, for any purpose, be deemed

a part of this Agreement.

18. Successors and Assigns; Severability; Several Obligations.

This Agreement is intended to bind and inure to the benefit of the Parties and their

respective successors, permitted assigns, heirs, executors, administrators, and representatives;

provided that nothing contained in this Section 18 shall be deemed to permit Transfers of interests

in any Claims against or Interests in any Company Entity, other than in accordance with the express

terms of this Agreement. If any provision of this Agreement, or the application of any such

provision to any person or entity or circumstance, shall be held invalid or unenforceable in whole

or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and

the remaining part of such provision hereof and this Agreement shall continue in full force and


28

effect so long as the economic or legal substance of the transactions contemplated hereby is not

affected in any manner materially adverse to any Party. Upon any such determination of invalidity,

the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent

of the Parties as closely as possible in a reasonably acceptable manner in order that the transactions

contemplated hereby are consummated as originally contemplated to the greatest extent possible.

The agreements, representations, and obligations of the Parties are, in all respects, several and

neither joint nor joint and several. For the avoidance of doubt, the obligations arising out of this

Agreement are several and not joint with respect to each Consenting Party, in accordance with its

proportionate interest hereunder, and the Parties agree not to proceed against any Consenting Party

for the obligations of another.

19. No Third-Party Beneficiaries.

Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties

and no other person or entity shall be a third-party beneficiary hereof.

20. Prior Negotiations; Entire Agreement.

This Agreement, including the exhibits and schedules hereto (including the Term Sheet),

constitutes the entire agreement of the Parties, and supersedes all other prior negotiations, with

respect to the subject matter hereof and thereof, except that the Parties acknowledge that any

confidentiality agreements (if any) heretofore executed between the Company and each

Consenting Party shall continue in full force and effect in accordance with its terms.

21. Counterparts.

This Agreement may be executed in several counterparts, each of which shall be deemed

to be an original, and all of which together shall be deemed to be one and the same agreement.

Execution copies of this Agreement may be delivered by facsimile, electronic mail, or otherwise,

which shall be deemed to be an original for the purposes of this paragraph.

22. Notices.

All notices hereunder shall be deemed given if in writing and delivered, if

contemporaneously sent by electronic mail, facsimile, courier or by registered or certified mail

(return receipt requested) to the following addresses and facsimile numbers:

(1) If to the Company, to:

Hexion Inc.

180 East Broad Street

Columbus, Ohio 43215

Attention: Douglas Johns


29

with a copy to:


885 Third Avenue

New York, New York 10022

Attention: George Davis ([email protected])

Andrew Parlen ([email protected])

- and -


330 North Wabash, Suite 2800

Chicago, IL 60611

Attention: Caroline Reckler ([email protected])

Jason Gott ([email protected])

(2) If to a Consenting Creditor, to the addresses or facsimile numbers set forth below following

such Consenting Creditor’s signature to this Agreement or on the applicable Joinder Agreement

(if any), as the case may be,

with a copy to (solely in the case of Consenting Creditors that are members of the First Lien Ad

Hoc Group):

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park


Email: [email protected]; [email protected]; [email protected] and

[email protected]

Attention: Ira S. Dizengoff, Esq., Philip C. Dublin, Esq., Daniel Fisher, Esq. and Naomi Moss,

Esq.

with a copy to (solely in the case of Consenting Creditors that are members of the 1.5 Lien Ad

Hoc Group):

Jones Day

250 Vesey Street

New York, NY 10281

Attention: Sidney P. Levinson ([email protected])

Jeremy D. Evans ([email protected])

with a copy to (solely in the case of Consenting Creditors that are members of the Crossholder

Ad Hoc Group):

Milbank LLP

55 Hudson Yards


30


Attention: Samuel A. Khalil ([email protected])

Matthew L. Brod ([email protected])

(3) If to a Consenting Sponsor, to the addresses or facsimile numbers set forth below following

such Consenting Sponsor’s signature to this Agreement or on the applicable Joinder Agreement

(if any), as the case may be.

Any notice given by electronic mail, facsimile, delivery, mail, or courier shall be effective

when received.

23. Reservation of Rights; No Admission.

a. Nothing contained herein shall (i) limit (A) the ability of any Party to

consult with other Parties, or (B) the rights of any Party under any applicable bankruptcy,

insolvency, foreclosure, or similar proceeding, including the right to appear as a party in interest

in any matter to be adjudicated in order to be heard concerning any matter arising in the

Chapter 11 Cases, in each case, so long as such consultation or appearance is consistent with such

Party’s obligations hereunder; (ii) limit the ability of any Consenting Party to sell or enter into

any transactions in connection with the Claims, or any other claims against or interests in the

Company, subject to the terms of Section 4(b) hereof; or (iii) constitute a waiver or amendment

of any provision of any applicable credit agreement or indenture or any agreements executed in

connection with such credit agreement or indenture.

b. Except as expressly provided in this Agreement, nothing herein is intended

to, or does, in any manner waive, limit, impair, or restrict the ability of each of the Parties to

protect and preserve its rights, remedies, and interests, including its claims against any of the

other Parties (or their respective affiliates or subsidiaries) or its full participation in any

bankruptcy case filed by the Company or any of its affiliates and subsidiaries. This Agreement

is part of a proposed settlement of matters that could otherwise be the subject of litigation among

the Parties. Pursuant to Rule 408 of the Federal Rule of Evidence, any applicable state rules of

evidence, and any other applicable law, foreign or domestic, this Agreement and all negotiations

relating thereto shall not be admissible into evidence in any proceeding other than a proceeding

to enforce its terms. This Agreement 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.

24. Relationship Among Consenting Parties.

Notwithstanding anything to the contrary herein, the duties and obligations of the

Consenting Creditors under this Agreement shall be several, not joint. It is understood and agreed

that no Consenting Creditor has any fiduciary duty, duty of trust or confidence in any kind or form

with any other Consenting Creditor, the Company or any other stakeholder of the Company and,

except as expressly provided in this Agreement, there are no commitments among or between

them. In this regard, it is understood and agreed that any Consenting Party may trade in the debt


31

of the Company without the consent of the Company or any other Consenting Party, subject to

applicable securities laws, the terms of this Agreement, and any Confidentiality Agreement entered

into with the Company; provided that no Consenting Party shall have any responsibility for any

such trading by any other Person by virtue of this Agreement. No prior history, pattern, or practice

of sharing confidences among or between the Consenting Parties shall in any way affect or negate

this understanding and agreement.

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

a. This Agreement is not and shall not be deemed to be a solicitation for votes

in favor of the Plan in the Chapter 11 Cases. The acceptances of the Consenting Parties with

respect to the Plan will not be solicited until such Consenting Parties has received the Disclosure

Statement and related ballots and solicitation materials.

b. Each Party acknowledges that it has had an opportunity to receive

information from the Company and that it has been represented by counsel in connection with

this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any

legal decision that would provide any Party with a defense to the enforcement of the terms of this

Agreement against such Party based upon lack of legal counsel shall have no application and is

expressly waived.

c. Although none of the Parties intends that this Agreement should constitute,

and they each believe it does not constitute, a solicitation or acceptance of a chapter 11 plan of

reorganization or an offering of securities, each Consenting Party acknowledges, agrees, and

represents to the other Parties that it (i) is an “accredited investor” as such term is defined in Rule

501(a) of the Securities Act of 1933, (ii) understands that any securities to be acquired by it

pursuant to the Plan have not been registered under the Securities Act and that such securities are,

to the extent not acquired pursuant to section 1145 of the Bankruptcy Code, being offered and

sold pursuant to an exemption from registration contained in the Securities Act, based in part

upon such Consenting Party’s representations contained in this Agreement and cannot be sold

unless subsequently registered under the Securities Act or an exemption from registration is

available, and (iii) has such knowledge and experience in financial and business matters that such

Consenting Party is capable of evaluating the merits and risks of the securities to be acquired by

it pursuant to the Plan and understands and is able to bear any economic risks with such

investment.

26. Conflicts.

In the event of any conflict among the terms and provisions of the RSA and of the Term

Sheet, the terms and provisions of the Term Sheet shall control.

27. Payment of Fees and Expenses.

The Company shall pay or reimburse all reasonable and documented fees and out-of-pocket

expenses (expenses when due (including travel costs and expenses) of the attorneys, accountants,

other professionals, advisors, and consultants of the Ad Hoc Groups (whether incurred directly or

on their behalf and regardless of whether such fees and expenses are incurred before or after the


32

Petition Date), including the fees and expenses of (a) the following advisors to the First Lien Ad

Hoc Group: (i) Akin Gump Strauss Hauer & Feld, LLP as counsel; (ii) Ashby & Geddes, as local

counsel; and (iii) Evercore Group, L.L.C., as financial advisor; (b) the following advisors to the

1.5 Lien Ad Hoc Group: (i) Jones Day, as counsel; (ii) Young Conaway Stargatt & Taylor LLP,

as local counsel; and (iii) Perella Weinberg Partners, as financial advisor; and (c) the following

advisors to the Crossholder Ad Hoc Group (i) Milbank LLP, as counsel (ii) Morris, Nichols, Arsht

& Tunnell LLP, as local counsel; and (iii) Houlihan Lokey Capital, Inc., as financial advisor; in

each case, including all amounts payable or reimbursable under applicable fee or engagement

letters with the Company (which agreements shall not be terminated by the Company before the

termination of this Agreement); provided, further, that to the extent that the Company terminates

this Agreement under Section 7(b), the Company’s reimbursement obligations under this Section

27 shall survive with respect to any and all fees and expenses incurred on or prior to the date of

termination and such termination shall not automatically terminate any applicable fee or

engagement letters. Each of the RSA Order, the BCA Approval Order and the Debt Backstop

Order shall contain language approving the payment of all such fees and expenses by the Company,

including any back-end, transaction, success or similar fees provided for under the applicable fee

or engagement letters with the Company.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be

executed and delivered by their respective duly authorized officers, solely in their respective

capacity as officers of the undersigned and not in any other capacity, as of the date first set forth

above.

[Signature pages follow.]


EXHIBIT A

Term Sheet


EXECUTION VERSION

THIS TERM SHEET IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR A

SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE

MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR

SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS

AND/OR PROVISIONS OF THE BANKRUPTCY CODE. NOTHING CONTAINED IN

THIS TERM SHEET SHALL BE AN ADMISSION OF FACT OR LIABILITY OR, UNTIL

THE OCCURRENCE OF THE AGREEMENT EFFECTIVE DATE ON THE TERMS

DESCRIBED HEREIN AND IN THE RESTRUCTURING SUPPORT AGREEMENT,

DEEMED BINDING ON ANY OF THE PARTIES HERETO.

Hexion Restructuring Term Sheet

This Term Sheet, which is Exhibit A to a Restructuring Support Agreement dated

April 1, 2019, by and among the Debtors, the Consenting Noteholders, and the Consenting

Sponsors (the “Restructuring Support Agreement”), describes the proposed terms of the Debtors’

restructuring (the “Restructuring”). The Debtors will implement the Restructuring through a plan

of reorganization under chapter 11 of the Bankruptcy Code, which shall be consistent with the

terms of this Term Sheet and the Restructuring Support Agreement (as it may be amended or

supplemented from time to time in accordance with the terms of the Restructuring Support

Agreement, the “Plan”), in voluntary chapter 11 cases (the “Chapter 11 Cases”) to be commenced

in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). This

Term Sheet incorporates the rules of construction set forth in section 102 of the Bankruptcy Code.

Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the

Restructuring Support Agreement.

This Term Sheet does not include a description of all of the terms, conditions, and other

provisions that are to be contained in the Definitive Documents, which remain subject to discussion

and negotiation in accordance with the Restructuring Support Agreement. Consummation of the

transactions contemplated by this Term Sheet are subject to (1) the negotiation and execution of

definitive documents evidencing and related to the Restructuring contemplated herein, (2)

satisfaction of all of the conditions in any definitive documentation evidencing the transactions

comprising the Restructuring, and (3) entry of a Final Order of the Bankruptcy Court confirming

the Plan and the satisfaction of any conditions to the effectiveness thereof. The Definitive

Documents will contain terms and conditions that are dependent on each other, including those

described in this Term Sheet.


2

OVERVIEW OF THE RESTRUCTURING

Summary Subject in all respects to and as provided by the other terms of this

Term Sheet and to the Restructuring Support Agreement, Hexion Inc.

and certain of its affiliates (collectively, the “Debtors”) will

restructure their funded debt obligations with the proceeds of a new,

$1.641 billion Exit Facility and a $300 million common equity

Rights Offering available to holders of Notes Claims, in each case

backstopped by certain holders of Notes Claims that have executed

the Restructuring Support Agreement, as well as with a new Exit

ABL Facility and through the issuance of new common equity in

exchange for all outstanding Notes Claims, in each case as set forth

in this Term Sheet, the Restructuring Support Agreement and the

exhibits and schedules annexed thereto. The Debtors’ creditors and

equityholders will receive the following treatment:

holders of the Debtors’ 1L Notes will receive $1.45 billion in

cash (less adequate protection payments reflecting interest on

the 1L Notes paid during the Chapter 11 Cases), 72.5% of the

New Hexion Common Shares (subject to dilution for the

Rights Offering Shares, the equity issued pursuant to the MIP

and any equity issued pursuant to the Equity Backstop

Premium and the Debt Backstop Premium (collectively, the

“Agreed Dilution”)), and 72.5% of the Rights in the Rights

Offering;

holders of the Debtors’ 1.5L Notes, 2L Notes, and Unsecured

Notes will receive 27.5% of the New Hexion Common

Shares (subject to the Agreed Dilution) and 27.5% of the

Rights in the Rights Offering;

general unsecured creditors will be paid in full; and

holders of the Debtors’ outstanding common equity will

receive no recovery on account of such common equity

interests.

The Restructuring will be supported through the Debtors’ borrowing

under a new, $350 million DIP term facility and a $350 million DIP

ABL facility.

Implementation The Debtors will effectuate the Restructuring through the Chapter 11

Cases and Confirmation of the Plan, which shall be consistent with

this Term Sheet and subject to the terms and conditions set forth in

the Restructuring Support Agreement.

Rights Offering The Plan will provide for a rights offering (the “Rights Offering”)

that will provide Holders of allowed Notes Claims with rights to


3

purchase for cash (the “Rights”) their pro rata1 share of $300 million

of New Hexion Common Shares issued on the Effective Date (the

“Rights Offering Shares”) at a 35% discount to a stipulated post-new

money plan total equity value of $1.374 billion (such stipulated

value, the “Plan Equity Value”) (based on a total enterprise value of

$3.1 billion) (the “Rights Offering Purchase Price”).2 Participation

in the Rights Offering will be available to Holders of allowed Notes

Claims, in each case who are eligible to participate in the Rights

Offering under applicable securities laws.

New Hexion Common Shares issued pursuant to the Rights Offering

shall be issued in reliance on the exemption from the registration

requirements of the federal securities laws pursuant to section 1145

of the Bankruptcy Code to the maximum extent permitted by law,

and otherwise pursuant to Section 4(a)(2) and/or Regulation S of the

Securities Act of 1933 (the “Securities Act”), or another available

exemption from registration, as applicable.

Equity Backstop

Obligations

The Rights Offering will be backstopped on a several, and not joint

and several, basis by certain parties to the Restructuring Support

Agreement (the “Equity Backstop Parties”) pursuant to, and in the

amounts set forth in, the schedule attached as Schedule 1 to the

Restructuring Support Agreement (the “Equity Backstop Allocation

Schedule”) subject to negotiation and execution of Definitive

Documentation following receipt of all necessary internal approvals.

Schedule 1 shall be redacted in the Restructuring Support

Agreement, including in any filing with the Bankruptcy Court,

provided that, to the extent required as evidentiary support, it will be

filed under seal with the Bankruptcy Court.

The Rights Offering will be conducted on the terms and conditions

to be set forth in the Equity Backstop Agreement to be entered into

after the date of the Restructuring Support Agreement and an order

of the Bankruptcy Court approving the Debtors’ entry into the Equity

Backstop Agreement (the “BCA Approval Order”).

1 The Rights shall be allocated on a pro rata basis on the same basis as the allocation of the primary equity among

holders of allowed 1L Notes Claims and holders of Junior Notes Claims (i.e., 72.5% of the Rights shall be made

available to holders of allowed 1L Notes Claims and 27.5% to holders of allowed Junior Notes Claims ratably

based on Claim amounts within the respective classes). 2 On the closing date of the Rights Offering, each Equity Backstop Party that is a registered investment company

under the Investment Company Act of 1940, as amended (each an “Investment Company”) shall deliver and pay

its respective Funding Amount by wire transfer of immediately available funds in U.S. dollars to a segregated

bank account of the subscription agent for the Rights Offering (the “Rights Offering Subscription Agent”)

designated by the Rights Offering Subscription Agent in a funding notice delivered to Equity Backstop Parties,

or make other arrangements that are acceptable to the applicable Investment Company and the Debtors, in

satisfaction of such Equity Backstop Party’s Rights Offering backstop obligation and its obligations to fully

exercise its subscription rights in accordance with the Equity Backstop Agreement.


4

As consideration for the Put Option and the obligations of the Equity

Backstop Parties and whether or not the Put Option is exercised,

under the terms of the Equity Backstop Agreement, each Equity

Backstop Party will receive, based on its Equity Backstop

Obligations, its pro rata share of a premium (the “Equity Backstop

Premium”), which shall equal 8% of the aggregate Equity Backstop

Obligations and which shall be fully earned and nonrefundable upon

entry of the BCA Approval Order, payable free and clear of and

without withholding on account of any taxes, treated as an

administrative expense of each of the Debtor’s Estates, and paid in

cash (or, at the option of each Equity Backstop Party, in New Hexion

Common Shares at the Plan Equity Value) upon closing of the Rights

Offering or in such other circumstances as may be agreed by the

parties in the Equity Backstop Agreement.

New Hexion Common Shares purchased pursuant to the Equity

Backstop Agreement shall be issued in reliance on the exemption

from the registration requirements of the federal securities laws

pursuant to section 1145 of the Bankruptcy Code to the maximum

extent permitted by law, and otherwise in reliance on the exemption

from the registration requirements of the federal securities laws

pursuant to Section 4(a)(2) and/or Regulation S of the Securities Act,

or another available exemption from registration.

The Debtors and Reorganized Debtors shall use commercially

reasonable efforts to 1) obtain “restricted” and “unrestricted” CUSIP

identifiers for the New Hexion Common Shares (as necessary), 2)

make the New Hexion Common Shares (including “restricted” and

“unrestricted” securities) eligible for clearance and settlement

through the Depository Trust Company, and 3) make the New

Hexion Common Shares eligible for transfer pursuant to Rule 144A

of the Securities Act, including commercially reasonable efforts to

comply with the requirements of Rule 144(A)(d)(4). Other than

restrictions imposed by state “blue sky” laws and federal securities

law and regulations, the New Hexion Common Shares shall not be

subject to any transfer restrictions, including, without limitation, any

rights of first offer, rights of first refusal, or rights of last offer

provisions, other than customary provisions relating to the protection

of net operating losses, if any, to be agreed upon by the Required

Consenting Noteholders.

Exit Facility Pursuant to a competitive bidding process among third party

financing sources in consultation with the Required Consenting

Noteholders, the Debtors shall obtain an exit facility in an amount of

not more than $1.641 billion (the “Exit Facility”). Certain

Consenting Noteholders (the “Debt Backstop Parties,” and together

with the Equity Backstop Parties, the “Backstop Parties”) will

backstop the Exit Facility on a several basis in the amounts set forth


5

in, the schedule attached as Schedule 2 to the Restructuring Support

Agreement (the “Debt Backstop Allocation Schedule”), subject to

negotiation and execution of Definitive Documents following receipt

of all necessary internal approvals, and on the following terms, such

other terms as are on Schedule 4 to the Restructuring Support

Agreement and on such other terms to be agreed upon by the Debt

Backstop Parties. Schedules 2 and 4 shall be redacted in the

Restructuring Support Agreement, including in any filing with the

Bankruptcy Court, provided that, to the extent required as

evidentiary support, it will be filed under seal with the Bankruptcy

Court:

Security: First Lien on all US assets (with carve out for ABL

collateral), including Principal Properties, if any, plus 100%

of foreign sub stock

Commitment Length: until December 31, 2019

As consideration for the obligations of the Debt Backstop Parties,

and whether or not the Debt Backstop Parties provide the Exit

Facility, under the terms of the Debt Backstop Agreement to be

entered into after the date of the Restructuring Support Agreement,

each Debt Backstop Party will receive, based on its Debt Backstop

Obligations, its pro rata share of a premium (the “Debt Backstop

Premium”), which shall consist of a premium equal to 3.375% of the

aggregate amount of Debt Backstop Obligations, which shall be fully

earned and nonrefundable upon entry of the DCA Approval Order,

payable free and clear of and without withholding on account of any

taxes, treated as an administrative expense of each of the Debtor’s

Estates, and payable in cash (or, at the option of each Debt Backstop

Party, in New Hexion Common Shares at the Plan Equity Value)

upon the closing of the Exit Facility or in such other circumstances

as may be agreed by the parties in the Debt Backstop Agreement.

The obligations of the Debt Backstop Parties as set forth above shall

be referred to as the “Debt Backstop Obligations.”

In addition, the parties listed on Schedule 3 to the Restructuring

Support Agreement (the “Additional Put Option Premium

Schedule”) shall receive as additional consideration for providing the

Debt Backstop Obligation, their pro rata share of 1.5% of the

aggregate amount of Debt Backstop Obligation (the “Additional Put

Option Premium”), which shall be fully earned and nonrefundable

upon entry of the DCA Approval Order, payable free and clear of and

without withholding on account of any taxes, treated as an

administrative expense of each of the Debtor’s Estates, and payable

in cash upon the closing of the Exit Facility in connection with the

Restructuring or in such other circumstances as may be agreed by the

parties in the Debt Backstop Agreement. Schedule 3 shall be


6

redacted in the Restructuring Support Agreement, including in any

filing with the Bankruptcy Court, provided that, to the extent

required as evidentiary support, it will be filed under seal with the

Bankruptcy Court.

Exit ABL Facility The Debtors will enter into an undrawn new asset-based revolving

loan facility on the Effective Date.

TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN

Type of Claim Treatment Impairment

/ Voting

DIP Facility Claims In full satisfaction of each allowed DIP Facility

Claim, each Holder thereof will be repaid in full in

cash.

N/A

Administrative Claims

Except to the extent that a Holder of an allowed

Administrative Claim and the Debtor against which

such allowed Administrative Claim is asserted agree

to less favorable treatment for such Holder, each

Holder of an allowed Administrative Claim shall

receive, in full satisfaction of its Claim, payment in

full in cash.

N/A

Priority Tax Claims

In full satisfaction of the allowed Priority Tax

Claims, each Holder of an allowed Priority Tax

Claim will be paid in full in cash or otherwise

receive treatment consistent with the provisions of

section 1129(a)(9) of the Bankruptcy Code.

N/A

Other Secured Claims

In full satisfaction of each allowed Other Secured

Claim, each Holder thereof will receive (a) payment

in full in cash, (b) delivery of the collateral securing

any such Claim and payment of any interest required

under section 506(b) of the Bankruptcy Code,

(c) Reinstatement of such Claim, or (d) other

treatment rendering such Claim Unimpaired.

Unimpaired;

deemed to

accept

Other Priority Claims


Other Priority Claim and the Debtor against which

such allowed Other Priority Claim is asserted agree

to less favorable treatment for such Holder, in full

satisfaction of each allowed Other Priority Claim

against the Debtors, each Holder thereof shall

receive payment in full in cash or other treatment

Unimpaired;

deemed to

accept


7

rendering such Claim Unimpaired.

1L Notes Claims In full satisfaction of each allowed 1L Notes Claim,

each Holder thereof will receive its pro rata share of

(a) cash in the amount of $1,450,000,000 (but less

the sum of adequate protection payments reflecting

interest on the 1L Notes paid during the Chapter 11

Cases), (b) 72.5% of New Hexion Common Shares,

subject to the Agreed Dilution, and (c) 72.5% of the

Rights.

Impaired;

entitled to

vote

Junior Notes Claims In full satisfaction of each allowed Junior Notes

Claim, each Holder thereof will receive its pro rata

share of (a) 27.5% of New Hexion Common Shares,

subject to the Agreed Dilution; and (b) 27.5% of the

Rights.

Impaired;

entitled to

vote

General Unsecured

Claims


General Unsecured Claim and the Debtor against

which such allowed General Unsecured Claim is

asserted agree to less favorable treatment for such

Holder (including, without limitation, with respect

to the Consenting Sponsor Claim Settlement), in full

satisfaction of each allowed General Unsecured

Claim against the Debtors, each Holder thereof shall

receive payment in cash in an amount equal to such

allowed General Unsecured Claim in the ordinary

course of business in accordance with the terms and

conditions of the particular transaction giving rise to

such Claim.

Unimpaired;

deemed to

accept

Subordinated

Securities Claims

No recovery Imparied;

deemed to

reject

Intercompany Claims

No property will be distributed to the Holders of

allowed Intercompany Claims. Unless otherwise

provided for under the Plan, each Intercompany

Claim will either be Reinstated or canceled and

released at the option of the Debtors with the consent

of the Required Consenting Noteholders.

Unimpaired;

deemed to

accept; or

Impaired

deemed to

reject

Intercompany

Interests

Intercompany Interests shall receive no recovery or

distribution and be Reinstated solely to the extent

necessary to maintain the Debtors’ corporate

structure.

Unimpaired;

deemed to

accept; or

Impaired;

deemed to


8

reject

Existing Equity

Interests

Each Holder of Existing Equity Interests shall

receive no distribution on account of such Existing

Equity Interests.

Impaired;

deemed to

reject.

OTHER TERMS OF THE RESTRUCTURING

Executory Contracts

and Unexpired Leases

Except as otherwise provided in this Term Sheet or the Restructuring

Support Agreement, the Debtors shall assume all executory contracts

and unexpired leases other than those to be identified on a schedule

of rejected contracts included in the Plan Supplement, which shall be

consistent with the Restructuring Support Agreement and this Term

Sheet, including as specified in “Employee Matters” and

“Indemnification of Prepetition Directors, Officers, Managers, et al.”

The schedule of rejected contracts included in the Plan Supplement

shall be acceptable to the Debtors and reasonably acceptable to the

Required Consenting Noteholders.

Charter; Bylaws;

Corporate Governance

Corporate governance for the Reorganized Debtors, including

charters, bylaws, a shareholder rights agreement, operating

agreements, or other organization or formation documents, as

applicable, shall be consistent with section 1123(a)(6) of the

Bankruptcy Code, as applicable.

The Reorganized Hexion Board shall consist of seven (7) members,

which shall be comprised of Craig Rogerson, in his capacity as Chief

Executive Officer of the Reorganized Debtors, and six (6) other

directors, which shall be selected by a committee consisting of

representatives from the following six (6) institutions: Cyrus Capital

Partners, L.P.; Monarch Alternative Capital LP; GoldenTree Asset

Management; GSO Capital Partners; Brigade Capital Management;

and Davidson Kempner Capital Management LP (collectively, the

“Board Committee”) in consultation with Craig Rogerson, in his

capacity as Chief Executive Officer of the Reorganized Debtors;

provided, that, (x) if a holder represented on the Board Committee

determines to give up its seat the next largest pro forma holder

willing to serve will replace such resigning holder and (y) if any

holder represented on the Board Committee sells claims and, after

such sale, such holder is not then one of the six (6) largest holders,

on a pro forma basis (without giving effect to the Agreed Dilution),

the other members of the Board Committee shall determine whether

to request such selling member resign from the Board Committee

and be replaced by the next largest pro forma holder willing to serve;

provided, further, that if the Reorganized Hexion Board is not fully

selected by the Effective Date then the Reorganized Board shall

select the remaining members in consultation with the Board


9

Committee.

Employee Matters Substantially all employees of the Debtors to be retained by the

Reorganized Debtors. The Reorganized Debtors shall assume any

employment, confidentiality, and non-competition agreements,

bonus, gainshare and incentive programs (other than awards of stock

options, restricted stock, restricted stock units, and other equity

awards), vacation, holiday pay, severance, retirement, supplemental

retirement, executive retirement, pension, deferred compensation,

medical, dental, vision, life and disability insurance, flexible

spending account, and other health and welfare benefit plans,

programs and arrangements, and all other wage, compensation,

employee expense reimbursement, and other benefit obligations of

the Debtors, in each case, so long as current or future liabilities

associated with such programs have previously been provided or

made available to the First Lien Advisors, the 1.5L Advisors, and the

Crossover Advisors; provided, however, that neither the

Restructuring nor the transactions contemplated by the Plan will

constitute a change of control or other acceleration event for

purposes of any of the foregoing.

Consenting Sponsor

Claim Settlement

Subject to and upon the occurrence of the Effective Date, the

Consenting Sponsors shall receive the Settlement Note, in full

satisfaction, compromise, and discharge of any General Unsecured

Claims held by such Consenting Sponsors as of the Effective Date

other than any Claims arising under or related to the Debtors’

indemnification provisions or director and officer insurance policies

(the “Consenting Sponsor Claim Settlement”).

Indemnification of

Prepetition Directors,

Officers, Managers, et

al.

The Plan shall provide that, consistent with applicable law all

indemnification provisions currently in place (whether in the by-

laws, certificates of incorporation or formation, limited liability

company agreements, other organizational documents, board

resolutions, indemnification agreements, employment contracts or

otherwise) for the current and former direct and indirect sponsors,

directors, officers, managers, employees, attorneys, accountants,

investment bankers, and other professionals of the Debtors, as

applicable, shall be reinstated and remain intact and irrevocable and

shall survive effectiveness of the Restructuring.

MIP Up to 10% of the fully diluted New Hexion Common Shares issued

on the Effective Date shall be issuable in connection with a

management incentive plan, the details and allocation of which shall

be determined by the Reorganized Hexion Board (including with

respect to form, structure and vesting) (the “MIP”)


10

Tax Issues The Debtors and the Consenting Noteholders shall cooperate in good

faith to structure the Restructuring and related transactions in a tax-

efficient manner; provided that such structure shall be reasonably

acceptable to the Debtors and the Required Consenting Noteholders.

Company Status Upon

Emergence

The Debtors and, following the Effective Date, Reorganized Hexion

will use best efforts to attempt to obtain a listing of the New Hexion

Common Shares on the NYSE or NASDAQ on the Effective Date,

or, if such a listing is not reasonably possible, on the OTCQX

Premier (if the OTCQX Premier is not possible, the OTCQX, and if

the OTCQX is not possible, the OTCQB) and will use best efforts to

obtain a NYSE or NASDAQ listing as soon as possible following the

Effective Date; provided, however, the foregoing covenant shall not

apply to the extent (i) the Board of Directors of Hexion Holdings

LLC, or Reorganized Hexion (on or after the Effective Date)

determines that such listing is not in the best interests of the

Company, (ii) the holders of 73%, on a pro forma basis, of the New

Hexion Common Shares (without giving effect to the Agreed

Dilution), determine otherwise3 or (iii) such covenant shall cause a

potential termination event under the RSA to be reasonably likely to

occur.

Registration Rights Registration rights (including piggyback registration rights) will be

provided to the Equity Backstop Parties to the extent they receive

any “restricted” or “control” New Hexion Common Shares (but shall

be provided with respect to all New Hexion Common Shares such

Equity Backstop Parties receive) under the Securities Act, on terms

(including time periods, “cut back” provisions, lockup agreements)

and conditions determined as set forth in the Equity Backstop

Agreement.

Cancellation of Notes,

Instruments,

Certificates, and Other

Documents

On the Effective Date, except to the extent otherwise provided in the

Plan, all notes, instruments, certificates, and other documents

evidencing Claims or Interests, including credit agreements and

indentures, shall be canceled and the obligations of the Debtors

thereunder or in any way related thereto shall be deemed satisfied in

full and discharged.

Issuance of New

Securities; Execution

of the Plan

Restructuring

Documents

On the Effective Date, the Debtors or Reorganized Debtors, as

applicable, shall issue all securities, notes, instruments, certificates,

and other documents required to be issued pursuant to the

Restructuring.

3 Mechanic for determination to be discussed.


11

Fees and Expenses The Debtors shall pay (a) the reasonable and documented fees and

expenses of all of the First Lien Advisors, the 1.5 Lien Advisors, and

the Crossover Advisors, (b) any applicable filing or other similar fees

required to be paid by such parties in all applicable jurisdictions, in

each case, (i) subject to entry of the BCA Approval Order and the

DCA Approval Order (as applicable), and (ii) in accordance with the

terms and conditions of the existing fee letters between the Debtors

and the applicable advisors and the BCA Approval Order and DCA

Approval Order (as applicable), and (c) the reasonable and

documented fees and expenses, including the fees and expenses of

one counsel and one local counsel each, of (w) the trustee under the

1L Notes Indentures, (x) the trustee under the 1.5L Notes Indenture,

and (y) the trustee under the 2L Notes Indenture or (z) the trustee

under the Unsecured Notes Indenture.

Retention of

Jurisdiction

The Plan will provide for the retention of jurisdiction by the

Bankruptcy Court for usual and customary matters.

Releases The exculpation provisions, Debtor releases, and third-party releases

to be included in the Plan will be consistent with Exhibit 1 attached

hereto in all material respects, to the fullest extent permissible under

applicable law.

Consent Rights All consent rights not otherwise set forth herein shall be set forth in

the Restructuring Support Agreement.

Conditions Precedent

to the Effective Date

The Plan shall contain customary conditions precedent to occurrence

of the Effective Date, including the following:

1) the Equity Backstop Agreement and the Debt Backstop

Agreement shall remain in full force and effect and shall not

have been terminated, and the parties thereto shall be in

compliance therewith;

2) the Bankruptcy Court shall have entered the DCA Approval

Order and the BCA Approval Order;

3) the Restructuring Support Agreement shall remain in full

force and effect and shall not have been terminated, and the

parties thereto shall be in compliance therewith;

4) all conditions precedent to the effectiveness of the Exit

Facility and the Exit ABL Facility shall have been satisfied

or duly waived;

5) the Bankruptcy Court shall have entered the Confirmation

Order in form and substance consistent with the

Restructuring Support Agreement and such order shall be a

final order;

6) the Debtors shall have obtained all authorizations, consents,

regulatory approvals, rulings, or documents that are


12

necessary to implement and effectuate the Plan and each of

the other transactions contemplated by the Restructuring;

7) the final version of the Plan, Plan Supplement, and all of the

schedules, documents, and exhibits contained therein, and all

other schedules, documents, supplements, and exhibits to the

Plan, shall be consistent with the Restructuring Support

Agreement;

8) the Consenting Sponsors, on behalf of them and their

affiliates, shall have permanently waived any and all

management, monitoring or like fees or expenses owed by

any Company entity and any agreements providing for the

same shall have been terminated with no liability of the

Company other than in connection with the Consenting

Sponsor Claim Settlement; provided, however, that the

foregoing shall not limit, reduce, modify or impair the

Debtors’ or the Reorganized Debtors’ indemnification

obligations of the Consenting Sponsors and their affiliates,

which shall be assumed and unimpaired;

9) all fees, expenses, and other amounts payable to the

Consenting Noteholders pursuant to the Restructuring

Support Agreement, the Equity Backstop Agreement , and the

Debt Backstop Agreement, shall have been paid in full; and

10) the Restructuring to be implemented on the Effective Date

shall be consistent with the Plan and the Restructuring

Support Agreement.


13

ANNEX 1

DEFINITIONS

1L Notes Claims Any claim arising under, derived from, or based on the 1L Notes

Indentures.

1L Notes Indentures Those certain: (i) Indenture, dated as of March 14, 2012, among

Hexion Inc., as Issuer, the Guarantors party thereto, and Wilmington

Trust, National Association, as trustee, pursuant to which Hexion

Inc. issued 6.625% First-Priority Senior Secured Notes due 2020;

(ii) Indenture, dated as of April 15, 2015, among Hexion Inc., as

Issuer, the Guarantors party thereto, and Wilmington Trust, National

Association, as trustee, pursuant to which Hexion Inc. issued

10.00% First-Priority Senior Secured Notes due 2020; and

(iii) Indenture, dated as of February 8, 2017, among Hexion Inc., as

Issuer, the Guarantors party thereto, and Wilmington Trust, National

Association, as trustee, pursuant to which Hexion Inc. issued

10.375% First-Priority Senior Secured Notes due 2022.

1.5L Advisors Means (i) Jones Day, as counsel; (ii) Young Conaway Stargatt &

Taylor LLP, as local counsel; and (iii) Perella Weinberg Partners, as

financial advisor.

1.5L Notes Claims Any claim arising under, derived from, or based on the 1.5L Notes

Indenture.

1.5L Notes Indenture That certain Indenture, dated as of February 8, 2017, among Hexion

Inc., as Issuer, the Guarantors party thereto, and Wilmington Trust,

National Association, as trustee, pursuant to which Hexion Inc.

issued 13.75% Senior Secured Notes due 2022.

2L Notes Claims Any claim arising under, derived from, or based on the 2L Notes

Indenture.

2L Notes Indenture That certain Indenture, dated as of November 5, 2010, among

Hexion Inc. and Hexion Nova Scotia Finance, ULC as Issuers, the

Guarantors party thereto, and Wilmington Trust Company, as

trustee, pursuant to which Hexion Inc. issued 9.00% Second-

Priority Senior Secured Notes due 2020.

ABL Agent JPMorgan Chase Bank, N.A., as administrative agent under the

ABL Agreement.

ABL Agreement That certain Amended and Restated Asset-Based Revolving Credit

Agreement, dated as of December 21, 2016, as amended, restated,

supplemented or otherwise modified from time to time, by and


14

among Hexion Inc., as U.S. borrower, certain subsidiaries of Hexion

Inc. from time to time party thereto, as co-borrowers, the lenders

party thereto from time to time, the ABL Agent, and the other parties

thereto.

Administrative Claim A Claim incurred by the Debtors on or after the Petition Date and

before the Effective Date for a cost or expense of administration of

the Chapter 11 Cases entitled to priority under sections 503(b),

507(a)(2), or 507(b) of the Bankruptcy Code.

Affiliate With respect to any Person, all Persons that would fall within the

definition assigned to such term in section 101(2) of the Bankruptcy

Code, if such Person was a debtor in a case under the Bankruptcy

Code.

Avoidance Actions Means any and all avoidance, recovery, subordination, or other

claims, actions, or remedies that may be brought by or on behalf of

the Debtors or their Estates or other authorized parties in interest

under the Bankruptcy Code or applicable non-bankruptcy law,

including actions or remedies under sections 502, 510, 542, 544,

545, and 547 through and including 553 of the Bankruptcy Code.

Bankruptcy Rules Means the Federal Rules of Bankruptcy Procedure as promulgated

by the United States Supreme Court under section 2075 of title 28

of the United States Code, 28 U.S.C. § 2075, as applicable to the

Chapter 11 Cases and the general, local, and chambers rules of the

Bankruptcy Court.

Causes of Action Means any and all claims, actions, causes of action, choses in action,

suits, debts, damages, dues, sums of money, accounts, reckonings,

bonds, bills, specialties, covenants, contracts, controversies,

agreements, promises, variances, trespasses, judgments, remedies,

rights of set-off, third-party claims, subrogation claims, contribution

claims, reimbursement claims, indemnity claims, counterclaims,

and crossclaims (including all claims and any avoidance, recovery,

subordination, or other actions against insiders and/or any other

Entities under the Bankruptcy Code), whether known or unknown,

liquidated or unliquidated, fixed or contingent, matured or

unmatured, disputed or undisputed, that are or may be pending on

the Effective Date against any Entity, based in law or equity,

including under the Bankruptcy Code, whether direct, indirect,

derivative, or otherwise and whether asserted or unasserted as of the

date of entry of the Confirmation Order.

Claim As defined in section 101(5) of the Bankruptcy Code against a

Debtor.


15

Class Each class of Holders of Claims or Interests established under the

Plan pursuant to section 1122(a) of the Bankruptcy Code.

Confirmation Entry of the Confirmation Order on the docket of the Chapter 11

Cases, subject to the conditions set forth in the Plan.

Confirmation Order The order of the Bankruptcy Court confirming the Plan pursuant to

section 1129 of the Bankruptcy Code.

Consenting Noteholders The Holders of 1L Notes Claims, 1.5L Notes Claims, 2L Notes

Claims, and/or Unsecured Notes Claims who agree to support the

Restructuring set forth in this Term Sheet and are parties to the

Restructuring Support Agreement.

Consenting Sponsors AIF Hexion Holdings, LP, AP Momentive Holdings, LLC, AIF

Hexion Holdings II, L.P., and Apollo Investment Fund VI, L.P., in

their respective capacities as holders of outstanding common equity

of Hexion Holdings LLC.

Consummation Means the occurrence of the Effective Date.

Crossover Advisors (i) Milbank LLP, as co-counsel, (ii) Morris, Nichols, Arsht and

Tunnel LLP, as co-counsel, and (iii) Houlihan Lokey Capital, Inc.,

as financial advisor.

Debt Backstop

Agreement

That certain Debt Backstop Agreement, to be executed among the

Debtors and the Debt Backstop Parties (including all exhibits,

schedules, attachments and/or addendum thereto), pursuant to

which the Debt Backstop Parties will agree to backstop the Exit

Facility.

Debt Backstop

Percentage

With respect to any Debt Backstop Party, such Debt Backstop

Party’s percentage of the Debt Backstop Obligations as set forth

opposite such Debt Backstop Party’s name under the column titled

“Debt Backstop Percentage” on the Debt Backstop Allocation

Schedule; provided, that nothing herein shall prohibit the

consensual reallocation of such obligations among the Debt

Backstop Parties.

DIP Agent Means the administrative agent(s) under the DIP Facility, solely in

its capacity as such.


16

DIP Credit Agreement Means that certain senior secured debtor-in-possession credit

agreement, dated as of April 1, 2019, as amended, restated,

modified, supplemented, or replaced from time to time in

accordance with its terms, by and among the Debtors, the DIP

Lenders, and the DIP Agent.

DIP Facility Means (i) a debtor-in-possession term loan financing facility in the

amount of $350 million to be provided by certain lenders, with

JPMorgan Chase Bank, N.A., as administrative and collateral agent,

and (ii) a debtor-in-possession ABL facility in the amount of $350

million to be provided by certain lenders, with JPMorgan Chase

Bank, N.A. as administrative and collateral agent. The proceeds of

the DIP Facility shall be used for general corporate purposes and to

provide adequate protection payments to Holders of 1L Notes

Claims on the terms agreed in the orders approving the DIP Facility.

DIP Facility Claims Any claim arising under, derived from, or based on the DIP Facility.

DIP Lenders Means each of the lenders and their Affiliates under the DIP Facility,

solely in their capacities as such.

Disclosure Statement The disclosure statement in respect of the Plan.

Disclosure Statement

Order

The order entered by the Bankruptcy Court approving the

Disclosure Statement and Solicitation Materials as containing,

among other things, “adequate information” as required by

section 1125 of the Bankruptcy Code.

Effective Date The first date upon which all of the conditions precedent to the

effectiveness of the Plan have been satisfied or waived in

accordance with the terms of the Plan.

Entity As defined in section 101(15) of the Bankruptcy Code.

Equity Backstop

Agreement

That certain Equity Backstop Agreement, to be executed among the

Debtors and the Equity Backstop Parties (including all exhibits,

schedules, attachments and/or addendum thereto), pursuant to

which the Equity Backstop Parties will agree to backstop the Rights

Offering on the terms set forth in this Term Sheet.

Equity Backstop

Percentage

With respect to any Equity Backstop Party, such Equity Backstop

Party’s percentage of the Equity Backstop Obligations as set forth

opposite such Equity Backstop Party’s name under the column titled

“Equity Backstop Percentage” on the Equity Backstop Allocation

Schedule; provided, that nothing herein shall prohibit the

consensual reallocation of such obligations among the Equity


17

Backstop Parties.

Estate As to each Debtor, the estate created for the Debtor in its Chapter 11

Case pursuant to section 541 of the Bankruptcy Code.

Exculpated Parties Collectively, and in each case in its capacity as such: (a) the

Debtors; (b) the Reorganized Debtors; (c) the Consenting

Noteholders; (d) the Equity Backstop Parties; (e) the Debt Backstop

Parties; (f) the DIP Lenders; (g) the DIP Agent; (h) the Consenting

Sponsors; and (i) with respect to each of the foregoing Entities in

clauses (a) through (h), each such Entities’ predecessors, successors

and assigns, subsidiaries, Affiliates, managed accounts or funds,

current and former officers, directors, managers, principals,

shareholders, members, partners, employees, agents, advisory board

members, financial advisors, attorneys, accountants, investment

bankers, consultants, representatives, management companies, fund

advisors and other professionals, and such Entities’ respective heirs,

executors, Estate, servants, and nominees.

Existing Equity

Interests

Shares of common stock in Hexion Holdings LLC, as well as

Claims subject to subordination under section 510(b) of the

Bankruptcy Code.

Exit ABL Agreement That certain asset-based revolving credit agreement, which shall be

on terms substantially consistent with those of the ABL Agreement.

Exit ABL Facility A new asset-backed facility governed by the Exit ABL Agreement.

Final Order An order entered by the Bankruptcy Court or other court of

competent jurisdiction: (a) that has not been reversed, stayed,

modified, amended, or revoked, and as to which (i) any right to

appeal or seek leave to appeal, certiorari, review, reargument, stay,

or rehearing has been waived or (ii) the time to appeal or seek leave

to appeal, certiorari, review, reargument, stay, or rehearing has

expired and no appeal, motion for leave to appeal, or petition for

certiorari, review, reargument, stay, or rehearing is pending or (b) as

to which an appeal has been taken, a motion for leave to appeal, or

petition for certiorari, review, reargument, stay, or rehearing has

been filed and (i) such appeal, motion for leave to appeal or petition

for certiorari, review, reargument, stay, or rehearing has been

resolved by the highest court to which the order or judgment was

appealed or from which leave to appeal, certiorari, review,

reargument, stay, or rehearing was sought and (ii) the time to appeal

(in the event leave is granted) further or seek leave to appeal,

certiorari, further review, reargument, stay, or rehearing has expired

and no such appeal, motion for leave to appeal, or petition for

certiorari, further review, reargument, stay, or rehearing is pending.


18

First Lien Advisors (i) Akin Gump Strauss Hauer & Feld, LLP as counsel; (ii) Ashby &

Geddes, as local counsel; and (iii) Evercore Group, L.L.C., as

financial advisor.

General Unsecured

Claim

Any Claim, other than an ABL Claim, a 1L Notes Claim, a

1.5L Notes Claim, a 2L Notes Claim, an Administrative Claim, a

Professional Fee Claim, a Secured Tax Claim, an Other Secured

Claim, a Priority Tax Claim, a Litigation Claim, an Intercompany

Claim, any Claim subject to subordination under section 510(b) of

the Bankruptcy Code, or an Other Priority Claim.

Holder An Entity holding a Claim or Interest, as applicable.

Impaired With respect to any Class of Claims or Interests, a Class of Claims

or Interests that is impaired within the meaning of section 1124 of

the Bankruptcy Code.

Intercompany Claim A prepetition Claim held by a Debtor against a Debtor.

Intercompany Interest An Interest in any Debtor other than Hexion Holdings LLC.

Interest Any equity security (as defined in section 101(16) of the

Bankruptcy Code) in any Debtor.

Junior Notes Claims All 1.5L Notes Claims, 2L Notes Claims, and Unsecured Notes

Claims.

New Hexion Common

Shares

Common equity interests in Reorganized Hexion.

Notes Claims Any Claim that is a 1L Notes Claim, 1.5L Notes Claims, 2L Notes

Claim, or Unsecured Notes Claim.

Other Priority Claim Any Claim, other than an Administrative Claim or a Priority Tax

Claim, entitled to priority in right of payment under section 507(a)

of the Bankruptcy Code.

Other Secured Claim Any Secured Claim against any of the Debtors, other than an ABL

Claim, a 1L Notes Secured Claim, a 1.5L Notes Secured Claim, or

a 2L Notes Secured Claim.

Person An individual, corporation, partnership, limited liability company,

joint venture, trust, estate, unincorporated association,

governmental entity, or political subdivision thereof, or any other

entity.

Petition Date The date on which the Debtors commence the Chapter 11 Cases.


19

Plan Supplement All documents that are contained in any supplements filed in

connection with the Plan.

Priority Tax Claims Claims of governmental units of the type described in

section 507(a)(8) of the Bankruptcy Code.

Professional An entity employed pursuant to a Bankruptcy Court order in

accordance with sections 327 or 1103 of the Bankruptcy Code and

to be compensated for services rendered before or on the date of

Confirmation, pursuant to sections 327, 328, 329, 330, or 331 of the

Bankruptcy Code.

Professional Fee Claims All Administrative Claims for the compensation of Professionals

and the reimbursement of expenses incurred by such Professionals

through and including the Effective Date to the extent such fees and

expenses have not been previously paid.

Put Option On and subject to the terms and conditions of the Equity Backstop

Agreement, including entry of the BCA Approval Order, each

Equity Backstop Party shall grant to Hexion Inc. an option to require

such Equity Backstop Party to purchase unsubscribed shares in the

Rights Offering subject to the terms and conditions of the Equity

Backstop Agreement. Upon the exercise of the Put Option, each

Equity Backstop Party agrees, severally and not jointly, to purchase,

and Hexion Inc. agrees to sell to such Equity Backstop Party at a

price equal to the Rights Offering Purchase Price, the number of

unsubscribed shares equal to (a) such Equity Backstop Party’s

Equity Backstop Percentage multiplied by (b) the aggregate number

of unsubscribed shares, rounded among the Equity Backstop Parties

solely to avoid fractional shares as the Equity Backstop Parties may

reasonably determine. The obligations of the Equity Backstop

Parties as set forth above shall be referred to as the “Equity

Backstop Obligations.”

Reinstated With respect to Claims and Interests, that the Claim or Interest shall

be rendered Unimpaired in accordance with section 1124 of the

Bankruptcy Code.

Released Parties Collectively, and in each case in its capacity as such: (a) the


Noteholders; (d) the Equity Backstop Parties; (e) the Debt Backstop

Parties; (f) the DIP Lenders; (g) the DIP Agent; (h) the Consenting

Sponsors; and (i) with respect to each of the foregoing Entities in

clauses (a) through (h), each such Entities’ predecessors, successors




20





executors, Estate, servants, and nominees; provided, that, with

respect to the Equity Backstop Parties, the Debt Backstop Parties,

and the Consenting Noteholders, the entities listed in clause “m”

shall only be Releasing Parties to the extent such entities are

managed or controlled by such Equity Backstop Parties, Debt

Backstop Parties, or Consenting Noteholders.

Releasing Parties Collectively, and in each case in its capacity as such: (a) the


Noteholders; (d) the Equity Backstop Parties; (e) the Debt

Backstop Parties; (f) the DIP Lenders; (g) the DIP Agent; (h) the

Consenting Sponsors; (i) each Holder of a Claim or Interest who

votes to accept the Plan; (j) each Holder of a Claim or Interest who

is Unimpaired; (k) each Holder of a Claim or Interest who abstains

from voting; (l) each Holder of a Claim or Interest who votes to

reject the Plan but does not opt out of the releases provided in the

Plan; and (m) with respect to each of the foregoing Entities in

clauses (a) through (l), each such Entities’ predecessors, successors







executors, Estate, servants, and nominees; provided, that, with

respect to the Equity Backstop Parties, the Debt Backstop Parties,

and the Consenting Noteholders, the entities listed in clause “m”

shall only be Releasing Parties to the extent such entities are

managed or controlled by such Equity Backstop Parties, Debt

Backstop Parties, or Consenting Noteholders.

Reorganized Debtors The Debtors, as reorganized pursuant to and under the Plan or any

successor thereto.

Reorganized Hexion Hexion LLC, as reorganized pursuant to and under the Plan or any

successor thereto, or such other entity type as determined by the

Debtors and the Required Consenting Creditors.

Reorganized Hexion

Board

The initial board of directors of Reorganized Hexion.

Rights The rights to participate in the Rights Offerings on the terms set


21

forth in the rights offering procedures.

Secured When referring to a Claim: (a) secured by a lien on property in

which any of Debtors has an interest, which lien is valid, perfected,

and enforceable pursuant to applicable law or by reason of a

Bankruptcy Court order, or that is subject to setoff pursuant to

section 553 of the Bankruptcy Code, to the extent of the value of the

creditor’s interest in the Debtors’ interest in such property or to the

extent of the amount subject to setoff, as applicable, as determined

pursuant to section 506(a) of the Bankruptcy Code; or (b) allowed

pursuant to the Plan, or separate order of the Bankruptcy Court, as

a secured claim.

Settlement Note The $2.5 million senior unsecured note issued by Reorganized

Hexion on the Effective Date, which shall (i) mature on March 31,

2020, (ii) be payable upon any public offering or listing of New

Hexion Common Shares (or any other equity interests of the

Reorganized Debtors) on The Nasdaq Global Select Market, The

New York Stock Exchange, or any successor national securities

exchanges, on or after the Effective Date, (iii) be freely transferrable

by the holder, and (iv) contain other terms and conditions

reasonably acceptable to the Required Consenting Parties.

Solicitation Materials The solicitation materials in respect of the Plan.

Unimpaired With respect to a Class of Claims or Interests, a Class of Claims or

Interests that is not Impaired.

Unsecured Notes

Claims

Any claim arising under, derived from, or based on the Unsecured

Notes Indenture.

Unsecured Notes

Indenture

That certain Indenture, dated as of December 15, 1987, between

Hexion Inc. and the Bank of New York, as trustee, pursuant to which

Hexion Inc. issued 9.200% debentures due 2021 and

7.875% debentures due 2023.


22

Exhibit 1 to Term Sheet

Release and Exculpation Provisions to be Included in the Plan


23

Releases by the Debtors

Notwithstanding anything contained in the Plan to the contrary, pursuant to section 1123(b) of the

Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each

Released Party is deemed released and discharged by the Debtors, the Reorganized Debtors, and

their Estates from any and all Claims and Causes of Action, whether known or unknown, including

any derivative claims, asserted on behalf of the Debtors, that the Debtors, the Reorganized Debtors,

or their Estates would have been legally entitled to assert in their own right (whether individually

or collectively) or on behalf of the holder of any Claim or Interest, based on or relating to, or in

any manner arising from, in whole or in part, the Debtors (including the management, ownership

or operation thereof), the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions

(but excluding Avoidance Action brought as counterclaims or defenses to Claims asserted against

the Debtors), the formulation, preparation, dissemination, negotiation, or filing of the

Restructuring Support Agreement, or any transaction contemplated by the Restructuring, or any

contract, instrument, release, or other agreement or document (including providing any legal

opinion requested by any Entity regarding any transaction, contract, instrument, document, or

other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or the

Confirmation Order in lieu of such legal opinion) created or entered into in connection with the

Restructuring Support Agreement, the Disclosure Statement, the Plan, the Plan Supplement, the

Rights Offering, the DIP Facility, the DIP Credit Agreement, the Debt Backstop Agreement, the

Equity Backstop Agreement, the Exit Facility, the Exit ABL Facility, the Chapter 11 Cases, the

filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the

administration and implementation of the Plan, including the issuance or distribution of securities

pursuant to the Plan, or the distribution of property under the Plan, or upon any other act or

omission, transaction, agreement, event, or other occurrence taking place on or before the Effective

Date related or relating to the foregoing. Notwithstanding anything to the contrary in the

foregoing, the releases set forth above do not release (a) any post-Effective Date obligations of

any party or Entity under the Plan, any post-Effective Date transaction contemplated by the

Restructuring, or any document, instrument, or agreement (including those set forth in the Plan

Supplement) executed to implement the Plan or (b) any individual from any claim related to an act

or omission that is determined in a Final Order by a court competent jurisdiction to have constituted

actual fraud or willful misconduct.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to

Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related

provisions and definitions contained in the Plan, and further, shall constitute the Bankruptcy

Court’s finding that the Debtor Release is: (1) in exchange for the good and valuable consideration

provided by the Released Parties; (2) a good faith settlement and compromise of the Claims

released by the Debtor Release; (3) in the best interests of the Debtors and all Holders of Claims

and Interests; (4) fair, equitable, and reasonable; (5) given and made after due notice and

opportunity for hearing; and (6) a bar to any of the Debtors, the Reorganized Debtors, or the

Debtors’ Estates asserting any Claim or Cause of Action released pursuant to the Debtor Release.


24

Releases by Holders of Claims and Interests

Notwithstanding anything contained in the Plan to the contrary, as of the Effective Date, each

Releasing Party is deemed to have released and discharged each Debtor, Reorganized Debtor, and

Released Party from any and all Claims and Causes of Action, whether known or unknown,

including any derivative claims, asserted on behalf of the Debtors, that such Entity would have

been legally entitled to assert (whether individually or collectively), based on or relating to, or in

any manner arising from, in whole or in part, the Debtors (including the management, ownership,

or operation thereof), the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions,

the formulation, preparation, dissemination, negotiation, or filing of the Restructuring Support

Agreement, or any transaction contemplated by Restructuring, or any contract, instrument, release,

or other agreement or document (including providing any legal opinion requested by any Entity

regarding any transaction, contract, instrument, document, or other agreement contemplated by the

Plan or the reliance by any Released Party on the Plan or the Confirmation Order in lieu of such

legal opinion) created or entered into in connection with the Restructuring Support Agreement, the

Disclosure Statement, the Plan, the Plan Supplement, the Rights Offering, the DIP Facility, the

Debt Backstop Agreement, the Equity Backstop Agreement, the Exit Facility, the Exit ABL

Facility, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the

pursuit of Consummation, the administration and implementation of the Plan, including the

issuance or distribution of securities pursuant to the Plan, or the distribution of property under the

Plan, or upon any other act or omission, transaction, agreement, event, or other occurrence taking

place on or before the Effective Date related or relating to the foregoing. Notwithstanding anything

to the contrary in the foregoing, the releases set forth above do not release (a) any post-Effective

Date obligations of any party or Entity under the Plan, any post-Effective Date transaction

contemplated by the Restructuring, or any document, instrument, or agreement (including those

set forth in the Plan Supplement) executed to implement the Plan or (b) any individual from any

claim related to an act or omission that is determined in a Final Order by a court competent

jurisdiction to have constituted actual fraud or willful misconduct.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to

Bankruptcy Rule 9019, of this third-party release, which includes by reference each of the related

provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s

finding that this third party release is: (1) consensual; (2) essential to the confirmation of the Plan;

(3) given in exchange for the good and valuable consideration provided by the Released Parties;

(4) a good-faith settlement and compromise of the Claims released by the third-party release; (5)

in the best interests of the Debtors and their Estates; (6) fair, equitable, and reasonable; (7) given

and made after due notice and opportunity for hearing; and (8) a bar to any of the Releasing Parties

asserting any claim or Cause of Action released pursuant to this third party release.

Exculpation

Notwithstanding anything contained herein to the contrary, no Exculpated Party shall have or incur

liability for, and each Exculpated Party is hereby released and exculpated from, any Cause of

Action for any claim related to any act or omission in connection with, relating to, or arising out

of, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the

Restructuring Support Agreement and related prepetition transactions, the Disclosure Statement,


25

the Plan, the Plan Supplement, or any transaction contemplated by Restructuring, or any contract,

instrument, release or other agreement or document (including providing any legal opinion

requested by any Entity regarding any transaction, contract, instrument, document, or other

agreement contemplated by the Plan or the reliance by any Exculpated Party on the Plan or the

Confirmation Order in lieu of such legal opinion) created or entered into in connection with the

Disclosure Statement, the Plan, the Plan Supplement, the Restructuring Support Agreement, the

Rights Offering, the DIP Facility, the DIP Credit Agreement, the Debt Backstop Agreement, the

Equity Backstop Agreement, the Exit Facility, the Exit ABL Facility, the Filing of the Chapter 11

Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and

implementation of the Plan, including the issuance of securities pursuant to the Plan, or the

distribution of property under the Plan, except for claims related to any act or omission that is

determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud

or willful misconduct, but in all respects such Entities shall be entitled to reasonably rely upon the

advice of counsel with respect to their duties and responsibilities pursuant to the Plan. The

Exculpated Parties have, and upon completion of the Plan shall be deemed to have, participated in

good faith and in compliance with the applicable laws with regard to the solicitation of, and

distribution of, consideration pursuant to the Plan and, therefore, are not, and on account of such

distributions shall not be, liable at any time for the violation of any applicable law, rule, or

regulation governing the solicitation of acceptances or rejections of the Plan or such distributions

made pursuant to the Plan.


Exhibit B

Form of Joinder Agreement

The undersigned hereby acknowledges that it has reviewed and understands the

Restructuring Support Agreement (as amended, supplemented, or otherwise modified from time

to time in accordance with the terms thereof, the “Agreement”) dated as of April 1, 2019 by and

among (i) Hexion Holdings LLC (“Hexion”), Hexion LLC, Hexion Inc., Borden Holdings, LLC,

Lawter International Inc., Hexion CI Holding Company (China) LLC, Hexion Nimbus Inc.,

Hexion Nimbus Asset Holdings LLC, Hexion Deer Park LLC, Hexion VAD LLC, Hexion 2 U.S.

Finance Corp., Hexion HSM Holdings LLC, Hexion Investments Inc., Hexion International Inc.,

North American Sugar Industries Incorporated, Cuban-American Mercantile Corporation, The

West India Company, NL Coop Holdings LLC, and Hexion Nova Scotia Finance ULC, (each,

together with Hexion, a “Company Entity,” and collectively, and together with Hexion, the

“Company”), (ii) certain beneficial holders (or investment managers, advisors, or subadvisors to

certain beneficial holders) of those certain 1L Notes, 1.5L Notes, 2L Notes and Unsecured Notes

(collectively, the “Consenting Creditors”), and (iii) certain holders of common equity of Hexion

(the “Consenting Sponsors,” and, collectively with the Consenting Creditors, the “Consenting

Parties”) and agrees to be bound as a Consenting Party by the terms and conditions thereof binding

on the Consenting Parties with respect to all Claims/Interests held by the undersigned.1

The undersigned hereby makes the representations and warranties of the Consenting Parties

set forth in the Agreement to each other Party, effective as of the date hereof.

This joinder agreement shall be governed by the governing law set forth in the Agreement.

Date: _________________, 2019

[CONSENTING PARTY]

By:_________________________________

Name:

Title:

Address:

Claims/Interests under the [________]: $ _________

Other Claims/Interests: $ _________

1 Defined terms used but not otherwise defined herein shall have the meanings ascribed to them in the Agreement.


EXHIBIT C


RLF1 21297443v.1

HEXION RIGHTS OFFERING PROCEDURES

Pursuant to the Second Amended Joint Chapter 11 Plan of Reorganization of Hexion Holdings LLC and Its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code (as such plan of reorganization may be amended or modified from time to time, the “Plan”) of the Hexion Holdings LLC and its affiliated debtors (the “Debtors”), each Holder of an Allowed Notes Claim1 is being granted a subscription right (each, a “Right”) to purchase shares or membership interests, as applicable, of New Common Equity (the “Offered Shares”) of Hexion LLC or such other entity that issues the New Common Equity pursuant to the Plan (the “Company”), as more fully described in these Rights Offering Procedures. The Allowed Notes Claims are claims arising under or based upon the First Lien Notes, the 1.5 Lien Notes, the Second Lien Notes, the Borden 2021 Debentures, or the Borden 2023 Debentures (collectively, the “Notes”).

The offering of the Offered Shares is referred to as the “Rights Offering.”

The Offered Shares are being distributed and issued by the Debtors without registration under the Securities Act of 1933, as amended (the “Securities Act”), or any state or local law requiring registration for offer and sale of a security, in reliance upon the exemption provided in section 1145 of the Bankruptcy Code.

None of the Rights distributed in connection with these Rights Offering Procedures have been or will be registered under the Securities Act, nor any state or local law requiring registration for offer and sale of a security. To exercise the Rights, the Holder of the underlying Notes must electronically deliver such Notes into an account maintained by the Subscription Agent for the Rights Offering through the Automated Tender Offer Program (“ATOP”) of the Depository Trust Company (“DTC”), so that they are received by the Subscription Expiration Deadline. The Rights will not be detachable or otherwise transferable separately from the underlying Notes. Rather, the Rights, together with the underlying Notes with respect to which such Rights were allocated, will trade together and will be evidenced by the underlying Notes until the Subscription Expiration Deadline (as defined below), subject to such limitations, if any, that would be applicable to the transferability of the underlying Notes; provided, that following the exercise of any Rights, the Holder thereof shall be prohibited from selling, transferring, assigning, pledging, hypothecating, participating, donating or otherwise encumbering or disposing of, directly or indirectly (including through derivatives, options, swaps, forward sales or other transactions in which any person receives the right to own or acquire any current or future interest in the Rights, the Allowed Notes Claims, the Offered Shares, or the New Common Equity) (each of the above, a “Transfer”) the Notes corresponding to such Rights until the termination of the Rights Offering.

Pursuant to the Equity Backstop Agreement, the Company and certain Commitment Parties (as defined in the Equity Backstop Agreement) will enter into the Registration Rights Agreement pursuant to which, among other things, the Company has agreed to prepare a prospectus to be included in a registration statement to be filed by the Company with the SEC covering the Offered Shares of those Commitment Parties. There is no

1 Capitalized terms used but not defined herein shall have the meanings assigned to them in the Plan.


2 RLF1 21297443v.1

certainty that such registration statement will be filed or will be declared effective by the SEC at the time the Offered Shares are issued or at all.

Any Holder that subscribes for Offered Shares and is deemed to be an “underwriter” under section 1145(b) of the Bankruptcy Code will be subject to restrictions under the Securities Act on its ability to resell those securities. Resale restrictions are discussed in more detail in Section XI.B of the Disclosure Statement, entitled “Issuance & Transfer of 1145 Securities.”

The Rights Offering is being conducted by the Company in good faith and in compliance with the Bankruptcy Code. In accordance with section 1125(e) of the Bankruptcy Code, a debtor or any of its agents that participate, in good faith and in compliance with the applicable provisions of the Bankruptcy Code, in the offer, issuance, sale, or purchase of a security, offered or sold under the plan of the debtor, of an affiliate participating in a joint plan with the debtor, or of a newly organized debtor under the plan, is not liable, on account of such participation, for violation of any applicable law, rule, or regulation governing the offer, issuance, sale or purchase of securities.

Noteholders and Nominees of Noteholders (each as defined below) should note the following dates and times relating to the Rights Offering:

Date Calendar Date Event Subscription Commencement Date.........................................

Wednesday, May 22, 2019

Commencement of the Rights Offering.

Subscription Expiration Deadline..................................

5:00 p.m. (Prevailing Eastern Time) on Friday, June 14, 2019

The deadline for Noteholders to subscribe for Offered Shares. A Noteholder’s duly completed and executed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be returned to (a) its securities nominee (the “Nominee”) (as directed by its Nominee), or (b) Prime Clerk LLC (the “Subscription Agent”) if a Noteholder does not hold Notes through a Nominee (a “Registered Holder”) or is otherwise directed to do so by its Nominee, in either case so that such documents are actually received by the Subscription Agent on or before the Subscription Expiration Deadline. The Noteholder (excluding Registered Holders) must instruct its Nominee to electronically deliver, their applicable underlying Notes to the Subscription Agent via ATOP, so that such underlying Notes are actually received by the Subscription Agent on or before the Subscription Expiration Deadline. Registered Holders that participate in the Rights Offering shall be prohibited from transferring the underlying Notes, and the applicable indenture trustee shall be prohibited from effectuating any such requested transfers. Similarly, Notes delivered to the Subscription Agent via ATOP may not thereafter be transferred. Noteholders who are not Equity Backstop Parties must deliver the Purchase Price (as defined below) by the Subscription Expiration Deadline. Noteholders who are Equity Backstop Parties must deliver the Purchase Price no later than the Backstop Funding Deadline (as defined below).


3 RLF1 21297443v.1

To Noteholders and Nominees of Noteholders:

On May 21, 2019, the Debtors filed the Plan, and the Disclosure Statement for Second Amended Joint Chapter 11 Plan of Reorganization of Hexion Holdings LLC and Its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code (as such disclosure statement may be amended from time to time, the “Disclosure Statement”). Pursuant to the Plan, each Holder of an Allowed Notes Claim from the Subscription Commencement Date to the Subscription Expiration Deadline (each such Holder, a “Noteholder”) has the right to participate in the Rights Offering in accordance with the terms and conditions of the Plan and these Rights Offering Procedures.

Pursuant to the Plan and these Rights Offering Procedures, each Noteholder will be allocated Rights to subscribe for its Pro Rata Share of Offered Shares, and may exercise such Rights by (x) timely and properly executing and delivering its Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable), the form of which is attached to these Rights Offering Procedures as Annex 1 (the “Beneficial Holder Subscription Form”) to the Subscription Agent (if a Registered Holder) or its Nominee (or as otherwise directed by its Nominee), and (y) funding in cash the aggregate purchase price (the “Purchase Price”) for its Subscribed Shares (as defined below) in accordance with the instructions provided herein. Please note that all Beneficial Holder Subscription Forms (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be returned prior to the Subscription Expiration Deadline to (a) the Subscription Agent if a Noteholder is a Registered Holder or is otherwise directed to do so by its Nominee or (b) the applicable Nominee in sufficient time to allow such Nominee to process and deliver copies of all Beneficial Holder Subscription Forms (with accompanying IRS Forms) to the Subscription Agent.

As part of the exercise process, following exercise of Rights, the underlying Notes held through DTC or in registered form will be frozen from trading, as described below. For Noteholders who hold notes through a Nominee, all Beneficial Holder Subscription Forms and/or other instructions required by the Nominee must be returned to the applicable Nominee in sufficient time to allow such Nominee to process and deliver the applicable underlying Notes through ATOP prior to the Subscription Expiration Deadline. By instructing its Nominee to submit the underlying Notes through ATOP, the Holder is (i) authorizing its Nominee to exercise all Rights associated with the amount of Notes as to which the instruction pertains; and (ii) certifying that it understands that, once submitted, the underlying Notes will be frozen from trading until the Effective Date or the termination of the Rights Offering. Registered Holders that participate in the Rights Offering shall be prohibited from transferring the underlying Notes, and the applicable indenture trustee shall be prohibited from effectuating any such requested transfers until the Effective Date or the termination of the Rights Offering. If the Rights Offering is not terminated, on the Effective Date (a) the underlying Notes will be cancelled pursuant to the Plan; (b) the Holder will receive its Pro Rata Share of the New Common Equity and other recoveries distributed to its applicable Class(es) pursuant to the Plan; and (c) the Holder will additionally receive any Subscribed Shares (as defined below).


4 RLF1 21297443v.1

If a Noteholder holds Notes underlying the Rights that it wishes to exercise through multiple Nominees, it must complete, execute and deliver a separate Beneficial Holder Subscription Form with respect to each such Nominee.

The amount of time necessary for a Nominee to process and deliver the applicable Notes through ATOP may vary. Holders are urged to consult with their Nominees to determine the necessary deadline to return their Beneficial Holder Subscription Forms to their Nominee (as well as any other steps required by such Nominee, which may vary from Nominee to Nominee). Failure to submit such Beneficial Holder Subscription Form (or other instructions required by the Nominee) on a timely basis will result in forfeiture of a Noteholder’s Rights. None of the Company, the Subscription Agent or any of the Equity Backstop Parties will have any liability for any such failure.

No Noteholder shall be entitled to participate in the Rights Offering unless cash in an amount equal to the Purchase Price of its Subscribed Shares, calculated in accordance with its Beneficial Holder Subscription Form, is received by the Subscription Agent (i) in the case of a Noteholder that is not an Equity Backstop Party, on or before the Subscription Expiration Deadline and (ii) in the case of a Noteholder that is an Equity Backstop Party, no later than the Backstop Funding Deadline, provided that the Equity Backstop Parties may deposit their Purchase Price in the Escrow Account (as defined in the Equity Backstop Agreement), in accordance with the terms of the Equity Backstop Agreement. No interest will be payable on any advanced funding of the Purchase Price. If the Rights Offering is terminated for any reason, the Purchase Price previously received by the Subscription Agent will be returned to the applicable Noteholders as provided in Section 7 hereof and the deposited Notes will be released by the Subscription Agent. If a Noteholder subscribed for Offered Shares pursuant to the Oversubscription Procedures (as defined below), and its oversubscription is not honored in whole or in part, the Purchase Price attributable to the portion of Oversubscription Shares (as defined below) that are not issued to such Noteholder will be returned to such Noteholder as provided in Section 7 hereof. No interest will be paid on any advanced funding of the Purchase Price or on any returned Purchase Price.

Before electing to participate in the Rights Offering, all Noteholders should review the Disclosure Statement (including the risk factors described in the section entitled “Factors to Consider Before Voting”) and the Plan, and, in each case, any amendments, supplements or other modifications thereto, in addition to these Rights Offering Procedures and the instructions contained in the Beneficial Holder Subscription Form. A copy of the Disclosure Statement is available from the Subscription Agent and on the Debtors’ restructuring website at http://www.omnimgt.com/HexionRestructuring.

In order to participate in the Rights Offering, you must complete all the steps outlined below. If all of the steps outlined below are not completed by the Subscription Expiration Deadline, you shall be deemed to have forever and irrevocably relinquished and waived your right to participate in the Rights Offering.

1. Participation in the Rights Offering

Noteholders have the right, but not the obligation, to participate in the Rights Offering.


5 RLF1 21297443v.1

Subject to the terms and conditions set forth in the Plan and these Rights Offering Procedures, each Noteholder is entitled to subscribe for up to its Pro Rata Share of Offered Shares at the Purchase Price.

In addition, in accordance with the Oversubscription Procedures, each Noteholder that duly subscribes and pays for all of its Pro Rata Share of Offered Shares (as calculated based on the applicable Notes electronically delivered via ATOP) has the right, but not the obligation, to duly subscribe for Oversubscription Shares.

Any Noteholder that subscribes for Offered Shares and is deemed to be an “underwriter” for purposes of section 1145(b) of the Bankruptcy Code shall receive restricted securities under the Securities Act to be held on the register at the transfer agent that are not freely transferable under applicable securities laws, and will bear a legend indicating that the securities may not be sold or otherwise transferred unless such securities are registered with the SEC pursuant to the Securities Act and comply with any applicable state or local law requiring registration of securities, or such sale or transfer is exempt from registration requirements of the Securities Act and any applicable state or local law.

SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN AND THESE RIGHTS OFFERING PROCEDURES, ALL SUBSCRIPTIONS SET FORTH IN THE BENEFICIAL HOLDER SUBSCRIPTION FORM ARE IRREVOCABLE.

2. Oversubscription Procedures

If any Offered Shares remain available for subscription after giving effect to the aggregate number of Offered Shares duly subscribed for and purchased by the Noteholders (such number of remaining Offered Shares, the “Oversubscription Shares”), the Subscription Agent (in consultation with and at the direction of the Company’s advisors) shall employ the oversubscription procedures described below (the “Oversubscription Procedures”).

If any Oversubscription Shares are available, each Noteholder that has duly subscribed for and purchased one hundred percent (100%) of its Pro Rata Share of Offered Shares (each Noteholder duly electing to subscribe for the Oversubscription Shares, an “Oversubscription Participant”) also may elect to subscribe for and purchase that number of Oversubscription Shares up to one hundred percent (100%) of its Pro Rata Share of Offered Shares; provided, however, that if the number of Oversubscription Shares is less than the number of Offered Shares for which Oversubscription Participants have duly subscribed pursuant to the Oversubscription Procedures (the “Elected Oversubscription Shares”), then the Elected Oversubscription Shares shall be reduced pro rata based on each Oversubscription Participant’s subscription amount pursuant to the Oversubscription Procedures (and irrespective of the allocation of Rights under the Plan) in order to equal the Oversubscription Shares. The Purchase Price paid for Oversubscription Shares that are subscribed for but not issued to an Oversubscription Participant will be returned to the Oversubscription Participant without interest as provided in Section 7 hereof.

Oversubscription Participants must indicate on their Beneficial Holder Subscription Form the number of Oversubscription Shares for which they wish to subscribe, and must fund the


6 RLF1 21297443v.1

Purchase Price for such Oversubscription Shares in accordance with the instructions provided herein.

3. Subscription Period

The Rights Offering will commence on the Subscription Commencement Date and will expire on the Subscription Expiration Deadline. Each Noteholder intending to purchase Offered Shares in the Rights Offering must affirmatively elect to exercise its Rights in the manner set forth in the Rights Offering Instructions (consistent herewith, including as described in Section 5 hereof) on or prior to the Subscription Expiration Deadline and must pay for any exercised Rights by the applicable deadline.

Any exercise (including payment by any Noteholder that is not an Equity Backstop Party) of Rights after the Subscription Expiration Deadline will not be allowed and any purported exercise received by the Subscription Agent after the Subscription Expiration Deadline, regardless of when the documents or payment relating to such exercise were sent, will not be honored.

The Subscription Expiration Deadline may be extended by the Debtors with the consent of the Required Consenting Noteholders (as defined in the Plan), or as required by law. Any such extension will be followed by a public announcement thereof no later than 9:00 a.m. (Prevailing Eastern Time) on the next Business Day after the previously scheduled Subscription Expiration Deadline.

4. Delivery of the Beneficial Holder Subscription Form

Each Noteholder may exercise all or any portion of such Noteholder’s Rights, but subject to the terms and conditions of the Plan and these Rights Offering Procedures, the exercise of any Rights will be irrevocable. In order to facilitate the exercise of the Rights, beginning on the Subscription Commencement Date, the Subscription Agent will furnish, or cause to be furnished, to each Noteholder or its Nominee, as applicable, the Beneficial Holder Subscription Form, together with appropriate instructions for the proper completion and due execution by, and timely delivery by or on behalf of, the Noteholder of the Beneficial Holder Subscription Form and the payment of the Purchase Price for that number of Offered Shares set forth in Items 2 and 3 of such Noteholder’s Beneficial Holder Subscription Form (including any Oversubscription Shares, the “Subscribed Shares”). To effectuate delivery of the aforementioned documents, the Subscription Agent is authorized to rely on (i) information or registers provided by the applicable indenture trustees of the Notes and (ii) securities position reports requested and obtained from DTC for purposes of distribution. In addition, appropriate service of the aforementioned documents will be deemed completed by the Subscription Agent upon delivery of such documents to DTC and the applicable Nominees (or such Nominees’ agents); provided, however, that the Subscription Agent will instruct such Nominees (or their agents) to immediately distribute such documents to the underlying Noteholders in accordance with their customary procedures.


7 RLF1 21297443v.1

5. Exercise of Rights

For any Noteholder holding through a Nominee: In order to exercise a Noteholder’s Rights, such Noteholder’s Nominee must submit the relevant portion of Notes as to which the Rights pertain into the ATOP system to the account maintained by the Subscription Agent with DTC.

For any Registered Holder: By exercising a Registered Holder’s Rights, such Registered Holder’s underlying Notes will be frozen from trading on the register of the applicable indenture trustee, and the indenture trustee will be prohibited from effectuating any such requested transfer without the approval of the Subscription Agent.

(a) In order to validly exercise Rights, each Noteholder that is not an Equity Backstop Party must:

(i) instruct its Nominee(s) to electronically deliver, the Notes underlying the Rights that are being exercised through ATOP, such that they are received by the Subscription Expiration Deadline (this requirement does not apply to Registered Holders);

(ii) return a duly completed and executed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) to the Subscription Agent (if a Registered Holder) or its Nominee (or as otherwise directed by its Nominee) so that such documents are actually received by the Subscription Agent on or before the Subscription Expiration Deadline; and

(iii) no later than the Subscription Expiration Deadline, pay the Purchase Price for all Subscribed Shares, including all Oversubscription Shares, to the Subscription Agent by wire transfer of immediately available funds in accordance with the instructions included in Item 6 of the Beneficial Holder Subscription Form.

(b) In order to validly exercise Rights, each Noteholder that is an Equity Backstop Party must:

(i) instruct its Nominees to electronically deliver the Notes underlying the Rights that are being exercised through ATOP, such that they are received by the Subscription Expiration Deadline (this requirement does not apply to Registered Holders);

(ii) return a duly completed and executed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) to the Subscription Agent (if a Registered Holder) or its Nominee (or as otherwise directed by its Nominee) so that such documents are actually received by the Subscription Agent on or before the Subscription Expiration Deadline; and

(iii) no later than the deadline specified in the Funding Notice (as defined in the Equity Backstop Agreement) (such deadline, the “Backstop Funding Deadline”), pay the Purchase Price for all Subscribed Shares to the Subscription Agent or to the Escrow Account established and maintained by a third party satisfactory to the Equity Backstop Parties and the Company (the “Escrow Agent”) by wire transfer


8 RLF1 21297443v.1

of immediately available funds in accordance with the instructions included in the Funding Notice.

(c) With respect to 5(a) and 5(b) above, a Noteholder that holds Allowed Notes Claims through a Nominee must duly complete, execute and return its Beneficial Holder Subscription Form in accordance with the instructions herein directly to its Nominee (or as otherwise directed by its Nominee) in sufficient time to allow its Nominee to process its instructions and deliver to the Subscription Agent its completed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) on or before the Subscription Expiration Deadline. Noteholders that are Equity Backstop Parties must deliver their payment of the Purchase Price for their Subscribed Shares directly to the Subscription Agent or to the Escrow Account, as applicable, and in accordance with the instructions in the Funding Notice no later than Backstop Funding Deadline.

(d) Any Noteholder that is not an Equity Backstop Party and that does not hold an Allowed Notes Claim through a Nominee must deliver their completed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) and payment directly to the Subscription Agent on or before the Subscription Expiration Deadline.

(e) In the event that funds received by the Subscription Agent in payment for such Noteholder’s Subscribed Shares are less than the Purchase Price for the Subscribed Shares of such Noteholder, the number of Subscribed Shares deemed to be purchased by the Noteholder will be the lesser of (i) the number of Subscribed Shares elected to be purchased by such Noteholder as evidenced by the relevant ATOP submission(s) and (ii) a number determined by dividing the amount of such funds received by the Purchase Price, in each case up to such Noteholder’s Pro Rata Share of Offered Shares. For the avoidance of doubt, the principal amount(s) of underlying Notes held by a Noteholder that is electronically delivered through ATOP will control, regardless of the principal amount(s) reflected on the Beneficial Holder Subscription Form, for purposes of making any Rights calculations or otherwise.

(f) The payments of cash made in accordance with the Rights Offering will be deposited and held by the Subscription Agent in a segregated bank account established by the Subscription Agent for this purpose, until disbursed to the Company in connection with the settlement of the Rights Offering on the Effective Date or returned to subscribing Noteholders as provided in Section 7. The Subscription Agent may not use such funds for any other purpose prior to such Effective Date and may not encumber or permit such funds to be encumbered with any lien or similar encumbrance. Such funds held in the segregated bank account or otherwise by the Subscription Agent shall not be deemed part of the Debtors’ bankruptcy estate.


9 RLF1 21297443v.1

6. Transfer Restriction; Revocation

B. The Rights will not be detachable or otherwise transferable separately from the Notes. If any Rights are transferred by a Noteholder in contravention of the foregoing, the Rights will be cancelled, and neither such Noteholder nor the purported transferee will receive any Offered Shares otherwise purchasable on account of such transferred Rights.

C. The Rights together with the underlying Notes with respect to which such Rights were allocated, will trade together as a unit, subject to such limitations, if any, that would be applicable to the transferability of the underlying Notes.

D. Once a Noteholder has properly exercised its Rights, subject to the terms and conditions contained in these Rights Offering Procedures and the Equity Backstop Agreement in the case of any Equity Backstop Party, such exercise will be irrevocable. Moreover, following the exercise of any Rights, the Holder thereof shall be prohibited from transferring or assigning the Notes, as applicable, corresponding to such Rights until the termination of the Rights Offering.

7. Termination/Return of Payment

Unless the Effective Date has occurred, the Rights Offering will be deemed automatically terminated without any action of any party upon the earlier of (i) revocation of the Plan or rejection of the Plan by all classes entitled to vote, (ii) termination of the Restructuring Support Agreement (as defined in the Equity Backstop Agreement) in accordance with its terms, (iii) termination of the Equity Backstop Agreement in accordance with its terms, and (iv) September 5, 2019, if the closing of the Rights Offering has not occurred on or prior to that date, which may be extended by the Debtors with the consent of the Required Consenting Noteholders. If the Rights Offering is terminated, any cash paid to the Subscription Agent will be returned, without interest, and all deposited Notes shall be released by the Subscription Agent, to the applicable Noteholder as soon as reasonably practicable thereafter, but in any event within six (6) Business Days after the date on which the Rights Offering is terminated.

If the number of Oversubscription Shares issuable to the Oversubscription Participants is less than the aggregate number of Offered Shares for which Oversubscription Participants have duly subscribed, then the Purchase Price paid for Oversubscription Shares that are subscribed for but not issued will be returned, without interest, to the Oversubscription Participants as soon as reasonably practicable thereafter, but in any event within six (6) Business Days after the Effective Date.

8. Settlement of the Rights Offering and Distribution of the Subscribed Shares

The settlement of the Rights Offering is conditioned on confirmation of the Plan by the Bankruptcy Court, compliance by the Debtors with these Rights Offering Procedures, satisfaction of the conditions precedent set forth in the Equity Backstop Agreement and the simultaneous occurrence of the Effective Date. The Debtors intend that the Subscribed Shares will be issued in book-entry form in accordance with the practices and procedures of DTC, and that DTC, or its nominee, will be the holder of record of such Subscribed Shares. The Company will cause the Subscribed Shares to be credited to the accounts at DTC through which the


10 RLF1 21297443v.1

respective Noteholders or Nominees, as applicable, held the Notes underlying the applicable Allowed Notes Claims (as evidenced by the Noteholder’s ATOP submission), and, for Notes held through Nominees, the Nominees will arrange for the credit of the Subscribed Shares to the individual accounts of the applicable Noteholders. For Registered Holders, the Subscription Agent will obtain delivery instructions directly from Registered Holders that participate in the Rights Offering.

If for any reason the Subscribed Shares cannot be issued in book-entry form in accordance with the practices and procedures of DTC, the Subscribed Shares will be issued and registered in the name of the subscribing Noteholders on the books and records of the applicable transfer agent of the Subscribed Shares, subject to the terms of the Plan and applicable law, including compliance with section 1145 of the Bankruptcy Code. After the initial issuance of the Subscribed Shares, however, Noteholders may freely transfer such Subscribed Shares in accordance with the procedures of the applicable transfer agent.

9. Fractional Subscribed Shares

No fractional Rights or shares will be issued in the Rights Offering. All share allocations (including each Noteholder’s Subscribed Shares) will be calculated and rounded down to the nearest whole share. No compensation shall be paid, whether in cash or otherwise, in respect of any rounded-down amounts.

10. Validity of Exercise of Rights

All questions concerning the timeliness, viability, form, and eligibility of any exercise of Rights (including each Noteholder’s Subscribed Shares) will be determined in good faith by the Debtors in consultation with the Required Consenting Noteholders and if necessary, subject to a final and binding determination by the Bankruptcy Court. The Debtors, with the consent of the Required Consenting Noteholders, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as they may determine in good faith, or reject the purported exercise of any Rights. Beneficial Holder Subscription Forms will be deemed not to have been received or accepted until all irregularities have been waived or cured within such time as the Debtors determine in good faith and with the consent of the Required Consenting Noteholders. In addition, the Debtors, with the consent of the Required Consenting Noteholders, may permit any such defect or irregularity to be cured within such time as they may determine in good faith to be appropriate.

For the avoidance of doubt and notwithstanding the above, the Debtor and its agents are not required to inform parties of any defect or irregularity with their submission of documents or payments and may reject such submissions without previously notifying the party prior to such rejection. Additionally, each such irregularity or defect if reviewed, will be done so on an individual submission basis.

Before exercising any Rights, Noteholders should read the Disclosure Statement and the Plan for information relating to the Debtors and risk factors to be considered.

11. Modification of Procedures


11 RLF1 21297443v.1

The Debtors reserve the right, with the consent of the Required Consenting Noteholders, to modify or adopt additional procedures consistent with the provisions of these Rights Offering Procedures to effectuate the Rights Offering and to issue the Subscribed Shares; provided, however, that the Debtors shall provide prompt written notice to each Noteholder (which may be through such Noteholder’s applicable Nominee) of any material modification to these Rights Offering Procedures made after the commencement of the Rights Offering, which such notice may be provided through posting such notice on the Subscription Agent’s website at https://cases.primeclerk.com/hexionsubscription. In so doing, the Debtors, with the consent of the Required Consenting Noteholders, may execute and enter into agreements and take further action that the Debtors determine in good faith are necessary and appropriate to effect and implement the Rights Offering and the issuance of the Subscribed Shares.

12. DTC

Some or all of the Notes are held in book-entry form in accordance with the practices and procedures of the DTC. The Debtors intend to comply with the practices and procedures of DTC for the purpose of conducting the Rights Offering, and, subject to compliance with Section 11 hereof, these Rights Offering Procedures will be deemed appropriately modified to achieve such compliance.

Without limiting the foregoing, the Company intends that, to the extent practicable, the Offered Shares will be issued in book entry form, except with respect to persons that may be deemed underwriters under section 1145(b) of the Bankruptcy Code (who are obligated to make themselves known to the Company), and that DTC, or its nominee, will be the holder of record of such Offered Shares. The ownership interest of each Holder of such Offered Shares, and transfers of ownership interests therein, is expected to be recorded on the records of the direct and indirect participants in DTC. It is expected that all Subscribed Shares will be allocated to exercising Noteholders through DTC, along with the related distribution of New Common Equity, on or as soon as practicable after the Effective Date. To the extent the Offered Shares are not eligible to be held through DTC, the Offered Shares will be allocated to Noteholders based on the information provided in Item 8 on the Beneficial Holder Subscription Form.

13. Inquiries and Transmittal of Documents; Subscription Agent

The Rights Offering Instructions should be carefully read and strictly followed.

Questions relating to the Rights Offering should be directed to the Subscription Agent at the following phone number or email address: +1 (844) 627-8452 (domestic toll-free) or +1 (347) 292-4080 (for international calls) or [email protected]. To obtain copies of the documents, please visit https://cases.primeclerk.com/hexionsubscription.

The risk of non-delivery of all documents and payments to the Subscription Agent and any Nominee is on the Noteholder electing to exercise its Rights and not the Debtors or the Subscription Agent.

Registered Holders and Nominees (or Noteholders that are instructed by their Nominees to return the Beneficial Holder Subscription Form directly to the Subscription Agent) must return


12 RLF1 21297443v.1

the Beneficial Holder Subscription Form and the appropriate IRS tax form by no later than the Subscription Expiration Deadline to the following:

Hexion Rights Offering c/o Prime Clerk LLC

One Grand Central Place 60 East 42nd Street, Suite 1440

New York, NY 10165 Email: [email protected]

All documents relating to the Rights Offering are available from the Subscription Agent

at this address. In addition, these documents, together with all filing made with the Court by the Debtors, are available free of charge from the Debtors’ restructuring website at http://www.omnimgt.com/HexionRestructuring.

Only choose one method of return. If you choose to return the applicable documents via

email, do not follow up with hard copies.

14. Equity Backstop Agreement

The Debtors are party to that certain Equity Backstop Commitment Agreement (the “Equity Backstop Agreement”) dated April 25, 2019 with the Equity Backstop Parties. In the event of any conflict between these Rights Offering Procedures and the terms of the Equity Backstop Agreement, the terms of the Equity Backstop Agreement will control.


RLF1 21297443v.1

HEXION RIGHTS OFFERING INSTRUCTIONS

Terms used and not defined herein shall have the meaning assigned to them in the Plan.

To elect to participate in the Rights Offering, you must follow the instructions set out below:

1. Insert the principal amount of your Notes that you hold in Item 1 of your Beneficial Holder Subscription Form. If your Nominee holds the Notes issued by the Debtors on your behalf and you do not know the principal amount, please contact your Nominee immediately. Please note that the principal amount of your Notes electronically delivered by your Nominee through ATOP will control for all purposes to the extent of any discrepancies.

2. Complete the calculation in Item 1a-1k of your Beneficial Holder Subscription Form, which calculates your Maximum Participation Amount (i.e., the maximum amount of Offered Shares, not including Oversubscription Shares, you are entitled to purchase in the Rights Offering). Such amount must be rounded down to the nearest whole share.

3. Complete the calculation in Item 2a-2k of your Beneficial Holder Subscription Form, which calculates the Purchase Price for the amount of Offered Shares, not including any Oversubscription Shares, which you elect to purchase.

4. Complete the calculation in Item 3 of your Beneficial Holder Subscription Form if you are subscribing for Oversubscription Shares, which calculates the Purchase Price for the amount of Oversubscription Shares which you elect to purchase.

5. Complete the calculation in Item 4 of your Beneficial Holder Subscription Form, which calculates the Purchase Price for the amount of Offered Shares, including Oversubscription Shares, which you elect to purchase. If you do not wish to purchase all of the Offered Shares to which you are entitled, you must provide instructions to your Nominee to submit ONLY the relevant portion of your Notes into the ATOP system (as reflected in Item 5 of your Beneficial Holder Subscription Form). For example, if you only wish to subscribe for 50% of your Notes, then submit, or request that your Nominee submit, only 50% of your Notes through ATOP. Registered Holders will be prohibited from trading only the portion of their underlying Notes on account of Rights for which they wish to subscribe.

6. Read Item 6 of your Beneficial Holder Subscription Form.

7. Read, complete and sign the certification in Item 7 of your Beneficial Holder Subscription Form and all other requested information in the remaining items.

8. Read, complete and sign an IRS Form W-9 if you are a U.S. person. If you are a non-U.S. person, read, complete and sign an appropriate IRS Form IRS Form W-8. These forms may be obtained from the IRS at its website: www.irs.gov.


2 RLF1 21297443v.1

9. Instruct your Nominee to electronically deliver via ATOP your Notes to the Subscription Agent by the Subscription Expiration Deadline. This requirement does not apply to Registered Holders.

10. Return your signed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) to the Subscription Agent prior to the Subscription Expiration Deadline or to your Nominee in sufficient time to allow your Nominee to process your instructions and prepare and deliver your Beneficial Holder Subscription Form to the Subscription Agent (or otherwise follow the instructions of your Nominee) prior to the Subscription Expiration Deadline.

11. Arrange for full payment of the Purchase Price in immediately available funds, calculated in accordance with Item 4 of your Beneficial Holder Subscription Form. A Noteholder who is not an Equity Backstop Party should follow the payment instructions as provided in Item 6 of the Beneficial Holder Subscription Form. Any Equity Backstop Party should follow the payment instructions that will be provided in the Funding Notice, except to the extent of any Purchase Price previously paid by such Equity Backstop Party to the Subscription Agent or the Escrow Account in accordance with the terms of the Equity Backstop Agreement.

12. For Equity Backstop Parties ONLY, confirm that you are an Equity Backstop Party by checking the appropriate box in Item 7 of your Beneficial Holder Subscription Form, so that the Nominee will receive confirmation that payment does not have to be made prior to the Subscription Expiration Deadline. (This instruction is only for Equity Backstop Parties).

The Subscription Expiration Deadline is 5:00 p.m. (Prevailing Eastern Time) on June 14, 2019.

Beneficial Holder Subscription Forms (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be received by the Subscription Agent and the underlying Notes must be delivered through ATOP to the Subscription Agent (except with respect to Registered Holders) by the Subscription Expiration Deadline or the subscription represented by your Beneficial Holder Subscription Form will not be recognized, and the associated Rights will be deemed forever relinquished and waived.

If you hold your Notes through a Nominee, please note that, unless otherwise directed by your Nominee, the Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be received by your Nominee in sufficient time to allow such Nominee to process and deliver your underlying Notes through ATOP to the Subscription Agent by the Subscription Expiration Deadline or the subscription represented by your Beneficial Holder Subscription Form will not be recognized, and the associated Rights will be deemed forever relinquished and waived

Further, the full payment of the Purchase Price by Noteholders who are not Equity Backstop Parties must be received by the Subscription Agent by the Subscription Expiration Deadline or the subscription represented by your Beneficial Holder


3 RLF1 21297443v.1

Subscription Form will not be recognized, and the associated Rights will be deemed forever relinquished and waived.

Noteholders that are Equity Backstop Parties must deliver the Purchase Price for their Subscribed Shares directly to the Subscription Agent or to the Escrow Account, as applicable, pursuant to the Funding Notice (except to the extent of any funding amounts previously provided by any such Noteholders to the Subscription Agent or the Escrow Account in accordance with the terms of the Equity Backstop Agreement) no later than the Backstop Funding Deadline.


Registered Holders and Nominees (or Noteholders that are instructed by their Nominees to return the Beneficial Holder Subscription Form directly to the Subscription Agent) must return the Beneficial Holder Subscription Form and the appropriate IRS tax form by no later than the Subscription Expiration Deadline to the following:







RLF1 21297443v.1

Annex 1

Beneficial Holder Subscription Form


RLF1 21297443v.1

HEXION RIGHTS OFFERING

BENEFICIAL HOLDER SUBSCRIPTION FORM

FOR USE BY NOTEHOLDERS IN CONNECTION WITH DEBTORS’

PROPOSED CONFIRMATION OF THE PLAN AND THE RELATED

DISCLOSURE STATEMENT DATED MAY 21, 2019

SUBSCRIPTION EXPIRATION DEADLINE

The Subscription Expiration Deadline is 5:00 p.m. (Prevailing Eastern Time) on June 14, 2019.

Equity Backstop Parties must deliver the appropriate funding amounts directly to the Subscription Agent or the Escrow Account, as applicable (except to the extent of any funding amounts previously provided by any such Equity Backstop Party to the Subscription Agent or the Escrow Account in accordance with the terms of the Equity Backstop Agreement), no later than the deadline specified in the Funding Notice (the “Backstop Funding Deadline”).

If you are a Registered Holder, your duly completed and executed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be received by the Subscription Agent by the Subscription Expiration Deadline or the subscription represented by your Beneficial Holder Subscription Form will not be recognized and will be deemed forever relinquished and waived.

If you hold your Notes through a Nominee, your duly completed and executed Beneficial Holder Subscription Form (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be received by your Nominee (or as otherwise directed by your Nominee) in sufficient time to allow such Nominee to deliver your underlying Notes through ATOP and your Beneficial Holder Subscription Form to the Subscription Agent by the Subscription Expiration Deadline or the subscription represented by your Beneficial Holder Subscription Form will not be recognized and will be deemed forever relinquished and waived.

Further, you must complete (or otherwise coordinate for the completion of) a wire transfer of the Purchase Price to the Subscription Agent in accordance with the wire instructions by the Subscription Expiration Deadline, or in accordance with


2 RLF1 21297443v.1

the Funding Notice if you are an Equity Backstop Party, or the subscription represented by your Beneficial Holder Subscription Form will not be recognized and will be deemed forever relinquished and waived.

The Offered Shares are being distributed and issued by the Debtors without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption provided in section 1145 of the Bankruptcy Code. None of the Offered Shares have been registered under the Securities Act, nor any state or local law requiring registration for offer or sale of a security.

Please consult the Plan and the Rights Offering Procedures for additional information with respect to this Beneficial Holder Subscription Form. Any terms capitalized but not defined herein shall have the meaning as set forth in the Plan.

Each Noteholder is entitled to subscribe for its Pro Rata Share of Offered Shares. The maximum number of shares of Offered Shares for which a Noteholder is entitled to subscribe (calculated based on the principal amount of underlying Notes electronically delivered via ATOP), not including any Oversubscription Shares, is referred to as the “Maximum Participation Amount.”

In addition, each Noteholder that has subscribed for its Maximum Participation Amount may, but is not required to, subscribe for and purchase Oversubscription Shares up to an amount of Oversubscription Shares equal to its Maximum Participation Amount.

If the actual number of Oversubscription Shares is less than the aggregate number of Oversubscription Shares for which Noteholders have duly subscribed, then the number of Oversubscription Shares that each such Noteholder will receive will be reduced pro rata in proportion to the ratio of (x) the actual number of Oversubscription Shares to (y) the number of Oversubscription Shares subscribed for by all Noteholders in the aggregate, and the Purchase Price paid for Oversubscription Shares that are subscribed for but not issued will be returned as soon as practicable following the Subscription Expiration Deadline and finalization of the results of the Rights Offering.

To subscribe, fill out all Items below (unless marked as optional).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


3 RLF1 21297443v.1

Item 1. Amount of Notes and Calculation of Maximum Number of Offered Shares (not including Oversubscription Shares)

The undersigned Noteholder certifies that it is a beneficial Holder of Notes in the following principal amount and that the person executing this form is an authorized signatory of that beneficial Holder. For purposes of this Beneficial Holder Subscription Form, do not adjust the principal (face) amount for any accrued or unmatured interest. The amounts below must correspond to the principal amounts of Notes that your Nominee electronically delivers via ATOP or, with respect to Registered Holders, the principal amounts reflected on the register of the applicable indenture trustee (if there is a discrepancy between Item 1 and the amount delivered via ATOP or on the indenture trustee’s register, ATOP or such register, as applicable, shall control). (If a Nominee holds your Notes on your behalf and you do not know the principal amount, please contact your Nominee immediately).

IMPORTANT NOTE: IF YOU HOLD YOUR NOTES THROUGH MORE THAN ONE NOMINEE, YOU MUST COMPLETE AND RETURN A SEPARATE BENEFICIAL HOLDER SUBSCRIPTION FORM TO EACH APPLICABLE NOMINEE. YOU MAY NOT AGGREGATE POSITIONS HELD BY DIFFERENT NOMINEES ON A SINGLE BENEFICIAL HOLDER SUBSCRIPTION FORM.

[Insert principal amount of Notes electronically delivered through ATOP (or, for Registered Holders, reflected on the applicable indenture trustee’s register) and calculate Maximum Number of Offered Shares for each CUSIP held]

If you own the following Notes:

CUSIP/ISIN Principal Amount delivered via ATOP or

reflected on the applicable indenture trustee’s

register

Rights Factor The Maximum Number of

Offered Shares is:

6.625% first lien notes due 2020

428302 AA1 / US428302AA14

$______________________ x 0.006884432 =

_____________ Item 1a

(Round down to the nearest whole share)


4 RLF1 21297443v.1




register


Offered Shares is:


428302 AD5 / US428302AD52

$______________________ x 0.006884432 =

_____________ Item 1b



U43218 AB9 / USU43218AB99

$______________________ x 0.006884432 =

_____________ Item 1c



42929L AC8 / US42929LAC81

$______________________ x 0.007042852 =

_____________ Item 1d



42829L AD6 / US42829LAD64

$______________________ x 0.006859644 =

_____________ Item 1e



5 RLF1 21297443v.1




register


Offered Shares is:


U4321L AB0 / USU4321LAB00

$______________________ x 0.006859644 =

_____________ Item 1f


13.750% 1.5 lien notes due 2022

42829L AE4 / US42829LAE48

$______________________ x 0.005965126 =

_____________ Item 1g


13.750% 1.5 lien notes due 2022

U4321L AC8 / USU4321LAC82

$______________________ x 0.005965126 =

_____________ Item 1h


9.000% second lien notes due 2020

428303 AM3 / US428303AM35

$______________________ x 0.006029759 =

_____________ Item 1i


9.200% unsecured debentures due 2021

099599 AH5 / US099599AH59

$______________________ x 0.005855332 =

_____________


6 RLF1 21297443v.1




register


Offered Shares is:

Item 1j (Round down to the nearest

whole share)

7.875% unsecured debentures due 2023

099599 AJ1 / US099599AJ16

$______________________ x 0.005890168 =

_____________ Item 1k


Total Maximum Participation Amount (Total of Items 1a-1k): (THIS IS ALSO THE MAXIMUM NUMBER OF OVERSUBSCRIPTION

SHARES YOU MAY ELECT TO PURCHASE IN ITEM 3 BELOW) ______________


7 RLF1 21297443v.1

Item 2. Purchase Price for Offered Shares

By filling in the following blanks, you are subscribing for the number of Offered Shares specified below (specify a number of Offered Shares, which is not greater than the Maximum Participation Amount calculated in Item 1 above), on the terms and subject to the conditions set forth in the Plan and the Rights Offering Procedures.

2a

________________________ (Insert number of Offered Shares you elect to purchase – not to exceed the

amount in Item 1a above)

x $13.00 =

$_________________________

Item 2a – Purchase Price

2b


amount in Item 1b above)

x $13.00 =

$_________________________

Item 2b – Purchase Price

2c


amount in Item 1c above)

x $13.00 =

$_________________________

Item 2c – Purchase Price

2d


amount in Item 1d above)

x $13.00 =

$_________________________

Item 2d – Purchase Price


8 RLF1 21297443v.1

2e


amount in Item 1e above)

x $13.00 =

$_________________________

Item 2e – Purchase Price

2f

________________________

(Insert number of Offered Shares you elect to purchase – not to exceed the

amount in Item 1f above)

x $13.00 =

$_________________________

Item 2f – Purchase Price

2g


amount in Item 1g above)

x $13.00 =

$_________________________

Item 2g – Purchase Price

2h

_______________________ (Insert number of Offered Shares you elect to purchase – not to exceed the

amount in Item 1h above)

x $13.00 =

$_________________________

Item 2h – Purchase Price

2i


amount in Item 1i above)

x $13.00 =

$_________________________

Item 2i – Purchase Price


9 RLF1 21297443v.1

2j


amount in Item 1j above)

x $13.00 =

$_________________________

Item 2j – Purchase Price

2k


amount in Item 1k above)

x $13.00 =

$_________________________

Item 2k – Purchase Price

Total Offered Shares Electing to Purchase:

_______________________

(Indicate total number of Offered Shares you elect to

purchase from Items 2a-2k in each row above)

Total Purchase Price for Offered Shares

(insert in Item 4 below:

$___________________________

(Indicate total Purchase Price of Offered Shares you elect to purchase by adding Items 2a-2k in each row

above)

Item 3. Oversubscription Shares Exercise Amount (Optional). By filling in the following blanks, you are subscribing for the number of Oversubscription Shares specified below (specify a

number of Oversubscription Shares, which is not greater than the Maximum Participation Amount calculated in Item 2 above), on the terms of and subject to the conditions set forth in the Plan and Rights Offering Procedures.


10 RLF1 21297443v.1

_____________________________

(Indicate total number of Oversubscription Shares you elect to purchase)

X

$13.00

=

$_________________________

Purchase Price of Oversubscription Shares

(Insert in Item 4 below)


11 RLF1 21297443v.1

Item 4. Purchase Price. (Required). Calculate the Purchase Price for all your Subscribed Shares by adding the total purchase price from each of Item 2 and Item 3 (if any).

$_____________________ (Purchase Price of Offered Shares

from Item 2)

+

$______________________ (Purchase Price of

Oversubscription Shares from Item 3, if any)

= $______________________

(Purchase Price for Subscribed Shares)


12 RLF1 21297443v.1

Item 5. Principal Amount and Nominee/ DTC Information. Holders electing to participate in the Rights Offering must electronically deliver their applicable underlying Notes via DTC’s Automated Tender Offer Program (“ATOP”) or your applicable depository. THIS SECTION DOES NOT APPLY TO REGISTERED HOLDERS. IF YOU HAVE ANY QUESTIONS REGARDING WHETHER YOU ARE A REGISTERD HOLDER, PLEASE CONTACT THE SUBSCRIPTION AGENT FOR FURTHER INFORMATION.

The undersigned hereby certifies that the undersigned has electronically delivered their underlying Notes via DTC’s ATOP system in the following principal amount(s). (Noteholders must coordinate with their Nominee to tender their Notes in order to obtain the DTC ATOP Confirmation Number from their Nominee, as applicable, to complete this table prior to returning this Beneficial Holder Subscription Form):

CUSIP/ISIN Principal Amount Tendered

DTC ATOP Confirmation Number

Euroclear or Clearstream Ref

Number

Nominee Holding Position at DTC,

or Other Applicable Depository

428302 AA1 / US428302AA14

$

428302 AD5 / US428302AD52

$

U43218 AB9 / USU43218AB99

$

42929L AC8 / US42929LAC81

$

42829L AD6 / US42829LAD64

$

U4321L AB0 / USU4321LAB00

$

42829L AE4 / US42829LAE48

$

U4321L AC8 / USU4321LAC82

$

428303 AM3 / US428303AM35

$

099599 AH5 / US099599AH59

$

099599 AJ1 / US099599AJ16


13 RLF1 21297443v.1

Item 6. Payment and Delivery Instructions

Payment of the Purchase Price calculated pursuant to Item 4 above shall be made by wire transfer ONLY of immediately available funds.

YOUR BENEFICIAL HOLDER SUBSCRIPTION FORM (WITH ACCOMPANYING IRS FORM W-9 OR APPROPRIATE IRS FORM W-8, AS APPLICABLE) MUST BE RECEIVED BY THE SUBSCRIPTION AGENT AND THE UNDERLYING NOTES MUST BE DELIVERED THROUGH ATOP TO THE SUBSCRIPTION AGENT (EXCEPT FOR REGISTERED HOLDERS ONLY) BY THE SUBSCRIPTION EXPIRATION DEADLINE OR THE SUBSCRIPTION REPRESENTED BY YOUR BENEFICIAL HOLDER SUBSCRIPTION FORM WILL NOT BE RECOGNIZED, AND THE ASSOCIATED RIGHTS WILL BE DEEMED FOREVER RELINQUISHED AND WAIVED.

IF YOU HOLD YOUR NOTES THROUGH A NOMINEE, PLEASE NOTE THAT, UNLESS OTHERWISE DIRECTED BY YOUR NOMINEE, THE BENEFICIAL HOLDER SUBSCRIPTION FORM (WITH ACCOMPANYING IRS FORM W-9 OR APPROPRIATE IRS FORM W-8, AS APPLICABLE) MUST BE RECEIVED BY YOUR NOMINEE IN SUFFICIENT TIME TO ALLOW SUCH NOMINEE TO PROCESS AND DELIVER YOUR UNDERLYING NOTES THROUGH ATOP TO THE SUBSCRIPTION AGENT BY THE SUBSCRIPTION EXPIRATION DEADLINE OR THE SUBSCRIPTION REPRESENTED BY YOUR BENEFICIAL HOLDER SUBSCRIPTION FORM WILL NOT BE RECOGNIZED, AND THE ASSOCIATED RIGHTS WILL BE DEEMED FOREVER RELINQUISHED AND WAIVED.

NOTEHOLDERS WHO ARE NOT EQUITY BACKSTOP PARTIES MUST DELIVER FULL PAYMENT OF THE PURCHASE PRICE SO AS TO BE RECEIVED BY THE SUBSCRIPTION AGENT BY THE SUBSCRIPTION EXPIRATION DEADLINE OR THE SUBSCRIPTION REPRESENTED BY SUCH NOTEHOLDER’S BENEFICIAL HOLDER SUBSCRIPTION FORM WILL NOT BE RECOGNIZED, AND THE ASSOCIATED RIGHTS WILL BE DEEMED FOREVER RELINQUISHED AND WAIVED. NOTEHOLDERS WHO ARE EQUITY BACKSTOP PARTIES MUST DELIVER THE PURCHASE PRICE IN ACCORDANCE WITH THE INSTRUCTIONS IN THE FUNDING NOTICE.

Registered Holders and Nominees (or Noteholders that are instructed by their Nominees

to return the Beneficial Holder Subscription Form directly to the Subscription Agent) must return the Beneficial Holder Subscription Form and the appropriate IRS tax form by no later than the Subscription Expiration Deadline to the following:




14 RLF1 21297443v.1




For Noteholders other than Equity Backstop Parties, payment of the Purchase Price calculated in Item 4 above shall be made by wire transfer ONLY in accordance with the following instructions:

U.S. Wire Instructions: Account Name :

Bank Account No.:

ABA/Routing No.:

Bank Name:

Bank Address:

Reference: [Insert Form Number in memo field]2

International Wire Instructions: Correspondent/Intermediary Bank SWIFT

Correspondent/Intermediary Bank Name

Correspondent/Intermediary Bank Address

Beneficiary Account Number

Beneficiary Name

Beneficiary Address

Memo, Special Instructions, Originator to Beneficiary Information, Bank to Bank Information

[Insert Form Number in memo field]

Please note that the failure to include the claimant name or form number in the reference

field of any domestic or international wire payment may result in the rejection of the corresponding rights offering submission. In addition, please also note that payments cannot be aggregated, and one wire should be sent per Beneficial Holder Subscription Form submission.

2 Upon submission of your Beneficial Holder Subscription Form, the Subscription Agent will provide you

with a form number that must be included in the wire reference section.


15 RLF1 21297443v.1

Item 7. Certification.

The undersigned Noteholder certifies that (i) as of the date hereof, the undersigned is the beneficial Holder of the Notes set forth in Item 1 above and will continue to be the beneficial owner thereof through the Subscription Expiration Deadline, (ii) the undersigned has received a copy of the Plan, the Disclosure Statement, the Rights Offering Procedures and the Rights Offering Instructions and (iii) the undersigned understands that the exercise of its Rights under the Rights Offering is subject to all the terms and conditions set forth in the Plan and the Rights Offering Procedures.

For Noteholders who hold Notes through Nominees: By electing to subscribe for the amount of Offered Shares designated under Item 2 above, the undersigned Noteholder is hereby instructing its Nominee to arrange for delivery of its Beneficial Holder Subscription Form and underlying Notes shown in Item 1 via ATOP to the Subscription Agent.

For Registered Holders who do not hold Notes through Nominees: By electing to subscribe for the amount of Offered Shares designated under Item 2 above, the undersigned Noteholder is hereby acknowledging that it is prohibited from trading its underlying Notes.

The undersigned Noteholder acknowledges that, by executing this Beneficial Holder Subscription Form, the undersigned has elected to subscribe for the number of Offered Shares associated with the amounts tendered through ATOP and designated under Item 2 above and will be bound to pay for the Offered Shares it has subscribed for and that it may be liable to the Debtors to the extent of any nonpayment.

Date: __________________________________________

Name of Noteholder: __________________________________________

U.S. Federal Tax EIN/SSN (optional): __________________________________________

If Non-U.S. person, check here and attach appropriate IRS Form W- 8 ☐

If U.S. person, check here and attach IRS Form W-9 ☐

If Equity Backstop Party, check here ☐ (ONLY CHECK THIS BOX IF YOU ARE CERTAIN THIS APPLIES TO YOU. IF YOU ARE UNSURE, DO NOT CHECK THIS BOX AND PLEASE CONTACT THE SUBSCRIPTION AGENT.)

Signature: __________________________________________

Name of Signatory: __________________________________________

Title: __________________________________________

Address: __________________________________________

Telephone Number: __________________________________________


16 RLF1 21297443v.1

Email: __________________________________________


17 RLF1 21297443v.1

Item 8. Registration Information3

In the event the Offered Shares will not be eligible to be initially distributed through DTC, please indicate on the lines provided below the Noteholder’s name and address as you would like it to be reflected on the Debtors’ or the transfer agent’s records (as applicable) (this will apply to all Offered Shares and Oversubscription Shares, if any):4

Registered Holder Name:5 _________________________________________________________

Registered Holder Name (continued from above, if necessary): __________________________

Address 1: ____________________________________________________________________

Address 2: ____________________________________________________________________

City, State, and Zip Code: ________________________________________________________

Foreign Country Name: __________________________________________________________

Telephone Number: _____________________________________________________________

E-Mail Address: ________________________________________________________________

U.S. Tax Identification Number: ___________________________________________________

Check here if non-US (no TIN)

[Remainder of page left intentionally blank. Please make sure to complete the “account type” on the following page.]

3 This section is required. If you fail to complete this section (including the “account type”

information requested below), we will be unable to register the applicable securities in your name. 4 After the initial issuance of shares, Noteholders may transfer such shares to third parties in

accordance with the procedures of the transfer agent or the Debtor (as applicable). 5 Registration in the name of DTC or Cede & Co. is not permitted in this section. In addition, if the

resulting shares are being registered to a trust, you must provide the name of the trustee and the trust date. Failure to provide this information will result in a delay in delivery of the resulting shares.


18 RLF1 21297443v.1

Please indicate the “account type” that may be used in connection with registration of your Subscribed Shares.

Please check only one box:

INDIVIDUAL ACCOUNT;

IRA ACCOUNT;

CORPORATIONS (S-CORP): (ASSOCIATED, ASSOCIATES, ASSOCIATION, CO, CO. COMPANY, CORP, CORPORATE/PARTNER, ENTERPRISE(S), FUND, GROUP, INCORPORATED, INC, INTERNATIONAL, INTL, LIMITED, LTD, LIFETIME LIMITED COMPANY, LLC, L.L.C, PARTNER, PARTNERS, PLC, PUBLIC LIMITED COMPANY);

PARTNERSHIP: (LP, L P, L.P., LLP, LIMITED PARTNERSHIP, LIFETIME LIMITED PARTNERSHIP);

BANK;

NOMINEE ACCOUNTS;

THE NEW C-CORP;

NON-PROFIT: (CEMETERY, CHURCH, COLLEGE, COMMISSION FOR CHILDREN WITH, COMMISSION FOR HANDICAPPED, COMMISSION MINISTRIES INC, COMMISSION OF PUBLIC WORKS, COMMISSION OF BANKING & FOUNDATIONS, HOSPITAL, SCHOOL, SYNAGOGUE, UNIVERSITY);

FIDUCIARY ACCOUNT: (CUSTODIAN, CO-TRUSTEE, ESTATE, EXECUTOR, EXECUTRIX FBO, F/B/O, FAO, FIDUCIARY TRUST, ITF, LIFE TEN, PENSION PLAN, INDIVIDUAL NAME PROFIT SHARING PLAN, RETIREMENT PLAN, 401K PLAN, SELL TRANSFER PLEDGE , STATE UNIFORM TRANSFER RO MINOR’S ACT, TTEE, TTEES, UW, UTMA, UGMA, USUFRUCT, UNIFIED, UNIF GIFT MIN ACT, UNIF TRUST MIN ACT, UNIFIED GIFT TO MINORS ACT, UNIFORM GIFT TO MINORS, UNIFORM TRANSFER TO MINORS, GRANT (GRANTOR ANNUITY TRUST);

TENANTS IN COMMON;

TENANTS BY ENTIRETY: (TEN ENT, TENANTS ENT, TENANTS ENTIRETY, TENANTS BY ENTIRETY, TENANTS BY ENTIRETIES);

JOINT TENANTS: (JT TEN, JT TEN WROS, JT WROS, J/T/W/R/S, JOINT TENANCY, JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, JT OWNERSHIP, IF JT ACCOUNT WITH TOD); or

COMMUNITY PROPERTY: (COM PROP, COMM PROP, COM PROPERTY, COMM PROPERTY, MARITAL PROPERTY, HWACP, HUSBAND & WIFE AS COMMUNITY PROPERTY).


19 RLF1 21297443v.1

Item 9. Wire information in the event a refund is needed:6

Account Name :

Bank Account No.:

ABA/Routing No.:

Bank Name:

Bank Address:

Reference: AS INDICATED ABOVE, TO THE EXTENT THE RIGHTS OFFERING SHARES ARE DTC ELIGIBLE SUCH SHARES WILL ONLY BE DELIVERED TO THE ACCOUNT ASSOCIATED WITH THE UNDERLYING APPLICABLE NOTES POSITION ELECTRONICALLY DELIVERED VIA DTC’S ATOP. REGISTERED HOLDERS WILL HAVE THEIR SHARES ISSUED ON THE BOOKS AND RECORDS OF THE TRANSFER AGENT.

****

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

6 If payment of the Purchase Price will be made by your Nominee on your behalf, the wire information in

this Item 9 should be your Nominee’s information, and any refund will be issued to your Nominee.


20 RLF1 21297443v.1

PLEASE RETURN THIS BENEFICIAL HOLDER SUBSCRIPTION FORM (WITH ACCOMPANYING IRS FORM W-9 OR APPROPRIATE IRS FORM W- 8, AS

APPLICABLE) TO THE SUBSCRIPTION AGENT.

IF YOU HOLD YOUR NOTES THROUGH A NOMINEE, PLEASE RETURN THIS BENEFICIAL HOLDER SUBSCRIPTION FORM (WITH ACCOMPANYING IRS FORM W-9 OR APPROPRIATE IRS FORM W- 8, AS APPLICABLE) ONLY TO YOUR NOMINEE (OR AS OTHERWISE DIRECTED BY YOUR NOMINEE). DO NOT RETURN THIS FORM DIRECTLY TO THE SUBSCRIPTION AGENT (UNLESS OTHERWISE DIRECTED TO DO SO BY YOUR NOMINEE).


Registered Holders and Nominees (or Noteholders that are instructed by their Nominees to return the Beneficial Holder Subscription Form directly to the Subscription Agent) must return the Beneficial Holder Subscription Form and the appropriate IRS tax form by no later than the Subscription Expiration Deadline to the following:


60 East 42nd Street, Suite1440 New York, NY 10022

Email: [email protected]

Only choose one method of return. If you choose to return the applicable documents via email, do not follow up with hard copies.


EXHIBIT D


EXECUTION VERSION

43633.00000

EQUITY BACKSTOP COMMITMENT AGREEMENT

AMONG

HEXION HOLDINGS LLC

THE OTHER DEBTORS

AND

THE COMMITMENT PARTIES PARTY HERETO

Dated as of April 25, 2019


TABLE OF CONTENTS

Page

i

ARTICLE I DEFINITIONS .........................................................................................................2 Section 1.1 Definitions....................................................................................................2 Section 1.2 Construction ...............................................................................................17

ARTICLE II BACKSTOP COMMITMENT ...........................................................................18 Section 2.1 The Rights Offering; Subscription Rights .................................................18 Section 2.2 The Commitment .......................................................................................19 Section 2.3 Commitment Party Default; Replacement of Defaulting

Commitment Parties...................................................................................19 Section 2.4 Assignment of Commitment Rights...........................................................20 Section 2.5 Escrow Account Funding ...........................................................................21 Section 2.6 Closing .......................................................................................................22

ARTICLE III BACKSTOP COMMITMENT PREMIUM AND EXPENSE REIMBURSEMENT ...........................................................................................23

Section 3.1 Premium Payable by the Debtors ...............................................................23 Section 3.2 Payment of Commitment Premium ...........................................................23 Section 3.3 Expense Reimbursement ............................................................................24 Section 3.4 Tax Treatment of Commitment Premium ..................................................24

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE DEBTORS .............24 Section 4.1 Organization and Qualification ..................................................................25 Section 4.2 Corporate Power and Authority .................................................................25 Section 4.3 Execution and Delivery; Enforceability .....................................................25 Section 4.4 Authorized and Issued Equity Interests. ....................................................26 Section 4.5 Issuance ......................................................................................................27 Section 4.6 No Conflict.................................................................................................27 Section 4.7 Consents and Approvals ............................................................................27 Section 4.8 Arm’s-Length .............................................................................................28 Section 4.9 Financial Statements ..................................................................................28 Section 4.10 Company SEC Documents and Disclosure Statement...............................28 Section 4.11 Absence of Certain Changes ......................................................................29 Section 4.12 No Violation; Compliance with Laws .......................................................29 Section 4.13 Legal Proceedings ......................................................................................29 Section 4.14 Labor Relations ..........................................................................................29 Section 4.15 Intellectual Property ...................................................................................30 Section 4.16 Title to Real and Personal Property ...........................................................30 Section 4.17 No Undisclosed Relationships ...................................................................31 Section 4.18 Licenses and Permits ..................................................................................31 Section 4.19 Environmental ............................................................................................31 Section 4.20 Taxes ..........................................................................................................32 Section 4.21 Employee Benefit Plans .............................................................................33 Section 4.22 Internal Control Over Financial Reporting ................................................34 Section 4.23 Disclosure Controls and Procedures ..........................................................34 Section 4.24 Material Contracts ......................................................................................34


TABLE OF CONTENTS (cont’d)

Page

ii

Section 4.25 No Unlawful Payments ..............................................................................35 Section 4.26 Compliance with Money Laundering and Sanctions Laws .......................35 Section 4.27 No Broker’s Fees .......................................................................................36 Section 4.28 Investment Company Act ..........................................................................36 Section 4.29 Insurance ....................................................................................................36 Section 4.30 Volcker Compliance ..................................................................................37

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES ...............................................................................37

Section 5.1 Organization ...............................................................................................37 Section 5.2 Organizational Power and Authority .........................................................37 Section 5.3 Execution and Delivery..............................................................................38 Section 5.4 No Conflict.................................................................................................38 Section 5.5 Consents and Approvals ............................................................................38 Section 5.6 No Registration ..........................................................................................39 Section 5.7 Purchasing Intent .......................................................................................38 Section 5.8 Sophistication; Investigation ......................................................................39 Section 5.9 No Broker’s Fees .......................................................................................40 Section 5.10 Sufficient Funds .........................................................................................40 Section 5.11 Additional Securities Law Matters. ...........................................................40

ARTICLE VI ADDITIONAL COVENANTS ...........................................................................41 Section 6.1 Orders Generally ........................................................................................41 Section 6.2 Confirmation Order; Plan and Disclosure Statement.................................41 Section 6.3 Conduct of Business ..................................................................................42 Section 6.4 Access to Information; Confidentiality. .....................................................43 Section 6.5 Financial Information.................................................................................44 Section 6.6 Commercially Reasonable Efforts .............................................................44 Section 6.7 Registration Rights Agreement; Company Organizational

Documents .................................................................................................45 Section 6.8 Blue Sky .....................................................................................................46 Section 6.9 Use of Proceeds ..........................................................................................46 Section 6.10 Share Legend .............................................................................................46 Section 6.11 Antitrust Approval .....................................................................................47 Section 6.12 Alternative Transactions ............................................................................48 Section 6.13 Reorganized Company ...............................................................................48 Section 6.14 Withdrawal of Commitment Party .............................................................49 Section 6.15 Continued Volcker Compliance .................................................................49 Section 6.16 DTC Eligibility; CUSIP; Transferability ...................................................50 Section 6.17 Commitment Party Termination; Replacement of Terminating

Commitment Parties...................................................................................50

ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF THE PARTIES ...................51 Section 7.1 Conditions to the Obligations of the Commitment Parties ........................51 Section 7.2 Waiver of Conditions to Obligations of Commitment Parties ...................54 Section 7.3 Conditions to the Obligations of the Debtors ............................................54



Page

iii

ARTICLE VIII INDEMNIFICATION AND CONTRIBUTION ...........................................56 Section 8.1 Indemnification Obligations ......................................................................56 Section 8.2 Indemnification Procedure .........................................................................56 Section 8.3 Settlement of Indemnified Claims .............................................................57 Section 8.4 Contribution ...............................................................................................58 Section 8.5 Treatment of Indemnification Payments ....................................................58 Section 8.6 No Survival ................................................................................................58

ARTICLE IX TERMINATION .................................................................................................58 Section 9.1 Consensual Termination ............................................................................58 Section 9.2 Automatic Termination; Termination by the Commitment Parties. ..........59 Section 9.3 Termination by the Debtors .......................................................................62 Section 9.4 Effect of Termination .................................................................................63

ARTICLE X GENERAL PROVISIONS ...................................................................................64 Section 10.1 Notices .......................................................................................................64 Section 10.2 Assignment; Third Party Beneficiaries ......................................................66 Section 10.3 Prior Negotiations; Entire Agreement .......................................................66 Section 10.4 Governing Law; Venue ..............................................................................66 Section 10.5 Binding Agreement ....................................................................................67 Section 10.6 Waiver of Jury Trial ...................................................................................67 Section 10.7 Counterparts ...............................................................................................67 Section 10.8 Waivers and Amendments; Rights Cumulative; Consent ..........................67 Section 10.9 Headings ....................................................................................................68 Section 10.10 Specific Performance .................................................................................68 Section 10.11 Damages .....................................................................................................68 Section 10.12 No Reliance ................................................................................................69 Section 10.13 Publicity .....................................................................................................69 Section 10.14 Settlement Discussions ..............................................................................69 Section 10.15 No Recourse ...............................................................................................69

SCHEDULES

Schedule 1 Commitment Schedule Company Disclosure Schedules


1

EQUITY BACKSTOP COMMITMENT AGREEMENT

THIS EQUITY BACKSTOP COMMITMENT AGREEMENT (this “Agreement”), dated as of April 25, 2019, is made by and among Hexion Holdings LLC, a Delaware limited liability company (including as debtor in possession and a reorganized debtor, as applicable, the “Company”), and each of the other Debtors (as defined below), on the one hand, and each Commitment Party (as defined below), on the other hand. The Company, the other Debtors and each Commitment Party is referred to herein, individually, as a “Party” and, collectively, as the “Parties”. Capitalized terms that are used but not otherwise defined in this Agreement shall have the meanings given to them in Section 1.1 hereof or, if not defined therein, shall have the meanings given to them in the Plan (as defined below).

RECITALS

WHEREAS, the Debtors, the Commitment Parties and the other Consenting Parties (as defined in the Restructuring Support Agreement) are party to a Restructuring Support Agreement (including the terms and conditions set forth in the Restructuring Term Sheet (the “Restructuring Term Sheet”) attached as Exhibit A to the Restructuring Support Agreement, dated April 1, 2019, by and among the Debtors and the signature parties thereto (the Restructuring Term Sheet, the Restructuring Support Agreement and all other exhibits thereto, as may be amended, supplemented or otherwise modified from time to time, the “Restructuring Support Agreement”)), which (a) provides for the restructuring of the Debtors’ capital structure and financial obligations pursuant to a plan of reorganization to be filed in cases (the “Chapter 11 Cases”) that were commenced on April 1, 2019 under title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as it may be amended from time to time, the “Bankruptcy Code”), in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), implementing the terms and conditions of the Restructuring Transactions and (b) requires that the Plan be consistent with the Restructuring Support Agreement;

WHEREAS, pursuant to the Plan and this Agreement, the Company will conduct a rights offering for the Rights Offering Shares (as defined below) at an aggregate purchase price equal to the Rights Offering Amount (as defined below) and a per-share purchase price equal to the Per Share Purchase Price (as defined below); and

WHEREAS, subject to the terms and conditions contained in this Agreement, each Commitment Party has agreed to purchase (on a several and not a joint basis) its Commitment Percentage (as defined below) of the Unsubscribed Shares (as defined below), if any.

NOW, THEREFORE, in consideration of the mutual promises, agreements, representations, warranties and covenants contained herein, the Debtors and each of the Commitment Parties hereby agrees as follows:


2

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. Except as otherwise expressly provided in this Agreement, whenever used in this Agreement (including any Exhibits and Schedules hereto), the following terms shall have the respective meanings specified therefor below or in the Plan, as applicable:

“1L Notes” means the notes issued under the 1L Notes Indenture.

“1L Notes Claims” means all claims and obligations arising under or in connection with the 1L Notes Indenture.

“1L Notes Indenture” means, collectively, those certain: (a) Indenture, dated as of March 14, 2012, among Hexion Inc., as Issuer, the Guarantors party thereto, and Wilmington Trust, National Association, as trustee, pursuant to which Hexion Inc. issued 6.625% First-Priority Senior Secured Notes due 2020; (b) Indenture, dated as of April 15, 2015, among Hexion Inc., as Issuer, the Guarantors party thereto, and Wilmington Trust, National Association, as trustee, pursuant to which Hexion Inc. issued 10.00% First-Priority Senior Secured Notes due 2020; and (c) Indenture, dated as of February 8, 2017, among Hexion Inc., as Issuer, the Guarantors party thereto, and Wilmington Trust, National Association, as trustee, pursuant to which Hexion Inc. issued 10.375% First-Priority Senior Secured Notes due 2022.

“1.5L Advisors” has the meaning set forth in the Restructuring Term Sheet.

“1.5 Lien Ad Hoc Group” has the meaning set forth in the Restructuring Support Agreement.

“1.5L Notes” means the notes issued under the 1.5L Notes Indenture.

“1.5L Notes Claims” means all claims and obligations arising under or in connection with the 1.5L Notes Indenture.

“1.5L Notes Indenture” means that certain Indenture, dated as of February 8, 2017, among Hexion Inc., as Issuer, the Guarantors party thereto, and Wilmington Trust, National Association, as trustee, pursuant to which Hexion Inc. issued 13.75% Senior Secured Notes due 2022.

“2L Notes” means the notes issued under the 2L Notes Indenture.

“2L Notes Claims” means all claims and obligations arising under or in connection with the 2L Notes Indenture.

“2L Notes Indenture” means that certain Indenture, dated as of November 5, 2010, among Hexion Inc. and Hexion Nova Scotia Finance, ULC as Issuers, the Guarantors party thereto, and Wilmington Trust Company, as trustee, pursuant to which Hexion Inc. issued 9.00% Second-Priority Senior Secured Notes due 2020.


3

“Additional Put Option Premium” has the meaning set forth in the Restructuring Term Sheet.

“Advisors” means the First Lien Advisors, 1.5L Advisors and the Crossholder Advisors.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, Controls or is Controlled by or is under common Control with such Person, and shall include the meaning of “affiliate” set forth in section 101(2) of the Bankruptcy Code as if such person were a debtor. “Affiliated” has a correlative meaning.

“Affiliated Fund” means (a) any investment fund or separately managed account the primary investment advisor or sub-advisor to which is a Commitment Party or an Affiliate thereof or (b) one or more special purpose vehicles that are wholly owned by one or more Commitment Party and its Affiliated Funds, created for the purpose of holding the Rights Offering Backstop Commitment, and in each case with respect to which such Commitment Party remains obligated to fund the Rights Offering Backstop Commitment.

“Aggregate Fully Diluted Common Shares” means the total number of Common Shares outstanding as of the Effective Date after giving effect to the Plan (but prior to any Common Shares issued or issuable under the MIP, the Commitment Premium, the Debt Backstop Premium and the Additional Put Option Premium).

“Agreed Dilution” has the meaning set forth in the Restructuring Term Sheet.

“Agreement” has the meaning set forth in the Preamble.

“Alternative Transaction” has the meaning set forth in the Restructuring Support Agreement.

“Antitrust Authorities” means the United States Federal Trade Commission, the Antitrust Division of the United States Department of Justice, the attorneys general of the several states of the United States and any other Governmental Entity, whether domestic or foreign, having jurisdiction pursuant to, or enforcing, the Antitrust Laws, and “Antitrust Authority” means any of them.

“Antitrust Laws” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, and any other Law, whether domestic or foreign, governing agreements in restraint of trade, monopolization, pre-merger notification, the lessening of competition through merger or acquisition or anti-competitive conduct, and any foreign investment Laws.

“Applicable Consent” has the meaning set forth in Section 4.7.

“Applicable Requisite Commitment Parties” means, with respect to any economic treatment referred to in this Agreement, (a) (i) if such economic treatment affects all Commitment Parties, the Requisite Commitment Parties or (ii) if such economic treatment does not affect all Commitment Parties, the Commitment Parties representing sixty-six and two-thirds


4

percent (66 2/3%) of the aggregate Rights Offering Backstop Commitments of such affected Commitment Parties as of the date on which consent or approval is solicited; and (b) additionally, if such economic treatment, by its terms, is disproportionately unfavorable to one or more Commitment Parties as compared to other Commitment Parties, such one or more Commitment Parties.

“Available Shares” means, with respect to Section 2.3, the amount of a Defaulting Commitment Party’s Rights Offering Backstop Commitment, and with respect to Section 6.17, the amount of a Terminating Commitment Party’s Rights Offering Backstop Commitment.

“Bankruptcy Code” has the meaning set forth in the Recitals.

“Bankruptcy Court” has the meaning set forth in the Recitals.

“Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, 28 U.S.C. § 2075, as applicable to the Chapter 11 Cases and the general, local, and chambers rules of the Bankruptcy Court.

“BCA Approval Obligations” means the obligations of the Company and the other Debtors under this Agreement and the BCA Approval Order.

“BCA Approval Order” means an Order of the Bankruptcy Court that is not stayed (under Bankruptcy Rule 6004(h) or otherwise) that (a) authorizes the Debtors to enter into and perform under this Agreement, including all exhibits and other attachments hereto, pursuant to section 363 of the Bankruptcy Code, (b) authorizes the Commitment Premium, Expense Reimbursement and indemnification provisions contained in this Agreement and (c) provides that the Commitment Premium, Expense Reimbursement and the indemnification provisions contained herein shall constitute allowed administrative expenses of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code and shall be payable by the Debtors as provided in this Agreement without further Order of the Bankruptcy Court.

“BHC Act” means the Bank Holding Company Act of 1956, as amended, and the rules and regulations promulgated thereunder.

“Business Day” means any day, other than a Saturday, Sunday or legal holiday, as defined in Bankruptcy Rule 9006(a).

“Chapter 11 Cases” has the meaning set forth in the Recitals.

“Closing” has the meaning set forth in Section 2.6(a).

“Closing Date” has the meaning set forth in Section 2.6(a).

“Code” means the Internal Revenue Code of 1986, as amended.


5

“Commitment Amount” means, with respect to any Commitment Party, such Commitment Party’s commitment amount as set forth opposite such Commitment Party’s name under the column titled “Commitment Amount” on the Commitment Schedule.

“Commitment Party” means each Party listed as such on the Commitment Schedule. Unless the context otherwise requires, each reference herein to a Commitment Party shall be deemed also to include a reference to such Commitment Party’s Related Purchaser, if applicable.

“Commitment Party Default” means the failure by any Commitment Party to deliver and pay the aggregate Per Share Purchase Price for such Commitment Party’s Commitment Percentage of any Unsubscribed Shares by the Escrow Account Funding Date (or in the case of any Investment Company, the Closing Date) in accordance with Section 2.5(b).

“Commitment Party Replacement” has the meaning set forth in Section 2.3(a).

“Commitment Party Replacement Period” has the meaning set forth in Section 2.3(a).

“Commitment Percentage” means, with respect to any Commitment Party, the quotient of (a) such Commitment Party’s Commitment Amount and (b) the Rights Offering Amount; provided, however, that solely for purposes of calculating a Commitment Party’s Rights Offering Backstop Commitment, (x) such Commitment Party’s Commitment Amount shall be deemed reduced by an amount equal to (i) the Per Share Purchase Price multiplied by (ii) the number of Subscribed Shares purchased by such Commitment Party in the Rights Offering (including pursuant to the oversubscription procedures in connection therewith) and (y) the Rights Offering Amount shall be deemed reduced by an amount equal to (i) the Per Share Purchase Price multiplied by (ii) the number of Subscribed Shares purchased by all Commitment Parties in the Rights Offering (including pursuant to the oversubscription procedures in connection therewith but excluding Excess Subscribed Shares). Notwithstanding the foregoing, the Commitment Amount of any Commitment Party shall not be deemed reduced to a number that is less than zero for any purposes under this Agreement. Any reference to “Commitment Percentage” in this Agreement means the Commitment Percentage in effect at the time of the relevant determination, subject to the proviso in the first sentence of this definition.

“Commitment Schedule” means Schedule 1 to this Agreement, as amended, supplemented or otherwise modified from time to time in accordance with this Agreement.

“Commitment Premium” has the meaning set forth in Section 3.1.

“Commitment Premium Per Share Purchase Price” means (a) Plan Equity Value divided by (b) the Aggregate Fully Diluted Common Shares, rounded to two decimal places.

“Commitment Premium Share Amount” means the number of Common Shares equal to the product of (a) the quotient obtained by dividing (i) such Commitment Party’s Commitment Percentage by (ii) the aggregate Commitment Percentage of the Commitment Parties, taken as a whole, and (b) the quotient obtained by dividing (i) the Commitment Premium by (ii) the Commitment Premium Per Share Purchase Price.


6

“Common Shares” means the new common equity interests in the reorganized Company.

“Company” has the meaning set forth in the Preamble, and for the avoidance of doubt shall also include any different corporate form or a Person other than the Company that will serve as the parent entity of the Debtors and the issuer of Common Shares on the Effective Date (after consummation of the Plan).

“Company Benefit Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA), other than a Foreign Plan or a Multiemployer Plan, established, sponsored, maintained or contributed to or required to be contributed to by any Debtor.

“Company Board” means the board of directors of the Company.

“Company Disclosure Schedules” means the disclosure schedules delivered by the Company to the Commitment Parties on the date of this Agreement.

“Company Organizational Documents” means collectively, the organizational documents of the Company and, if applicable, New Parent, including any certificate of formation or applicable articles of incorporation, limited liability company agreement, bylaws, or any similar documents.

“Company Restructuring” has the meaning set forth in Section 6.13(a).

“Company SEC Documents” means all of the reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) filed with the SEC by the Debtors.

“Confirmation Order” means a Final Order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code.

“Contract” means any agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral, but excluding the Plan.

“Control” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or agency or otherwise.

“Covered Fund” has the meaning set forth in Section 13 of the BHC Act and the regulations issued thereunder.

“Crossholder Ad Hoc Group” has the meaning set forth in the Restructuring Support Agreement.

“Crossholder Advisors” has the meaning set forth in the Restructuring Term Sheet.


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“Debt Backstop Agreement” means that certain Debt Backstop Agreement, to be executed among the Debtors and the debt backstop parties party thereto (including all exhibits, schedules, attachments and/or addendum thereto), pursuant to which the debt backstop parties will agree to backstop the Exit Facility in an aggregate principal amount of $1,641,000,000.

“Debt Backstop Order” has the meaning set forth in the Restructuring Support Agreement.

“Debt Backstop Premium” has the meaning set forth in the Restructuring Support Agreement.

“Debtor Breach Termination Event” shall mean a termination of this Agreement, predicated upon a willful or intentional action or inaction of a Debtor, pursuant to (a) Section 9.2(b)(i) (Breach of this Agreement); (b) Section 9.2(a)(i) (Outside Date) if any Debtor’s material breach of this Agreement, the Restructuring Support Agreement or the Debt Backstop Agreement caused the failure of the Closing to occur by the Outside Date; (c) Section 9.2(a)(ii) or 9.3(d) (Termination of the Restructuring Support Agreement) as a result of a termination of the Restructuring Support Agreement pursuant to Section 7(a)(i) or 7(a)(ii) thereto as a result of a breach by a Company Entity (as defined in the Restructuring Support Agreement); or (d) Section 9.2(a)(iv) or 9.3(e) (Termination of Debt Backstop Agreement) as a result of a termination of the Debt Backstop Agreement pursuant to Section 9.2(a)(i) thereof (if any Debtor’s material breach of this Agreement, the Restructuring Support Agreement or the Debt Backstop Agreement caused the failure of the closing under the Debt Backstop Agreement to occur by the Outside Date) or Section 9.2(b)(i) thereof. For purposes of this definition, “willful or intentional action or inaction” means an act or omission undertaken by a Debtor with the knowledge that such act or omission would, or would reasonably be expected to, cause a Debtor Breach Termination Event.

“Debtors” means, collectively: the Company, Hexion Inc., Hexion LLC, Lawter International Inc., Hexion CI Holding Company (China) LLC, Hexion Nimbus Inc., Hexion Nimbus Asset Holdings LLC, Hexion Deer Park LLC, Hexion VAD LLC, Hexion 2 U.S. Finance Corp., Hexion HSM Holdings LLC, Hexion Investments Inc., Hexion International Inc., North American Sugar Industries Incorporated, Cuban-American Mercantile Corporation, The West India Company, NL Coop Holdings LLC, and Hexion Nova Scotia Finance, ULC. For purposes of Article IV hereto, the term “Debtors” shall not include Hexion Nova Scotia Finance, ULC.

“Debt Raise” means the transactions contemplated by the Debt Backstop Agreement.

“Debt Term Sheet” means the Hexion Inc. term sheet attached as Exhibit A to the Debt Backstop Agreement.

“Defaulting Commitment Party” means, in respect of a Commitment Party Default that is continuing, the applicable defaulting Commitment Party.

“Deferred Compensation Liability” means the amount, as of immediately prior to the date hereof and on and as of the Closing Date, of all distributions that may become payable in respect of any non-qualified deferred compensation plan established, maintained, sponsored, or


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contributed, or required to be contributed, by a Debtor or any of its Subsidiaries, including any supplemental retirement plan, and account balances thereunder.

“Definitive Documentation” means the definitive documents and agreements governing the Restructuring Transactions as set forth in the Restructuring Support Agreement. “Definitive Documents” has a correlative meaning.

“DIP Facility” means any credit agreement for debtor-in-possession financing.

“DIP Orders” means, collectively, any Interim DIP Order, Final DIP Order, and any other interim or Final Order authorizing the Debtors to obtain postpetition financing or use cash collateral.

“Disclosure Statement” has the meaning set forth in the Restructuring Support Agreement.

“Discount to Equity Value” means 0.35.

“DTC” means the Depositary Trust Company.

“Effective Date” means the date upon which (a) no stay of the Confirmation Order is in effect, (b) all conditions precedent to the effectiveness of the Plan have been satisfied or are expressly waived in accordance with the terms thereof, as the case may be, and (c) on which the Restructuring and the other transactions to occur on the Effective Date pursuant to the Plan become effective or are consummated.

“End Date” has the meaning set forth in Section 9.2(a)(i).

“Environmental Laws” means all applicable laws (including common law), rules, regulations, codes, ordinances, orders in council, Orders, decrees, treaties, directives, judgments or legally binding agreements promulgated or entered into by or with any Governmental Entity, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material or to health and safety matters (to the extent relating to the environment or Hazardous Materials).

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any of the Debtors, is, or at any relevant time during the past six years was, treated as a single employer or under common control under or within the meaning of Section 414 of the Code or Section 4001 of ERISA.

“Escrow Account” has the meaning set forth in Section 2.5(a).

“Escrow Account Funding Date” has the meaning set forth in Section 2.5(b).

“Event” means any event, development, occurrence, circumstance, effect, condition, result, state of facts or change.


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“Excess Subscribed Shares” means, with respect to any Commitment Party, any Subscribed Shares purchased by such Commitment Party that are in excess of its Commitment Amount.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Commitment Party Purchaser” has the meaning set forth in Section 2.4(b).

“Exit Facilities” means, collectively (a) an asset-based revolving loan facility on terms and conditions (and in an amount) reasonably acceptable to the Company and the Requisite Commitment Parties and (b) the term loan credit facility or facilities to be entered into by certain of the Debtors on the Effective Date, and/or the senior secured notes to be issued (or guaranteed) by certain of the Debtors on the Effective Date, including, for the avoidance of doubt, any portion of such financing extended pursuant to the commitments provided under the Debt Backstop Agreement, in an aggregate principal amount of $1,641,000,000, on terms and conditions set forth in the Restructuring Term Sheet, any definitive documentation governing such financing, and, to the extent provided pursuant to the Debt Backstop Agreement, the Debt Term Sheet.

“Expense Reimbursement” has the meaning set forth in Section 3.3(a).

“FCPA” has the meaning set forth in Section 4.25.

“Filing Party” has the meaning set forth in Section 6.11(b).

“Final DIP Order” means an Order authorizing use of cash collateral and/or debtor-in-possession financing, which is a Final Order.

“Final Order” means, as applicable, an Order of the Bankruptcy Court or other court of competent jurisdiction with respect to the relevant subject matter that has not been reversed, stayed, reconsidered, readjudicated, modified, or amended, and as to which the time to appeal or seek certiorari has expired and no appeal or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the Order could be appealed or from which certiorari could be sought or the new trial, reargument, or rehearing shall have been denied, resulted in no modification of such Order, or has otherwise been dismissed with prejudice.

“Financial Reports” has the meaning set forth in Section 6.5.

“Financial Statements” has the meaning set forth in Section 4.9.

“First Lien Ad Hoc Group” has the meaning set forth in the Restructuring Support Agreement.

“First Lien Advisors” has the meaning set forth in the Restructuring Term Sheet.

“Foreign Plan” has the meaning set forth in Section 4.21(b).


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“Funding Amount” has the meaning set forth in Section 2.5(b).

“Funding Notice” has the meaning set forth in Section 2.5(a).

“Funding Notice Date” has the meaning set forth in Section 2.5(a).

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” has the meaning of “governmental unit” set forth in section 101(27) of the Bankruptcy Code.

“Hazardous Materials” means all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including explosive or radioactive substances or petroleum or any fraction thereof, petroleum distillates, petroleum products, natural gas, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas, of any nature subject to regulation or which can give rise to liability under any Environmental Law or any third party claim.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time.

“Indemnified Claim” has the meaning set forth in Section 8.2.

“Indemnified Person” has the meaning set forth in Section 8.1.

“Indemnifying Party” has the meaning set forth in Section 8.1.

“Intellectual Property Rights” has the meaning set forth in Section 4.15.

“Interim DIP Order” means an Order authorizing use of cash collateral and/or debtor-in-possession financing on an interim basis.

“Investment Companies” has the meaning set forth in Section 2.5(b).

“Investment Company Act” has the meaning set forth in Section 4.28.

“IRS” means the United States Internal Revenue Service.

“Joint Filing Party” has the meaning set forth in Section 6.11(c).

“Joint Ventures” has the meaning set forth in Section 4.25.

“Knowledge of the Company” means the actual knowledge, after reasonable inquiry of their direct reports, of Craig Rogerson, Chief Executive Officer, and George Knight, Chief Financial Officer.

“Law” means any law (statutory or common), statute, regulation, rule, code or ordinance enacted, adopted, issued or promulgated by any Governmental Entity.

“Legal Proceedings” has the meaning set forth in Section 4.13.


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“Legend” has the meaning set forth in Section 6.10.

“Lien” means any lien, adverse claim, charge, option, right of first refusal, servitude, security interest, mortgage, pledge, deed of trust, easement, encumbrance, restriction on transfer, conditional sale or other title retention agreement, defect in title, lien or judicial lien as defined in sections 101(36) and (37) of the Bankruptcy Code or other restrictions of a similar kind.

“Losses” has the meaning set forth in Section 8.1.

“Material Adverse Effect” means any Event, which individually, or together with all other Events, has had a material and adverse effect on (a) the business, assets, liabilities, finances, properties, results of operations or condition (financial or otherwise) of the Debtors and their Subsidiaries, taken as a whole, or (b) the ability of the Debtors and their Subsidiaries, taken as a whole, to perform their obligations under, or to consummate the transactions contemplated by, the Transaction Agreements, including the Rights Offering and the Debt Raise, in each case, except to the extent such Event results from, arises out of, or is attributable to, the following (either alone or in combination): (i) any change after the date hereof in global, national or regional political conditions (including hostilities, acts of war, sabotage, terrorism or military actions, or any escalation or material worsening of any such hostilities, acts of war, sabotage, terrorism or military actions existing or underway) or in the general business, market, financial or economic conditions affecting the industries, regions and markets in which the Debtors or their Subsidiaries operate, including any change in the United States or applicable foreign economies or securities, commodities or financial markets, or force majeure events or “acts of God”; (ii) any changes after the date hereof in applicable Law or GAAP, or in the interpretation or enforcement thereof; (iii) the execution, announcement or performance of this Agreement or the other Transaction Agreements or the transactions contemplated hereby or thereby (including any act or omission of the Debtors or their Subsidiaries expressly required or prohibited, as applicable, by the Restructuring Support Agreement or this Agreement or consented to or required by the Requisite Commitment Parties in writing); (iv) changes in the market price or trading volume of the claims or equity or debt securities of the Debtors or their Subsidiaries (but not the underlying facts giving rise to such changes unless such facts are otherwise excluded pursuant to the clauses contained in this definition); (v) the departure of officers or directors of any of the Debtors or any or their Subsidiaries not in contravention of the terms and conditions of this Agreement (but not the underlying facts giving rise to such departure unless such facts are otherwise excluded pursuant to the clauses contained in this definition); (vi) the filing of the Chapter 11 Cases or actions taken in connection with the Chapter 11 Cases that are directed by the Bankruptcy Court and made in compliance with the Bankruptcy Code and the Transaction Agreements; (vii) declarations of national emergencies in the United States or natural disasters in the United States; (viii) the events leading up to the filing of the Chapter 11 Cases that were publicly disclosed prior to the Closing Date and are set forth in Schedule 1.1(a) of the Company Disclosure Schedules or (ix) the occurrence of a Commitment Party Default; provided, that the exceptions set forth in clauses (i), (ii) and (vii) shall not apply to the extent that such Event is disproportionately adverse to the Debtors and their Subsidiaries, taken as a whole, as compared to other companies in the industries in which the Debtors or their Subsidiaries operate.

“Material Contracts” means all “plans of acquisition, reorganization, arrangement, liquidation or succession” and “material contracts” (as such terms are defined in


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Items 601(b)(2) and 601(b)(10) of Regulation S-K under the Exchange Act) to which any of the Debtors is a party.

“Milbank” means Milbank LLP.

“Milestone” has the meaning set forth in the Restructuring Support Agreement.

“MIP” means the new management incentive plan to be adopted by the reorganized Company, on the Effective Date, on the terms and conditions set forth in the Restructuring Term Sheet.

“Money Laundering Laws” has the meaning set forth in Section 4.26(a).

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any of the Debtors or any ERISA Affiliate is making or accruing an obligation to make contributions, has within any of the preceding six plan years made or accrued an obligation to make contributions, or each such plan with respect to which any such entity has any actual or contingent liability or obligation.

“New Parent” has the meaning set forth in Section 6.13(a).

“Non-Consenting Commitment Party” has the meaning set forth in Section 6.14.

“Notes Claims” the 1L Notes Claims, 1.5L Notes Claims, 2L Notes Claims and Unsecured Notes Claims.

“Noteholders” means all holders of the Notes.

“Notes” means, collectively, the 1L Notes, 1.5L Notes, 2L Notes and Unsecured Notes.

“Order” means any judgment, order, award, injunction, writ, permit, license or decree of any Governmental Entity or arbitrator of applicable jurisdiction.

“Outside Date” has the meaning set forth in Section 9.2(a)(i).

“Partial Noteholder Termination” has the meaning set forth in Section 9.2(a)(iii).

“Party” has the meaning set forth in the Preamble.

“Per Share Purchase Price” means (a) Plan Equity Value multiplied by (b) (i) one (1) minus (ii) the Discount to Equity Value and then divided by (c) the Aggregate Fully Diluted Common Shares, rounded to two decimal places.

“Permitted Liens” means (a) Liens for Taxes that (i) are not yet delinquent or (ii) are being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (b) landlord’s, operator’s, vendors’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other similar Liens for labor, materials or supplies provided with respect to any Real Property or personal property any such lien is incurred in the


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ordinary course of business consistent with past practice and as otherwise not prohibited under this Agreement, for amounts that are not more than sixty (60) days delinquent and that do not materially detract from the value of, or materially impair the use of, any of the Real Property or personal property of any of the Debtors, or, if for amounts that do materially detract from the value of, or materially impair the use of, any of the Real Property or personal property of any of the Debtors, if such Lien is being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (c) zoning, building codes and other land use Laws regulating the use or occupancy of any Real Property or the activities conducted thereon that are imposed by any Governmental Entity having jurisdiction over such Real Property (but excluding any violation thereof); provided, that no such zoning, building codes and other land use Laws prohibit the use or occupancy of such Real Property; (d) easements, covenants, conditions, minor encroachments, restrictions and other similar matters adversely affecting title to any Real Property and other title defects and encumbrances that do not or would not materially impair the use or occupancy of such Real Property or the operation of the Debtors’ business; (e) Liens permitted under the DIP Facility as of the date hereof; (f) Liens listed on Schedule 1.1(b) of the Company Disclosure Schedules; and (g) Liens that, pursuant to the Confirmation Order, will not survive beyond the Effective Date.

“Person” means an individual, firm, corporation (including any non-profit corporation), partnership, limited liability company, joint venture, association, trust, Governmental Entity or other entity or organization.

“Petition Date” means April 1, 2019.

“Plan” means the Debtors’ joint plan of reorganization to be approved by the Confirmation Order, including the Plan Supplement and all exhibits, supplements, appendices and schedules thereto, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion), as may be amended, supplemented, or modified from time to time in accordance with its terms and with the Restructuring Support Agreement and in a manner that is reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

“Plan Equity Value” means an amount equal to $1,374,000,000.

“Plan Solicitation Order” means an Order, in form and substance reasonably acceptable to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties, in their sole discretion), approving the Disclosure Statement with respect to the Plan and approving the Rights Offering Procedures and the solicitation with respect to the Plan.


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“Plan Supplement” means the documents filed with the Bankruptcy Court as exhibits or supplements to the Plan, including any documents identified by the Plan or Disclosure Statement as such.

“Pre-Closing Period” has the meaning set forth in Section 6.3.

“Put Election” has the meaning set forth in Section 2.2.

“Put Option” has the meaning set forth in Section 2.2.

“Real Property” means, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any of the Debtors or any of their Subsidiaries, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures incidental to the ownership or lease thereof.

“Registration Rights Agreement” has the meaning set forth in Section 6.7(a).

“Regulation S” has the meaning set forth in Section 5.11(b).

“Related Party” means, with respect to any Person, (a) any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of such Person and (b) any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of any of the foregoing.

“Related Purchaser” means, with respect to any Commitment Party, any reasonably creditworthy Affiliate or Affiliated Fund of such Commitment Party (other than any portfolio company of such Commitment Party or its Affiliates).

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the environment. “Released” has a correlative meaning.

“Replacing Commitment Parties” has the meaning set forth in Section 2.3(a).

“Replacing Terminating Commitment Parties” has the meaning set forth in Section 6.17.

“Representatives” means, with respect to any Person, such Person’s directors, officers, members, partners, managers, employees, agents, investment bankers, attorneys, accountants, advisors and other representatives.

“Requisite Commitment Parties” means the Commitment Parties holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate Rights Offering Backstop Commitments as of the date on which the consent or approval of the Requisite Commitment Parties is solicited.


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“Restructuring” has the meaning set forth in the Restructuring Support Agreement.

“Restructuring Support Agreement” has the meaning set forth in the Recitals.

“Restructuring Term Sheet” has the meaning set forth in the Recitals.

“Restructuring Transactions” means, collectively, the transactions contemplated by the Restructuring Support Agreement.

“Rights Offering” means the rights offering that is backstopped by the Commitment Parties for the Rights Offering Amount in connection with the Restructuring Transactions substantially on the terms reflected in the Restructuring Support Agreement and this Agreement, and in accordance with the Rights Offering Procedures.

“Rights Offering Amount” means an amount equal to $300,000,000.

“Rights Offering Backstop Commitment” has the meaning set forth in Section 2.2.

“Rights Offering Expiration Time” means the time and the date on which the rights offering subscription forms must be duly delivered to the Rights Offering Subscription Agent in accordance with the Rights Offering Procedures, together with the applicable aggregate Per Share Purchase Price, if applicable.

“Rights Offering Participants” means those Persons who duly subscribe for Rights Offering Shares in accordance with the Rights Offering Procedures.

“Rights Offering Procedures” means the procedures with respect to the Rights Offering that are approved by the Bankruptcy Court pursuant to the Plan Solicitation Order, which procedures shall be reasonably satisfactory to the Requisite Commitment Parties and the Company (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

“Rights Offering Shares” means the Common Shares (including all Unsubscribed Shares purchased by the Commitment Parties pursuant to this Agreement) distributed pursuant to and in accordance with the Rights Offering Procedures in the Rights Offering.

“Rights Offering Subscription Agent” means Omni Management Group, Inc. or another subscription agent appointed by the Company and reasonably satisfactory to the Requisite Commitment Parties.

“Rule 144A” has the meaning set forth in Section 5.11(b).

“RSA Order” has the meaning set forth in the Restructuring Support Agreement.


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“Sanctions” means any sanctions administered or enforced by the U.S. government (including without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control or the U.S. Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other applicable jurisdictions.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“SOX” has the meaning set forth in Section 4.10.

“Subscribed Shares” means, with respect to any Commitment Party, any Rights Offering Shares purchased by such Commitment Party in the Rights Offering pursuant to its exercise, in whole or in part, of its Subscription Rights.

“Subscription Rights” means the subscription rights to purchase Rights Offering Shares.

“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body, or (c) has the power to direct the business and policies.

“Taxes” means all taxes, assessments, duties, levies or other mandatory governmental charges paid to a Governmental Entity, including all federal, state, local, foreign and other income, franchise, profits, gross receipts, capital gains, capital stock, transfer, property, sales, use, value-added, occupation, excise, severance, windfall profits, stamp, payroll, social security, withholding and other taxes, assessments, duties, levies or other mandatory governmental charges of any kind whatsoever paid to a Governmental Entity (whether payable directly or by withholding and whether or not requiring the filing of a return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest thereon and shall include any liability for such amounts as a result of being a member of a combined, consolidated, unitary or affiliated group, as successor, by contract, as withholding agent, or otherwise.

“Terminating Commitment Parties” has the meaning set forth in Section 9.2(a)(iii).

“Terminating Commitment Party Replacement” has the meaning set forth in Section 6.17.

“Terminating Commitment Party Replacement Period” has the meaning set forth in Section 6.17.

“Transaction Agreements” has the meaning set forth in Section 4.2(a).

“Transfer” means to sell, transfer, assign, pledge, hypothecate, participate, donate or otherwise encumber or dispose of, directly or indirectly (including through derivatives, options,


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swaps, pledges, forward sales, participations or other transactions in which any Person receives the right to own or acquire) any current or future interest in a Subscription Right, a Note Claim, a Rights Offering Share, a Common Share or any other economic interest or right arising therefrom. “Transfer” used as a noun has a correlative meaning.

“Unfunded Pension Liability” means the excess of a Company Benefit Plan’s amount of unfunded benefit liabilities under Section 4001(a)(18) of ERISA, over the current value of that Company Benefit Plan’s assets, determined in accordance with the assumptions used for funding the Company Benefit Plan pursuant to Section 412 of the Code for the applicable plan year.

“Unsecured Notes” means the notes issued under the Unsecured Notes Indenture.

“Unsecured Notes Claims” means all claims and obligations arising under or in connection with the Unsecured Notes Indenture.

“Unsecured Notes Indenture” means that certain Indenture, dated as of December 15, 1987, between Hexion Inc. and the Bank of New York, as trustee, pursuant to which Hexion Inc. issued 9.200% debentures due 2021 and 7.875% debentures due 2023.

“Unsubscribed Shares” means the Rights Offering Shares that have not been duly purchased in the Rights Offering by Noteholders in accordance with the Rights Offering Procedures and the Plan, including, for purposes of calculating the number of Unsubscribed Shares to be purchased pursuant to the Rights Offering Backstop Commitment, any additional Common Shares issued and sold to the Commitment Parties on account of such Unsubscribed Shares pursuant to this Agreement to account for the Per Share Purchase Price at which Unsubscribed Shares will be sold.

“Volcker Rule” has the meaning set forth in Section 4.31(a).

“willful or intentional breach” has the meaning set forth in Section 9.4(a).

Section 1.2 Construction. In this Agreement, unless the context otherwise requires:

(a) references to Articles, Sections, Exhibits and Schedules are references to the articles and sections or subsections of, and the exhibits and schedules attached to, this Agreement;

(b) references in this Agreement to “writing” or comparable expressions include a reference to a written document transmitted by means of electronic mail in portable document format (pdf), facsimile transmission or comparable means of communication;

(c) words expressed in the singular number shall include the plural and vice versa; words expressed in the masculine shall include the feminine and neuter gender and vice versa;


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(d) the words “hereof”, “herein”, “hereto” and “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including all Exhibits and Schedules attached to this Agreement, and not to any provision of this Agreement;

(e) the term “this Agreement” shall be construed as a reference to this Agreement as the same may have been, or may from time to time be, amended, modified, varied, novated or supplemented;

(f) “include”, “includes” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words;

(g) references to “day” or “days” are to calendar days;

(h) references to “the date hereof” means the date of this Agreement;

(i) unless otherwise specified, references to a statute means such statute as amended from time to time and includes any successor legislation thereto and any rules or regulations promulgated thereunder in effect from time to time; and

(j) references to “dollars” or “$” refer to currency of the United States of America, unless otherwise expressly provided.

ARTICLE II

BACKSTOP COMMITMENT

Section 2.1 The Rights Offering; Subscription Rights.

(a) On and subject to the terms and conditions hereof, including entry of the BCA Approval Order by the Bankruptcy Court, the Company shall conduct the Rights Offering pursuant to and in accordance with the Rights Offering Procedures (including the oversubscription procedures contained therein), this Agreement and the Plan Solicitation Order, as applicable.

(b) If reasonably requested by the Requisite Commitment Parties from time to time prior to the Rights Offering Expiration Time (and any permitted extensions thereto), the Company shall use its commercially reasonable efforts to notify, or use its commercially reasonable efforts to cause the Rights Offering Subscription Agent to notify, within 48 hours of receipt of such request by the Company, the Commitment Parties of the aggregate number of Subscription Rights known by the Company or the Rights Offering Subscription Agent to have been exercised pursuant to the Rights Offering as of the most recent practicable time before such notification. The Rights Offering will be conducted, the Common Shares issued in satisfaction of the Company’s obligation to pay the Commitment Premium will be issued, and the offer and sale of the Unsubscribed Shares purchased by the Commitment Parties pursuant to this Agreement will be conducted, in reliance upon the exemption from registration under the Securities Act provided in Section 1145 of the Bankruptcy Code to the maximum extent permitted by Law or otherwise in reliance upon a specific exemption from the registration requirements of the Securities Act.


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Section 2.2 The Commitment. On and subject to the terms and conditions hereof, including entry of the Confirmation Order, each Commitment Party hereby grants to the Company an option (collectively, the “Put Option”) to require such Commitment Party to purchase (or cause any of its Related Purchasers to purchase) Unsubscribed Shares on the Closing Date subject to the terms and conditions of this Agreement. Upon the exercise of the Put Option, each Commitment Party agrees, severally and not jointly (in accordance with its Commitment Percentage), to purchase, and the Company agrees to sell to such Commitment Party (or Related Purchaser), on the Closing Date, for the applicable aggregate Per Share Purchase Price, the number of Unsubscribed Shares equal to (x) such Commitment Party’s Commitment Percentage multiplied by (y) the aggregate number of Unsubscribed Shares, rounded among the Commitment Parties solely to avoid fractional shares as the Requisite Commitment Parties may determine in their sole discretion (provided that in no event shall such rounding reduce the aggregate commitment of the Commitment Parties). The obligations of the Commitment Parties to purchase such Unsubscribed Shares as described in this Section 2.2 shall be referred to as the “Rights Offering Backstop Commitment.” The Company may exercise the Put Option by delivery to each Commitment Party of a written put election notice (the “Put Election”), provided that the Put Option shall automatically and irrevocably be deemed to have been exercised by the Company, without the need for delivery of written notice or the taking of any other further action by the Company or any other any Person, if the conditions set forth in Sections 7.1(d) and 7.1(e) shall have been satisfied or waived in accordance with this Agreement.

Section 2.3 Commitment Party Default; Replacement of Defaulting Commitment Parties.

(a) Upon the occurrence of a Commitment Party Default, the Commitment Parties and their respective Related Purchasers (other than any Defaulting Commitment Party) shall have the right and opportunity (but not the obligation), within five (5) Business Days (or such shorter period as may be necessary to consummate the Rights Offering in compliance with applicable securities laws and regulations) after receipt of written notice from the Company to all Commitment Parties of such Commitment Party Default, which notice shall be given promptly following the occurrence of such Commitment Party Default and to all Commitment Parties substantially concurrently (such period, the “Commitment Party Replacement Period”), to make arrangements for one or more of the Commitment Parties and their respective Related Purchasers (other than the Defaulting Commitment Party) to purchase all or any portion of the Available Shares (such purchase, a “Commitment Party Replacement”) on the terms and subject to the conditions set forth in this Agreement and in such amounts as may be agreed upon by all of the Commitment Parties electing to purchase all or any portion of the Available Shares, or, if no such arrangements are made, based upon the relative applicable Commitment Percentages of any such Commitment Parties and their respective Related Purchasers (other than any Defaulting Commitment Party) (such Commitment Parties the “Replacing Commitment Parties”). Any Available Shares purchased by a Replacing Commitment Party (and any commitment and applicable aggregate Per Share Purchase Price associated therewith) shall be included, among other things, in the determination of (x) the Unsubscribed Shares of such Replacing Commitment Party for all purposes hereunder, (y) the Commitment Percentage of such Replacing Commitment Party for purposes of Section 2.3(c), Section 2.5(b), Section 3.1 and Section 3.2 and (z) the Rights Offering Backstop Commitment of such Replacing Commitment Party for purposes of the


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definition of “Requisite Commitment Parties.” If a Commitment Party Default occurs, the Outside Date shall be delayed only to the extent necessary to allow for the Commitment Party Replacement to be completed within the Commitment Party Replacement Period and prior to the Outside Date (as so delayed).

(b) Notwithstanding anything in this Agreement to the contrary, if a Commitment Party is a Defaulting Commitment Party, or if this Agreement is terminated with respect to such Commitment Party as a result of its default hereunder, it shall not be entitled to any of the Commitment Premium or expense reimbursement applicable to such Defaulting Commitment Party (including the Expense Reimbursement) or indemnification provided, or to be provided, under or in connection with this Agreement or the other Transaction Documents (and if (x) the Closing occurs notwithstanding such a default or termination with respect to a Commitment Party, and (y) the amount funded in the Rights Offering (including the purchase of Unsubscribed Shares hereunder) is less than the Rights Offering Amount because of the failure of such Commitment Party to fund its Commitment in full, then the aggregate Commitment Premium payable by the Debtors shall be reduced ratably; provided, that, for the avoidance of doubt, such reduction shall not reduce the amount of the Commitment Premium payable to each Commitment Party that is not a Defaulting Commitment Party).

(c) Except as set forth in Section 2.3(a) above, nothing in this Agreement shall be deemed to require a Commitment Party to pay more than its Commitment Amount in its purchase of the Unsubscribed Shares.

(d) For the avoidance of doubt, notwithstanding anything to the contrary set forth in Section 9.4 but subject to Section 10.11, no provision of this Agreement shall relieve any Defaulting Commitment Party from liability hereunder, or limit the availability of the remedies set forth in Section 10.10, in connection with any such Defaulting Commitment Party’s Commitment Party Default. Any Defaulting Commitment Party shall be liable to each Commitment Party that is not a Defaulting Commitment Party, and to the Company, as a result of any breach of its obligations hereunder. For the avoidance doubt, nothing in this provision shall require the Company to issue any Common Shares to any Defaulting Commitment Party.

Section 2.4 Assignment of Commitment Rights.

(a) Each Commitment Party shall have the right to require, by written notice to the Company no later than two (2) Business Days prior to the Closing Date, that all or any portion of its (x) Subscription Rights or (y) Rights Offering Backstop Commitment, in each case be issued in the name of, and delivered to one or more of its Related Purchasers, which notice of designation shall (i) be addressed to the Company and signed by such Commitment Party and each Related Purchaser, (ii) specify the number of Common Shares to be delivered to or issued in the name of each such Related Purchaser, (iii) specify (A) the cash amount or (B) the number of Common Shares, in each case, in respect of the Commitment Premium and as elected by the applicable Commitment Party pursuant to Section 3.2, to be delivered to or issued in the name of each such Related Purchaser, and (iv) contain a confirmation by each such Related Purchaser of the accuracy of the representations made by each Commitment Party under this Agreement as applied to such Related Purchaser; provided that no such designation shall relieve such Commitment Party from any of its obligations under this Agreement.


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(b) Each Commitment Party shall have the right to Transfer all or any portion of its (x) Subscription Rights or (y) Rights Offering Backstop Commitment, in each case to any other Commitment Party or such other Commitment Party’s Related Purchaser (each, an “Existing Commitment Party Purchaser”); provided, that (a) such Existing Commitment Party Purchaser shall have been a Commitment Party or its Related Purchaser as of immediately prior to such Transfer and (b) if applicable, such Existing Commitment Party Purchaser shall deliver to the Company a joinder to this Agreement, in a form reasonably acceptable to the Company and the Requisite Commitment Parties, that contains a confirmation of the accuracy of the representations made by each Commitment Party under this Agreement as applied to such Person.

(c) Except as set forth in Section 2.4(a) and (b), no Commitment Party shall have the right to Transfer all or any portion of its Rights Offering Backstop Commitment to any Person, including the Company or any of its Affiliates.

(d) The Parties hereby agree that, notwithstanding anything to the contrary set forth in Section 4(b)(i) of the Restructuring Support Agreement, if any Consenting Party acquires additional Claims against or Interests in any Company Entity from any Person that is not a Consenting Party during the Support Period, such Consenting Party shall report its updated holdings only to the legal advisors to the Company within five (5) Business Days of such acquisition. No report shall be required for any acquisition of additional Claims against or Interests in any Company Entity from any Person that is a Consenting Party. The Company shall notify the legal advisors to the Ad Hoc Groups in writing if any Transfer of Claims against or Interests in any Company Entity shall constitute a Company Termination Event. For purposes of this Section 2.4(d), capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Restructuring Support Agreement.

(e) For the avoidance of doubt, nothing in this Agreement shall restrict the ability of a Commitment Party to transfer any Notes (including the associated Subscription Rights) in compliance with Section 4 of the Restructuring Support Agreement, and any such transfer shall not impair or otherwise affect the rights and obligations of such Commitment Party under this Agreement.

Section 2.5 Escrow Account Funding.

(a) Funding Notice. No later than the seventh (7th) Business Day following the Rights Offering Expiration Time, the Rights Offering Subscription Agent shall, on behalf of the Company, deliver to each Commitment Party a written notice (the “Funding Notice,” and the date of such delivery, the “Funding Notice Date”) (which may be delivered by email to any Commitment Party at the email address provided by such Commitment Party) setting forth (i) the number of Rights Offering Shares elected to be purchased by the Rights Offering Participants, and the aggregate Per Share Purchase Price therefor; (ii) the aggregate number of Unsubscribed Shares, if any, and the aggregate Per Share Purchase Price therefor; (iii) the Commitment Party’s Commitment Percentage and the aggregate number of Rights Offering Shares (based upon such Commitment Party’s Commitment Percentage) to be issued and sold by the Company to such Commitment Party on account of any Unsubscribed Shares, and the aggregate Per Share Purchase Price therefor; (iv) if applicable, the number of Rights Offering Shares such Commitment Party


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is subscribed for in the Rights Offering and for which such Commitment Party had not yet paid to the Rights Offering Subscription Agent the aggregate Per Share Purchase Price therefor, (v) the aggregate Per Share Purchase Price in respect of (iii) and (iv); and (vi) subject to the last sentence of Section 2.5(b), the escrow account designated in escrow agreements reasonably acceptable to the Company and the Requisite Commitment Parties (the “Escrow Account”), to which such Commitment Party shall deliver and pay the aggregate Per Share Purchase Price for such Commitment Party’s Commitment Percentage of the Unsubscribed Shares and, if not previously paid, the aggregate Per Share Purchase Price for the Rights Offering Shares such Commitment Party has subscribed for in the Rights Offering. The Company shall promptly direct the Rights Offering Subscription Agent to provide any written backup, information and documentation relating to the information contained in the applicable Funding Notice as any Commitment Party may reasonably request.

(b) Escrow Account Funding. No later than the second (2nd) Business Day following receipt of the Funding Notice (the “Escrow Account Funding Date”), each Commitment Party (other than those that are registered investment companies under the Investment Company Act (“Investment Companies”), unless an Investment Company shall so choose) shall deliver and pay an amount equal to the sum of (i) the aggregate Per Share Purchase Price for such Commitment Party’s Commitment Percentage of the Unsubscribed Shares, plus (ii) the aggregate Per Share Purchase Price for the Common Shares issuable pursuant to such Commitment Party’s exercise of the Subscription Rights that such Commitment Party exercised in the Rights Offering (the “Funding Amount”), by wire transfer of immediately available funds in U.S. dollars into the Escrow Account in satisfaction of such Commitment Party’s Rights Offering Backstop Commitment and the Subscription Rights that such Commitment Party exercised. If the Closing does not occur, all amounts deposited by the Commitment Parties in the Escrow Account shall be returned to the Commitment Parties in accordance with the terms of the escrow agreement. On the Effective Date, each Commitment Party that is an Investment Company shall, at its option, deliver and pay its respective Funding Amount by wire transfer of immediately available funds in U.S. dollars to a segregated bank account of the Rights Offering Subscription Agent designated by the Rights Offering Subscription Agent in the Funding Notice, or make other arrangements that are acceptable to the applicable Investment Company and the Company, in satisfaction of such Commitment Party’s Rights Offering Backstop Commitment and its obligations to fully exercise its Subscription Rights.

Section 2.6 Closing.

(a) Subject to Article VII, and Article IX unless otherwise mutually agreed in writing between the Debtors and the Requisite Commitment Parties, the closing of the Rights Offering (the “Closing”) shall take place electronically at 10:00 a.m., New York City time, on the date on which all of the conditions set forth in Article VII shall have been satisfied or waived in accordance with this Agreement (other than conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions). The date on which the Closing actually occurs shall be referred to herein as the “Closing Date”.

(b) At the Closing, the funds held in the Escrow Account (and any amounts paid to a Rights Offering Subscription Agent bank account pursuant to the last sentence of Section 2.5(b)) shall, as applicable, be released and utilized in accordance with the Plan.


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(c) At the Closing, issuance of the Unsubscribed Shares will be made by the Company to each Commitment Party (or its designee in accordance with Section 2.4) against payment of the aggregate Per Share Purchase Price for the Unsubscribed Shares purchased by such Commitment Party, in satisfaction of such Commitment Party’s Rights Offering Backstop Commitment. Unless a Commitment Party requests delivery of a physical share certificate, the entry of any Unsubscribed Shares to be delivered pursuant to this Section 2.6(c) into the account of a Commitment Party pursuant to the Company’s book entry procedures and delivery to such Commitment Party of an account statement reflecting the book entry of such Unsubscribed Shares shall be deemed delivery of such Unsubscribed Shares for purposes of this Agreement. Notwithstanding anything to the contrary in this Agreement, all Unsubscribed Shares will be delivered with all issue, stamp, transfer, sales and use, or similar transfer Taxes or duties that are due and payable (if any) in connection with such delivery duly paid by the Company on behalf of the Company.

ARTICLE III

BACKSTOP COMMITMENT PREMIUM AND EXPENSE REIMBURSEMENT

Section 3.1 Premium Payable by the Debtors. Subject to Section 3.2, in consideration for the Rights Offering Backstop Commitments and the other agreements of the Commitment Parties in this Agreement, the Debtors shall pay or cause to be paid a nonrefundable aggregate premium in an amount equal to $24,000,000, which represents 8.0% of the Rights Offering Amount, payable in accordance with Section 3.2, to the Commitment Parties (including any Replacing Commitment Party, but excluding any Defaulting Commitment Party) or their respective designees, as applicable, based upon their respective Commitment Percentages at the time such payment is made (the “Commitment Premium”), provided that the aggregate amount of the Commitment Premium payable by the Company shall be subject to reduction in accordance with Section 2.3(b).

The provisions for the payment of the Commitment Premium and Expense Reimbursement, and the indemnification provided herein, are an integral part of the transactions contemplated by this Agreement and without these provisions the Commitment Parties would not have entered into this Agreement.

Section 3.2 Payment of Commitment Premium. The Commitment Premium shall be fully earned, nonrefundable and non-avoidable upon entry of the BCA Approval Order and shall be paid by the Debtors, free and clear of any withholding or deduction for any applicable Taxes, on the Closing Date as set forth above. For the avoidance of doubt, to the extent payable in accordance with the terms of this Agreement, the Commitment Premium will be payable regardless of the amount of Unsubscribed Shares (if any) actually purchased. At the option of each Commitment Party (such option to be exercised no later than ten (10) days prior to the anticipated Effective Date), the Company shall satisfy the obligation to pay the Commitment Premium to such Commitment Party on the Closing Date, in lieu of any cash payment, by issuing the number of additional Common Shares (rounding down to the nearest whole share solely to avoid fractional shares) to each Commitment Party equal to such Commitment Party’s Commitment Premium Share Amount; provided, that if the Closing does not occur, the


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Commitment Premium shall be payable only in cash and only to the extent provided in (and in accordance with) Section 9.4. The Commitment Premium and the Expense Reimbursement shall, pursuant to the BCA Approval Order, constitute allowed administrative expenses of the Debtors’ estate under sections 503(b) and 507 of the Bankruptcy Code.

Section 3.3 Expense Reimbursement.

(a) In accordance with and subject to the BCA Approval Order and the terms and conditions of the existing fee letters between the Debtors and certain advisors to the Commitment Parties, the Debtors agree to pay, in accordance with Section 3.3(b) below, (i) all reasonable and documented out-of-pocket fees and expenses (including travel costs and expenses) of all of the Advisors incurred on behalf of the Commitment Parties in connection with the Chapter 11 Cases and/or the Restructuring (whether incurred before or after the Petition Date), including the negotiation, preparation and implementation of the Transaction Agreements and the other agreements and transactions contemplated hereby and thereby and (ii) any applicable filing or other similar fees required to be paid in all applicable jurisdictions (such payment obligations, the “Expense Reimbursement”). The Expense Reimbursement shall, pursuant to the BCA Approval Order, constitute allowed administrative expenses against each of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code. For the avoidance of doubt, the amount payable pursuant to this Section 3.3 shall be determined without duplication of recovery under the Restructuring Support Agreement.

(b) The Expense Reimbursement accrued through the date on which the BCA Approval Order is entered shall be paid in accordance with the BCA Approval Order as promptly as reasonably practicable after the date of the entry of the BCA Approval Order. The Expense Reimbursement shall thereafter be payable in accordance with the procedures set forth in the BCA Approval Order; provided, that the Debtors’ final payment shall be made contemporaneously with the Closing or the termination of this Agreement pursuant to Article IX.

Section 3.4 Tax Treatment of Commitment Premium. The Commitment Parties and the Debtors hereto agree to treat, for federal income tax purposes, the entering into of the Rights Offering Backstop Commitments pursuant to this Agreement as the sale of a put option by the Commitment Parties to the Debtors and the Commitment Premium as the sale price for such put option. The Commitment Parties and the Debtors shall not take any position or action inconsistent with such treatment and/or characterization.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE DEBTORS

Except (a) as set forth in the corresponding section of the Company Disclosure Schedules or (b) as disclosed in the Company SEC Documents filed with the SEC on or after December 31, 2017 and publicly available on the SEC’s Electronic Data-Gathering, Analysis and Retrieval system prior to the date hereof (excluding the exhibits, annexes and schedules thereto,


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any disclosures contained in the “Forward-Looking Statements” or “Risk Factors” sections thereof, or any other statements that are similarly predictive, cautionary or forward looking in nature), the Company, on behalf of itself and each of the other Debtors, jointly and severally, hereby represents and warrants to the Commitment Parties (unless otherwise set forth herein, as of the date of this Agreement and as of the Closing Date) as set forth below.

Section 4.1 Organization and Qualification. Each of the Debtors and each of their Subsidiaries (a) is a duly organized and validly existing corporation, limited liability company, or limited partnership, as the case may be, and, if applicable, in good standing (or the equivalent thereof) under the Laws of the jurisdiction of its incorporation or organization (except where the failure to have such authority or qualification would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect), (b) has the corporate, limited liability company or other applicable power and authority to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (c) except where the failure to have such authority or qualification would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications.

Section 4.2 Corporate Power and Authority. Each of the Debtors has the requisite corporate, limited liability company or other applicable power and authority (i) (A) subject to entry of the BCA Approval Order, the Confirmation Order, and any other applicable orders of the Bankruptcy Court, to enter into, execute and deliver this Agreement and to perform the BCA Approval Obligations and (B) subject to entry of the BCA Approval Order, the Confirmation Order, and any other applicable orders of the Bankruptcy Court, to perform each of its other obligations hereunder and (ii) subject to entry of the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, and any other applicable orders of the Bankruptcy Court, to consummate the transactions contemplated herein and in the Plan, to enter into, execute and deliver all agreements to which it will be a party as contemplated by this Agreement and the Plan (this Agreement, the Plan, the Disclosure Statement, the Debt Backstop Agreement, the debtor-in-possession credit agreement for the DIP Facility to be entered into in accordance with the DIP Orders, the Exit Facilities, and such other agreements and any Plan supplements or documents referred to herein or therein or hereunder or thereunder, collectively with the Restructuring Support Agreement, the “Transaction Agreements”) and to perform its obligations under each of the Transaction Agreements (other than this Agreement). Subject to the receipt of the foregoing Orders, as applicable, the execution and delivery of this Agreement and each of the other Transaction Agreements and the consummation of the transactions contemplated hereby and thereby have been or will be duly authorized by all requisite corporate action on behalf of the Debtors and no other corporate proceedings on the part of the Debtors are or will be necessary to authorize this Agreement or any of the other Transaction Agreements or to consummate the transactions contemplated hereby or thereby.

Section 4.3 Execution and Delivery; Enforceability. This Agreement has been duly executed and delivered by the Debtors. Subject to the entry of the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, and any other


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applicable orders of the Bankruptcy Court, as applicable, each other Transaction Agreement will be, duly executed and delivered by the Company and each of the other Debtors party thereto. Upon entry of the BCA Approval Order and assuming due and valid execution and delivery hereof by the Commitment Parties, the BCA Approval Obligations will constitute the valid and legally binding obligations of the Company and, to the extent applicable, the other Debtors, enforceable against the Company and, to the extent applicable, the other Debtors, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or hereafter in effect relating to creditor’s rights generally and subject to general principles of equity. Upon entry of the BCA Approval Order and assuming due and valid execution and delivery of this Agreement and the other Transaction Agreements by the Commitment Parties and, to the extent applicable, any other parties hereof and thereof, each of the obligations of the Company and, to the extent applicable, the other Debtors hereunder and thereunder will constitute the valid and legally binding obligations of the Company and, to the extent applicable, the other Debtors, enforceable against the Company and, to the extent applicable, the other Debtors, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or hereafter in effect relating to creditor’s rights generally and subject to general principles of equity.

Section 4.4 Authorized and Issued Equity Interests.

(a) On the Closing Date, (i) the total issued equity interests of the Company will consist solely of the Common Shares issued pursuant to the Plan, which shall include the Common Shares to be issued with respect to pre-petition creditor claims under the Plan, the Common Shares issued under the Rights Offering, the Common Shares issued in respect of the Commitment Premium pursuant to Article III and the Common Shares issued in respect of the Debt Backstop Premium pursuant to the Debt Backstop Agreement, (ii) no equity interests will be held by the Company in its treasury, (iii) no equity interests will be reserved for issuance upon exercise of stock options and other rights to purchase or acquire equity interests granted in connection with any employment arrangement entered into in accordance with Section 6.3, except as reserved in respect of the MIP, and (iv) no warrants to purchase equity interests will be issued and outstanding. Except as set forth in the prior sentence, as of the Closing Date, no units or shares of capital stock or other equity securities or voting interest in the Company will have been issued, reserved for issuance or outstanding.

(b) Except as described in this Section 4.4 or Section 4.4 of the Company Disclosure Schedules, and except as set forth in the Registration Rights Agreement, the Company Organizational Documents and this Agreement, as of the Closing Date, none of the Debtors or any of their respective Subsidiaries will be party to or otherwise bound by or subject to any outstanding option, warrant, call, right, security, commitment, Contract, arrangement or undertaking (including any preemptive right) that (i) obligates the Debtors or their respective Subsidiaries to issue, deliver, sell or transfer, or repurchase, redeem or otherwise acquire, or cause to be issued, delivered, sold or transferred, or repurchased, redeemed or otherwise acquired, any units or shares of the capital stock of, or other equity or voting interests in, any of the Debtors or their respective Subsidiaries or any security convertible or exercisable for or exchangeable into any units or capital stock of, or other equity or voting interest in, any of the Debtors or their respective Subsidiaries, (ii) obligates any of the Debtors or their respective Subsidiaries to issue,


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grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking, (iii) restricts the Transfer of any units or shares of capital stock of any of the Debtors or their respective Subsidiaries (other than any restrictions included in the Exit Facilities or any corresponding pledge agreement or in the organizational documents of any joint venture of the Debtors or their subsidiaries) or (iv) relates to the voting of any equity interests in any of the Debtors or their respective Subsidiaries, except as to voting rights attendant to any such equity interests or as set forth in the organizational documents thereof.

Section 4.5 Issuance. The Common Shares to be issued pursuant to the Plan, including the Common Shares to be issued in connection with the consummation of the Rights Offering and pursuant to the terms hereof, will, when issued and delivered on the Closing Date in exchange for the aggregate Per Share Purchase Price therefor, be duly and validly authorized, issued and delivered and shall be fully paid and non-assessable, and free and clear of all Taxes, Liens (other than Transfer restrictions imposed hereunder or under the Company Organizational Documents or by applicable Law), preemptive rights, subscription and similar rights (other than any rights set forth in the Company Organizational Documents and the Registration Rights Agreement).

Section 4.6 No Conflict. Assuming the consents described in clauses (a) through (h) of Section 4.7 are obtained, the execution and delivery by the Company and, if applicable, any other Debtor, of this Agreement, the Plan and the other Transaction Agreements, the compliance by the Company and, if applicable, any other Debtor, with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein will not (a) conflict with, or result in a breach, modification or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time, or both), or result, except to the extent specified in the Plan, in the acceleration of, or the creation of any Lien under, or cause any payment or consent to be required under any Contract to which any Debtor will be bound as of the Closing Date after giving effect to the Plan or to which any of the property or assets of any Debtor will be subject as of the Closing Date after giving effect to the Plan, (b) result in any violation of the provisions of any of the Debtors’ organizational documents (in the case of each of (a) and (b), other than, for the avoidance of doubt, a breach or default that would be triggered as a result of the Chapter 11 Cases or the Company’s or any Debtor’s undertaking to implement the Restructuring Transactions through the Chapter 11 Cases), or (c) result in any violation of any Law or Order applicable to any Debtor or any of their properties, except in each of the cases described in clause (a) or (c) for any conflict, breach, modification, violation, default, acceleration or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.7 Consents and Approvals. No consent, approval, authorization, Order, registration or qualification of or with any Governmental Entity having jurisdiction over any of the Debtors or any of their properties (each, an “Applicable Consent”) is required for the execution and delivery by the Company and, to the extent relevant, the other Debtors, of this Agreement, the Plan and the other Transaction Agreements, the compliance by the Company and, to the extent relevant, the other Debtors, with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except for (a) the entry of the BCA Approval Order


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authorizing the Debtors to enter into this Agreement and perform the BCA Approval Obligations, (b) entry of the Plan Solicitation Order, (c) entry of the Debt Backstop Order, (d) entry by the Bankruptcy Court, or any other court of competent jurisdiction, of Orders as may be necessary in the Chapter 11 Cases from time-to-time; (e) the entry of the Confirmation Order, (f) filings, notifications, authorizations, approvals, consents, clearances or termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement, (g) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or “Blue Sky” Laws in connection with the purchase of the Unsubscribed Shares by the Commitment Parties, the issuance of the Subscription Rights, the issuance of the Rights Offering Shares pursuant to the exercise of the Subscription Rights or the issuance of Common Shares as payment of the Commitment Premium, and (h) any Applicable Consents that, if not made or obtained, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.8 Arm’s-Length. The Debtors acknowledge and agree that (a) each of the Commitment Parties is acting solely in the capacity of an arm’s-length contractual counterparty to the Debtors with respect to the transactions contemplated hereby (including in connection with determining the terms of the Rights Offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any of its Subsidiaries and (b) no Commitment Party is advising the Company or any of its Subsidiaries as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.

Section 4.9 Financial Statements. The audited consolidated balance sheets of the Company as at December 31, 2018 and the related consolidated statements of operations and of cash flows for the fiscal year then ended, as filed with the SEC (the “Financial Statements”), in each case, present fairly the consolidated financial condition of the Company as at such date, and the consolidated results of its operations and its consolidated cash flows for the fiscal year then ended. All such Financial Statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as disclosed therein).

Section 4.10 Company SEC Documents and Disclosure Statement. The Debtors and each of their Subsidiaries, if applicable, have filed with or furnished to the SEC all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be filed or furnished by them since December 31, 2017 under the Exchange Act or the Securities Act. As of their respective dates, and, if amended, as of the date of the last such amendment, each of the Company SEC Documents, including any financial statements or schedules included therein, (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Company SEC Document or necessary in order to make the statements in such Company SEC Document, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act, the Securities Act and the Sarbanes-Oxley Act of 2002 (“SOX”), as the case may be, and the applicable rules and regulations of the SEC under the Exchange Act, the Securities Act and SOX, as the case may be.


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Section 4.11 Absence of Certain Changes. Since December 31, 2018, no Event has occurred or exists that has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.12 No Violation; Compliance with Laws. (a) The Company is not in violation of its certificate of formation or limited liability company operating agreement, and (b) no other Debtor or any of its Subsidiaries is in violation of its respective charter or bylaws, certificate of formation or limited liability company operating agreement or similar organizational document in any material respect. None of the Debtors or their Subsidiaries is or has been at any time since December 31, 2017 in violation of any Law or Order, except for any such violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.13 Legal Proceedings. Other than as set forth in Section 4.13 of the Company Disclosure Schedules, the Chapter 11 Cases and any adversary proceedings or contested motions commenced in connection therewith, (a) there are no material legal, governmental, administrative, judicial or regulatory investigations, audits, actions, suits, claims, arbitrations, demands, demand letters, claims, notices of noncompliance or violations, or proceedings (“Legal Proceedings”) pending or, to the Knowledge of the Company, threatened to which any of the Debtors or their Subsidiaries is a party or to which any property of any of the Debtors or their Subsidiaries is the subject which, if adversely determined, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (b) no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in each case that in any manner draws into question the validity or enforceability of this Agreement, the Plan or the other Transaction Agreements or that would reasonably be expected to have, in the aggregate, a Material Adverse Effect.

Section 4.14 Labor Relations. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) there are no strikes or other labor disputes pending or threatened against any of the Debtors or their respective Subsidiaries; (b) to the Knowledge of the Company, the hours worked and payments made to employees of any of the Debtors or any of their respective Subsidiaries have not been in violation of the Fair Labor Standards Act of 1938 or any other applicable Law dealing with such matters; (c) all payments due from any of the Debtors or their Subsidiaries or for which any claim may be made against any of the Debtors or their Subsidiaries, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of any of the Debtors or their respective Subsidiaries, as applicable, to the extent required by GAAP; (d) each of the Debtors and their Subsidiaries has complied and is currently in compliance with all Laws and legal requirements in respect of personnel, employment and employment practices (including for purposes of classification); and (e) the Debtors and their respective Subsidiaries have not and are not engaged in any unfair labor practice. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the consummation of the transactions contemplated by the Transaction Agreements will not give rise to a right of termination or right of renegotiation on the part of any union under any material collective bargaining agreement to which any of the Debtors (or any predecessor)


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or any of their respective Subsidiaries is a party or by which any of the Debtors (or any predecessor) or any of their respective Subsidiaries is bound.

Section 4.15 Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) each of the Debtors and each of their Subsidiaries owns, or possesses the right to use, all of the patents, patent rights, trademarks, service marks, trade names, copyrights, mask works, domain names, and any and all applications or registrations for any of the foregoing (collectively, “Intellectual Property Rights”) that are reasonably necessary for the operation of their respective businesses, without infringement upon the rights of any other Person (of which any of the Debtors and their Subsidiaries has been notified in writing), (b) to the Knowledge of the Company, none of the Debtors nor their respective Subsidiaries nor any Intellectual Property Right, proprietary right, product, process, method, substance, part, or other material now employed, sold or offered by or contemplated to be employed, sold or offered by such Person, is interfering with, infringing upon, misappropriating or otherwise violating any valid Intellectual Property Rights of any Person, and (c) no claim or litigation regarding any of the foregoing is pending or, to the Knowledge of the Company, threatened.

Section 4.16 Title to Real and Personal Property.

(a) Real Property. Each of the Debtors and each of their respective Subsidiaries has valid fee simple title to, or a valid leasehold interest in, or valid easements or other limited property interests in, all of its Real Properties and has valid title to its personal properties and assets, in each case, except for Permitted Liens and except for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes, and except where the failure (or failures) to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided, however, the enforceability of the Debtors’ leasehold title in any leased Real Properties may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditor’s rights generally or general principles of equity, including the Chapter 11 Cases. To the Knowledge of the Company, all such properties and assets are free and clear of Liens, other than Permitted Liens.

(b) Leased Real Property. Other than as a consequence of the Chapter 11 Cases, each of the Debtors and each of their respective Subsidiaries is in compliance with all obligations under all leases to which it is a party that have not been rejected in the Chapter 11 Cases, except where the failure to comply would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and none of the Debtors or their Subsidiaries has received written notice of any good faith claim asserting that such leases are not in full force and effect, except leases in respect of which the failure to be in full force and effect would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each of the Debtors and each of their Subsidiaries enjoys peaceful and undisturbed possession under all such leases, other than leases in respect of which the failure to enjoy peaceful and undisturbed possession would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.


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(c) Personal Property. Other than as a consequence of the Chapter 11 Cases, each of the Debtors and each of their Subsidiaries owns or possesses the right to use all of its personal property, including all Intellectual Property Rights and all licenses and rights with respect to any of the foregoing used in the conduct of their businesses, without any conflict (of which any of the Debtors and their Subsidiaries has been notified in writing) with the rights of others, and free from any burdensome restrictions on the present conduct of the Debtors or their respective Subsidiaries, as the case may be, except where such conflicts and restrictions would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.17 No Undisclosed Relationships. Other than Contracts or other direct or indirect relationships between or among any of the Debtors or their Subsidiaries, there are no Contracts or other direct or indirect relationships existing as of the date hereof between or among any of the Debtors or their Subsidiaries, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors, or Affiliate thereof, on the other hand that is required by the Exchange Act to be described in the Company’s filings with the SEC and that is not so described. A correct and complete copy of any Contract existing as of the date hereof between or among any of the Debtors or their Subsidiaries, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors or their Subsidiaries, or Affiliate thereof, on the other hand, that is required by the Exchange Act to be described in the Company’s filings with the SEC is filed as an exhibit to, or incorporated by reference as indicated in, the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 that the Company filed on April 11, 2019, or any other Company SEC Document filed between April 11, 2019 and the date hereof.

Section 4.18 Licenses and Permits. The Debtors and their Subsidiaries possess all licenses, certificates, permits and other authorizations issued by, have made all declarations and filings with and have maintained all financial assurances required by, the appropriate Governmental Entities that are necessary for the ownership or lease of their respective properties and the conduct of the business, except where the failure to possess, make or give the same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. None of the Debtors or their Subsidiaries (a) has received notice of any revocation or modification of any such license, certificate, permit or authorization or (b) has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except to the extent that any of the foregoing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.19 Environmental. Except as set forth in Section 4.19 of the Company Disclosure Schedules and as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) no written notice, claim, demand, request for information, Order, complaint or penalty has been received by any of the Debtors or their Subsidiaries, and there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened which allege a violation of or liability under any Environmental Laws (including with respect to exposure to Hazardous Materials), in each case relating to any of the Debtors or their Subsidiaries, (b) each Debtor and each of their respective Subsidiaries has received (including timely application for renewal of the same),


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and maintained in full force and effect, all environmental permits, licenses and other approvals, and has maintained all financial assurances, in each case to the extent necessary for its operations to comply with all applicable Environmental Laws and is, and since January 1, 2017, has been, in compliance with the terms of such permits, licenses and other approvals and with all applicable Environmental Laws, (c) to the Knowledge of the Company, no Hazardous Material is located at, on or under any property currently or formerly owned, operated or leased by any of the Debtors or their Subsidiaries that has given rise or would reasonably be expected to give rise to any cost, liability or obligation of any of the Debtors under any Environmental Laws, (d) to the Knowledge of the Company, no Hazardous Material has been Released, generated, owned, treated, stored, transported or handled by any of the Debtors or their Subsidiaries, and none of the Debtors or their Subsidiaries has arranged for or permitted the disposal of Hazardous Material at any location in a manner that has given rise or would reasonably be expected to give rise to any cost, liability or obligation of any of the Debtors or their Subsidiaries under any Environmental Laws, and (e) no agreements in which any of the Debtors or their Subsidiaries has expressly assumed responsibility for any known obligation of any other Person arising under or relating to Environmental Laws that remains unresolved. Notwithstanding the generality of any other representations and warranties in this Agreement, the representations and warranties in this Section 4.19 constitute the sole and exclusive representations and warranties in this Agreement with respect to any environmental, health or safety matters, including any arising under or relating to Environmental Laws.

Section 4.20 Taxes.

(a) Except as would not reasonably be expected to be material to the Debtors and their Subsidiaries taken as a whole, (i) each of the Debtors and their Subsidiaries have filed or caused to be filed all U.S. federal, state, provincial, local and non-U.S. Tax returns required to have been filed by it and (ii) taken as a whole, each such Tax return is true and correct.

(b) Each of the Debtors and their Subsidiaries has timely paid or caused to be timely paid all Taxes shown to be due and payable by it on the returns referred to in clause (a) and all other Taxes or assessments (or made adequate provision (in accordance with GAAP) for the payment of all Taxes due) with respect to all periods or portions thereof ending on or before the date hereof, which Taxes, if not paid or adequately provided for, would reasonably be expected to be material to the Debtors taken as a whole, excluding Taxes being contested in good faith by appropriate proceedings and for which the Debtors or their Subsidiaries have set aside on their books adequate reserves in accordance with GAAP.

(c) As of the date hereof, with respect to the Debtors, other than in connection with the Chapter 11 Cases and other than Taxes or assessments that are being contested in good faith and are not expected to result in significant negative adjustments that would be material to the Debtors taken as a whole, (i) no claims have been asserted in writing with respect to any material Taxes, (ii) no presently effective waivers or extensions of statutes of limitation with respect to Taxes have been given or requested and (iii) no Tax returns are being examined by, and no written notification of intention to examine has been received from, the IRS or any other Governmental Entity.


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(d) None of the Debtors nor any of their Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for a taxable period (or portion thereof) ending after the Closing Date as a result of any (1) installment sale or open transaction disposition made or entered into prior to the Closing, (2) prepaid amount received prior to the Closing, (3) election under Section 108(i) of the Code (or any similar provision of state, local or non-U.S. Law), or (4) any adjustment pursuant to Section 481(a) of the Code (or any similar provision of state, local or non-U.S. Law) made or requested prior to the Closing or, to the Knowledge of the Company, proposed by any Governmental Entity prior to the Closing. None of the Debtors and their Subsidiaries has any material liability pursuant to or attributable to Section 965 of the Code.

(e) The Debtors and each Subsidiary have complied in all material respects with all applicable laws, rules, and regulations relating to the payment and withholding of Taxes, and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper Governmental Entity all material required amounts.

Section 4.21 Employee Benefit Plans.

(a) Other than the Hexion Inc. Pension Plan, none of the Debtors nor any of their ERISA Affiliates sponsor, maintain, contribute to, or has an obligation to contribute to, or has any outstanding liability (contingent or otherwise) to any Multiemployer Plan or any plan that is subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA. No condition exists that could reasonably be expected to result in any material liability or obligation (contingent or otherwise) to the Debtors under Title IV of ERISA. The Unfunded Pension Liability for the Hexion Inc. Pension Plan does not exceed $50 million. The Deferred Compensation Liabilities are unfunded and do not exceed $6 million in the aggregate.

(b) Except as set forth in Schedule 4.21 of the Company Disclosure Schedules, none of the Debtors nor any of the Subsidiaries has established, sponsors or maintains, or has any liability (contingent or otherwise) with respect to, any material defined benefit employee pension benefit plan (within the meaning of U.S. Accounting Standards Codification Topic 715-30) governed by or subject to the Laws of a jurisdiction other than the United States of America (a “Foreign Plan”). No Foreign Plan has unfunded liabilities in excess of $175 million with respect to any single Foreign Plan and in excess of $250 million with respect to all Foreign Plans in the aggregate.

(c) Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect to the Debtors, there are no pending, or to the Knowledge of the Company, threatened claims, sanctions, actions or lawsuits, asserted or instituted against any Company Benefit Plan or Foreign Plan or any Person as fiduciary or sponsor of any Company Benefit Plan, or Foreign Plan in each case other than claims for benefits in the normal course.

(d) Except as set forth in Schedule 4.21 of the Company Disclosure Schedules or as would not reasonably be expected to result, individually or in the aggregate, in a material liability to the Debtors, none of the Company Benefit Plans or Foreign Plans obligates any Debtor or any Debtor’s Subsidiary to provide, nor has any Debtor or any of their respective Subsidiaries promised or agreed to provide or otherwise has any liability (contingent or otherwise) with respect


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to, retiree or post-employment health, welfare or life insurance or benefits, other than as required under Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code or any similar Law for which the covered Person pays the full cost of coverage.

(e) Except as set forth in Schedule 4.21 of the Company Disclosure Schedules or as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, (i) all compensation and benefit arrangements of the Debtors and their respective Subsidiaries and all Company Benefits Plans comply and have complied in both form and operation with their terms and all applicable Laws and legal requirements and (ii) none of the Debtors has any obligation to provide any individual with a “gross up” or similar payment in respect of any Taxes that may become payable under Section 409A or 4999 of the Code. Except as set forth in Schedule 4.21 of the Company Disclosure Schedules, on the Effective Date, no compensation or benefit plan, practice, program, policy, agreement, or arrangement will exist that, as a result of the Chapter 11 Cases or any transactions related thereto, including the transactions contemplated by this Agreement, could reasonably be expected to result in the acceleration of the time of payment or vesting, or a material increase in the amount of compensation or benefit due to any employee, director, or other service provider of any of the Debtors or any of their Subsidiaries.

Section 4.22 Internal Control Over Financial Reporting. The Company has established and maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) that complies with the requirements of the Exchange Act and has been designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and to the Knowledge of the Company, there are no weaknesses in the Company’s internal control over financial reporting as of the date hereof.

Section 4.23 Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) designed to ensure that information required to be disclosed by the Company in the reports that it files and submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including that information required to be disclosed by the Company in the reports that it files and submits under the Exchange Act is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosure.

Section 4.24 Material Contracts. Other than as a result of a rejection motion filed by any of the Debtors in the Chapter 11 Cases, all Material Contracts are valid, binding and enforceable by and against the Debtor party thereto and, to the Knowledge of the Company, each other party thereto (except where the failure to be valid, binding or enforceable does not constitute a Material Adverse Effect), and no written notice to terminate, in whole or part, any Material Contract has been delivered to any of the Debtors (except where such termination would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect). Other than as a result of the filing of the Chapter 11 Cases or any rejection motion filed by any of the Debtors in the Chapter 11 Cases, none of the Debtors nor, to the Knowledge of the Company, any other party to any Material


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Contract, is in material default or breach under the terms thereof, in each case, except for such instances of material default or breach that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Material Contract has been publicly filed with the SEC.

Section 4.25 No Unlawful Payments. Since January 1, 2014, none of the Debtors, their respective Subsidiaries or, to the Knowledge of the Company, any joint ventures of which the Debtors or their respective subsidiaries own at least forty-nine percent (49%) interest (such joint ventures, together with the Subsidiaries of such joint ventures, the “Joint Ventures”) nor, to the Knowledge of the Company, any of their respective directors, officers, employees or agents has in any material respect: (a) used any funds of any of the Debtors, their respective Subsidiaries or to the Knowledge of the Company, the Joint Ventures for any unlawful contribution, gift, entertainment or other unlawful expense, in each case relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee; (c) otherwise violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (“FCPA”), or the UK Bribery Act 2010; or (d) made any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment. No material Legal Proceeding by or before any Governmental Entity or any arbitrator involving any of the Debtors, their respective Subsidiaries and the Joint Ventures with respect to the FCPA, UK Bribery Act 2010 or similar applicable anti-corruption laws is pending or, to the Knowledge of the Company, threatened, and no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in any manner that (i) would be material and adverse to the Debtors or their Subsidiaries, or (ii) to the Knowledge of the Company, would be material and adverse to the Joint Ventures. The Debtors, their respective Subsidiaries and to the Knowledge of the Company, the Joint Ventures have implemented and maintain in effect policies and procedures designed to ensure compliance by the Debtors, their respective Subsidiaries and the Joint Ventures and their respective directors, officers, employees and agents with the FCPA, UK Bribery Act 2010 and any other applicable anti-corruption laws.

Section 4.26 Compliance with Money Laundering and Sanctions Laws.

(a) The operations of the Debtors, their respective Subsidiaries, and to the Knowledge of the Company, the Joint Ventures are and, since January 1, 2014 have been at all times, conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transactions Reporting Act of 1970, the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the money laundering statutes of all jurisdictions in which the Debtors, their respective Subsidiaries and the Joint Ventures operate (and the rules and regulations promulgated thereunder) and any related or similar Laws (collectively, the “Money Laundering Laws”) and no material Legal Proceeding by or before any Governmental Entity or any arbitrator involving any of the Debtors or their respective Subsidiaries, or to the Knowledge of the Company, the Joint Ventures with respect to Money Laundering Laws is pending or, to the Knowledge of the Company, threatened, and no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in any manner that (i) would be material and adverse to the Debtors or their


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Subsidiaries, or (ii) to the Knowledge of the Company, would be material and adverse to the Joint Ventures. The Debtors, their respective Subsidiaries and to the Knowledge of the Company, the Joint Ventures have implemented and maintain in effect policies and procedures designed to ensure compliance by the Debtors, their respective Subsidiaries, the Joint Ventures and their respective directors, officers, employees and agents with applicable Money Laundering Laws.

(b) None of the Debtors, their Subsidiaries or to the Knowledge of the Company, the Joint Ventures nor, to the Knowledge of the Company, any of their respective directors, officers, employees or other Persons acting on their behalf with express authority to so act is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. None of the Debtors, their respective Subsidiaries or, to the Knowledge of the Company, the Joint Ventures, nor, to the Knowledge of the Company, any of their respective current or former directors, officers, employees, agents, Controlled Affiliates or other Persons acting on their behalf with express authority to so act, has engaged since January 1, 2014, or is engaged, in any transaction(s) or activities which would result in a violation of Sanctions in any material respect. The Company will not directly or indirectly use the proceeds of the Rights Offering, or lend, contribute or otherwise make available such proceeds to any other Debtor, its Subsidiaries, joint venture partner (including the Joint Ventures) or other Person, for the purpose of financing the activities of any Person that, to the Knowledge of the Company, is currently subject to any Sanctions. No material Legal Proceeding by or before any Governmental Entity or any arbitrator involving any of the Debtors, their respective Subsidiaries and the Joint Ventures with respect to Sanctions is pending or, to the Knowledge of the Company, threatened, and no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in any manner that (i) would be material and adverse to the Debtors or their Subsidiaries, or (ii) to the Knowledge of the Company, would be material and adverse to the Joint Ventures. The Debtors, their respective Subsidiaries and to the Knowledge of the Company, the Joint Ventures, have implemented and maintain in effect policies and procedures designed to ensure compliance by the Debtors, their respective Subsidiaries and the Joint Ventures, and their respective directors, officers, employees and agents with applicable Sanctions.

Section 4.27 No Broker’s Fees. None of the Debtors or any of their respective Subsidiaries is a party to any Contract with any Person (other than this Agreement) that would give rise to a valid claim against the Commitment Parties for a brokerage commission, finder’s fee or like payment in connection with the Rights Offering or the sale of the Unsubscribed Shares.

Section 4.28 Investment Company Act. None of the Debtors or any of their respective Subsidiaries is, or immediately after giving effect to the consummation of the Restructuring will be, an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended (the “Investment Company Act”), and this conclusion is based on one or more bases or exclusions other than Sections 3(c)(1) and 3(c)(7) of the Investment Company Act, including that none of the Debtors or their Subsidiaries comes within the basic definition of ‘investment company’ under section 3(a)(1) of the Investment Company Act.

Section 4.29 Insurance. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) the Debtors


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and their respective Subsidiaries have insured their properties and assets against such risks and in such amounts as are customary for companies engaged in similar businesses in similar geographies; (b) all premiums due and payable in respect of material insurance policies maintained by the Debtors and their respective Subsidiaries have been paid; (c) the Company reasonably believes that the insurance maintained by or on behalf of the Debtors and their respective Subsidiaries is adequate in all material respects; and (d) as of the date hereof, to the Knowledge of the Company, none of the Debtors or their respective Subsidiaries has received notice from any insurer or agent of such insurer with respect to any material insurance policies of the Debtors or their respective Subsidiaries of any cancellation or termination of such policies, other than such notices which are received in the ordinary course of business or for policies that have expired in accordance with their terms.

Section 4.30 Volcker Compliance.

(a) None of the Debtors nor their Subsidiaries nor their respective “Affiliates” (as defined in Section 2(k) of the BHC Act) have: (i) taken any action to acquire or retain an ownership interest in or to sponsor, or omitted to take any action necessary to prevent themselves from acquiring or retaining an ownership interest in or sponsoring, a Covered Fund for purposes the Volcker Rule (the terms “sponsor” and “covered fund” having the meanings set forth in Section 13 of the BHC Act and the rules and regulations adopted thereunder (collectively, the “Volcker Rule”)), (ii) engaged in proprietary trading as defined in the Volcker Rule, (iii) provided a line of credit, guarantee or other form of credit support or backstop in favor of a Covered Fund, or (iv) provided services in favor of a Covered Fund, except, in each case, as otherwise permitted under an exemption or exclusion from the Volcker Rule and disclosed to the Commitment Parties in Section 4.31 of the Company Disclosure Schedules (which disclosure shall list each such activity and describe the exemption or exclusion applicable thereto).

(b) The Company is not, and after giving effect to the Rights Offering, the sale of the Common Shares thereunder and the application of the proceeds thereof, the Company will not be, a Covered Fund.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES

Each Commitment Party, severally (in accordance with its Commitment Percentage) and not jointly, represents and warrants as to itself only (unless otherwise set forth herein, as of the date of this Agreement and as of the Closing Date) as set forth below.

Section 5.1 Organization. Such Commitment Party is a legal entity duly organized, validly existing and, if applicable, in good standing (or the equivalent thereof) under the Laws of its jurisdiction of incorporation or organization.

Section 5.2 Organizational Power and Authority. Such Commitment Party has the requisite power and authority (corporate or otherwise) to enter into, execute and deliver this Agreement and each other Transaction Agreement to which such Commitment Party is a party and to perform its obligations hereunder and thereunder


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and has taken all necessary action (corporate or otherwise) required for the due authorization, execution, delivery and performance by it of this Agreement and the other Transaction Agreements.

Section 5.3 Execution and Delivery; Enforceability. This Agreement and each other Transaction Agreement to which such Commitment Party is a party (a) has been, or prior to its execution and delivery will be, duly and validly executed and delivered by such Commitment Party and (b) will constitute valid and legally binding obligations of such Commitment Party, enforceable against such Commitment Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar Laws limiting creditors’ rights generally or by equitable principles relating to enforceability.

Section 5.4 No Conflict. Assuming that the consents referred to in clauses (a) and (b) of Section 5.5 are obtained, the execution and delivery by such Commitment Party of this Agreement and each other Transaction Agreement to which such Commitment Party is a party, the compliance by such Commitment Party with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein (a) will not conflict with, or result in breach, modification, termination or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time or both), or result in the acceleration of, or the creation of any Lien under, any Contract to which such Commitment Party is party or is bound or to which any of the property or assets or such Commitment Party are subject, (b) will not result in any violation of the provisions of the certificate of incorporation or bylaws (or comparable constituent documents) of such Commitment Party and (c) will not result in any material violation of any Law or Order applicable to such Commitment Party or any of its properties, except in each of the cases described in clauses (a) or (c), for any conflict, breach, modification, termination, violation, default, acceleration or Lien which would not reasonably be expected, individually or in the aggregate, to prohibit, materially delay, or materially and adversely impact such Commitment Party’s performance of its obligations under this Agreement.

Section 5.5 Consents and Approvals. No consent, approval, authorization, Order, registration or qualification of or with any Governmental Entity having jurisdiction over such Commitment Party or any of its properties is required for the execution and delivery by such Commitment Party of this Agreement and each other Transaction Agreement to which such Commitment Party is a party, the compliance by such Commitment Party with the provisions hereof and thereof and the consummation of the transactions (including the purchase by such Commitment Party of its Commitment Percentage of the Unsubscribed Shares or its portion of the Rights Offering Shares) contemplated herein and therein, except (a) any consent, approval, authorization, Order, registration or qualification which, if not made or obtained, would not reasonably be expected, individually or in the aggregate, to prohibit, materially delay, or materially and adversely impact such Commitment Party’s performance of its obligations under this Agreement and each other Transaction Agreement to which such Commitment Party is a party and (b) filings, notifications, authorizations, approvals, consents, clearances or termination or expiration of


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all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement.

Section 5.6 No Registration. Such Commitment Party understands that (a) the Unsubscribed Shares and any Common Shares issued to such Commitment Party in satisfaction of the Commitment Premium have not been registered under the Securities Act or any state or foreign securities or “blue sky” laws by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends on, among other things, the bona fide nature of the investment intent and the accuracy of such Commitment Party’s representations as expressed herein or otherwise made pursuant hereto, and (b) the Unsubscribed Shares cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available.

Section 5.7 Purchasing Intent. Such Commitment Party is acquiring the Unsubscribed Shares and any Common Shares issued to such Commitment Party in satisfaction of the Commitment Premium for its own account or accounts or funds over which it holds voting discretion or exercises discretionary investment management, not otherwise as a nominee or agent, and not otherwise with the view to, or for resale in connection with, any distribution thereof not in compliance with the Securities Act, any applicable securities or “blue sky” laws of any state of the United States or other applicable securities Laws, and such Commitment Party has no present intention of selling, granting any other participation in, or otherwise distributing the same, except in compliance with the Securities Act, any applicable securities or “blue sky” laws of any state of the United States and any applicable securities Laws. Such Commitment Party has not engaged in any short selling of or any hedging transaction with respect to the Unsubscribed Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.

Section 5.8 Sophistication; Investigation. Such Commitment Party has such knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of its investment in the Unsubscribed Shares and any Common Shares issued to such Commitment Party in satisfaction of the Commitment Premium. Such Commitment Party understands and accepts that its investment in the Unsubscribed Shares and any Common Shares involve risks. Such Commitment Party has received such documentation as it has deemed necessary to make an informed investment decision in connection with its investment in the Unsubscribed Shares and any Common Shares, has had adequate time to review such documents prior to making its decision to invest, has had a full opportunity to ask questions of and receive answers from the Company or any person or persons acting on behalf of the Company concerning the terms and conditions of an investment in the Company and has made an independent decision to invest in the Unsubscribed Shares and any Common Shares based upon the foregoing and other information available to it, which it has deemed adequate for this purpose. With the assistance of each Commitment Party’s own professional advisors, to the extent that such Commitment Party has deemed appropriate, such Commitment Party has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the Unsubscribed Shares and any Common Shares. Such Commitment Party understands and is able to bear any economic risks associated with such investment (including the necessity of holding such shares for an indefinite period of time). Except for the representations and


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warranties expressly set forth in this Agreement or any other Transaction Agreement, such Commitment Party has independently evaluated the merits and risks of its decision to enter into this Agreement and disclaims reliance on any representations or warranties, either express or implied, by or on behalf of any of the Debtors.

Section 5.9 No Broker’s Fees. Such Commitment Party is not a party to any Contract with any Person (other than the Transaction Agreements and any Contract giving rise to the Expense Reimbursement hereunder) that would give rise to a valid claim against any of the Debtors for a brokerage commission, finder’s fee or like payment in connection with the Rights Offering or the sale of the Unsubscribed Shares.

Section 5.10 Sufficient Funds. Such Commitment Party has sufficient assets and the financial capacity to perform all of its obligations under this Agreement, including the ability to fully exercise all Subscription Rights that are issued to it pursuant to the Rights Offering, fund such Commitment Party’s Rights Offering Backstop Commitment.

Section 5.11 Additional Securities Law Matters.

(a) Such Commitment Party has been advised by the Company that the Unsubscribed Shares are characterized as “restricted securities” under the Securities Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that such Commitment Party must continue to bear the economic risk of the investment in its Unsubscribed Shares unless the offer and sale of its Unsubscribed Shares is subsequently registered under the Securities Act and all applicable state or foreign securities or “blue sky” laws or an exemption from such registration is available.

(b) Such Commitment Party (i) is either (x) a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act (“Rule 144A”) or an “accredited investor” within the meaning of Rule 501(a) of the Securities Act or (y) not a “U.S. Person” as such term is defined in Regulation S under the Securities Act (“Regulation S”) and (ii) has the knowledge, skill and experience in business, financial and investment matters so that the undersigned is capable of evaluating the merits, risks and consequences of an investment in the Unsubscribed Shares and any Common Shares and is able to bear the economic risk of loss of such investment, including the complete loss of such investment. Such Commitment Party further represents that it fully understands the limitations on transfer and restrictions on sales and other dispositions set forth in this Agreement.

(c) No such Commitment Party, its Affiliates or any person acting on its or any of their behalf has engaged, or will engage, in any form of general solicitation or general advertising (within the meaning of Rule 502(c) of the Securities Act) or directed selling efforts (within the meaning of Regulations S) in connection with the offering of the Unsubscribed Shares.

(d) Such Commitment Party is not purchasing the Unsubscribed Shares as a result of any advertisement, article, notice or other communication regarding the Unsubscribed Shares published in any newspaper, magazine or similar media or broadcast over television or


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radio or presented at any seminar or, to such Commitment Party’s knowledge, any other general solicitation or general advertisement or directed selling efforts.

ARTICLE VI

ADDITIONAL COVENANTS

Section 6.1 Orders Generally. The Debtors shall support and make commercially reasonable efforts, consistent with the Restructuring Support Agreement and the Plan, to (a) obtain the entry of the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order, and any DIP Orders supported by the Requisite Commitment Parties, and (b) cause the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order and any DIP Orders supported by the Requisite Commitment Parties to become Final Orders (and request that such Orders become effective immediately upon entry by the Bankruptcy Court pursuant to a waiver of Rules 3020 and 6004(h) of the Bankruptcy Rules, as applicable), in each case, consistent with the Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support Agreement, following the filing of the respective motion seeking entry of such Orders. The Debtors shall provide each of the Commitment Parties and its counsel copies of the proposed motions seeking entry of the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order and the DIP Orders (together with the proposed Plan Solicitation Order, the proposed BCA Approval Order, the proposed Debt Backstop Order and the DIP Orders), reasonably in advance of filing the same to the extent reasonably practicable, and the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order and the DIP Orders must be in form and substance reasonably satisfactory to Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion). Any amendments, modifications, changes, or supplements to the BCA Approval Order, Plan Solicitation Order, Confirmation Order, Debt Backstop Order and DIP Orders, and any of the motions seeking entry of such Orders, shall be in form and substance reasonably satisfactory to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

Section 6.2 Confirmation Order; Plan and Disclosure Statement. The Debtors shall use their commercially reasonable efforts to obtain entry of the Confirmation Order. The Debtors shall provide to each of the Commitment Parties and its counsel a copy of the proposed Plan and the Disclosure Statement and any proposed amendment, modification, supplement or change to the Plan or the Disclosure Statement, and an opportunity to review and comment on such documents that is reasonable under the circumstances prior to such documents being filed with the Bankruptcy Court, and each such amendment, modification, supplement or change to the Plan or the Disclosure Statement must be in form and substance reasonably satisfactory to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support


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Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion). The Debtors shall provide to each of the Commitment Parties and its counsel a copy of the proposed Confirmation Order (together with copies of any briefs, pleadings and motions related thereto), and an opportunity to review and comment on such Order, briefs, pleadings and motions that is reasonable under the circumstances prior to such Order, briefs, pleadings and motions being filed with the Bankruptcy Court, and such Order, briefs, pleadings and motions must be in form and substance reasonably satisfactory to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

Section 6.3 Conduct of Business. Except as expressly set forth in this Agreement, the Restructuring Support Agreement, the Plan or with the prior written consent of Requisite Commitment Parties (requests for which, including related information, shall be directed to the Advisors to the Commitment Parties), during the period from the date of this Agreement to the earlier of the Closing Date and the date on which this Agreement is terminated in accordance with its terms (the “Pre-Closing Period”), the Debtors shall operate in the ordinary course consistent with industry practice and the operations contemplated pursuant to the Company’s business plan (as may be updated from time to time with the consent (which shall not be unreasonably withheld, delayed or conditioned) of the Requisite Commitment Parties for any material updates) taking into account the Restructuring and the commencement and pendency of the Chapter 11 Cases.

For the avoidance of doubt, the following shall be deemed to occur outside of the ordinary course of business of the Debtors and shall require the prior written consent of the Requisite Commitment Parties (which shall not be unreasonably withheld, delayed or conditioned) unless the same would otherwise be permissible under the Restructuring Support Agreement, the Plan or this Agreement without the consent of any other party: (1) entry into, or any material amendment, modification, termination, waiver, supplement, restatement or other change to, any Material Contract or any assumption of any Material Contract in connection with the Chapter 11 Cases (other than (a) any Material Contracts that are otherwise addressed by clause (4) below, (b) any such amendment modification, waiver, supplement, restatement or other change that, taken as a whole, is no less favorable to the Debtors than the Contract prior thereto, and (c) any extension of a Material Contract on substantially similar terms in the ordinary course of business), (2) entry into, or any material amendment, modification, waiver, supplement, restatement or other change to, any employment agreement or arrangement with its officers or senior management to which any of the Debtors is a party (other than (a) such amendment, modification, waiver, supplement, restatement or other change that, taken as a whole, is no less favorable to the Debtors than the employment agreement prior thereto or is not inconsistent in any material respect with the Restructuring Support Agreement and has been approved by the Bankruptcy Court and (b) any extension of a such an employment agreement or arrangement on substantially similar terms in the ordinary course of business), (3) any (x) termination by any of the Debtors without cause or (y) material reduction by any of the Debtors without cause in the title or responsibilities, in each case, of the individuals who are, as of the date of this Agreement, the Chief Executive Officer or the Chief Financial Officer of the Company, (4) the adoption or material amendment of any


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management or employee incentive, retention, equity-based or equity plan, program, policy, agreement or arrangement by any of the Debtors except for (x) the MIP in accordance with the Restructuring Term Sheet and in a manner consistent with the process set forth in the definitive forms and (y) any such plans, programs, policies, agreements, or arrangements the current and future liabilities associated with which have previously been provided or made available to the Advisors, (5) entry into, or any material amendment, modification, waiver, supplement, restatement or other change to, any Contract between any Debtor, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors, or Affiliate thereof, on the other hand (other than (a) any such amendment, modification, waiver, supplement, restatement or other change that, taken as a whole, is no less favorable to the Debtors than the Contract prior thereto and (b) any extension of a Contract on substantially similar terms in the ordinary course of business) and (6) commencement, release, assignment, compromise, discharge, waiver, settlement, agreement to settle, or satisfaction of any material Legal Proceeding. Except as otherwise provided in this Agreement, nothing in this Agreement shall give the Commitment Parties, directly or indirectly, any right to control or direct the operations of the Debtors. Prior to the Closing Date, the Debtors shall exercise, consistent with the terms and conditions of this Agreement, control and supervision of the business of the Debtors.

Section 6.4 Access to Information; Confidentiality.

(a) Subject to applicable Law and Section 6.4(b), upon reasonable notice during the Pre-Closing Period, the Debtors shall afford the Commitment Parties and their Representatives upon request reasonable access, during normal business hours and without unreasonable disruption or interference with the Debtors’ business or operations, to the Debtors’ employees, properties, books, Contracts and records and, during the Pre-Closing Period, the Debtors shall furnish promptly to such parties all reasonable information concerning the Debtors’ business, properties and personnel as may reasonably be requested by any such party, provided that the foregoing shall not require the Debtors (i) to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company, would cause any of the Debtors to violate any of their respective obligations with respect to confidentiality to a third party if the Company shall have used its commercially reasonable efforts to obtain, but failed to obtain, the consent of such third party to such inspection or disclosure, (ii) to disclose any legally privileged information of any of the Debtors or (iii) to violate any applicable Laws or Orders. All requests for information and access made in accordance with this Section 6.4 shall be directed to an executive officer of the Company or such Person as may be designated by the Company’s executive officers.

(b) From and after the date hereof until the date that is one (1) year after the expiration of the Pre-Closing Period, each Commitment Party shall, and shall cause its Representatives to, (i) keep confidential and not provide or disclose to any Person any documents or information received or otherwise obtained by such Commitment Party or its Representatives pursuant to Section 6.4(a), Section 6.5 or in connection with a request for approval pursuant to Section 6.3 (except that provision or disclosure may be made to any Affiliate or Representative of such Commitment Party who needs to know such information for purposes of this Agreement or the other Transaction Agreements and who agrees to observe the terms of this Section 6.4(b) (and such Commitment Party will remain liable for any breach of such terms by any such Affiliate or Representative)), and (ii) not use such documents or information for any purpose other than in


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connection with this Agreement or the other Transaction Agreements or the transactions contemplated hereby or thereby. Notwithstanding the foregoing, the immediately preceding sentence shall not apply in respect of documents or information that (A) is now or subsequently becomes generally available to the public through no violation of this Section 6.4(b), (B) becomes available to a Commitment Party or its Representatives on a non-confidential basis from a source other than any of the Debtors or any of their respective Representatives, (C) becomes available to a Commitment Party or its Representatives through document production or discovery in connection with the Chapter 11 Cases or other judicial or administrative process, but subject to any confidentiality restrictions imposed by the Chapter 11 Cases or other such process, or (D) such Commitment Party or any Representative thereof is required to disclose pursuant to judicial or administrative process or pursuant to applicable Law or applicable securities exchange rules; provided, that, such Commitment Party or such Representative shall provide the Company with prompt written notice of such legal compulsion and cooperate with the Company to obtain a protective Order or similar remedy to cause such information or documents not to be disclosed, including interposing all available objections thereto, at the Company’s sole cost and expense; provided, further, that, in the event that such protective Order or other similar remedy is not obtained, the disclosing party shall furnish only that portion of such information or documents that is legally required to be disclosed and shall exercise its commercially reasonable efforts (at the Company’s sole cost and expense) to obtain assurance that confidential treatment will be accorded such disclosed information or documents. Notwithstanding the foregoing, any Commitment Party or its Affiliates or Representatives may disclose such information or documents without notice of any kind to any regulatory authority (including any self-regulatory authority) in connection with any routine examination, investigation, regulatory sweep or other regulatory inquiry not specifically targeted to the disclosing party.

(c) Except as required by this Agreement and the other Transaction Agreements, each of the Debtors agrees that it shall not directly disclose any material non-public information to any Commitment Party or its Representatives without the execution and delivery by the disclosing Debtor and such Commitment Party of a non-disclosure agreement containing customary cleansing mechanisms.

Section 6.5 Financial Information. During the Pre-Closing Period, the Debtors shall deliver to the Advisors to each Commitment Party that so requests, all statements and reports the Debtors are required to deliver to any lender under the DIP Facility as of the date hereof (the “Financial Reports”). Neither any waiver by the parties to the DIP Facility of their right to receive the Financial Reports nor any amendment or termination of the DIP Facility shall limit the Debtors’ obligation to deliver the Financial Reports to the Commitment Parties in accordance with the terms of this Agreement.

Section 6.6 Commercially Reasonable Efforts.

(a) Without in any way limiting any other respective obligation of the Debtors or any Commitment Party in this Agreement, each Party shall use commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement and the Plan, including using commercially reasonable efforts in:


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(i) timely preparing and filing all documentation reasonably necessary to effect all necessary notices, reports and other filings of such Person and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party or Governmental Entity;

(ii) cooperating with the defense of any Legal Proceedings in any way challenging (A) this Agreement, the Plan, the Registration Rights Agreement or any other Transaction Agreement, (B) the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order or the DIP Orders or (C) the consummation of the transactions contemplated hereby and thereby, including seeking to have any stay or temporary restraining Order entered by any Governmental Entity vacated or reversed; and

(iii) working together in good faith to finalize the Company Organizational Documents, Transaction Agreements, the Registration Rights Agreement and all other documents relating thereto for timely inclusion in the Plan and filing with the Bankruptcy Court.

(b) Subject to applicable Laws or applicable rules relating to the exchange of information, and in accordance with the Restructuring Support Agreement, the Commitment Parties and the Debtors shall have the right to review in advance, and to the extent practicable each will consult with the other on all of the information relating to Commitment Parties or the Debtors, as the case may be, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any third party and/or Governmental Entity in connection with the transactions contemplated by this Agreement or the Plan; provided, however, that the Commitment Parties are not required to provide for review in advance declarations or other evidence submitted in connection with any filing with the Bankruptcy Court. In exercising the foregoing rights, the Parties shall act as reasonably and as promptly as practicable.

(c) Nothing contained in this Section 6.6 shall limit the ability of any Commitment Party to consult with the Debtors, to appear and be heard, or to file objections, concerning any matter arising in the Chapter 11 Cases to the extent not inconsistent with the Transaction Agreements.

Section 6.7 Registration Rights Agreement; Company Organizational Documents.

(a) The Plan will provide that from and after the Effective Date each Commitment Party shall be entitled to registration rights that are customary for a transaction of this nature, pursuant to a registration rights agreement to be entered into as of the Effective Date, which agreement shall be in form and substance consistent with the terms set forth in the Restructuring Support Agreement and otherwise in form and substance reasonably satisfactory to the Requisite Commitment Parties and the Company (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion) (the “Registration Rights Agreement”). A form of the Registration


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Rights Agreement shall be filed with the Bankruptcy Court as part of the Plan Supplement or an amendment thereto.

(b) The Plan will provide that on the Effective Date, the Company Organizational Documents will be duly authorized, approved, adopted and in full force and effect. Forms of the Company Organizational Documents shall be filed with the Bankruptcy Court as part of the Plan Supplement or an amendment thereto.

Section 6.8 Blue Sky. The Company shall, on or before the Closing Date, use reasonable best efforts to obtain an exemption for, or to qualify the offer and sale of the Unsubscribed Shares to the Commitment Parties pursuant to this Agreement under applicable securities and “Blue Sky” Laws of the states of the United States (or to obtain an exemption from such qualification) and any applicable foreign jurisdictions, and shall provide evidence of any such action so taken to the Commitment Parties on or prior to the Closing Date. The Company shall use reasonable best efforts to timely make all filings and reports relating to the offer and sale of the Unsubscribed Shares issued hereunder required under applicable securities and “Blue Sky” Laws of the states of the United States. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 6.8.

Section 6.9 Use of Proceeds. The Debtors will apply the proceeds from the exercise of the Subscription Rights and the sale of the Unsubscribed Shares and for the purposes identified in the Disclosure Statement and the Plan.

Section 6.10 Share Legend. Each certificate evidencing Unsubscribed Shares issued hereunder shall be stamped or otherwise imprinted with a legend (the “Legend”) in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [DATE OF ISSUANCE], HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.”

In the event that any such Unsubscribed Shares are uncertificated, such Unsubscribed Shares shall be subject to a restrictive notation substantially similar to the Legend in the share ledger or other appropriate records maintained by the Company or agent and the term “Legend” shall include such restrictive notation. The Company shall remove the Legend (or restrictive notation, as applicable) set forth above from the certificates evidencing any such shares (or the share register or other appropriate Company records, in the case of uncertified shares), upon request, at any time after the restrictions described in such Legend cease to be applicable, including, as applicable, when such shares may be sold under Rule 144 of the Securities Act. The Company may reasonably request such opinions, certificates or other evidence that such restrictions no longer apply as a condition to removing the Legend.


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Section 6.11 Antitrust Approval.

(a) Each Party agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to consummate and make effective the transactions contemplated by this Agreement, the Plan and the other Transaction Agreements, including (i) if applicable, filing, or causing to be filed, the Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by this Agreement with the Antitrust Division of the United States Department of Justice and the United States Federal Trade Commission and any filings (or, if required by any Antitrust Authority, any drafts thereof) under any other Antitrust Laws that are necessary to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable (and with respect to any filings required pursuant to the HSR Act, no later than fifteen (15) Business Days following the date hereof) and (ii) promptly furnishing any documents or information reasonably requested by any Antitrust Authority.

(b) The Company and each Commitment Party that is subject to an obligation pursuant to the Antitrust Laws to notify or make any filing with respect to any transaction contemplated by this Agreement, the Plan or the other Transaction Agreements and that has notified the Company in writing of such obligation (each such Commitment Party, a “Filing Party”) agree to reasonably cooperate with each other in the preparation of and as to the appropriate time of filing such notification and its content. The Company and each Filing Party shall, to the extent permitted by applicable Law: (i) promptly notify each other of, and if in writing, furnish each other with copies of (or, in the case of material oral communications, advise each other orally) of any material communications from or with an Antitrust Authority; (ii) not participate in any meeting with an Antitrust Authority unless it consults with each other Filing Party and the Company, as applicable, in advance and, to the extent permitted by the Antitrust Authority and applicable Law, give each other Filing Party and the Company, as applicable, a reasonable opportunity to attend and participate thereat; (iii) furnish each other Filing Party and the Company, as applicable, with copies of all material correspondence and communications between such Filing Party or the Company and any Antitrust Authority; (iv) furnish each other Filing Party with such necessary information and reasonable assistance as may be reasonably necessary in connection with the preparation of necessary filings or submission of information to any Antitrust Authority; and (v) not withdraw its filing, if any, under the HSR Act without the prior written consent of the Requisite Commitment Parties and the Company.

(c) Should a Filing Party be subject to an obligation under the Antitrust Laws to jointly notify with one or more other Filing Parties (each, a “Joint Filing Party”) any transaction contemplated by this Agreement, the Plan or the other Transaction Agreements, such Joint Filing Party shall promptly notify each other Joint Filing Party of, and if in writing, furnish each other Joint Filing Party with copies of (or, in the case of material oral communications, advise each other Joint Filing Party orally of) any communications from or with an Antitrust Authority.

(d) The Company and each Filing Party shall use their reasonable best efforts to obtain all authorizations, approvals, consents, or clearances under any applicable Antitrust Laws and to cause the termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement at the earliest


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possible date after the date of this Agreement. The communications contemplated by this Section 6.11 may be made by the Company or a Filing Party on an outside counsel-only basis or subject to other agreed upon confidentiality safeguards. The obligations in this Section 6.11 shall not apply to filings, correspondence, communications or meetings with Antitrust Authorities unrelated to the transactions contemplated by this Agreement, the Plan or the other Transaction Agreements.

Section 6.12 Alternative Transactions. Notwithstanding anything to the contrary in this Agreement, the Debtors shall not, and shall instruct and direct their respective Representatives not to, seek or solicit any discussions or negotiations with respect to, any Alternative Transaction; provided, however, that nothing in this Section 6.12 shall limit the Debtors’ ability to engage in marketing efforts, discussions, and/or negotiations with any party regarding the Exit Facilities to be consummated on the Effective Date; provided, further, that (a) if any Debtor receives an unsolicited proposal or expression of interest regarding any Alternative Transaction, the Debtors shall be permitted to discuss or negotiate the terms of such proposal or expression of interest and shall promptly notify counsel to the Commitment Parties, orally and in writing, of any such proposal or expression of interest, with such notice to include the material terms thereof, including (unless prohibited by a separate agreement) the identity of the person or group of persons involved, and (b) the Debtors shall promptly furnish the Advisors with copies of any written offer, oral offer, or any other information that they receive relating to the foregoing and shall promptly inform the Advisors of any material changes to such proposals.

Section 6.13 Reorganized Company.

(a) The Requisite Commitment Parties may request at any time prior to the Disclosure Statement hearing that the Company be organized in a different corporate form or that a Person other than the Company (a “New Parent”) serve as the parent entity of the Debtors and the issuer of equity interests in the Rights Offering and the Debt Raise (in each case, a “Company Restructuring”). Provided that such a Company Restructuring does not cause the Company to fail to satisfy any Milestone or does not otherwise pose a material impediment to consummation of the Plan, the Company and the Commitment Parties shall work in good faith to effect a Company Restructuring that is reasonably acceptable to the Company and the Requisite Commitment Parties.

(b) The Company shall use best efforts to attempt to obtain a listing of the Common Shares on the NYSE or NASDAQ on the Effective Date, or, if such a listing is not reasonably possible, on the OTCQX Premier (if the OTCQX Premier is not possible, the OTCQX, and if the OTCQX is not possible, the OTCQB) and will use best efforts to obtain a NYSE or NASDAQ listing as soon as possible following the Effective Date; provided, however, the foregoing covenant shall not apply to the extent (i) the Company Board determines that such listing is not in the best interests of the Company, (ii) the holders of 73%, on a pro forma basis, of the Common Shares (without giving effect to the Agreed Dilution), determine otherwise or (iii) the listing shall cause a potential termination event under the Restructuring Support Agreement to be reasonably likely to occur. The Company hereby agrees to provide the Commitment Parties and the Advisors with reasonably detailed updates on a periodic basis with respect to its efforts to obtain a listing pursuant to this Section 6.13(b).


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(c) If a Company Restructuring is agreed to be implemented in accordance with Section 6.13(a), then this Agreement and the Debt Backstop Agreement shall be amended as necessary to reflect such determination, and the Debtors shall use reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to effectuate the Company Restructuring, including, if applicable, causing the New Parent to enter into and become a party to this Agreement and the Debt Backstop Agreement and become fully bound by the agreements and obligations of the Debtors hereunder and thereunder and make the representations and warranties made by the Debtors hereunder and thereunder.

Section 6.14 Withdrawal of Commitment Party. In the event there is any waiver or extension of the Outside Date beyond the End Date pursuant to Section 9.2(a)(i), then any Commitment Party that did not consent thereto (each, a “Non-Consenting Commitment Party”) may elect, within seven (7) days of such waiver or extension, as applicable, to withdraw as a Commitment Party by delivering written notice to the Company and the Advisors of such election; provided that, at any time on or before the expiration of such period, any Commitment Party that has not made such election shall be entitled to request from the Company the amount of the aggregate Rights Offering Backstop Commitments of all other Non-Consenting Commitment Parties that have made such elections at such time and the Company shall within one (1) Business Day advise such Commitment Party of such aggregate amount. Upon such election, (a) the Commitment Parties (other than the Non-Consenting Commitment Parties) shall automatically assume the Rights Offering Backstop Commitments of the Non-Consenting Commitment Parties on a pro rata basis according to such Commitment Parties’ Commitment Percentages (relative to the aggregate Rights Offering Backstop Commitments provided by the Commitment Parties (other than the Non-Consenting Commitment Parties)) at the time of the election by the Non-Consenting Commitment Party to withdraw (provided, that following the delivery of a notice by a Non-Consenting Commitment Party under this Section 6.14, the Commitment Parties shall have at least five (5) Business Days to make arrangements to assume the Rights Offering Backstop Commitments of the Non-Consenting Commitment Party) and (b) the Non-Consenting Commitment Parties shall automatically cease to be a party to this Agreement and the Debt Backstop Agreement and will no longer have any rights as a Commitment Party (and, for the avoidance of doubt, the Non-Consenting Commitment Parties shall not be entitled to receive any portion of the Commitment Premium). Any Rights Offering Backstop Commitments assumed by a Commitment Party in accordance with this Section 6.14 shall be included, among other things, in the determination of (x) the Commitment Percentage of such Commitment Party for purposes of Section 2.3(c), Section 2.5(b), Section 3.1, Section 3.2 and Section 9.4 and (y) the Rights Offering Backstop Commitment of such party for purposes of the definition of “Requisite Commitment Parties”.

Section 6.15 Continued Volcker Compliance. None of the Debtors or their Subsidiaries nor their respective “Affiliates” (as defined in Section 2(k) of the BHC Act) shall: (a) take any action to acquire or retain an ownership interest in or to sponsor, or fail to take any action necessary to prevent themselves from acquiring or retaining an ownership interest in or sponsoring, a Covered Fund for purposes the Volcker Rule, (b) engage in proprietary trading as defined in the Volcker Rule, (c) provide a line of credit, guarantee or other form of credit support or backstop in favor of a Covered Fund, or (d)


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provide services in favor of a Covered Fund, except, in each case, as otherwise permitted under an exemption or exclusion from the Volcker Rule.

Section 6.16 DTC Eligibility; CUSIP; Transferability. The Company shall use reasonable best efforts to promptly (a) make, when applicable from time to time after the Closing, all Common Shares eligible for deposit, clearance and settlement with DTC in accordance with applicable DTC rules and procedures, (b) obtain “restricted” and “unrestricted” CUSIP identifiers for the Common Shares and (c) ensure that the Common Shares can be transferred pursuant to Rule 144A, including compliance with the requirements under Rule 144(A)(d)(4). The Common Shares shall not be subject to any transfer restrictions, including, without limitation, any rights of first offer or rights of first refusal provisions, other than customary provisions relating to the protection of net operating losses, if any, to be agreed upon by the Requisite Commitment Parties and any restrictions resulting from the operation of state or federal securities laws.

Section 6.17 Commitment Party Termination; Replacement of Terminating Commitment Parties.

(a) Upon the exercise of a Partial Noteholder Termination, the Commitment Parties and their respective Related Purchasers (other than any Terminating Commitment Parties) shall have the right and opportunity (but not the obligation), within ten (10) days (or such shorter period as may be necessary to consummate the Rights Offering in compliance with applicable securities laws and regulations) after receipt of written notice from the Company to all Commitment Parties of such Partial Noteholder Termination, which notice shall be given promptly following the occurrence of such Partial Noteholder Termination and to all Commitment Parties substantially concurrently (such period, the “Terminating Commitment Party Replacement Period”), to make arrangements for one or more of the remaining Commitment Parties and/or their respective Related Purchasers (other than the Terminating Commitment Parties) to purchase all or any portion of the Available Shares (such purchase, a “Terminating Commitment Party Replacement”) on the terms and subject to the conditions set forth in this Agreement and in such amounts as may be agreed upon by all of the Commitment Parties electing to purchase all or any portion of the Available Shares (such Commitment Parties the “Replacing Terminating Commitment Parties”). Any Available Shares purchased by a Replacing Terminating Commitment Party (and any commitment and applicable aggregate Per Share Purchase Price associated therewith) shall be included, among other things, in the determination of (x) the Unsubscribed Shares of such Replacing Terminating Commitment Party for all purposes hereunder, (y) the Commitment Percentage of such Replacing Terminating Commitment Party for purposes of Section 2.3(c), Section 2.5(b), Section 3.1 and Section 3.2 and (z) the Rights Offering Backstop Commitment of such Replacing Terminating Commitment Party for purposes of the definition of “Requisite Commitment Parties.” In the event the Commitment Parties and their respective Related Purchasers (other than any Terminating Commitment Parties), fail to make arrangements for one or more of the Commitment Parties and/or their respective Related Purchasers (other than the Terminating Commitment Parties) to purchase all of the Available Shares as described in this Section 6.17(a) within the Terminating Commitment Party Replacement Period, then each of the Company and the Requisite Commitment Parties shall have the right to terminate this Agreement.


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(b) Notwithstanding anything in this Agreement to the contrary, if this Agreement is terminated with respect to a Commitment Party that is a Terminating Commitment Party hereunder, it shall not be entitled to any of the Commitment Premium applicable to such Terminating Commitment Party (and if (x) the Closing occurs notwithstanding such a termination with respect to a Commitment Party, and (y) the amount funded in the Rights Offering (including the purchase of Available Shares hereunder) is less than the Rights Offering Amount, then the aggregate Commitment Premium payable by the Debtors shall be reduced ratably; provided, that, for the avoidance of doubt, such reduction shall not reduce the amount of the Commitment Premium payable to each Commitment Party that is not a Defaulting Commitment Party).

(c) Nothing in this Section 6.17 shall be deemed to require a Commitment Party to pay more than its Commitment Amount in its purchase of the Unsubscribed Shares.

ARTICLE VII

CONDITIONS TO THE OBLIGATIONS OF THE PARTIES

Section 7.1 Conditions to the Obligations of the Commitment Parties. The obligations of each Commitment Party to consummate the transactions contemplated hereby shall be subject to (unless waived in accordance with Section 7.2) the satisfaction of the following conditions prior to or at the Closing:

(a) BCA Approval Order. The Bankruptcy Court shall have entered the BCA Approval Order, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion), and such Order shall be a Final Order, provided that if the Requisite Commitment Parties do not notify the Company that the BCA Approval Order is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, the BCA Approval Order shall be deemed satisfactory in satisfaction of this condition.

(b) Plan Solicitation Order. The Bankruptcy Court shall have entered the Plan Solicitation Order, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion), and such Order shall be a Final Order, provided that if the Requisite Commitment Parties do not notify the Company that the Plan Solicitation Order is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, the Plan Solicitation Order shall be deemed satisfactory in satisfaction of this condition.

(c) Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties), and such Order shall be a Final Order, provided that if the Requisite Commitment Parties do not notify the Company that the Confirmation Order


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is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, the Confirmation Order shall be deemed satisfactory in satisfaction of this condition.

(d) Rights Offering. The Rights Offering shall have been conducted, in all material respects, in accordance with the Plan Solicitation Order, the Rights Offering Procedures and this Agreement, as applicable.

(e) Effective Date. The Effective Date shall have occurred, or shall be deemed to have occurred concurrently with the Closing, as applicable, in accordance with the terms and conditions in the Plan and in the Confirmation Order.

(f) Registration Rights Agreement; Company Organizational Documents.

(i) The Registration Rights Agreement shall have been executed and delivered by the Company, shall otherwise have become effective with respect to the Commitment Parties and the other parties thereto, and shall be in full force and effect.

(ii) The Company Organizational Documents shall have been duly approved and adopted and shall be in full force and effect.

(g) Expense Reimbursement. The Debtors shall have paid all Expense Reimbursements accrued through the Closing Date pursuant to Section 3.3; provided, that invoices for such Expense Reimbursement must have been received by the Debtors at least three (3) Business Days prior to the Closing Date in order to be required to be paid as a condition to Closing.

(h) Antitrust Approvals. All applicable waiting periods under any Antitrust Laws, or imposed by any Antitrust Authority, in connection with the transactions contemplated by this Agreement shall have been terminated or expired and all authorizations, approvals, consents or clearances under the Antitrust Laws or otherwise required by a Governmental Entity in connection with the transactions contemplated by this Agreement shall have been obtained.

(i) No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the transactions contemplated by this Agreement;

(j) Representations and Warranties.

(i) The representations and warranties of the Debtors contained in Sections 4.11 (Absence of Certain Changes) and 4.29 (Investment Company Act) shall be true and correct in all respects on and as of the Closing Date with the same effect as if made on and as of the Closing Date (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date).

(ii) The representations and warranties of the Debtors contained in Sections 4.1 (Organization and Qualification), 4.2 (Corporate Power and


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Authority), 4.3 (Execution and Delivery; Enforceability), 4.4 (Authorized and Issued Equity Interests), 4.5 (Issuance), 4.6(b) (No Conflict), 4.14 (Labor Relations), 4.19 (Environmental), 4.21 (Employee Benefit Plans) and 4.27 (No Broker’s Fees) shall be true and correct in all material respects on and as of the Closing Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date).

(iii) The representations and warranties of the Debtors contained in this Agreement other than those referred to in clauses (i) and (ii) above shall be true and correct (disregarding all materiality or Material Adverse Effect qualifiers) on and as of the Closing Date after giving effect to the Plan with the same effect as if made on and as of the Closing Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except where the failure to be so true and correct does not constitute, individually or in the aggregate, a Material Adverse Effect.

(k) Covenants. The Debtors shall have performed and complied, in all material respects, with all of their respective covenants and agreements contained in this Agreement that contemplate, by their terms, performance or compliance prior to the Closing Date.

(l) Material Adverse Effect. Since the date of this Agreement, there shall not have occurred, and there shall not exist, any Event that has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

(m) Officer’s Certificate. The Commitment Parties shall have received on and as of the Closing Date a certificate of the chief executive officer or chief financial officer of the Company confirming that the conditions set forth in Sections 7.1(j) (Representations and Warranties), (k) (Covenants) and (l) (Material Adverse Effect) have been satisfied.

(n) Funding Notice. The Commitment Parties shall have received the Funding Notice in accordance with the terms of Section 2.5.

(o) Exit Facilities. Each Exit Facility shall have become effective, shall be for the amount set forth for such Exit Facility in the Restructuring Support Agreement, if applicable, and shall otherwise be in form and substance substantially in accordance with the Restructuring Support Agreement, or as otherwise set forth in the Plan and reasonably acceptable to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion).

(p) Key Contracts. Except as otherwise provided in the Restructuring Term Sheet or the Restructuring Support Agreement, the Debtors shall have assumed all executory contracts and unexpired leases other than those identified on a schedule of rejected contracts included in the Plan Supplement, which shall be in form and substance reasonably acceptable to the Debtors and the Requisite Commitment Parties and otherwise consistent with the


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Restructuring Support Agreement and the Restructuring Term Sheet, including as specified in “Employee Matters” and “Indemnification of Prepetition Directors, Officers, Managers, et al.” in the Restructuring Term Sheet.

(q) Restructuring Support Agreement. The Restructuring Support Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms.

(r) Debt Backstop Agreement. The Debt Backstop Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms and the closing of the transactions contemplated thereunder has occurred or shall occur substantially simultaneously with the Closing.

(s) DIP Orders. The Debtors shall not have proposed or supported entry of any DIP Order that is not in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion), provided that if the Requisite Commitment Parties do not notify the Company that any DIP Order is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, such DIP Order shall be deemed satisfactory in satisfaction of this condition.

Section 7.2 Waiver of Conditions to Obligations of Commitment Parties. All or any of the conditions set forth in Section 7.1 may only be waived in whole or in part with respect to all Commitment Parties by a written instrument executed by the Requisite Commitment Parties in their sole discretion and if so waived, all Commitment Parties shall be bound by such waiver, provided that any such waiver that would have the effect of amending, restating, modifying, or changing this Agreement or any of such Commitment Party’s rights hereunder in a manner that would otherwise require any Commitment Party’s consent pursuant to Section 10.8 (other than any such consent predicated on Section 10.8(e)(vii)) shall also require the consent of such Commitment Party.

Section 7.3 Conditions to the Obligations of the Debtors. The obligations of the Debtors to consummate the transactions contemplated hereby with the Commitment Parties is subject to (unless waived by the Debtors) the satisfaction of each of the following conditions:

(a) BCA Approval Order. The Bankruptcy Court shall have entered the BCA Approval Order in form and substance satisfactory to the Debtors, and such Order shall be a Final Order.

(b) Plan Solicitation Order. The Bankruptcy Court shall have entered the Plan Solicitation Order in form and substance satisfactory to the Debtors, and such Order shall be a Final Order.

(c) Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order in form and substance satisfactory to the Debtors, and such Order shall be a Final Order.


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(d) Effective Date. The Effective Date shall have occurred, or shall be deemed to have occurred concurrently with the Closing, as applicable, in accordance with the terms and conditions in the Plan and in the Confirmation Order.

(e) Antitrust Approvals. All applicable waiting periods under any Antitrust Laws, or imposed by any Antitrust Authority in connection with the transactions contemplated by this Agreement shall have been terminated or expired and all authorizations, approvals, consents or clearances under the Antitrust Laws or otherwise required by any Governmental Entity in connection with the transactions contemplated by this Agreement shall have been obtained.

(f) No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the transactions contemplated by this Agreement.

(g) Representations and Warranties. The representations and warranties of the Commitment Parties contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same effect as if made on and as of the Closing Date (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date), except where the failure to be so true and correct would not, individually or in the aggregate, prevent or materially impede the Commitment Parties from consummating the transactions contemplated by this Agreement.

(h) Covenants. The Commitment Parties shall have performed and complied, in all material respects, with all of their covenants and agreements contained in this Agreement and in any other document delivered pursuant to this Agreement, except where the failure to perform or comply would not, individually or in the aggregate, prevent or materially impede the Commitment Parties from consummating the transactions contemplated by this Agreement.

(i) Exit Facilities. Each Exit Facility shall have become effective, shall be for the amount set forth for such Exit Facility in the Restructuring Support Agreement, if applicable, and shall otherwise be in form and substance substantially in accordance with the Restructuring Support Agreement, or as otherwise set forth in the Plan and reasonably acceptable to the Debtors (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company in its sole discretion).

(j) Restructuring Support Agreement. The Restructuring Support Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms.

(k) Debt Backstop Agreement. The Debt Backstop Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms and the closing of the transactions contemplated thereunder has occurred or shall occur substantially simultaneously with the Closing.


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ARTICLE VIII

INDEMNIFICATION AND CONTRIBUTION

Section 8.1 Indemnification Obligations. Following the entry of the BCA Approval Order, the Company and the other Debtors (the “Indemnifying Parties” and each, an “Indemnifying Party”) shall, jointly and severally, indemnify and hold harmless each Commitment Party and its Affiliates, equity holders, members, partners, general partners, managers and its and their respective Representatives and controlling persons (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and costs and expenses (other than Taxes of the Commitment Parties except to the extent otherwise provided for in this Agreement) arising out of a claim asserted by a third-party (collectively, “Losses”) that any such Indemnified Person may incur or to which any such Indemnified Person may become subject arising out of or in connection with this Agreement, including the Rights Offering Backstop Commitment, the Rights Offering, the payment of the Commitment Premium or the use of the proceeds of the Rights Offering, or any claim, challenge, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, whether or not such proceedings are brought by the Company, the other Debtors, their respective equity holders, Affiliates, creditors or any other Person, and reimburse each Indemnified Person upon demand for reasonable documented (with such documentation subject to redaction to preserve attorney client and work product privileges) legal or other third-party expenses incurred in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including in connection with the enforcement of the indemnification obligations set forth herein), irrespective of whether or not the transactions contemplated by this Agreement or the Plan are consummated or whether or not this Agreement is terminated; provided, that the foregoing indemnity will not, as to any Indemnified Person, apply to Losses (a) as to a Defaulting Commitment Party, its Related Parties or any Indemnified Person related thereto, caused by a Commitment Party Default by such Commitment Party, or (b) to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from the fraud, bad faith, willful misconduct or gross negligence of such Indemnified Person.

Section 8.2 Indemnification Procedure. Promptly after receipt by an Indemnified Person of notice of the commencement of any claim, challenge, litigation, investigation or proceeding (an “Indemnified Claim”), such Indemnified Person will, if a claim is to be made hereunder against the Indemnifying Party in respect thereof, notify the Indemnifying Party in writing of the commencement thereof; provided, that (a) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure and (b) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have to such Indemnified Person otherwise than on account of this Article VIII. In case any such Indemnified Claims are brought against any Indemnified Person and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein, and, at its election by providing written notice to such Indemnified Person, the Indemnifying Party will be entitled to assume


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the defense thereof, with counsel reasonably acceptable to such Indemnified Person; provided, that if the parties (including any impleaded parties) to any such Indemnified Claims include both such Indemnified Person and the Indemnifying Party and based on advice of such Indemnified Person’s counsel there are legal defenses available to such Indemnified Person that are different from or additional to those available to the Indemnifying Party, such Indemnified Person shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Indemnified Claims. Upon receipt of notice from the Indemnifying Party to such Indemnified Person of its election to so assume the defense of such Indemnified Claims with counsel reasonably acceptable to the Indemnified Person, the Indemnifying Party shall not be liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection with the defense thereof or participation therein (other than reasonable costs of investigation) unless (i) such Indemnified Person shall have employed separate counsel (in addition to any local counsel) in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the Indemnifying Party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Indemnified Claims (in addition to one local counsel in each jurisdiction in which local counsel is required)), (ii) the Indemnifying Party shall not have employed counsel reasonably acceptable to such Indemnified Person to represent such Indemnified Person within a reasonable time after the Indemnifying Party has received notice of commencement of the Indemnified Claims from, or delivered on behalf of, the Indemnified Person, (iii) after the Indemnifying Party assumes the defense of the Indemnified Claims, the Indemnified Person determines in good faith that the Indemnifying Party has failed or is failing to defend such claim and provides written notice of such determination and the basis for such determination, and such failure is not reasonably cured within ten (10) Business Days of receipt of such notice, or (iv) the Indemnifying Party shall have authorized in writing the employment of counsel for such Indemnified Person.

Section 8.3 Settlement of Indemnified Claims. In connection with any Indemnified Claim for which an Indemnified Person is assuming the defense in accordance with this Article VIII, the Indemnifying Party shall not be liable for any settlement of any Indemnified Claims effected by such Indemnified Person without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed). If any settlement of any Indemnified Claims is consummated with the written consent of the Indemnifying Party or if there is a final judgment for the plaintiff in any such Indemnified Claims, the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Person from and against any and all Losses by reason of such settlement or judgment to the extent such Losses are otherwise subject to indemnification by the Indemnifying Party hereunder in accordance with, and subject to the limitations of, this Article VIII. The Indemnifying Party shall not, without the prior written consent of an Indemnified Person (which consent shall be granted or withheld, conditioned or delayed in the Indemnified Person’s sole discretion), effect any settlement of any pending or threatened Indemnified Claims in respect of which indemnity or contribution has been sought hereunder by such Indemnified Person unless (a) such settlement includes an unconditional release of such Indemnified Person in form and substance satisfactory to such Indemnified Person from all liability on the claims that are the subject matter of such


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Indemnified Claims and (b) such settlement does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

Section 8.4 Contribution. If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless from Losses that are subject to indemnification pursuant to Section 8.1, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Person as a result of such Loss in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, but also the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, as well as any relevant equitable considerations. It is hereby agreed that the relative benefits to the Indemnifying Party, on the one hand, and all Indemnified Persons, on the other hand, shall be deemed to be in the same proportion as (a) the total value received or proposed to be received by the Company pursuant to the issuance and sale of the Unsubscribed Shares in the Rights Offering contemplated by this Agreement and the Plan bears to (b) the Commitment Premium paid or proposed to be paid to the Commitment Parties. The Indemnifying Parties also agree that no Indemnified Person shall have any liability based on their comparative or contributory negligence or otherwise to the Indemnifying Parties, any Person asserting claims on behalf of or in right of any of the Indemnifying Parties, or any other Person in connection with an Indemnified Claim.

Section 8.5 Treatment of Indemnification Payments. All amounts paid by an Indemnifying Party to an Indemnified Person under this Article VIII shall, to the extent permitted by applicable Law, be treated as adjustments to the Per Share Purchase Price for all Tax purposes. The provisions of this Article VIII are an integral part of the transactions contemplated by this Agreement and without these provisions the Commitment Parties would not have entered into this Agreement. The BCA Approval Order shall provide that the obligations of the Debtors under this Article VIII shall constitute allowed administrative expenses of the Debtors’ estate under sections 503(b) and 507 of the Bankruptcy Code and are payable without further Order of the Bankruptcy Court, and that the Debtors may comply with the requirements of this Article VIII without further Order of the Bankruptcy Court.

Section 8.6 No Survival. All representations, warranties, covenants and agreements made in this Agreement shall not survive the Closing Date except for covenants and agreements that by their terms are to be satisfied after the Closing Date, which covenants and agreements shall survive until satisfied in accordance with their terms.

ARTICLE IX

TERMINATION

Section 9.1 Consensual Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date by mutual written consent of the Debtors and the Requisite Commitment Parties.


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Section 9.2 Automatic Termination; Termination by the Commitment Parties.

(a) Notwithstanding anything to the contrary in this Agreement, unless and until there is an unstayed Order of the Bankruptcy Court providing that the giving of notice under and/or termination of this Agreement in accordance with its terms is not prohibited by the automatic stay imposed by section 362 of the Bankruptcy Code, and except as otherwise provided in this Section 9.2, at which point this Agreement may be terminated by the Requisite Commitment Parties upon written notice to the Debtors upon the occurrence of any of the following Events, this Agreement shall terminate automatically without any further action or notice by any Party at 5:00 p.m., New York City time on the fifth (5th) Business Day following the occurrence of any of the following Events; provided that, the Requisite Commitment Parties may waive such termination or extend any applicable dates in accordance with Section 10.8:

(i) the Closing Date has not occurred by 11:59 p.m., New York City time on August 29, 2019 (as it may be extended pursuant to this Section 9.2(a)(i) or Section 2.3(a), the “Outside Date”), unless prior thereto the Effective Date occurs and the Rights Offering has been consummated; provided, that the Outside Date may be waived or extended with the prior written approval of the Requisite Commitment Parties; provided, further, that if any Commitment Party does not consent to a waiver or extension of the Outside Date beyond 5:00 p.m., New York City time on December 31, 2019 (“the End Date”) within seven (7) days of a written request being made either by the Debtors or by any other Commitment Party for such a waiver or extension (which request was made no later than the date seven (7) days prior to the Outside Date and has not been withdrawn) and such waiver or extension is duly approved by the Requisite Commitment Parties (provided, that, each such waiver or extension of the Outside Date beyond the End Date shall not extend the Outside Date by more than thirty (30) days), such Commitment Party shall be deemed a Non-Consenting Commitment Party who has elected to withdraw from its Rights Offering Backstop Commitment pursuant to Section 6.14 (Withdrawal of Commitment Party) and shall no longer be a party to this Agreement, the Debt Backstop Agreement or the Restructuring Support Agreement (and, for the avoidance of doubt, such Commitment Party shall not be entitled to receive any portion of the Commitment Premium);

(ii) the Restructuring Support Agreement is terminated as to all parties thereto in accordance with its terms;

(iii) the Required Consenting First Lien Noteholders, the Required Consenting 1.5L Noteholders or the Required Consenting Crossholder Noteholders (as such terms are defined in the Restructuring Support Agreement) exercise their respective termination rights under the Restructuring Support Agreement (a “Partial Noteholder Termination”), provided, that, any such termination of this Agreement on account thereof shall only be effective with respect to the Commitment Parties included within the group of Noteholders (the Consenting 1.5L Noteholders, the Consenting Crossholder Noteholders or the Consenting First Lien Noteholders, each as defined in the Restructuring Support Agreement) that exercised their termination rights under the Restructuring Support Agreement (the “Terminating Commitment Parties”);


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

(v) the Company or any of the other Debtors files any motion, application or adversary proceeding (or any of the Company or any of the other Debtors supports any such motion, application, or adversary proceeding filed or commenced by any third party) challenging the validity or enforceability, or seeking avoidance or subordination, of the Notes Claims, provided that, in the event that this Agreement is to be terminated by the Requisite Commitment Parties under this subsection upon written notice to the Debtors in accordance with this Section 9.2(a), the Company or any of the other Debtors shall have until 5:00 p.m., New York City time on the fifth (5th) Business Day following receipt of such notice to withdraw such motion, application or adversary proceeding or otherwise cure before the Requisite Commitment Parties are permitted to terminate pursuant to this Section 9.2(a)(v);

(vi) (A) the Bankruptcy Court approves or authorizes an Alternative Transaction; or (B) any of the Debtors enters into any Contract providing for the consummation of any Alternative Transaction or files any motion or application seeking authority to propose, join in or participate in the formation of, any actual or proposed Alternative Transaction;

(vii) an acceleration of the obligations or termination of commitments under the DIP Facility; or

(viii) any of the Milestones have not been achieved, extended, or waived within three (3) Business Days after the date of such Milestone as set forth in the Restructuring Support Agreement.

(b) This Agreement may be terminated by the Requisite Commitment Parties, upon written notice to the Company upon the occurrence of any of the following Events, provided that such Events have not been cured by the Company or the other Debtors by 5:00 p.m., New York City time on the fifth (5th) Business Day following the receipt of such notice by the Debtors:

(i) (A) the Company or the other Debtors shall have breached any representation, warranty, covenant or other agreement made by the Company or the other Debtors in this Agreement or any such representation or warranty shall have become inaccurate and such breach or inaccuracy would, individually or in the aggregate, cause a condition set forth in Section 7.1(j) (Representations and Warranties), Section 7.1(k) (Covenants) or Section 7.1(l) (Material Adverse Effect) not to be satisfied, (B) the Commitment Parties shall have delivered written notice of such breach or inaccuracy to the Debtors, (C) notwithstanding anything to the contrary in Section 9.2(b), such breach or inaccuracy is not cured by the Company or the other Debtors by the tenth (10th) Business Day after receipt of such notice, and (D) as a result of such failure to cure, any condition set forth in Section 7.1(j) (Representations and Warranties), Section 7.1(k) (Covenants), or Section 7.1(l) (Material Adverse Effect) is not capable of being satisfied; provided, that, this Agreement shall not terminate automatically pursuant to this Section 9.2(b)(i) if the Commitment Parties are then in willful or intentional breach of this Agreement;


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(ii) any Law or final and non-appealable Order shall have been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan, the Debt Raise or the Rights Offering or the transactions contemplated by this Agreement or the other Transaction Agreements, in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors in a manner reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion);

(iii) the Company or any other Debtor (A) amends or modifies, or files a pleading seeking authority to amend or modify, the Definitive Documentation in a manner that is materially inconsistent with this Agreement; (B) suspends or revokes the Transaction Agreements; or (C) publicly announces its intention to take any such action listed in sub-clauses (A) or (B) of this subsection;

(iv) any of the BCA Approval Order, Plan Solicitation Order, Debt Backstop Order, RSA Order or Confirmation Order is terminated, reversed, stayed, dismissed, vacated, or reconsidered, or any such Order is modified or amended after entry without the prior written consent (not to be unreasonably withheld, conditioned or delayed, provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion) of the Requisite Commitment Parties in a manner that prevents or prohibits the consummation of the transactions contemplated by this Agreement or the other Transaction Agreements in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors in a manner reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion); or

(v) any of the Orders approving this Agreement, the Debt Backstop Agreement, the Restructuring Support Agreement, the Rights Offering Procedures, the Plan or the Disclosure Statement or the Confirmation Order are reversed, stayed, dismissed, vacated or reconsidered or modified or amended without the acquiescence or written consent (not to be unreasonably withheld, conditioned or delayed, provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion) of the Requisite Commitment Parties (and such action has not been reversed or vacated within thirty (30) calendar days after its issuance) in a manner that prevents or prohibits the consummation of the Restructuring Transactions contemplated in this Agreement or any of the Definitive Documents Agreements in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided


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thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion); or

(vi) pursuant to the terms of Section 6.17.

Section 9.3 Termination by the Debtors.

This Agreement may be terminated by the Debtors upon written notice to each Commitment Party upon the occurrence of any of the following Events, subject to the rights of the Debtors to fully and conditionally waive, in writing, on a prospective or retroactive basis the occurrence of such Event:

(a) any Law or final and non-appealable Order shall have been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the Rights Offering or the transactions contemplated by this Agreement or the other Transaction Agreements, in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors in a manner reasonably satisfactory to the Requisite Commitment Parties;

(b) subject to the right of the Commitment Parties to arrange a Commitment Party Replacement in accordance with Section 2.3(a) (which will be deemed to cure any breach by the replaced Commitment Party pursuant to this subsection (b)), (i) any Commitment Party shall have breached any representation, warranty, covenant or other agreement made by such Commitment Party in this Agreement or any such representation or warranty shall have become inaccurate and such breach or inaccuracy would, individually or in the aggregate, cause a condition set forth in Section 7.3(g) (Representations and Warranties) or Section 7.3(h) (Covenants) not to be satisfied, (ii) the Debtors shall have delivered written notice of such breach or inaccuracy to such Commitment Party, (iii) such breach or inaccuracy is not cured by such Commitment Party by the tenth (10th) Business Day after receipt of such notice, and (iv) as a result of such failure to cure, any condition set forth in Section 7.3(g) (Representations and Warranties) or Section 7.3(h) (Covenants) is not capable of being satisfied; provided, that the Debtors shall not have the right to terminate this Agreement pursuant to this Section 9.3(b) if any Debtor then in willful or intentional breach of this Agreement;

(c) the BCA Approval Order, Plan Solicitation Order, Debt Backstop Order, RSA Order or Confirmation Order is terminated, reversed, stayed, dismissed, vacated, or reconsidered, or any such Order is modified or amended after entry without the prior acquiescence or written consent (not to be unreasonably withheld, conditioned or delayed) of the Debtors in a manner that prevents or prohibits the consummation of the Restructuring Transactions contemplated in this Agreement or any of the Definitive Documents in a way that cannot be remedied by the Commitment Parties subject to the reasonable satisfaction of the Debtors;

(d) the Restructuring Support Agreement is terminated as to all parties in accordance with its terms;

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


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(f) any of the Orders approving any Exit Facility, this Agreement, the Debt Backstop Agreement, the Restructuring Support Agreement, the Rights Offering Procedures, the Plan or the Disclosure Statement or the Confirmation Order are reversed, stayed, dismissed, vacated or reconsidered or modified or amended without the acquiescence or consent (not to be unreasonably withheld, conditioned or delayed) of the Debtors (and such action has not been reversed or vacated within thirty (30) calendar days after its issuance) in a manner that prevents or prohibits the consummation of the Restructuring Transactions contemplated in this Agreement or any of the Definitive Documents in a way that cannot be remedied by the Commitment Parties subject to the reasonable satisfaction of the Debtors;

(g) the board of directors or managers or similar governing body, as applicable, of any Debtor determines that continued performance under this Agreement (including taking any action or refraining from taking any action) would be inconsistent with the exercise of its fiduciary duties under applicable law (as reasonably determined by such board or body in good faith after consultation with legal counsel; or

(h) pursuant to the terms of Section 6.17.

Section 9.4 Effect of Termination.

(a) Upon termination of this Agreement pursuant to this Article IX, this Agreement shall forthwith become void and there shall be no further obligations or liabilities on the part of the Parties; provided, that (i) the obligations of the Debtors to pay the Expense Reimbursement pursuant to Article III and to satisfy their indemnification obligations pursuant to Article VIII shall survive the termination of this Agreement and shall remain in full force and effect, in each case, until such obligations have been satisfied, (ii) the provisions set forth in Article VIII, this Section 9.4 and Article X shall survive the termination of this Agreement in accordance with their terms and (iii) subject to Section 10.11 (Damages), nothing in this Section 9.4 shall relieve any Party from liability for its fraud, gross negligence or any willful or intentional breach of this Agreement. For purposes of this Agreement, “willful or intentional breach” means a breach of this Agreement that is a consequence of an act undertaken by the breaching Party with the knowledge that the taking of such act would, or would reasonably be expected to, cause a breach of this Agreement.

(b) If this Agreement is terminated pursuant to Section 9.3(g) (Fiduciary Out), Section 9.2(b)(iii) (Revocation of Agreement), Section 9.2(a)(vi) (Alternative Transaction) or Section 9.2(a)(ii) as a result of the Company terminating the Restructuring Support Agreement pursuant to Section 7(b)(vii) thereof (Fiduciary Out), then the Debtors shall pay the Commitment Premium in cash to the Commitment Parties or their designees based upon their respective Commitment Percentages on the date of termination, by wire transfer of immediately available funds to such accounts as the Commitment Parties may designate within three (3) Business Days following consummation of an Alternative Transaction.

(c) If this Agreement is terminated pursuant to a Debtor Breach Termination Event, and a definitive agreement with respect to an Alternative Transaction that is subsequently consummated is executed within twelve (12) months after the date of the effectiveness of such termination of this Agreement, then the Debtors shall pay the Commitment Premium in cash to


64

the Commitment Parties or their designees based upon their respective Commitment Percentages on the date of termination, by wire transfer of immediately available funds to such accounts as the Commitment Parties may designate within three (3) Business Days following the consummation of such Alternative Transaction.

(d) To the extent that all amounts due in respect of the Commitment Premium pursuant to Section 9.4(b) have actually been paid by the Debtors to the Commitment Parties in connection with a termination of this Agreement, the Commitment Parties shall not have any additional recourse against the Debtors for any obligations or liabilities relating to or arising from this Agreement, (other than obligations and liabilities pursuant to Section 8.1, any Expense Reimbursement and any other obligation or liability that expressly survives the termination of this Agreement;) except for liability for intentional fraud, gross negligence or willful or intentional breach of this Agreement pursuant to Section 9.4(a). The Commitment Premium payable pursuant to this Section 9.4 shall constitute an allowed administrative expense claim of the Debtors’ estates pursuant to sections 503(b) and 507 of the Bankruptcy Code.

(e) Except as set forth in this Section 9.4, the Commitment Premium shall not be payable upon the termination of this Agreement.

ARTICLE X

GENERAL PROVISIONS

Section 10.1 Notices. All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via electronic facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the Parties at the following addresses (or at such other address for a Party as may be specified by like notice):

(a) If to the Company or any of the other Debtors:

Hexion Holdings LLC 180 East Broad Street Columbus, Ohio 43215 Attn: Douglas Johns with copies (which shall not constitute notice) to:


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Latham & Watkins LLP 885 Third Avenue New York, New York 10022 Attention: George Davis ([email protected]) Andrew Parlen ([email protected]) - and - Latham & Watkins LLP 330 North Wabash, Suite 2800 Chicago, IL 60611 Attention: Caroline Reckler ([email protected])


(b) If to the Commitment Parties:

To each Commitment Party at the addresses or e-mail addresses set forth below the Commitment Party’s signature in its signature page to this Agreement.

with a copy, solely in the case of Commitment Parties that are members of the Crossholder Ad Hoc Group (which shall not constitute notice) to:

Milbank LLP 55 Hudson Yards New York, New York 10001 Attn: Samuel Khalil ([email protected]) Matthew Brod ([email protected]) Scott Golenbock ([email protected]) with a copy, solely in the case of Commitment Parties that are members of the First Lien Ad Hoc Group (which shall not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, New York 10036 Attention: Ira S. Dizengoff, Esq. ([email protected])

Philip C. Dublin, Esq. ([email protected]) Daniel Fisher, Esq. ([email protected]) Naomi Moss, Esq. ([email protected])

with a copy, solely in the case of Commitment Parties that are members of the 1.5 Lien Ad Hoc Group (which shall not constitute notice) to:

Jones Day 250 Vesey Street New York, NY 10281


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Attention: Sidney P. Levinson ([email protected]) Jeremy D. Evans ([email protected])

Section 10.2 Assignment; Third Party Beneficiaries. Neither this

Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of the Debtors and the Requisite Commitment Parties, other than an assignment by a Commitment Party expressly permitted by Section 2.4 and any purported assignment in violation of this Section 10.2 shall be void ab initio. Except as provided in Article VIII with respect to the Indemnified Persons, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person any rights or remedies under this Agreement other than the Parties. Notwithstanding anything to the contrary herein, each Party hereto recognizes, acknowledges and agrees that this Agreement binds only the desk or business unit that executes this Agreement and shall not be binding on any other desk, business unit or affiliate, unless such desk, business unit or affiliate separately becomes a Party hereto.

Section 10.3 Prior Negotiations; Entire Agreement.

(a) This Agreement (including the agreements attached as Exhibits to and the documents and instruments referred to in this Agreement), the Debt Backstop Agreement and the Restructuring Support Agreement constitute the entire agreement of the Parties and supersede all prior agreements, arrangements or understandings, whether written or oral, among the Parties with respect to the subject matter of this Agreement, except that the Parties hereto acknowledge that any confidentiality agreements heretofore executed among the Parties will each continue in full force and effect.

(b) Notwithstanding anything to the contrary in the Plan (including any amendments, supplements or modifications thereto) or the Confirmation Order (and any amendments, supplements or modifications thereto) or an affirmative vote to accept the Plan submitted by any Commitment Party, nothing contained in the Plan (including any amendments, supplements or modifications thereto) or Confirmation Order (including any amendments, supplements or modifications thereto) shall alter, amend or modify the rights of the Commitment Parties under this Agreement unless such alteration, amendment or modification has been made in accordance with Section 10.8.

Section 10.4 Governing Law; Venue. 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 OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY AGREES FOR ITSELF THAT ANY LEGAL ACTION, SUIT, OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER ARISING UNDER, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT, OR PROCEEDING, SHALL BE BROUGHT IN THE


67

BANKRUPTCY COURT, OR IF THE BANKRUPTCY COURT DOES NOT HAVE JURISDICTION TO HEAR SUCH ACTION, SUIT OR PROCEEDING, ANY STATE OR FEDERAL COURT LOCATED IN NEW YORK COUNTY, NEW YORK, AND BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF THE PARTIES IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OF PROCEEDING TO AN ADDRESS PROVIDED IN WRITING BY THE RECIPIENT OF SUCH MAILING, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

Section 10.5 Binding Agreement. Each party hereto agrees that this Agreement is a binding and enforceable agreement with respect to the subject matter contained herein or therein (including an obligation to negotiate in good faith).

Section 10.6 Waiver of Jury Trial. EACH PARTY HEREBY

WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE AMONG THE PARTIES UNDER THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE.

Section 10.7 Counterparts. This Agreement may be executed by facsimile, portable document format (pdf) or other electronic transmission, in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the Parties and delivered to each other Party (including via facsimile or other electronic transmission), it being understood that each Party need not sign the same counterpart.

Section 10.8 Waivers and Amendments; Rights Cumulative; Consent. This Agreement may be amended, restated, modified, or changed only by a written instrument signed by the Debtors and the Requisite Commitment Parties (other than a Defaulting Commitment Party); provided that, in addition, each Commitment Party’s prior written consent shall be required for any amendment that would have the effect of: (a) modifying such Commitment Party’s Commitment Percentage or Commitment Amount, (b) increasing the Per Share Purchase Price to be paid in respect of the Rights Offering Shares (except to the extent resulting from a proportionate decrease in the number of Common Shares to be offered in the Rights Offering), (c) extending the End Date; (d) increasing the Rights Offering Amount without each Commitment Party having the opportunity (but not the obligation) to participate pro rata in such increase (for the avoidance of doubt, this clause shall only apply to the Rights Offering Shares to be issued pursuant to this Agreement and shall not apply to any subsequent issuance of Common Shares, it being agreed that no Commitment Party shall be required to purchase such Common Shares); (e) amending any of the following: (i) Section 2.4 (Assignment of Commitment Rights), (ii) Section 3.2 (Payment of Commitment Premium), (iii) Section 6.13(b) (Reorganized Company), (iv)


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Section 6.14 (Withdrawal of Commitment Party), (v) Section 6.16 (DTC Eligibility; CUSIP; Transferability), (vi) this Section 10.8; (vii) Article IX (Termination) or (viii) the definition of “Requisite Commitment Parties” or of “Applicable Requisite Commitment Parties”; or (f) otherwise having a materially adverse and disproportionate effect on such Commitment Party; provided, further, that a written instrument signed by the Debtors and the Requisite Commitment Parties (other than a Defaulting Commitment Party) shall be required to amend, restate, modify or change any provision that gives the Requisite Commitment Parties consent rights with respect to any matter. The terms and conditions of this Agreement may be waived (i) by the Debtors only by a written instrument executed by the Debtors and (ii) by the Commitment Parties only by a written instrument executed by the Requisite Commitment Parties (provided that each Commitment Party’s prior written consent shall be required for any waiver having the effects referred to in the first proviso of this Section 10.8). No delay on the part of any Party in exercising any right, power or privilege pursuant to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any Party of any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. Except as otherwise provided in this Agreement, the rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any Party otherwise may have at law or in equity. For the avoidance of doubt, nothing in this Agreement shall affect or otherwise impair the rights, including consent rights, of the Commitment Parties under the Restructuring Support Agreement or any other Definitive Document.

Section 10.9 Headings. The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

Section 10.10 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to an injunction or injunctions without the necessity of posting a bond to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Unless otherwise expressly stated in this Agreement, no right or remedy described or provided in this Agreement is intended to be exclusive or to preclude a Party from pursuing other rights and remedies to the extent available under this Agreement, at law or in equity.

Section 10.11 Damages. Notwithstanding anything to the contrary in this Agreement, none of the Parties will be liable for, and none of the Parties shall claim or seek to recover, any punitive, special, indirect or consequential damages or damages for lost profits. Notwithstanding anything to the contrary in this Agreement, the applicable Commitment Party agrees that it is jointly and severally liable for any damages caused by any breach of this Agreement by any of its Related Purchasers in the event such Commitment Party has Transferred all or a portion of its Rights Offering Backstop Commitment hereunder to any Related Purchaser(s) pursuant to Section 2.4 hereof.


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Section 10.12 No Reliance. No Commitment Party or any of its Related Parties shall have any duties or obligations to the other Commitment Parties in respect of this Agreement, the Plan or the transactions contemplated hereby or thereby, except those expressly set forth herein. Without limiting the generality of the foregoing, (a) no Commitment Party or any of its Related Parties shall be subject to any fiduciary or other implied duties to the other Commitment Parties, (b) no Commitment Party or any of its Related Parties shall have any duty to take any discretionary action or exercise any discretionary powers on behalf of any other Commitment Party, (c) no Commitment Party or any of its Related Parties shall have any duty to the other Commitment Parties to obtain, through the exercise of diligence or otherwise, to investigate, confirm, or disclose to the other Commitment Parties any information relating to the Company or any of its Subsidiaries that may have been communicated to or obtained by such Commitment Party or any of its Affiliates in any capacity, (d) no Commitment Party may rely, and each Commitment Party confirms that it has not relied, on any due diligence investigation that any other Commitment Party or any Person acting on behalf of such other Commitment Party may have conducted with respect to the Company or any of its Affiliates or any of their respective securities, and (e) each Commitment Party acknowledges that no other Commitment Party is acting as a placement agent, initial purchaser, underwriter, broker or finder with respect to its Unsubscribed Shares or Commitment Percentage of its Rights Offering Backstop Commitment.

Section 10.13 Publicity. At all times prior to the Closing Date or the earlier termination of this Agreement in accordance with its terms, the Debtors and the Commitment Parties shall consult with each other prior to issuing any press releases (and provide each other a reasonable opportunity to review and comment upon such release) or otherwise making public announcements with respect to the transactions contemplated by this Agreement, it being understood that nothing in this Section 10.13 shall prohibit any Party from filing any motions or other pleadings or documents with the Bankruptcy Court in connection with the Chapter 11 Cases. Except as required by applicable Law or as ordered by the Bankruptcy Court or other court of competent jurisdiction, no Party or its advisors shall disclose to any Person (including, for the avoidance of doubt, any other Party) the Commitment Amount of any Commitment Party set forth on the Commitment Schedule without such Commitment Party’s prior written consent.

Section 10.14 Settlement Discussions. This Agreement and the transactions contemplated herein are part of a proposed settlement of a dispute between the Parties. Nothing herein shall be deemed an admission of any kind. Pursuant to Section 408 of the U.S. Federal Rules of Evidence and any applicable state rules of evidence, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any Legal Proceeding, except to the extent filed with, or disclosed to, the Bankruptcy Court in connection with the Chapter 11 Cases (other than a Legal Proceeding to approve or enforce the terms of this Agreement).

Section 10.15 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that certain of the Parties may be partnerships or limited liability companies, each Party covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments


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delivered in connection with this Agreement shall be had against any Party’s Affiliates, or any of such Party’s Affiliates’ or respective Related Parties in each case other than the Parties to this Agreement and each of their respective successors and permitted assignees under this Agreement, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any of the Related Parties, as such, for any obligation or liability of any Party under this Agreement or any documents or instruments delivered in connection herewith for any claim based on, in respect of or by reason of such obligations or liabilities or their creation; provided, however, nothing in this Section 10.15 shall relieve or otherwise limit the liability of any Party hereto, any Related Purchaser, or any of their respective successors or permitted assigns for any breach or violation of its obligations under this Agreement or such other documents or instruments. For the avoidance of doubt, prior to the Effective Date, none of the Parties will have any recourse, be entitled to commence any proceeding or make any claim under this Agreement or in connection with the transactions contemplated hereby except against any of the Parties, any Related Purchaser, or their respective successors and permitted assigns, as applicable.

[Remainder of Page Intentionally Left Blank]


IN WITNESS WHEREOF, the undersigned Parties have duly executed this Agreement as of the date first above written.

[Signature Pages Follow]


EXHIBIT E


EXECUTION VERSION

4839-0569-7937 US-DOCS\106840112.743633.00000

RLF1 21160830v.1

DEBT BACKSTOP COMMITMENT AGREEMENT

AMONG

HEXION HOLDINGS LLC

THE OTHER DEBTORS

AND

THE COMMITMENT PARTIES PARTY HERETO

Dated as of April 25, 2019


TABLE OF CONTENTS

Page

i US-DOCS\106840112.7 RLF1 21160830v.1

ARTICLE I DEFINITIONS .........................................................................................................2 Section 1.1 Definitions....................................................................................................2 Section 1.2 Construction ...............................................................................................15

ARTICLE II BACKSTOP COMMITMENT ...........................................................................16 Section 2.1 The Commitment .......................................................................................16 Section 2.2 Commitment Party Default; Replacement of Defaulting

Commitment Parties...................................................................................16 Section 2.3 Assignment of Commitment Rights...........................................................17 Section 2.4 Closing .......................................................................................................18

ARTICLE III PREMIUMS AND EXPENSE REIMBURSEMENT ......................................19 Section 3.1 Premiums Payable by the Debtors .............................................................19 Section 3.2 Payment of Premiums ................................................................................19 Section 3.3 Expense Reimbursement ............................................................................20

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE DEBTORS .............20 Section 4.1 Organization and Qualification ..................................................................21 Section 4.2 Corporate Power and Authority .................................................................21 Section 4.3 Execution and Delivery; Enforceability .....................................................22 Section 4.4 Authorized and Issued Equity Interests .....................................................22 Section 4.5 Issuance ......................................................................................................23 Section 4.6 No Conflict.................................................................................................23 Section 4.7 Consents and Approvals ............................................................................23 Section 4.8 Arm’s-Length .............................................................................................24 Section 4.9 Financial Statements ..................................................................................24 Section 4.10 Company SEC Documents and Disclosure Statement...............................24 Section 4.11 Absence of Certain Changes ......................................................................25 Section 4.12 No Violation; Compliance with Laws .......................................................25 Section 4.13 Legal Proceedings ......................................................................................25 Section 4.14 Labor Relations ..........................................................................................25 Section 4.15 Intellectual Property ...................................................................................26 Section 4.16 Title to Real and Personal Property ...........................................................26 Section 4.17 No Undisclosed Relationships ...................................................................27 Section 4.18 Licenses and Permits ..................................................................................27 Section 4.19 Environmental ............................................................................................27 Section 4.20 Taxes. .........................................................................................................28 Section 4.21 Employee Benefit Plans .............................................................................29 Section 4.22 Internal Control Over Financial Reporting ................................................30 Section 4.23 Disclosure Controls and Procedures ..........................................................30 Section 4.24 Material Contracts ......................................................................................30 Section 4.25 No Unlawful Payments ..............................................................................31 Section 4.26 Compliance with Money Laundering and Sanctions Laws .......................31 Section 4.27 No Broker’s Fees .......................................................................................32 Section 4.28 Investment Company Act ..........................................................................32



Page

ii US-DOCS\106840112.7 RLF1 21160830v.1

Section 4.29 Insurance ....................................................................................................33 Section 4.30 Volcker Compliance ..................................................................................33

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES ...............................................................................33

Section 5.1 Organization ...............................................................................................33 Section 5.2 Organizational Power and Authority .........................................................33 Section 5.3 Execution and Delivery..............................................................................34 Section 5.4 No Conflict.................................................................................................34 Section 5.5 Consents and Approvals ............................................................................34 Section 5.6 No Registration ..........................................................................................34 Section 5.7 Purchasing Intent .......................................................................................35 Section 5.8 Sophistication; Investigation ......................................................................35 Section 5.9 No Broker’s Fees .......................................................................................35 Section 5.10 Sufficient Funds .........................................................................................36 Section 5.11 Additional Securities Law Matters ............................................................36 . 36

ARTICLE VI ADDITIONAL COVENANTS ...........................................................................36 Section 6.1 Orders Generally ........................................................................................36 Section 6.2 Confirmation Order; Plan and Disclosure Statement.................................37 Section 6.3 Conduct of Business ..................................................................................38 Section 6.4 Access to Information; Confidentiality ......................................................39 Section 6.5 Financial Information.................................................................................40 Section 6.6 Commercially Reasonable Efforts .............................................................40 Section 6.7 [Reserved]. .................................................................................................41 Section 6.8 Blue Sky .....................................................................................................41 Section 6.9 Use of Proceeds ..........................................................................................42 Section 6.10 Share Legend .............................................................................................42 Section 6.11 Antitrust Approval .....................................................................................42 Section 6.12 Alternative Transactions ............................................................................43 Section 6.13 Reorganized Company. ..............................................................................44 Section 6.14 Withdrawal of Commitment Party .............................................................44 Section 6.15 Continued Volcker Compliance .................................................................45 Section 6.16 DTC Eligibility; CUSIP; Transferability ...................................................45 Section 6.17 Commitment Party Termination; Replacement of Terminating

Commitment Parties...................................................................................45

ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF THE PARTIES ...................46 Section 7.1 Conditions to the Obligations of the Commitment Parties ........................46 Section 7.2 Waiver of Conditions to Obligations of Commitment Parties ...................50 Section 7.3 Conditions to the Obligations of the Debtors ............................................50

ARTICLE VIII INDEMNIFICATION AND CONTRIBUTION ...........................................51 Section 8.1 Indemnification Obligations ......................................................................51 Section 8.2 Indemnification Procedure .........................................................................52



Page

iii US-DOCS\106840112.7 RLF1 21160830v.1

Section 8.3 Settlement of Indemnified Claims .............................................................53 Section 8.4 Contribution ...............................................................................................53 Section 8.5 Treatment of Indemnification Payments ....................................................54 Section 8.6 No Survival ................................................................................................54

ARTICLE IX TERMINATION .................................................................................................54 Section 9.1 Consensual Termination ............................................................................54 Section 9.2 Automatic Termination; Termination by the Commitment Parties. ..........54 Section 9.3 Termination by the Debtors .......................................................................58 Section 9.4 Effect of Termination .................................................................................59

ARTICLE X GENERAL PROVISIONS ...................................................................................60 Section 10.1 Notices .......................................................................................................60 Section 10.2 Assignment; Third Party Beneficiaries ......................................................62 Section 10.3 Prior Negotiations; Entire Agreement .......................................................62 Section 10.4 Governing Law; Venue ..............................................................................62 Section 10.5 Binding Agreement ....................................................................................63 Section 10.6 Waiver of Jury Trial ...................................................................................63 Section 10.7 Counterparts ...............................................................................................63 Section 10.8 Waivers and Amendments; Rights Cumulative; Consent ..........................63 Section 10.9 Headings ....................................................................................................64 Section 10.10 Specific Performance .................................................................................64 Section 10.11 Damages .....................................................................................................64 Section 10.12 No Reliance ................................................................................................64 Section 10.13 Publicity .....................................................................................................65 Section 10.14 Settlement Discussions ..............................................................................65 Section 10.15 No Recourse ...............................................................................................65

SCHEDULES

Schedule 1 Commitment Schedule Schedule 2 Additional Premium Company Disclosure Schedules


1 US-DOCS\106840112.7 RLF1 21160830v.1

DEBT BACKSTOP COMMITMENT AGREEMENT

THIS DEBT BACKSTOP COMMITMENT AGREEMENT (this “Agreement”), dated as of April 25, 2019, is made by and among Hexion Holdings LLC, a Delaware limited liability company (including as debtor in possession and a reorganized debtor, as applicable, the “Company”), and each of the other Debtors (as defined below), on the one hand, and each Commitment Party (as defined below), on the other hand. The Company, the other Debtors and each Commitment Party is referred to herein, individually, as a “Party” and, collectively, as the “Parties”. Capitalized terms that are used but not otherwise defined in this Agreement shall have the meanings given to them in Section 1.1 hereof or, if not defined therein, shall have the meanings given to them in the Plan (as defined below).

RECITALS

WHEREAS, the Debtors, the Commitment Parties and the other Consenting Parties (as defined in the Restructuring Support Agreement) are party to a Restructuring Support Agreement (including the terms and conditions set forth in the Restructuring Term Sheet (the “Restructuring Term Sheet”) attached as Exhibit A to the Restructuring Support Agreement, dated April 1, 2019, by and among the Debtors and the signature parties thereto (the Restructuring Term Sheet, the Restructuring Support Agreement and all other exhibits thereto, as may be amended, supplemented or otherwise modified from time to time, the “Restructuring Support Agreement”)), which (a) provides for the restructuring of the Debtors’ capital structure and financial obligations pursuant to a plan of reorganization to be filed in cases (the “Chapter 11 Cases”) that were commenced on April 1, 2019 under title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as it may be amended from time to time, the “Bankruptcy Code”), in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), implementing the terms and conditions of the Restructuring Transactions and (b) requires that the Plan be consistent with the Restructuring Support Agreement; and

WHEREAS, pursuant to the Plan and this Agreement, the Company will seek to obtain the ABL Exit Facility and the Syndicated Exit Facility (each as defined below), and subject to the terms and conditions contained in this Agreement, each Commitment Party agrees to commit to provide the Backstop Facility on a several and not a joint basis in an amount up to its Commitment.

NOW, THEREFORE, in consideration of the mutual promises, agreements, representations, warranties and covenants contained herein, the Debtors and each of the Commitment Parties hereby agree as follows:


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ARTICLE I

DEFINITIONS

Section 1.1 Definitions. Except as otherwise expressly provided in this Agreement, whenever used in this Agreement (including any Exhibits and Schedules hereto), the following terms shall have the respective meanings specified therefor below or in the Plan, as applicable:

“1.5L Advisors” has the meaning set forth in the Restructuring Term Sheet.

“1.5 Lien Ad Hoc Group” has the meaning set forth in the Restructuring Support Agreement.

“ABL Exit Facility” means an asset-based revolving loan facility in an amount not to exceed $350,000,000 on terms and conditions reasonably consistent with the Restructuring Support Agreement and otherwise reasonably acceptable to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Requisite Commitment Parties in their sole discretion).

“Additional Premium” means an amount equal to $24,615,000 (i.e., 1.5% of $1,641,000,000) to the Commitment Parties listed as “Debt Backstop Parties” on Schedule 2 to this Agreement.

“Advisors” means the First Lien Advisors, 1.5L Advisors and the Crossholder Advisors.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, Controls or is Controlled by or is under common Control with such Person, and shall include the meaning of “affiliate” set forth in section 101(2) of the Bankruptcy Code as if such person were a debtor. “Affiliated” has a correlative meaning.

“Affiliated Fund” means (a) any investment fund or separately managed account the primary investment advisor or sub-advisor to which is a Commitment Party or an Affiliate thereof or (b) one or more special purpose vehicles that are wholly owned by one or more Commitment Party and its Affiliated Funds, created for the purpose of holding the Commitment, and in each case with respect to which such Commitment Party remains obligated to fund the Commitment.

“Agreed Dilution” has the meaning set forth in the Restructuring Support Agreement.

“Agreement” has the meaning set forth in the Preamble.

“Alternative Transaction” has the meaning set forth in the Restructuring Support Agreement.


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“Antitrust Authorities” means the United States Federal Trade Commission, the Antitrust Division of the United States Department of Justice, the attorneys general of the several states of the United States and any other Governmental Entity, whether domestic or foreign, having jurisdiction pursuant to, or enforcing, the Antitrust Laws, and “Antitrust Authority” means any of them.

“Antitrust Laws” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, and any other Law, whether domestic or foreign, governing agreements in restraint of trade, monopolization, pre-merger notification, the lessening of competition through merger or acquisition or anti-competitive conduct, and any foreign investment Laws.

“Applicable Consent” has the meaning set forth in Section 4.7.

“Applicable Requisite Commitment Parties” means, with respect to any economic treatment referred to in this Agreement, (a) (i) if such economic treatment affects all Commitment Parties, the Requisite Commitment Parties or (ii) if such economic treatment does not affect all Commitment Parties, the Commitment Parties representing sixty-six and two-thirds percent (66 2/3%) of the aggregate Commitments of such affected Commitment Parties as of the date on which consent or approval is solicited; and (b) additionally, if such economic treatment, by its terms, is disproportionately unfavorable to one or more Commitment Parties as compared to other Commitment Parties, such one or more Commitment Parties

“Available Amount” means, with respect to Section 2.2, the amount of a Defaulting Commitment Party’s Commitment and, with respect to Section 6.17, the amount of a Terminating Commitment Party’s Commitment.

“Backstop Event” has the meaning set forth in Section 2.1.

“Backstop Facility” means a backstop facility in an aggregate stated principal amount equal to the sum of $1,641,000,000 minus the stated principal amount of the Syndicated Exit Facility on terms and conditions set forth in the Backstop Term Sheet and otherwise reasonably acceptable to the Company and the Requisite Commitment Parties (in their sole discretion) (provided, that to the extent inconsistent with the Backstop Term Sheet or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Commitment Parties in their sole discretion (or Requisite Commitment Parties or majority Commitment Parties to the extent explicitly provided for in the Backstop Term Sheet).

“Backstop Financing Documentation” has the meaning set forth in Section 2.4(b)(iii).

“Backstop Term Sheet” means the Exhibit A hereto.

“Bankruptcy Code” has the meaning set forth in the Recitals.

“Bankruptcy Court” has the meaning set forth in the Recitals.


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“Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, 28 U.S.C. § 2075, as applicable to the Chapter 11 Cases and the general, local, and chambers rules of the Bankruptcy Court.

“BCA Approval Obligations” means the obligations of the Company and the other Debtors under this Agreement and the BCA Approval Order.

“BCA Approval Order” has the meaning set forth in the Restructuring Term Sheet.

“BHC Act” means the Bank Holding Company Act of 1956, as amended, and the rules and regulations promulgated thereunder.

“Business Day” means any day, other than a Saturday, Sunday or legal holiday, as defined in Bankruptcy Rule 9006(a).

“Chapter 11 Cases” has the meaning set forth in the Recitals.

“Closing” has the meaning set forth in the Equity Backstop Agreement.

“Closing Date” has the meaning set forth in the Equity Backstop Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commitment Party” means each Party listed as such on the Commitment Schedule. Unless the context otherwise requires, each reference herein to a Commitment Party shall be deemed also to include a reference to such Commitment Party’s Related Purchaser, if applicable.

“Commitment Party Default” means the failure by any Commitment Party to fund such Commitment Party’s Commitment on the Closing Date.

“Commitment Party Replacement” has the meaning set forth in Section 2.2(a).

“Commitment Party Replacement Period” has the meaning set forth in Section 2.2(a).

“Commitment Percentage” means, with respect to any Commitment Party, the product of (i) a fraction, (x) the numerator of which is such Commitment Party’s Commitment and (y) the denominator of which is the aggregate amount of all Commitments, multiplied by (ii) 100. Any reference to “Commitment Percentage” in this Agreement means the Commitment Percentage in effect at the time of the relevant determination.

“Commitment Schedule” means Schedule 1 to this Agreement, as amended, supplemented or otherwise modified from time to time in accordance with this Agreement.


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“Commitments” means the principal amount set forth opposite such Commitment Party’s name on Schedule 1 to this Agreement.

“Common Shares” means the new common equity interests in the reorganized Company.

“Company” has the meaning set forth in the Preamble and for the avoidance of doubt shall also include any different corporate form or a Person other than the Company that will serve as the parent entity of the Debtors and the issuer of Common Shares on the Effective Date (after consummation of the Plan).

“Company Benefit Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA), other than a Foreign Plan or a Multiemployer Plan, established, sponsored, maintained or contributed to or required to be contributed to by any Debtor.

“Company Disclosure Schedules” means the disclosure schedules delivered by the Company to the Commitment Parties on the date of this Agreement.

“Company Organizational Documents” means collectively, the organizational documents of the Company and, if applicable, New Parent, including any certificate of formation or applicable articles of incorporation, limited liability company agreement, bylaws, or any similar documents.

“Company Restructuring” has the meaning set forth in Section 6.13(a).

“Company SEC Documents” means all of the reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) filed with the SEC by the Debtors.

“Confirmation Order” means a Final Order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code.

“Contract” means any agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral, but excluding the Plan.

“Control” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or agency or otherwise.

“Covered Fund” has the meaning set forth in Section 13 of the BHC Act and the regulations issued thereunder.


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“Crossholder Ad Hoc Group” has the meaning set forth in the Restructuring Support Agreement.

“Crossholder Advisors” has the meaning set forth in the Restructuring Term Sheet.

“Debt Backstop Order” means an order of the Bankruptcy Court that is not stayed (under Bankruptcy Rule 6004(h) or otherwise) that (a) authorizes the Debtors to enter into and perform under this Agreement, including all exhibits and other attachments hereto, pursuant to section 363 of the Bankruptcy Code, (b) authorizes the Premiums, Expense Reimbursement and the indemnification provisions contained in this Agreement and (c) provides that the Premiums, Expense Reimbursement and the indemnification provisions contained herein shall constitute allowed administrative expenses of the Debtors’ estates under section 503(b) and 507 of the Bankruptcy Code and shall be payable by the Debtors as provided in this Agreement without further order of the Bankruptcy Court.

“Debt Backstop Premium” means an amount equal to $55,383,750 (i.e., 3.375% of $1,641,000,000) to the Commitment Parties listed as “Commitment Parties” on Schedule 1 to this Agreement.

“Debt Raise” means the transactions contemplated by this Agreement.

“Debtor Breach Termination Event” shall mean a termination of this Agreement, predicated upon a willful or intentional action or inaction of a Debtor, pursuant to (a) Section 9.2(b)(i) (Breach of this Agreement); (b) Section 9.2(a)(i) (Outside Date) if any Debtor’s material breach of this Agreement, the Restructuring Support Agreement or the Equity Backstop Agreement caused the failure of the Closing to occur by the Outside Date; (c) Section 9.2(a)(ii) or 9.3(d) (Termination of the Restructuring Support Agreement) as a result of a termination of the Restructuring Support Agreement pursuant to Section 7(a)(i) or 7(a)(ii) thereto as a result of a breach by a Company Entity (as defined in the Restructuring Support Agreement); or (d) Section 9.2(a)(iv) or 9.3(e) (Termination of Equity Backstop Agreement) as a result of a termination of the Equity Backstop Agreement pursuant to Section 9.2(a)(i) thereof (if any Debtor’s material breach of this Agreement, the Restructuring Support Agreement or the Equity Backstop Agreement caused the failure of the closing under the Equity Backstop Agreement to occur by the Outside Date) or Section 9.2(b)(i) thereof. For purposes of this definition, “willful or intentional action or inaction” means an act or omission undertaken by a Debtor with the knowledge that such act or omission would, or would reasonably be expected to, cause a Debtor Breach Termination Event.

“Debtors” means, collectively: the Company, Hexion Inc., Hexion LLC, Lawter International Inc., Hexion CI Holding Company (China) LLC, Hexion Nimbus Inc., Hexion Nimbus Asset Holdings LLC, Hexion Deer Park LLC, Hexion VAD LLC, Hexion 2 U.S. Finance Corp., Hexion HSM Holdings LLC, Hexion Investments Inc., Hexion International Inc., North American Sugar Industries Incorporated, Cuban-American Mercantile Corporation, The West India Company, NL Coop Holdings LLC, and Hexion Nova Scotia Finance, ULC. For purposes of Article IV hereto, the term “Debtors” shall not include Hexion Nova Scotia Finance, ULC.


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“Defaulting Commitment Party” means, in respect of a Commitment Party Default that is continuing, the applicable defaulting Commitment Party.

“Deferred Compensation Liability” means the amount, as of immediately prior to the date hereof and on and as of the Closing Date, of all distributions that may become payable in respect of any non-qualified deferred compensation plan established, maintained, sponsored or contributed, or required to be contributed by a Debtor or any of its Subsidiaries, including any supplemental retirement plan, and account balances thereunder.

“Definitive Documentation” means the definitive documents and agreements governing the Restructuring Transactions as set forth in the Restructuring Support Agreement. “Definitive Documents” has a correlative meaning.

“DIP Facility” means any credit agreement for debtor-in-possession financing.

“DIP Orders” means, collectively, any Interim DIP Order, Final DIP Order, and any other interim or Final Order authorizing the Debtors to obtain postpetition financing or use cash collateral.

“Disclosure Statement” has the meaning set forth in the Restructuring Support Agreement.

“Effective Date” means the date upon which (a) no stay of the Confirmation Order is in effect, (b) all conditions precedent to the effectiveness of the Plan have been satisfied or are expressly waived in accordance with the terms thereof, as the case may be, and (c) on which the Restructuring and the other transactions to occur on the Effective Date pursuant to the Plan become effective or are consummated.

“End Date” has the meaning set forth in Section 9.2(a)(i).

“Environmental Laws” means all applicable laws (including common law), rules, regulations, codes, ordinances, orders in council, Orders, decrees, treaties, directives, judgments or legally binding agreements promulgated or entered into by or with any Governmental Entity, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material or to health and safety matters (to the extent relating to the environment or Hazardous Materials).

“Equity Backstop Agreement” has the meaning set forth in the Restructuring Support Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any of the Debtors, is, or at any relevant time during the past six years was, treated as a single employer or under common control under or within the meaning of Section 414 of the Code or Section 4001 of ERISA.


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“Event” means any event, development, occurrence, circumstance, effect, condition, result, state of facts or change.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Commitment Party Purchaser” has the meaning set forth in Section 2.3(b).

“Exit Facilities” means, collectively the ABL Exit Facility, the Syndicated Exit Facility and the Backstop Facility (if any).

“Expense Reimbursement” has the meaning set forth in Section 3.3(a).

“FCPA” has the meaning set forth in Section 4.25.

“Filing Party” has the meaning set forth in Section 6.11(b).

“Final DIP Order” means an Order authorizing use of cash collateral and/or debtor-in-possession financing, which is a Final Order.

“Final Order” means, as applicable, an Order of the Bankruptcy Court or other court of competent jurisdiction with respect to the relevant subject matter that has not been reversed, stayed, reconsidered, readjudicated, modified, or amended, and as to which the time to appeal or seek certiorari has expired and no appeal or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the Order could be appealed or from which certiorari could be sought or the new trial, reargument, or rehearing shall have been denied, resulted in no modification of such Order, or has otherwise been dismissed with prejudice.

“Financial Reports” has the meaning set forth in Section 6.5.

“Financial Statements” has the meaning set forth in Section 4.9.

“First Lien Ad Hoc Group” has the meaning set forth in the Restructuring Support Agreement.

“First Lien Advisors” has the meaning set forth in the Restructuring Term Sheet.

“Foreign Plan” has the meaning set forth in Section 4.21(b).

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” has the meaning of “governmental unit” set forth in section 101(27) of the Bankruptcy Code.

“Hazardous Materials” means all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including explosive or radioactive substances or


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petroleum or any fraction thereof, petroleum distillates, petroleum products, natural gas, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas, of any nature subject to regulation or which can give rise to liability under any Environmental Law or any third party claim.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time.

“Indemnified Claim” has the meaning set forth in Section 8.2.

“Indemnified Person” has the meaning set forth in Section 8.1.

“Indemnifying Party” has the meaning set forth in Section 8.1.

“Intellectual Property Rights” has the meaning set forth in Section 4.15.

“Interim DIP Order” means an Order authorizing use of cash collateral and/or debtor-in-possession financing on an interim basis.

“Investment Company Act” has the meaning set forth in Section 4.28.

“IRS” means the United States Internal Revenue Service.

“Joint Filing Party” has the meaning set forth in Section 6.11(c).

“Joint Ventures” has the meaning set forth in Section 4.25.

“Knowledge of the Company” means the actual knowledge, after reasonable inquiry of their direct reports, of Craig Rogerson, Chief Executive Officer, and George Knight, Chief Financial Officer.

“Law” means any law (statutory or common), statute, regulation, rule, code or ordinance enacted, adopted, issued or promulgated by any Governmental Entity.

“Legal Proceedings” has the meaning set forth in Section 4.13.

“Legend” has the meaning set forth in Section 6.10.

“Lien” means any lien, adverse claim, charge, option, right of first refusal, servitude, security interest, mortgage, pledge, deed of trust, easement, encumbrance, restriction on transfer, conditional sale or other title retention agreement, defect in title, lien or judicial lien as defined in sections 101(36) and (37) of the Bankruptcy Code or other restrictions of a similar kind.

“Losses” has the meaning set forth in Section 8.1.

“Marketing Period” has the meaning set forth in Section 7.1(t).


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“Material Adverse Effect” means any Event, which individually, or together with all other Events, has had a material and adverse effect on (a) the business, assets, liabilities, finances, properties, results of operations or condition (financial or otherwise) of the Debtors and their Subsidiaries, taken as a whole, or (b) the ability of the Debtors and their Subsidiaries, taken as a whole, to perform their obligations under, or to consummate the transactions contemplated by, the Transaction Agreements, including the Rights Offering and the Debt Raise, in each case, except to the extent such Event results from, arises out of, or is attributable to, the following (either alone or in combination): (i) any change after the date hereof in global, national or regional political conditions (including hostilities, acts of war, sabotage, terrorism or military actions, or any escalation or material worsening of any such hostilities, acts of war, sabotage, terrorism or military actions existing or underway) or in the general business, market, financial or economic conditions affecting the industries, regions and markets in which the Debtors or their Subsidiaries operate, including any change in the United States or applicable foreign economies or securities, commodities or financial markets, or force majeure events or “acts of God”; (ii) any changes after the date hereof in applicable Law or GAAP, or in the interpretation or enforcement thereof; (iii) the execution, announcement or performance of this Agreement or the other Transaction Agreements or the transactions contemplated hereby or thereby (including any act or omission of the Debtors or their Subsidiaries expressly required or prohibited, as applicable, by the Restructuring Support Agreement or this Agreement or consented to or required by the Requisite Commitment Parties in writing); (iv) changes in the market price or trading volume of the claims or equity or debt securities of the Debtors or their Subsidiaries (but not the underlying facts giving rise to such changes unless such facts are otherwise excluded pursuant to the clauses contained in this definition); (v) the departure of officers or directors of any of the Debtors or any of their Subsidiaries not in contravention of the terms and conditions of this Agreement (but not the underlying facts giving rise to such departure unless such facts are otherwise excluded pursuant to the clauses contained in this definition); (vi) the filing of the Chapter 11 Cases or actions taken in connection with the Chapter 11 Cases that are directed by the Bankruptcy Court and made in compliance with the Bankruptcy Code and the Transaction Agreements; (vii) declarations of national emergencies in the United States or natural disasters in the United States; (viii) the events leading up to the filing of the Chapter 11 Cases that were publicly disclosed prior to the Closing Date and are set forth in Schedule 1.1(a) of the Company Disclosure Schedules; or (ix) the occurrence of a Commitment Party Default; provided, that the exceptions set forth in clauses (i), (ii) and (vii) shall not apply to the extent that such Event is disproportionately adverse to the Debtors and their Subsidiaries, taken as a whole, as compared to other companies in the industries in which the Debtors or their Subsidiaries operate.

“Material Contracts” means all “plans of acquisition, reorganization, arrangement, liquidation or succession” and “material contracts” (as such terms are defined in Items 601(b)(2) and 601(b)(10) of Regulation S-K under the Exchange Act) to which any of the Debtors is a party.

“Milbank” means Milbank LLP.

“Milestone” has the meaning set forth in the Restructuring Support Agreement.


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“MIP” means the new management incentive plan to be adopted by the reorganized Company, on the Effective Date, on the terms and conditions set forth in the Restructuring Term Sheet.

“Money Laundering Laws” has the meaning set forth in Section 4.26(a).

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any of the Debtors or any ERISA Affiliate is making or accruing an obligation to make contributions, has within any of the preceding six plan years made or accrued an obligation to make contributions, or each such plan with respect to which any such entity has any actual or contingent liability or obligation.

“New Parent” has the meaning set forth in in Section 6.13(a).

“Non-Consenting Commitment Party” has the meaning set forth in Section 6.14.

“Order” means any judgment, order, award, injunction, writ, permit, license or decree of any Governmental Entity or arbitrator of applicable jurisdiction.

“Outside Date” has the meaning set forth in Section 9.2(a)(i).

“Partial Noteholder Termination” has the meaning set forth in Section 9.2(a)(iii).

“Party” has the meaning set forth in the Preamble.

“Permitted Liens” means (a) Liens for Taxes that (i) are not yet delinquent or (ii) are being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (b) landlord’s, operator’s, vendors’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other similar Liens for labor, materials or supplies provided with respect to any Real Property or personal property any such lien is incurred in the ordinary course of business consistent with past practice and as otherwise not prohibited under this Agreement, for amounts that are not more than sixty (60) days delinquent and that do not materially detract from the value of, or materially impair the use of, any of the Real Property or personal property of any of the Debtors, or, if for amounts that do materially detract from the value of, or materially impair the use of, any of the Real Property or personal property of any of the Debtors, if such Lien is being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (c) zoning, building codes and other land use Laws regulating the use or occupancy of any Real Property or the activities conducted thereon that are imposed by any Governmental Entity having jurisdiction over such Real Property (but excluding any violation thereof); provided, that no such zoning, building codes and other land use Laws prohibit the use or occupancy of such Real Property; (d) easements, covenants, conditions, minor encroachments, restrictions and other similar matters adversely affecting title to any Real Property and other title defects and encumbrances that do not or would not materially impair the use or occupancy of such Real Property or the operation of the Debtors’ business; (e) Liens permitted under the DIP Facility as


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of the date hereof; (f) Liens listed on Schedule 1.1(b) of the Company Disclosure Schedules; and (g) Liens that, pursuant to the Confirmation Order, will not survive beyond the Effective Date.

“Person” means an individual, firm, corporation (including any non-profit corporation), partnership, limited liability company, joint venture, association, trust, Governmental Entity or other entity or organization.

“Petition Date” means April 1, 2019.

“Plan” means the Debtors’ joint plan of reorganization to be approved by the Confirmation Order, including the Plan Supplement and all exhibits, supplements, appendices and schedules thereto, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion), as may be amended, supplemented, or modified from time to time in accordance with its terms and with the Restructuring Support Agreement and in a manner that is reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

“Plan Solicitation Order” means an Order, in form and substance reasonably acceptable to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties, in their sole discretion), approving the Disclosure Statement with respect to the Plan and approving the Rights Offering Procedures and the solicitation with respect to the Plan.

“Plan Supplement” means the documents filed with the Bankruptcy Court as exhibits or supplements to the Plan, including any documents identified by the Plan or Disclosure Statement as such.

“Pre-Closing Period” has the meaning set forth in Section 6.3.

“Premiums” means the Debt Backstop Premium and the Additional Premium.

“Real Property” means, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any of the Debtors or any of their Subsidiaries, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures incidental to the ownership or lease thereof.

“Regulation S” has the meaning set forth in Section 5.11(b).


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“Related Party” means, with respect to any Person, (a) any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of such Person and (b) any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of any of the foregoing.

“Related Purchaser” means, with respect to any Commitment Party, any reasonably creditworthy Affiliate or Affiliated Fund of such Commitment Party (other than any portfolio company of such Commitment Party or its Affiliates).

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the environment. “Released” has a correlative meaning.

“Replacing Commitment Parties” has the meaning set forth in Section 2.2(a).

“Replacing Terminating Commitment Parties” has the meaning set forth in Section 6.17.

“Representatives” means, with respect to any Person, such Person’s directors, officers, members, partners, managers, employees, agents, investment bankers, attorneys, accountants, advisors and other representatives.

“Requisite Commitment Parties” means the Commitment Parties holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate Commitments as of the date on which the consent or approval of the Requisite Commitment Parties is solicited.

“Restructuring” has the meaning set forth in the Restructuring Support Agreement.

“Restructuring Support Agreement” has the meaning set forth in the Recitals.

“Restructuring Term Sheet” has the meaning set forth in the Recitals.

“Restructuring Transactions” means, collectively, the transactions contemplated by the Restructuring Support Agreement.

“Rights Offering” has the meaning set forth in the Equity Backstop Agreement.

“Rights Offering Procedures” means the procedures with respect to the Rights Offering that are approved by the Bankruptcy Court pursuant to the Plan Solicitation Order, which procedures shall be reasonably satisfactory to the Requisite Commitment Parties and the Company (provided, that to the extent inconsistent with the Restructuring Support Agreement or the Equity Backstop Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

“RSA Order” has the meaning set forth Restructuring Support Agreement.


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“Rule 144A” has the meaning set forth in Section 5.11(b).

“Sanctions” means any sanctions administered or enforced by the U.S. government (including without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control or the U.S. Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other applicable jurisdiction.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities” means Common Shares and any debt securities issued pursuant to the Commitments.

“Securities Act” means the Securities Act of 1933, as amended.

“SOX” has the meaning set forth in Section 4.10.

“Subscribed Shares” means, with respect to any Commitment Party, any Rights Offering Shares purchased by such Commitment Party in the Rights Offering pursuant to its exercise, in whole or in part, of its Subscription Rights.

“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body, or (c) has the power to direct the business and policies.

“Syndicated Exit Facility” means a facility (which may be more than one facility) in an aggregate principal amount of up to $1,641,000,000 on terms and conditions set forth in the Restructuring Term Sheet and otherwise reasonably acceptable to the Company and the Requisite Commitment Parties (in their sole discretion) (provided, that to the extent inconsistent with the Restructuring Term Sheet or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Requisite Commitment Parties (in their sole discretion)).

“Taxes” means all taxes, assessments, duties, levies or other mandatory governmental charges paid to a Governmental Entity, including all federal, state, local, foreign and other income, franchise, profits, gross receipts, capital gains, capital stock, transfer, property, sales, use, value-added, occupation, excise, severance, windfall profits, stamp, payroll, social security, withholding and other taxes, assessments, duties, levies or other mandatory governmental charges of any kind whatsoever paid to a Governmental Entity (whether payable directly or by withholding and whether or not requiring the filing of a return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest thereon and shall include any liability for such amounts as a result of being a member of a combined, consolidated, unitary or affiliated group, as successor, by contract, as withholding agent, or otherwise.

“Terminating Commitment Parties” has the meaning set forth in Section 9.2(a)(iii).


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“Terminating Commitment Party Replacement” has the meaning set forth in Section 6.17.

“Terminating Commitment Party Replacement Period” has the meaning set forth in Section 6.17.

“Transaction Agreements” has the meaning set forth in Section 4.2(a).

“Transfer” means to sell, transfer, assign, pledge, hypothecate, participate, donate or otherwise encumber or dispose of, directly or indirectly (including through derivatives, options, swaps, pledges, forward sales, participations or other transactions in which any Person receives the right to own or acquire) any current or future interest in a Commitment or any other economic interest or right arising therefrom. “Transfer” used as a noun has a correlative meaning.

“Unfunded Pension Liability” means the excess of a Company Benefit Plan’s amount of unfunded benefit liabilities under Section 4001(a)(18) of ERISA, over the current value of that Company Benefit Plan’s assets, determined in accordance with the assumptions used for funding the Company Benefit Plan pursuant to Section 412 of the Code for the applicable plan year.

“Unsubscribed Shares” has the meaning set forth in the Equity Backstop Agreement.

“Volcker Rule” has the meaning set forth in Section 4.31(a).

“willful or intentional breach” has the meaning set forth in Section 9.4(a).

Section 1.2 Construction. In this Agreement, unless the context otherwise requires:

(a) references to Articles, Sections, Exhibits and Schedules are references to the articles and sections or subsections of, and the exhibits and schedules attached to, this Agreement;

(b) references in this Agreement to “writing” or comparable expressions include a reference to a written document transmitted by means of electronic mail in portable document format (pdf), facsimile transmission or comparable means of communication;

(c) words expressed in the singular number shall include the plural and vice versa; words expressed in the masculine shall include the feminine and neuter gender and vice versa;

(d) the words “hereof”, “herein”, “hereto” and “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including all Exhibits and Schedules attached to this Agreement, and not to any provision of this Agreement;


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(e) the term “this Agreement” shall be construed as a reference to this Agreement as the same may have been, or may from time to time be, amended, modified, varied, novated or supplemented;

(f) “include”, “includes” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words;

(g) references to “day” or “days” are to calendar days;

(h) references to “the date hereof” means the date of this Agreement;

(i) unless otherwise specified, references to a statute means such statute as amended from time to time and includes any successor legislation thereto and any rules or regulations promulgated thereunder in effect from time to time; and

(j) references to “dollars” or “$” refer to currency of the United States of America, unless otherwise expressly provided.

ARTICLE II

BACKSTOP COMMITMENT

Section 2.1 The Commitment. On and subject to the terms and conditions hereof, including entry of the Debt Backstop Order, if the Company fails to obtain third party financing for all or a portion of the Syndicated Exit Facility on the terms agreed by the Company and the Commitment Parties on the date hereof (such failure, the “Backstop Event”), then each Commitment Party agrees severally (in accordance with its Commitment Percentage) and not jointly, to fund the shortfall by providing its portion of the Backstop Facility on terms set forth on the Backstop Term Sheet not to exceed such Commitment Party’s Commitments on the Closing Date; provided that any Defaulting Commitment Party shall be liable to each Commitment Party that is not a Defaulting Commitment Party, and to the Company, as a result of any breach of its obligations hereunder.

Section 2.2 Commitment Party Default; Replacement of Defaulting Commitment Parties.

(a) Upon the occurrence of a Commitment Party Default, the Commitment Parties and their respective Related Purchasers (other than any Defaulting Commitment Party) shall have the right and opportunity (but not the obligation), within five (5) Business Days after receipt of written notice from the Company to all Commitment Parties of such Commitment Party Default, which notice shall be given promptly following the occurrence of such Commitment Party Default and to all Commitment Parties substantially concurrently (such period, the “Commitment Party Replacement Period”), to make arrangements for one or more of the Commitment Parties and their respective Related Purchasers (other than the Defaulting Commitment Party) to fund the Available Amount (such funding, a “Commitment Party Replacement”) on the terms and subject to the conditions set forth in this Agreement and in such amounts as may be agreed upon by all of the Commitment Parties electing to purchase all or any


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portion of the Available Amount, or, if no such arrangements are made, based upon the relative applicable Commitment Percentages of any such Commitment Parties and their respective Related Purchasers (other than any Defaulting Commitment Party) (such Commitment Parties the “Replacing Commitment Parties”). Any Available Amount funded (or agreed to be funded) by a Replacing Commitment Party (and any commitment associated therewith) shall be included, among other things, in the determination of (x) the Commitment Percentage of such Replacing Commitment Party for purposes of Section 2.3(c), Section 3.1, Section 3.2 and Section 9.4 and (y) the Commitment of such Replacing Commitment Party for purposes of the definition of “Requisite Commitment Parties.” If a Commitment Party Default occurs, the Outside Date shall be delayed only to the extent necessary to allow for the Commitment Party Replacement to be completed within the Commitment Party Replacement Period and prior to the Outside Date (as so delayed).

(b) Notwithstanding anything in this Agreement to the contrary, if a Commitment Party is a Defaulting Commitment Party, or if this Agreement is terminated with respect to such Commitment Party as a result of its default hereunder, it shall not be entitled to any of the Premiums or expense reimbursement applicable to such Defaulting Commitment Party (including the Expense Reimbursement) or indemnification provided, or to be provided, under or in connection with this Agreement or the other Transaction Documents (and if (x) the Closing occurs notwithstanding such a default or termination with respect to a Commitment Party, and (y) the aggregate Commitments that are actually funded are less than the aggregate Commitments because of the failure of such Commitment Party to fund its Commitment in full, then the aggregate amount of the Premiums payable by the Debtors, if applicable, shall be reduced ratably; provided, that, for the avoidance of doubt, such reduction shall not reduce the amount of the Premiums payable to each Commitment Party and each Replacing Commitment Party that is not a Defaulting Commitment Party).

(c) Nothing in this Section 2.2 shall be deemed to require a Commitment Party to fund more than its Commitment.

(d) For the avoidance of doubt, notwithstanding anything to the contrary set forth in Section 9.4 but subject to Section 10.11, no provision of this Agreement shall relieve any Defaulting Commitment Party from liability hereunder, or limit the availability of the remedies set forth in Section 10.10, in connection with any such Defaulting Commitment Party’s Commitment Party Default. Any Defaulting Commitment Party shall be liable to each Commitment Party that is not a Defaulting Commitment Party, and to the Company, as a result of any breach of its obligations hereunder.

Section 2.3 Assignment of Commitment Rights.

(a) Each Commitment Party shall have the right to assign (with two (2) Business Days’ prior notice to the Company), its Commitment hereunder to one or more of its Related Purchasers; provided that no such assignment shall relieve such Commitment Party from any of its obligations under this Agreement.

(b) Each Commitment Party shall have the right to Transfer all or any portion of its Commitment to any other Commitment Party or such other Commitment Party’s Related


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Purchaser (each, an “Existing Commitment Party Purchaser”); provided, that (a) such Existing Commitment Party Purchaser shall have been a Commitment Party or its Related Purchaser as of immediately prior to such Transfer and (b) if applicable, such Existing Commitment Party Purchaser shall deliver to the Company a joinder to this Agreement, in a form reasonably acceptable to the Company and the Requisite Commitment Parties, that contains a confirmation of the accuracy of the representations made by each Commitment Party under this Agreement as applied to such Person.

(c) Except as set forth in Section 2.3(a) and (b), no Commitment Party or any of its Related Purchasers shall have the right to Transfer all or any portion of its Commitment to any Person.

(d) The Parties hereby agree that, notwithstanding anything to the contrary set forth in Section 4(b)(i) of the Restructuring Support Agreement, if any Consenting Party acquires additional Claims against or Interests in any Company Entity from any Person that is not a Consenting Party during the Support Period, such Consenting Party shall report its updated holdings only to the legal advisors to the Company within five (5) Business Days of such acquisition. No report shall be required for any acquisition of additional Claims against or Interests in any Company Entity from any Person that is a Consenting Party. The Company shall notify the legal advisors to the Ad Hoc Groups in writing if any Transfer of Claims against or Interests in any Company Entity shall constitute a Company Termination Event. For purposes of this Section 2.3(d), capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Restructuring Support Agreement.

(e) For the avoidance of doubt, nothing in this Agreement shall restrict the ability of a Commitment Party to transfer any Notes (including the associated Subscription Rights) in compliance with Section 4 of the Restructuring Support Agreement, and any such transfer shall not impair or otherwise affect the rights and obligations of such Commitment Party under this Agreement.

Section 2.4 Closing.

(a) At the Closing, if a Backstop Event shall have occurred, each Commitment Party shall fund an amount equal to such Commitment Party’s Commitment Percentage of the Backstop Facility (which, for the avoidance of doubt shall not be greater than such Commitment Party’s Commitment), by wire transfer of immediately available funds in U.S. dollars, to the agent under the Backstop Facility to be disbursed in accordance with the terms of the Backstop Facility.

(b) At the Closing if the Backstop Event has occurred, the Company shall deliver to the Commitment Parties, to the reasonable satisfaction of the Commitment Parties holding a majority of the Commitments:

(i) The officer’s certificate contemplated by Section 7.1(m);


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(ii) Any documentation and other information required by applicable bank regulatory authorities pursuant to “know-your-customer” and anti-money laundering rules and regulations;

(iii) Definitive documentation (including, without limitation, an indenture, guarantees and security documents, intercreditor agreements, legal opinions, corporate records and documents from public officials, lien searches and officer’s certificates relating to the Backstop Facility (collectively, the “Backstop Financing Documentation”)), reasonably satisfactory to the Requisite Commitment Parties reflecting the terms and conditions set forth in the Backstop Term Sheet;

(iv) Evidence that the Debtors shall have no outstanding indebtedness or liens other than the indebtedness under the Exit Facilities (and certain other permitted indebtedness set forth in the Backstop Facility) and the liens securing such Exit Facilities (and certain other permitted liens set forth in the Exit Facilities and the Backstop Facility);

(v) Evidence of the perfection of liens, pledges, and mortgages on the collateral securing the Backstop Facility; and

(vi) Copies of all definitive documentation in connection with the ABL Exit Facility and the Syndicated Exit Facility (if any).

ARTICLE III

PREMIUMS AND EXPENSE REIMBURSEMENT

Section 3.1 Premiums Payable by the Debtors. Subject to Section 3.2, in consideration for the commitments of the Commitment Parties in this Agreement, the Debtors shall pay or cause to be paid to the applicable Commitment Party the Debt Backstop Premium and the Additional Premium, in each case, payable in accordance with Section 3.2 to the applicable Commitment Party (including any Replacing Commitment Party, but excluding any Defaulting Commitment Party) or their respective designees, as applicable, based upon their respective Commitment Percentages at the time such payment is made, with respect to the Debt Backstop Premium and based upon the allocations set forth on Schedule 2 to this Agreement with respect to the Additional Premium provided that the aggregate amount of the Premiums payable by the Company shall be subject to reduction in accordance with Section 2.2(b).

The provisions for the payment of the Premiums and Expense Reimbursement, and the indemnification provided herein, are an integral part of the transactions contemplated by this Agreement and without these provisions the Commitment Parties would not have entered into this Agreement.

Section 3.2 Payment of Premiums. The Premiums shall be fully earned, nonrefundable and non-avoidable upon entry of the Debt Backstop Order and shall be paid by the Debtors, free and clear of any withholding or deduction for any applicable Taxes, on the


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Closing Date as set forth above. For the avoidance of doubt, to the extent payable in accordance with the terms of this Agreement, the Premiums will be payable regardless of the amount of such Commitment Party’s Commitment actually funded. At the option of any applicable Commitment Party (such option to be exercised no later than ten (10) days prior to the anticipated Effective Date), the Company shall satisfy the obligation to pay such Commitment Party’s Debt Backstop Premium on the Closing Date, in lieu of any cash payment, by issuing the number of additional Common Shares (rounding down to the nearest whole share solely to avoid fractional shares) to each Commitment Party equal to such Commitment Party’s Debt Backstop Premium; provided, that if the Closing does not occur, the Debt Backstop Premium shall be payable only in cash, and the Premiums shall be payable only to the extent provided in (and in accordance with) Section 9.4. The Premiums and the Expense Reimbursement shall, pursuant to the Debt Backstop Order, constitute allowed administrative expenses of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code.

Section 3.3 Expense Reimbursement.

(a) Without duplication of the Equity Backstop Agreement, in accordance with and subject to the Debt Backstop Order and the terms and conditions of the existing fee letters between the Debtors and certain advisors to the Commitment Parties, the Debtors agree to pay, in accordance with Section 3.3(b) below, (i) all reasonable and documented out-of-pocket fees and expenses (including travel costs and expenses) of all of the Advisors incurred on behalf of the Commitment Parties in connection with the Chapter 11 Cases and/or the Restructuring (whether incurred before or after the Petition Date), including the negotiation, preparation and implementation of the Transaction Agreements and the other agreements and transactions contemplated hereby and thereby and (ii) any applicable filing or other similar fees required to be paid in all applicable jurisdictions (such payment obligations, the “Expense Reimbursement”). The Expense Reimbursement shall, pursuant to the Debt Backstop Order, constitute allowed administrative expenses against each of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code. For the avoidance of doubt, the amount payable pursuant to this Section 3.3 shall be determined without duplication of recovery under the Restructuring Support Agreement.

(b) The Expense Reimbursement accrued through the date on which the Debt Backstop Order is entered shall be paid in accordance with the Debt Backstop Order as promptly as reasonably practicable after the date of the entry of the Debt Backstop Order. The Expense Reimbursement shall thereafter be payable in accordance with the procedures set forth in the Debt Backstop Order; provided, that the Debtors’ final payment shall be made contemporaneously with the Closing or the termination of this Agreement pursuant to Article IX.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE DEBTORS

Except (a) as set forth in the corresponding section of the Company Disclosure Schedules or (b) as disclosed in the Company SEC Documents filed with the SEC on or after


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December 31, 2017 and publicly available on the SEC’s Electronic Data-Gathering, Analysis and Retrieval system prior to the date hereof (excluding the exhibits, annexes and schedules thereto, any disclosures contained in the “Forward-Looking Statements” or “Risk Factors” sections thereof, or any other statements that are similarly predictive, cautionary or forward looking in nature), the Company, on behalf of itself and each of the other Debtors, jointly and severally, hereby represents and warrants to the Commitment Parties (unless otherwise set forth herein, as of the date of this Agreement and as of the Closing Date) as set forth below.

Section 4.1 Organization and Qualification. Each of the Debtors and each of their Subsidiaries (a) is a duly organized and validly existing corporation, limited liability company, or limited partnership, as the case may be, and, if applicable, in good standing (or the equivalent thereof) under the Laws of the jurisdiction of its incorporation or organization (except where the failure to have such authority or qualification would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect), (b) has the corporate, limited liability company or other applicable power and authority to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (c) except where the failure to have such authority or qualification would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications.

Section 4.2 Corporate Power and Authority. Each of the Debtors has the requisite corporate, limited liability company or other applicable power and authority (i) (A) subject to entry of the BCA Approval Order, Debt Backstop Order, the Confirmation Order and any other applicable orders of the Bankruptcy Court, to enter into, execute and deliver this Agreement and to perform the BCA Approval Obligations and (B) subject to entry of the BCA Approval Order, Debt Backstop Order, the Confirmation Order and any other applicable orders of the Bankruptcy Court, to perform each of its other obligations hereunder and (ii) subject to entry of the BCA Approval Order, Debt Backstop Order, the Plan Solicitation Order, the Confirmation Order and any other applicable orders of the Bankruptcy Court, to consummate the transactions contemplated herein and in the Plan, to enter into, execute and deliver all agreements to which it will be a party as contemplated by this Agreement and the Plan (this Agreement, the Plan, the Disclosure Statement, the Equity Backstop Agreement, the debtor-in-possession credit agreement for the DIP Facility to be entered into in accordance with the DIP Orders, the Exit Facilities, and such other agreements and any Plan supplements or documents referred to herein or therein or hereunder or thereunder, collectively with the Restructuring Support Agreement, the “Transaction Agreements”) and to perform its obligations under each of the Transaction Agreements (other than this Agreement). Subject to the receipt of the foregoing Orders, as applicable, the execution and delivery of this Agreement and each of the other Transaction Agreements and the consummation of the transactions contemplated hereby and thereby have been or will be duly authorized by all requisite corporate action on behalf of the Debtors and no other corporate proceedings on the part of the Debtors are or will be necessary to authorize this Agreement or any of the other Transaction Agreements or to consummate the transactions contemplated hereby or thereby.


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Section 4.3 Execution and Delivery; Enforceability. This Agreement has been duly executed and delivered by the Debtors. Subject to the entry of the BCA Approval Order, Debt Backstop Order, the Plan Solicitation Order, the Confirmation Order and any other applicable orders of the Bankruptcy Court, as applicable, each other Transaction Agreement will be, duly executed and delivered by the Company and each of the other Debtors party thereto. Upon entry of the BCA Approval Order, Debt Backstop Order and assuming due and valid execution and delivery hereof by the Commitment Parties, the BCA Approval Obligations will constitute the valid and legally binding obligations of the Company and, to the extent applicable, the other Debtors, enforceable against the Company and, to the extent applicable, the other Debtors in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or hereafter in effect relating to creditor’s rights generally and subject to general principles of equity. Upon entry of the BCA Approval Order, Debt Backstop Order and assuming due and valid execution and delivery of this Agreement and the other Transaction Agreements by the Commitment Parties and, to the extent applicable, any other parties hereof and thereof, each of the obligations of the Company and, to the extent applicable, the other Debtors hereunder and thereunder will constitute the valid and legally binding obligations of the Company and, to the extent applicable, the other Debtors, enforceable against the Company and, to the extent applicable, the other Debtors, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or hereafter in effect relating to creditor’s rights generally and subject to general principles of equity.

Section 4.4 Authorized and Issued Equity Interests

(a) On the Closing Date, (i) the total issued equity interests of the Company will consist solely of the Common Shares issued pursuant to the Plan, which shall include the Common Shares to be issued with respect to pre-petition creditor claims under the Plan, the Common Shares issued under the Rights Offering, the Common Shares issued in respect of the Commitment Premium (as defined in the Equity Backstop Agreement) pursuant to Article III of the Equity Backstop Agreement and the Common Shares issued in respect of the Debt Backstop Premium, (ii) no equity interests will be held by the Company in its treasury, (iii) no equity interests will be reserved for issuance upon exercise of stock options and other rights to purchase or acquire equity interests granted in connection with any employment arrangement entered into in accordance with Section 6.3, except as reserved in respect of the MIP, and (iv) no warrants to purchase equity interests will be issued and outstanding. Except as set forth in the prior sentence, as of the Closing Date, no units or shares of capital stock or other equity securities or voting interest in the Company will have been issued, reserved for issuance or outstanding.

(b) Except as described in this Section 4.4 or Section 4.4 of the Company Disclosure Schedules, and except as set forth in the Registration Rights Agreement, the Company Organizational Documents, the Equity Backstop Agreement and this Agreement, as of the Closing Date, none of the Debtors or any of their respective Subsidiaries will be party to or otherwise bound by or subject to any outstanding option, warrant, call, right, security, commitment, Contract, arrangement or undertaking (including any preemptive right) that (i) obligates the Debtors or their respective Subsidiaries to issue, deliver, sell or transfer, or repurchase, redeem or otherwise acquire, or cause to be issued, delivered, sold or transferred, or


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repurchased, redeemed or otherwise acquired, any units or shares of the capital stock of, or other equity or voting interests in, any of the Debtors or their respective Subsidiaries or any security convertible or exercisable for or exchangeable into any units or capital stock of, or other equity or voting interest in, any of the Debtors or their respective Subsidiaries, (ii) obligates any of the Debtors or their respective Subsidiaries to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking, (iii) restricts the Transfer of any units or shares of capital stock of any of the Debtors or their respective Subsidiaries (other than any restrictions included in the Exit Facilities or any corresponding pledge agreement or in the organizational documents of any joint venture of the Debtors or their Subsidiaries) or (iv) relates to the voting of any equity interests in any of the Debtors or their respective Subsidiaries, except as to voting rights attendant to any such equity interests or as set forth in the organizational documents thereof.

Section 4.5 Issuance. The Common Shares to be issued pursuant to the Plan, including the Common Shares to be issued in respect of the Debt Backstop Premium or in connection with the consummation of the Rights Offering and pursuant to the terms of the Equity Backstop Agreement, will, when issued and delivered on the Closing Date in exchange for the aggregate Per Share Purchase Price (as defined in the Equity Backstop Agreement) therefor, be duly and validly authorized, issued and delivered and shall be fully paid and non-assessable, and free and clear of all Taxes, Liens (other than Transfer restrictions imposed hereunder or under the Company Organizational Documents or by applicable Law), preemptive rights, subscription and similar rights (other than any rights set forth in the Company Organizational Documents and the Registration Rights Agreement).

Section 4.6 No Conflict. Assuming the consents described in clauses (a) through (h) of Section 4.7 are obtained, the execution and delivery by the Company and, if applicable, any other Debtor, of this Agreement, the Plan and the other Transaction Agreements, the compliance by the Company and, if applicable, any other Debtor, with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein will not (a) conflict with, or result in a breach, modification or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time, or both), or result, except to the extent specified in the Plan, in the acceleration of, or the creation of any Lien under, or cause any payment or consent to be required under any Contract to which any Debtor will be bound as of the Closing Date after giving effect to the Plan or to which any of the property or assets of any Debtor will be subject as of the Closing Date after giving effect to the Plan, (b) result in any violation of the provisions of any of the Debtors’ organizational documents (in the case of each of (a) and (b), other than, for the avoidance of doubt, a breach or default that would be triggered as a result of the Chapter 11 Cases or the Company’s or any Debtor’s undertaking to implement the Restructuring Transactions through the Chapter 11 Cases), or (c) result in any violation of any Law or Order applicable to any Debtor or any of their properties, except in each of the cases described in clause (a) or (c) for any conflict, breach, modification, violation, default, acceleration or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.7 Consents and Approvals. No consent, approval, authorization, Order, registration or qualification of or with any Governmental Entity having jurisdiction over any of


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the Debtors or any of their properties (each, an “Applicable Consent”) is required for the execution and delivery by the Company and, to the extent relevant, the other Debtors, of this Agreement, the Plan and the other Transaction Agreements, the compliance by the Company and, to the extent relevant, the other Debtors, with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except for (a) the entry of the BCA Approval Order authorizing the Debtors to enter into the Equity Backstop Agreement and perform the BCA Approval Obligations, (b) entry of the Plan Solicitation Order, (c) entry of the Debt Backstop Order, (d) entry by the Bankruptcy Court, or any other court of competent jurisdiction, of Orders as may be necessary in the Chapter 11 Cases from time-to-time; (e) the entry of the Confirmation Order, (f) filings, notifications, authorizations, approvals, consents, clearances or termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement, (g) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or “Blue Sky” Laws in connection with the transactions contemplated by the Equity Backstop Agreement and this Agreement, and (h) any Applicable Consents that, if not made or obtained, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.8 Arm’s-Length. The Debtors acknowledge and agree that (a) each of the Commitment Parties is acting solely in the capacity of an arm’s-length contractual counterparty to the Debtors with respect to the transactions contemplated hereby (including in connection with determining the terms of the Rights Offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any of its Subsidiaries and (b) no Commitment Party is advising the Company or any of its Subsidiaries as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.

Section 4.9 Financial Statements. The audited consolidated balance sheets of the Company as at December 31, 2018 and the related consolidated statements of operations and of cash flows for the fiscal year then ended, as filed with the SEC (the “Financial Statements”), in each case, present fairly the consolidated financial condition of the Company as at such date, and the consolidated results of its operations and its consolidated cash flows for the fiscal year then ended. All such Financial Statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as disclosed therein).

Section 4.10 Company SEC Documents and Disclosure Statement. The Debtors and each of their Subsidiaries, if applicable, have filed with or furnished to the SEC all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be filed or furnished by them since December 31, 2017 under the Exchange Act or the Securities Act. As of their respective dates, and, if amended, as of the date of the last such amendment, each of the Company SEC Documents, including any financial statements or schedules included therein, (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Company SEC Document or necessary in order to make the statements in such Company SEC Document, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act, the Securities Act and the


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Sarbanes-Oxley Act of 2002 (“SOX”), as the case may be, and the applicable rules and regulations of the SEC under the Exchange Act, the Securities Act and SOX, as the case may be.

Section 4.11 Absence of Certain Changes. Since December 31, 2018, no Event has occurred or exists that has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.12 No Violation; Compliance with Laws. (a) The Company is not in violation of its certificate of formation or limited liability company operating agreement, and (b) no other Debtor or any of its Subsidiaries is in violation of its respective charter or bylaws, certificate of formation or limited liability company operating agreement or similar organizational document in any material respect. None of the Debtors or their Subsidiaries is or has been at any time since December 31, 2017 in violation of any Law or Order, except for any such violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.13 Legal Proceedings. Other than as set forth in Section 4.13 of the Company Disclosure Schedules, the Chapter 11 Cases and any adversary proceedings or contested motions commenced in connection therewith, (a) there are no material legal, governmental, administrative, judicial or regulatory investigations, audits, actions, suits, claims, arbitrations, demands, demand letters, claims, notices of noncompliance or violations, or proceedings (“Legal Proceedings”) pending or, to the Knowledge of the Company, threatened to which any of the Debtors or their Subsidiaries is a party or to which any property of any of the Debtors or their Subsidiaries is the subject which, if adversely determined, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (b) no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in each case that in any manner draws into question the validity or enforceability of this Agreement, the Plan or the other Transaction Agreements or that would reasonably be expected to have, in the aggregate, a Material Adverse Effect.

Section 4.14 Labor Relations. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) there are no strikes or other labor disputes pending or threatened against any of the Debtors or their respective Subsidiaries; (b) to the Knowledge of the Company, the hours worked and payments made to employees of any of the Debtors or any of their respective Subsidiaries have not been in violation of the Fair Labor Standards Act of 1938 or any other applicable Law dealing with such matters; (c) all payments due from any of the Debtors or their Subsidiaries or for which any claim may be made against any of the Debtors, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of any of the Debtors or their respective Subsidiaries, as applicable, to the extent required by GAAP; (d) each of the Debtors and their Subsidiaries has complied and is currently in compliance with all Laws and legal requirements in respect of personnel, employment and employment practices (including for purposes of classification); and (e) the Debtors and their respective Subsidiaries have not and are not engaged in any unfair labor practice. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the consummation of the transactions contemplated by the Transaction Agreements will not give rise to a right of termination or right


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of renegotiation on the part of any union under any material collective bargaining agreement to which any of the Debtors (or any predecessor) or any of their respective Subsidiaries is a party or by which any of the Debtors (or any predecessor) or any of their respective Subsidiaries is bound.

Section 4.15 Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) each of the Debtors and each of their Subsidiaries owns, or possesses the right to use, all of the patents, patent rights, trademarks, service marks, trade names, copyrights, mask works, domain names, and any and all applications or registrations for any of the foregoing (collectively, “Intellectual Property Rights”) that are reasonably necessary for the operation of their respective businesses, without infringement upon the rights of any other Person (of which any of the Debtors and their Subsidiaries has been notified in writing), (b) to the Knowledge of the Company, none of the Debtors nor their respective Subsidiaries nor any Intellectual Property Right, proprietary right, product, process, method, substance, part, or other material now employed, sold or offered by or contemplated to be employed, sold or offered by such Person, is interfering with, infringing upon, misappropriating or otherwise violating any valid Intellectual Property Rights of any Person, and (c) no claim or litigation regarding any of the foregoing is pending or, to the Knowledge of the Company, threatened.

Section 4.16 Title to Real and Personal Property.

(a) Real Property. Each of the Debtors and each of their respective Subsidiaries has valid fee simple title to, or a valid leasehold interest in, or valid easements or other limited property interests in, all of its Real Properties and has valid title to its personal properties and assets, in each case, except for Permitted Liens and except for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes, and except where the failure (or failures) to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided, however, the enforceability of the Debtors’ leasehold title in any leased Real Properties may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditor’s rights generally or general principles of equity, including the Chapter 11 Cases. To the Knowledge of the Company, all such properties and assets are free and clear of Liens, other than Permitted Liens.

(b) Leased Real Property. Other than as a consequence of the Chapter 11 Cases, each of the Debtors and each of their respective Subsidiaries is in compliance with all obligations under all leases to which it is a party that have not been rejected in the Chapter 11 Cases, except where the failure to comply would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and none of the Debtors or their Subsidiaries has received written notice of any good faith claim asserting that such leases are not in full force and effect, except leases in respect of which the failure to be in full force and effect would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each of the Debtors and each of their Subsidiaries enjoys peaceful and undisturbed possession under all such leases, other than leases in respect of which the failure to enjoy


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peaceful and undisturbed possession would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c) Personal Property. Other than as a consequence of the Chapter 11 Cases, each of the Debtors and each of their Subsidiaries owns or possesses the right to use all of its personal property, including all Intellectual Property Rights and all licenses and rights with respect to any of the foregoing used in the conduct of their businesses, without any conflict (of which any of the Debtors and their Subsidiaries has been notified in writing) with the rights of others, and free from any burdensome restrictions on the present conduct of the Debtors or their respective Subsidiaries, as the case may be, except where such conflicts and restrictions would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.17 No Undisclosed Relationships. Other than Contracts or other direct or indirect relationships between or among any of the Debtors or their Subsidiaries, there are no Contracts or other direct or indirect relationships existing as of the date hereof between or among any of the Debtors or their Subsidiaries, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors, or Affiliate thereof, on the other hand that is required by the Exchange Act to be described in the Company’s filings with the SEC and that is not so described. A correct and complete copy of any Contract existing as of the date hereof between or among any of the Debtors or their Subsidiaries, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors or their Subsidiaries, or Affiliate thereof, on the other hand, that is required by the Exchange Act to be described in the Company’s filings with the SEC is filed as an exhibit to, or incorporated by reference as indicated in, the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 that the Company filed on April 11, 2019, or any other Company SEC Document filed between April 11, 2019 and the date hereof.

Section 4.18 Licenses and Permits. The Debtors and their Subsidiaries possess all licenses, certificates, permits and other authorizations issued by, have made all declarations and filings with and have maintained all financial assurances required by, the appropriate Governmental Entities that are necessary for the ownership or lease of their respective properties and the conduct of the business, except where the failure to possess, make or give the same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. None of the Debtors or their Subsidiaries (a) has received notice of any revocation or modification of any such license, certificate, permit or authorization or (b) has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except to the extent that any of the foregoing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.19 Environmental. Except as set forth in Section 4.19 of the Company Disclosure Schedules and as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) no written notice, claim, demand, request for information, Order, complaint or penalty has been received by any of the Debtors or their Subsidiaries, and there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened which allege a violation of or liability under any Environmental Laws (including with respect to exposure to Hazardous Materials), in each case relating to any of the Debtors or their


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Subsidiaries, (b) each Debtor and each of their respective Subsidiaries has received (including timely application for renewal of the same), and maintained in full force and effect, all environmental permits, licenses and other approvals, and has maintained all financial assurances, in each case to the extent necessary for its operations to comply with all applicable Environmental Laws and is, and since January 1, 2017, has been, in compliance with the terms of such permits, licenses and other approvals and with all applicable Environmental Laws, (c) to the Knowledge of the Company, no Hazardous Material is located at, on or under any property currently or formerly owned, operated or leased by any of the Debtors or their Subsidiaries that has given rise or would reasonably be expected to give rise to any cost, liability or obligation of any of the Debtors under any Environmental Laws, (d) to the Knowledge of the Company, no Hazardous Material has been Released, generated, owned, treated, stored, transported or handled by any of the Debtors or their Subsidiaries, and none of the Debtors or their Subsidiaries has arranged for or permitted the disposal of Hazardous Material at any location in a manner that has given rise or would reasonably be expected to give rise to any cost, liability or obligation of any of the Debtors or their Subsidiaries under any Environmental Laws, and (e) no agreements in which any of the Debtors or their Subsidiaries has expressly assumed responsibility for any known obligation of any other Person arising under or relating to Environmental Laws that remains unresolved. Notwithstanding the generality of any other representations and warranties in this Agreement, the representations and warranties in this Section 4.19 constitute the sole and exclusive representations and warranties in this Agreement with respect to any environmental, health or safety matters, including any arising under or relating to Environmental Laws.

Section 4.20 Taxes.

(a) Except as would not reasonably be expected to be material to the Debtors and their Subsidiaries taken as a whole, (i) each of the Debtors and their Subsidiaries have filed or caused to be filed all U.S. federal, state, provincial, local and non-U.S. Tax returns required to have been filed by it and (ii) taken as a whole, each such Tax return is true and correct.

(b) Each of the Debtors and their Subsidiaries has timely paid or caused to be timely paid all Taxes shown to be due and payable by it on the returns referred to in clause (a) and all other Taxes or assessments (or made adequate provision (in accordance with GAAP) for the payment of all Taxes due) with respect to all periods or portions thereof ending on or before the date hereof, which Taxes, if not paid or adequately provided for, would reasonably be expected to be material to the Debtors taken as a whole, excluding Taxes being contested in good faith by appropriate proceedings and for which the Debtors or their Subsidiaries have set aside on their books adequate reserves in accordance with GAAP.

(c) As of the date hereof, with respect to the Debtors, other than in connection with the Chapter 11 Cases and other than Taxes or assessments that are being contested in good faith and are not expected to result in significant negative adjustments that would be material to the Debtors taken as a whole, (i) no claims have been asserted in writing with respect to any material Taxes, (ii) no presently effective waivers or extensions of statutes of limitation with respect to Taxes have been given or requested and (iii) no Tax returns are being examined by, and no written notification of intention to examine has been received from, the IRS or any other Governmental Entity.


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(d) None of the Debtors nor any of their Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for a taxable period (or portion thereof) ending after the Closing Date as a result of any (i) installment sale or open transaction disposition made or entered into prior to the Closing, (ii) prepaid amount received prior to the Closing, (iii) election under Section 108(i) of the Code (or any similar provision of state, local or non-U.S. Law), or (iv) any adjustment pursuant to Section 481(a) of the Code (or any similar provision of state, local or non-U.S. Law) made or requested prior to the Closing or, to the Knowledge of the Company, proposed by any Governmental Entity prior to the Closing. None of the Debtors and their Subsidiaries has any material liability pursuant to or attributable to Section 965 of the Code.

(e) The Debtors and each Subsidiary have complied in all material respects with all applicable laws, rules, and regulations relating to the payment and withholding of Taxes, and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper Governmental Entity all material required amounts.

Section 4.21 Employee Benefit Plans.

(a) Other than the Hexion Inc. Pension Plan, none of the Debtors nor any of their ERISA Affiliates sponsor, maintain, contribute to, or has an obligation to contribute to, or has any outstanding liability (contingent or otherwise) to any Multiemployer Plan or any plan that is subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA. No condition exists that could reasonably be expected to result in any material liability or obligation (contingent or otherwise) to the Debtors under Title IV of ERISA. The Unfunded Pension Liability for the Hexion Inc. Pension Plan does not exceed $50 million. The Deferred Compensation Liabilities are unfunded and do not exceed $6 million in the aggregate.

(b) Except as set forth in Schedule 4.21 of the Company Disclosure Schedules, none of the Debtors nor any of the Subsidiaries has established, sponsors or maintains, or has any liability (contingent or otherwise) with respect to, any material defined benefit employee pension benefit plan (within the meaning of U.S. Accounting Standards Codification Topic 715-30) governed by or subject to the Laws of a jurisdiction other than the United States of America (a “Foreign Plan”). No Foreign Plan has unfunded liabilities in excess of $175 million with respect to any single Foreign Plan and in excess of $250 million with respect to all Foreign Plans in the aggregate.

(c) Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect to the Debtors, there are no pending, or to the Knowledge of the Company, threatened claims, sanctions, actions or lawsuits, asserted or instituted against any Company Benefit Plan or Foreign Plan or any Person as fiduciary or sponsor of any Company Benefit Plan, or Foreign Plan in each case other than claims for benefits in the normal course.

(d) Except as set forth in Schedule 4.21 of the Company Disclosure Schedules or as would not reasonably be expected to result, individually or in the aggregate, in a material liability to the Debtors, none of the Company Benefit Plans or Foreign Plans obligates any Debtor or any Debtor’s Subsidiary to provide, nor has any Debtor or any of their respective


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Subsidiaries promised or agreed to provide or otherwise has any liability (contingent or otherwise) with respect to, retiree or post-employment health, welfare or life insurance or benefits, other than as required under Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code or any similar Law for which the covered Person pays the full cost of coverage.

(e) Except as set forth in Schedule 4.21 of the Company Disclosure Schedules or as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, (i) all compensation and benefit arrangements of the Debtors and their respective Subsidiaries and all Company Benefits Plans comply and have complied in both form and operation with their terms and all applicable Laws and legal requirements and (ii) none of the Debtors has any obligation to provide any individual with a “gross up” or similar payment in respect of any Taxes that may become payable under Section 409A or 4999 of the Code. Except as set forth in Schedule 4.21 of the Company Disclosure Schedules, on the Effective Date, no compensation or benefit plan, practice, program, policy, agreement, or arrangement will exist that, as a result of the Chapter 11 Cases or any transactions related thereto, including the transactions contemplated by this Agreement, could reasonably be expected to result in the acceleration of the time of payment or vesting, or a material increase in the amount of compensation or benefit due to any employee, director, or other service provider of any of the Debtors or any of their Subsidiaries.

Section 4.22 Internal Control Over Financial Reporting. The Company has established and maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) that complies with the requirements of the Exchange Act and has been designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and to the Knowledge of the Company, there are no weaknesses in the Company’s internal control over financial reporting as of the date hereof.

Section 4.23 Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) designed to ensure that information required to be disclosed by the Company in the reports that it files and submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including that information required to be disclosed by the Company in the reports that it files and submits under the Exchange Act is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosure.

Section 4.24 Material Contracts. Other than as a result of a rejection motion filed by any of the Debtors in the Chapter 11 Cases, all Material Contracts are valid, binding and enforceable by and against the Debtor party thereto and, to the Knowledge of the Company, each other party thereto (except where the failure to be valid, binding or enforceable does not constitute a Material Adverse Effect), and no written notice to terminate, in whole or part, any Material Contract has been delivered to any of the Debtors (except where such termination would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect). Other than as a result of the filing of the Chapter 11 Cases or any rejection motion filed by any of the Debtors in the Chapter 11 Cases, none of the Debtors nor, to the Knowledge of the


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Company, any other party to any Material Contract, is in material default or breach under the terms thereof, in each case, except for such instances of material default or breach that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Material Contract has been publicly filed with the SEC.

Section 4.25 No Unlawful Payments. Since January 1, 2014, none of the Debtors, their respective Subsidiaries or, to the Knowledge of the Company, any joint ventures of which the Debtors or their respective Subsidiaries own at least a forty-nine percent (49%) interest (such joint ventures, together with the Subsidiaries of such joint ventures, the “Joint Ventures”) nor, to the Knowledge of the Company, any of their respective directors, officers, employees or agents has in any material respect: (a) used any funds of any of the Debtors, their respective Subsidiaries or, to the Knowledge of the Company, the Joint Ventures for any unlawful contribution, gift, entertainment or other unlawful expense, in each case relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee; (c) otherwise violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (“FCPA”), or the UK Bribery Act 2010; or (d) made any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment. No material Legal Proceeding by or before any Governmental Entity or any arbitrator involving any of the Debtors, their respective Subsidiaries and the Joint Ventures with respect to the FCPA, UK Bribery Act 2010 or similar applicable anti-corruption laws is pending or, to the Knowledge of the Company, threatened, and no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in any manner that (i) would be material and adverse to the Debtors or their Subsidiaries, or (ii) to the Knowledge of the Company, would be material and adverse to the Joint Ventures. The Debtors, their respective Subsidiaries and to the Knowledge of the Company, the Joint Ventures have implemented and maintain in effect policies and procedures designed to ensure compliance by the Debtors, their respective Subsidiaries and the Joint Ventures and their respective directors, officers, employees and agents with the FCPA, UK Bribery Act 2010 and any other applicable anti-corruption laws.

Section 4.26 Compliance with Money Laundering and Sanctions Laws.

(a) The operations of the Debtors, their respective Subsidiaries, and to the Knowledge of the Company, the Joint Ventures are and, since January 1, 2014 have been at all times, conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transactions Reporting Act of 1970, the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the money laundering statutes of all jurisdictions in which the Debtors, their respective Subsidiaries and the Joint Ventures operate (and the rules and regulations promulgated thereunder) and any related or similar Laws (collectively, the “Money Laundering Laws”) and no material Legal Proceeding by or before any Governmental Entity or any arbitrator involving any of the Debtors or their respective Subsidiaries, or to the Knowledge of the Company, the Joint Ventures with respect to Money Laundering Laws is pending or, to the Knowledge of the Company, threatened, and no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in any manner that (i) would be material and adverse to the Debtors or their Subsidiaries, or (ii) to the Knowledge of the Company, would be material and adverse to


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the Joint Ventures. The Debtors, their respective Subsidiaries and to the Knowledge of the Company, the Joint Ventures have implemented and maintain in effect policies and procedures designed to ensure compliance by the Debtors, their respective Subsidiaries, the Joint Ventures and their respective directors, officers, employees and agents with applicable Money Laundering Laws.

(b) None of the Debtors, their Subsidiaries or to the Knowledge of the Company, the Joint Ventures nor, to the Knowledge of the Company, any of their respective directors, officers, employees or other Persons acting on their behalf with express authority to so act is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. None of the Debtors, their respective Subsidiaries or, to the Knowledge of the Company, the Joint Ventures, nor, to the Knowledge of the Company, any of their respective current or former directors, officers, employees, agents, Controlled Affiliates or other Persons acting on their behalf with express authority to so act, has engaged since January 1, 2014, or is engaged, in any transaction(s) or activities which would result in a violation of Sanctions in any material respect. The Company will not directly or indirectly use the proceeds of the Rights Offering, or lend, contribute or otherwise make available such proceeds to any other Debtor, its Subsidiaries, joint venture partner (including the Joint Ventures) or other Person, for the purpose of financing the activities of any Person that, to the Knowledge of the Company, is currently subject to any Sanctions. No material Legal Proceeding by or before any Governmental Entity or any arbitrator involving any of the Debtors, their respective Subsidiaries and the Joint Ventures with respect to Sanctions is pending or, to the Knowledge of the Company, threatened, and no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Legal Proceeding, in any manner that (i) would be material and adverse to the Debtors or their Subsidiaries, or (ii) to the Knowledge of the Company, would be material and adverse to the Joint Ventures. The Debtors, their respective Subsidiaries and to the Knowledge of the Company, the Joint Ventures have implemented and maintain in effect policies and procedures designed to ensure compliance by the Debtors, their respective Subsidiaries, and the Joint Ventures and their respective directors, officers, employees and agents with applicable Sanctions.

Section 4.27 No Broker’s Fees. None of the Debtors or any of their respective Subsidiaries is a party to any Contract with any Person (other than this Agreement) that would give rise to a valid claim against the Commitment Parties for a brokerage commission, finder’s fee or like payment in connection with the Rights Offering or the sale of any Common Shares issued in respect of the Debt Backstop Premium.

Section 4.28 Investment Company Act. None of the Debtors or any of their respective Subsidiaries is, or immediately after giving effect to the consummation of the Restructuring will be, an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended (the “Investment Company Act”), and this conclusion is based on one or more bases or exclusions other than Sections 3(c)(1) and 3(c)(7) of the Investment Company Act, including that none of the Debtors or their Subsidiaries comes within the basic definition of ‘investment company’ under section 3(a)(1) of the Investment Company Act.


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Section 4.29 Insurance. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) the Debtors and their respective Subsidiaries have insured their properties and assets against such risks and in such amounts as are customary for companies engaged in similar businesses in similar geographies; (b) all premiums due and payable in respect of material insurance policies maintained by the Debtors and their respective Subsidiaries have been paid; (c) the Company reasonably believes that the insurance maintained by or on behalf of the Debtors and their respective Subsidiaries is adequate in all material respects; and (d) as of the date hereof, to the Knowledge of the Company, none of the Debtors or their respective Subsidiaries has received notice from any insurer or agent of such insurer with respect to any material insurance policies of the Debtors or their respective Subsidiaries of any cancellation or termination of such policies, other than such notices which are received in the ordinary course of business or for policies that have expired in accordance with their terms.

Section 4.30 Volcker Compliance.

(a) None of the Debtors nor their Subsidiaries nor their respective “Affiliates” (as defined in Section 2(k) of the BHC Act) have: (i) taken any action to acquire or retain an ownership interest in or to sponsor, or omitted to take any action necessary to prevent themselves from acquiring or retaining an ownership interest in or sponsoring, a Covered Fund for purposes the Volcker Rule (the terms “sponsor” and “covered fund” having the meanings set forth in Section 13 of the BHC Act and the rules and regulations adopted thereunder (collectively, the “Volcker Rule”)), (ii) engaged in proprietary trading as defined in the Volcker Rule, (iii) provided a line of credit, guarantee or other form of credit support or backstop in favor of a Covered Fund, or (iv) provided services in favor of a Covered Fund, except, in each case, as otherwise permitted under an exemption or exclusion from the Volcker Rule and disclosed to the Commitment Parties in Section 4.31 of the Company Disclosure Schedules (which disclosure shall list each such activity and describe the exemption or exclusion applicable thereto).

(b) The Company is not, and after giving effect to the Rights Offering, the sale of the Common Shares thereunder and the application of the proceeds thereof, the Company will not be, a Covered Fund.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES

Each Commitment Party, severally (in accordance with its Commitment Percentage) and not jointly, represents and warrants as to itself only (unless otherwise set forth herein, as of the date of this Agreement and as of the Closing Date) as set forth below.

Section 5.1 Organization. Such Commitment Party is a legal entity duly organized, validly existing and, if applicable, in good standing (or the equivalent thereof) under the Laws of its jurisdiction of incorporation or organization.

Section 5.2 Organizational Power and Authority. Such Commitment Party has the requisite power and authority (corporate or otherwise) to enter into, execute and deliver this


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Agreement and each other Transaction Agreement to which such Commitment Party is a party and to perform its obligations hereunder and thereunder and has taken all necessary action (corporate or otherwise) required for the due authorization, execution, delivery and performance by it of this Agreement and the other Transaction Agreements.

Section 5.3 Execution and Delivery; Enforceability. This Agreement and each other Transaction Agreement to which such Commitment Party is a party (a) has been, or prior to its execution and delivery will be, duly and validly executed and delivered by such Commitment Party and (b) will constitute valid and legally binding obligations of such Commitment Party, enforceable against such Commitment Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar Laws limiting creditors’ rights generally or by equitable principles relating to enforceability.

Section 5.4 No Conflict. Assuming that the consents referred to in clauses (a) and (b) of Section 5.5 are obtained, the execution and delivery by such Commitment Party of this Agreement and each other Transaction Agreement to which such Commitment Party is a party, the compliance by such Commitment Party with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein (a) will not conflict with, or result in breach, modification, termination or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time or both), or result in the acceleration of, or the creation of any Lien under, any Contract to which such Commitment Party is party or is bound or to which any of the property or assets or such Commitment Party are subject, (b) will not result in any violation of the provisions of the certificate of incorporation or bylaws (or comparable constituent documents) of such Commitment Party and (c) will not result in any material violation of any Law or Order applicable to such Commitment Party or any of its properties, except in each of the cases described in clauses (a) or (c), for any conflict, breach, modification, termination, violation, default, acceleration or Lien which would not reasonably be expected, individually or in the aggregate, to prohibit, materially delay, or materially and adversely impact such Commitment Party’s performance of its obligations under this Agreement.

Section 5.5 Consents and Approvals. No consent, approval, authorization, Order, registration or qualification of or with any Governmental Entity having jurisdiction over such Commitment Party or any of its properties is required for the execution and delivery by such Commitment Party of this Agreement and each other Transaction Agreement to which such Commitment Party is a party, the compliance by such Commitment Party with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except (a) any consent, approval, authorization, Order, registration or qualification which, if not made or obtained, would not reasonably be expected, individually or in the aggregate, to prohibit, materially delay, or materially and adversely impact such Commitment Party’s performance of its obligations under this Agreement and each other Transaction Agreement to which such Commitment Party is a party and (b) filings, notifications, authorizations, approvals, consents, clearances or termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement.

Section 5.6 No Registration. Such Commitment Party understands that (a) any Securities issued to such Commitment Party issued in respect of the Debt Backstop Premium,


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have not been registered under the Securities Act or any state or foreign securities or “blue sky” laws by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends on, among other things, the bona fide nature of the investment intent and the accuracy of such Commitment Party’s representations as expressed herein or otherwise made pursuant hereto, and (b) such Securities cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available.

Section 5.7 Purchasing Intent. Such Commitment Party is acquiring any Securities issued to such Commitment Party issued in respect of the Debt Backstop Premium for its own account or accounts or funds over which it holds voting discretion or exercises discretionary investment management, not otherwise as a nominee or agent, and not otherwise with the view to, or for resale in connection with, any distribution thereof not in compliance with the Securities Act, any applicable securities or “blue sky” laws of any state of the United States or other applicable securities Laws, and such Commitment Party has no present intention of selling, granting any other participation in, or otherwise distributing the same, except in compliance with the Securities Act, any applicable securities or “blue sky” laws of any state of the United States and any applicable securities Laws.

Section 5.8 Sophistication; Investigation. Such Commitment Party has such knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of its investment in any Securities issued to such Commitment Party in respect of the Debt Backstop Premium. Such Commitment Party understands and accepts that its investment in any Securities involves risks. Such Commitment Party has received such documentation as it has deemed necessary to make an informed investment decision in connection with its investment in any Securities, has had adequate time to review such documents prior to making its decision to invest, has had a full opportunity to ask questions of and receive answers from the Company or any person or persons acting on behalf of the Company concerning the terms and conditions of an investment in the Company and has made an independent decision to invest in any Securities based upon the foregoing and other information available to it, which it has deemed adequate for this purpose. With the assistance of each Commitment Party’s own professional advisors, to the extent that such Commitment Party has deemed appropriate, such Commitment Party has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in any Securities. Such Commitment Party understands and is able to bear any economic risks associated with such investment (including the necessity of holding such shares for an indefinite period of time). Except for the representations and warranties expressly set forth in this Agreement or any other Transaction Agreement, such Commitment Party has independently evaluated the merits and risks of its decision to enter into this Agreement and disclaims reliance on any representations or warranties, either express or implied, by or on behalf of any of the Debtors.

Section 5.9 No Broker’s Fees. Such Commitment Party is not a party to any Contract with any Person (other than the Transaction Agreements and any Contract giving rise to the Expense Reimbursement hereunder) that would give rise to a valid claim against any of the


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Debtors for a brokerage commission, finder’s fee or like payment in connection with any Common Shares issued in respect of the Debt Backstop Premium.

Section 5.10 Sufficient Funds. Such Commitment Party has sufficient assets and the financial capacity to perform all of its obligations under this Agreement, including the ability to fund such Commitment Party’s Commitment.

Section 5.11 Additional Securities Law Matters.

(a) Such Commitment Party has been advised by the Company that any Securities are characterized as “restricted securities” under the Securities Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that such Commitment Party must continue to bear the economic risk of the investment in such Securities, if applicable, unless the offer and sale of its Securities is subsequently registered under the Securities Act and all applicable state or foreign securities or “blue sky” laws or an exemption from such registration is available.

(b) Such Commitment Party (i) is either (x) a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act (“Rule 144A”) or an “accredited investor” within the meaning of Rule 501(a) of the Securities Act or (y) not a “U.S. Person” as such term is defined in Regulation S under the Securities Act (“Regulation S”) and (ii) has the knowledge, skill and experience in business, financial and investment matters so that the undersigned is capable of evaluating the merits, risks and consequences of an investment in any Securities and is able to bear the economic risk of loss of such investment, including the complete loss of such investment. Such Commitment Party further represents that it fully understands the limitations on transfer and restrictions on sales and other dispositions set forth in this Agreement.

(c) No such Commitment Party, its Affiliates or any person acting on its or any of their behalf has engaged, or will engage, in any form of general solicitation or general advertising (within the meaning of Rule 502(c) of the Securities Act) or directed selling efforts (within the meaning of Regulations S) in connection with the offering of any Securities issued in respect of the Debt Backstop Premium.

(d) Such Commitment Party is not purchasing any Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to such Commitment Party’s knowledge, any other general solicitation or general advertisement or directed selling efforts.

ARTICLE VI

ADDITIONAL COVENANTS

Section 6.1 Orders Generally. The Debtors shall support and make commercially reasonable efforts, consistent with the Restructuring Support Agreement and the Plan, to (a) obtain the entry of the BCA Approval Order, the Plan Solicitation Order, the Confirmation


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Order, the Debt Backstop Order, and any DIP Orders supported by the Requisite Commitment Parties, and (b) cause the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order and any DIP Orders supported by the Requisite Commitment Parties to become Final Orders (and request that such Orders become effective immediately upon entry by the Bankruptcy Court pursuant to a waiver of Rules 3020 and 6004(h) of the Bankruptcy Rules, as applicable), in each case, consistent with the Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support Agreement, following the filing of the respective motion seeking entry of such Orders. The Debtors shall provide each of the Commitment Parties and its counsel copies of the proposed motions seeking entry of the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order and the DIP Orders (together with the proposed Plan Solicitation Order, the proposed BCA Approval Order, the proposed Debt Backstop Order and the DIP Orders), reasonably in advance of filing the same to the extent reasonably practicable, and the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order and the DIP Orders must be in form and substance reasonably satisfactory to Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion). Any amendments, modifications, changes, or supplements to the BCA Approval Order, Plan Solicitation Order, Confirmation Order, Debt Backstop Order and DIP Orders, and any of the motions seeking entry of such Orders, shall be in form and substance reasonably satisfactory to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

Section 6.2 Confirmation Order; Plan and Disclosure Statement. The Debtors shall use their commercially reasonable efforts to obtain entry of the Confirmation Order. The Debtors shall provide to each of the Commitment Parties and its counsel a copy of the proposed Plan and the Disclosure Statement and any proposed amendment, modification, supplement or change to the Plan or the Disclosure Statement, and an opportunity to review and comment on such documents that is reasonable under the circumstances prior to such documents being filed with the Bankruptcy Court, and each such amendment, modification, supplement or change to the Plan or the Disclosure Statement must be in form and substance reasonably satisfactory to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion). The Debtors shall provide to each of the Commitment Parties and its counsel a copy of the proposed Confirmation Order (together with copies of any briefs, pleadings and motions related thereto), and an opportunity to review and comment on such Order, briefs, pleadings and motions that is reasonable under the circumstances prior to such Order, briefs, pleadings and motions being filed with the Bankruptcy Court, and such Order, briefs, pleadings and motions must be in form and substance reasonably satisfactory to the Company and the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided


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thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion).

Section 6.3 Conduct of Business. Except as expressly set forth in this Agreement, the Equity Backstop Agreement, the Restructuring Support Agreement, the Plan or with the prior written consent of Requisite Commitment Parties (requests for which, including related information, shall be directed to the Advisors to the Commitment Parties), during the period from the date of this Agreement to the earlier of the Closing Date and the date on which this Agreement is terminated in accordance with its terms (the “Pre-Closing Period”), the Debtors shall operate in the ordinary course consistent with industry practice and the operations contemplated pursuant to the Company’s business plan (as may be updated from time to time with the consent (which shall not be unreasonably withheld, delayed or conditioned) of the Requisite Commitment Parties for any material updates) taking into account the Restructuring and the commencement and pendency of the Chapter 11 Cases.

For the avoidance of doubt, the following shall be deemed to occur outside of the ordinary course of business of the Debtors and shall require the prior written consent of the Requisite Commitment Parties (which shall not be unreasonably withheld, delayed or conditioned) unless the same would otherwise be permissible under the Restructuring Support Agreement, the Plan or this Agreement without the consent of any other party: (1) entry into, or any material amendment, modification, termination, waiver, supplement, restatement or other change to, any Material Contract or any assumption of any Material Contract in connection with the Chapter 11 Cases (other than (a) any Material Contracts that are otherwise addressed by clause (4) below, (b) any such amendment modification, waiver, supplement, restatement or other change that, taken as a whole, is no less favorable to the Debtors than the Contract prior thereto, and (c) any extension of a Material Contract on substantially similar terms in the ordinary course of business), (2) entry into, or any material amendment, modification, waiver, supplement, restatement or other change to, any employment agreement or arrangement with its officers or senior management to which any of the Debtors is a party (other than (a) such amendment, modification, waiver, supplement, restatement or other change that, taken as a whole, is no less favorable to the Debtors than the employment agreement prior thereto or is not inconsistent in any material respect with the Restructuring Support Agreement and has been approved by the Bankruptcy Court and (b) any extension of a such an employment agreement or arrangement on substantially similar terms in the ordinary course of business), (3) any (x) termination by any of the Debtors without cause or (y) material reduction by any of the Debtors without cause in the title or responsibilities, in each case, of the individuals who are, as of the date of this Agreement, the Chief Executive Officer, or the Chief Financial Officer of the Company, (4) the adoption or material amendment of any management or employee incentive, retention, equity-based or equity plan, program, policy, agreement or arrangement by any of the Debtors except for (x) the MIP in accordance with the Restructuring Term Sheet and in a manner consistent with the process set forth in the definitive forms and (y) any such plans, programs, policies, agreements, or arrangements the current and future liabilities associated with which have previously been provided or made available to the Advisors, (5) entry into, or any material amendment, modification, waiver, supplement, restatement or other change to, any Contract between any Debtor, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors, or Affiliate thereof, on the other hand (other than (a) any such


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amendment, modification, waiver, supplement, restatement or other change that, taken as a whole, is no less favorable to the Debtors than the Contract prior thereto and (b) any extension of a Contract on substantially similar terms in the ordinary course of business) and (6) commencement, release, assignment, compromise, discharge, waiver, settlement, agreement to settle, or satisfaction of any material Legal Proceeding. Except as otherwise provided in this Agreement, nothing in this Agreement shall give the Commitment Parties, directly or indirectly, any right to control or direct the operations of the Debtors. Prior to the Closing Date, the Debtors shall exercise, consistent with the terms and conditions of this Agreement, control and supervision of the business of the Debtors.

Section 6.4 Access to Information; Confidentiality.

(a) Subject to applicable Law and Section 6.4(b), upon reasonable notice during the Pre-Closing Period, the Debtors shall afford the Commitment Parties and their Representatives upon request reasonable access, during normal business hours and without unreasonable disruption or interference with the Debtors’ business or operations, to the Debtors’ employees, properties, books, Contracts and records and, during the Pre-Closing Period, the Debtors shall furnish promptly to such parties all reasonable information concerning the Debtors’ business, properties and personnel as may reasonably be requested by any such party, provided that the foregoing shall not require the Debtors (i) to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company, would cause any of the Debtors to violate any of their respective obligations with respect to confidentiality to a third party if the Company shall have used its commercially reasonable efforts to obtain, but failed to obtain, the consent of such third party to such inspection or disclosure, (ii) to disclose any legally privileged information of any of the Debtors or (iii) to violate any applicable Laws or Orders. All requests for information and access made in accordance with this Section 6.4 shall be directed to an executive officer of the Company or such Person as may be designated by the Company’s executive officers.

(b) From and after the date hereof until the date that is one (1) year after the expiration of the Pre-Closing Period, each Commitment Party shall, and shall cause its Representatives to, (i) keep confidential and not provide or disclose to any Person any documents or information received or otherwise obtained by such Commitment Party or its Representatives pursuant to Section 6.4(a), Section 6.5 or in connection with a request for approval pursuant to Section 6.3 (except that provision or disclosure may be made to any Affiliate or Representative of such Commitment Party who needs to know such information for purposes of this Agreement or the other Transaction Agreements and who agrees to observe the terms of this Section 6.4(b) (and such Commitment Party will remain liable for any breach of such terms by any such Affiliate or Representative)), and (ii) not use such documents or information for any purpose other than in connection with this Agreement or the other Transaction Agreements or the transactions contemplated hereby or thereby. Notwithstanding the foregoing, the immediately preceding sentence shall not apply in respect of documents or information that (A) is now or subsequently becomes generally available to the public through no violation of this Section 6.4(b), (B) becomes available to a Commitment Party or its Representatives on a non-confidential basis from a source other than any of the Debtors or any of their respective Representatives, (C) becomes available to a Commitment Party or its


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Representatives through document production or discovery in connection with the Chapter 11 Cases or other judicial or administrative process, but subject to any confidentiality restrictions imposed by the Chapter 11 Cases or other such process, or (D) such Commitment Party or any Representative thereof is required to disclose pursuant to judicial or administrative process or pursuant to applicable Law or applicable securities exchange rules; provided, that, such Commitment Party or such Representative shall provide the Company with prompt written notice of such legal compulsion and cooperate with the Company to obtain a protective Order or similar remedy to cause such information or documents not to be disclosed, including interposing all available objections thereto, at the Company’s sole cost and expense; provided, further, that, in the event that such protective Order or other similar remedy is not obtained, the disclosing party shall furnish only that portion of such information or documents that is legally required to be disclosed and shall exercise its commercially reasonable efforts (at the Company’s sole cost and expense) to obtain assurance that confidential treatment will be accorded such disclosed information or documents. Notwithstanding the foregoing, any Commitment Party or its Affiliates or Representatives may disclose such information or documents without notice of any kind to any regulatory authority (including any self-regulatory authority) in connection with any routine examination, investigation, regulatory sweep or other regulatory inquiry not specifically targeted to the disclosing party.

(c) Except as required by this Agreement and the other Transaction Agreements, each of the Debtors agrees that it shall not directly disclose any material non-public information to any Commitment Party or its Representatives without the execution and delivery by the disclosing Debtor and such Commitment Party of a non-disclosure agreement containing customary cleansing mechanisms.

Section 6.5 Financial Information. During the Pre-Closing Period, the Debtors shall deliver to the Advisors to each Commitment Party that so requests, all statements and reports the Debtors are required to deliver to any lender under the DIP Facility as of the date hereof (the “Financial Reports”). Neither any waiver by the parties to the DIP Facility of their right to receive the Financial Reports nor any amendment or termination of the DIP Facility shall limit the Debtors’ obligation to deliver the Financial Reports to the Commitment Parties in accordance with the terms of this Agreement.

Section 6.6 Commercially Reasonable Efforts.

(a) Without in any way limiting any other respective obligation of the Debtors or any Commitment Party in this Agreement, each Party shall use commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement and the Plan, including using commercially reasonable efforts in:

(i) timely preparing and filing all documentation reasonably necessary to effect all necessary notices, reports and other filings of such Person and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party or Governmental Entity;


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(ii) cooperating with the defense of any Legal Proceedings in any way challenging (A) this Agreement, the Plan, the Registration Rights Agreement or any other Transaction Agreement, (B) the BCA Approval Order, the Plan Solicitation Order, the Confirmation Order, the Debt Backstop Order or the DIP Orders or (C) the consummation of the transactions contemplated hereby and thereby, including seeking to have any stay or temporary restraining Order entered by any Governmental Entity vacated or reversed;

(iii) obtaining third party financing for the maximum amount of the Syndicated Exit Facility; and

(iv) working together in good faith to finalize the Company Organizational Documents, Transaction Agreements, the Registration Rights Agreement and all other documents relating thereto for timely inclusion in the Plan and filing with the Bankruptcy Court.

(b) Subject to applicable Laws or applicable rules relating to the exchange of information, and in accordance with the Restructuring Support Agreement, the Commitment Parties and the Debtors shall have the right to review in advance, and to the extent practicable each will consult with the other on all of the information relating to Commitment Parties or the Debtors, as the case may be, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any third party and/or Governmental Entity in connection with the transactions contemplated by this Agreement or the Plan; provided, however, that the Commitment Parties are not required to provide for review in advance declarations or other evidence submitted in connection with any filing with the Bankruptcy Court. In exercising the foregoing rights, the Parties shall act as reasonably and as promptly as practicable.

(c) Nothing contained in this Section 6.6 shall limit the ability of any Commitment Party to consult with the Debtors, to appear and be heard, or to file objections, concerning any matter arising in the Chapter 11 Cases to the extent not inconsistent with the Transaction Agreements.

Section 6.7 [Reserved].

Section 6.8 Blue Sky. The Company shall, on or before the Closing Date, use reasonable best efforts to obtain an exemption for, or to qualify the offer and sale of any Common Shares to the Commitment Parties issued in respect of the Debt Backstop Premium under applicable securities and “Blue Sky” Laws of the states of the United States (or to obtain an exemption from such qualification) and any applicable foreign jurisdictions, and shall provide evidence of any such action so taken to the Commitment Parties on or prior to the Closing Date. The Company shall use reasonable best efforts to timely make all filings and reports relating to the offer and sale of any Common Shares issued hereunder required under applicable securities and “Blue Sky” Laws of the states of the United States. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 6.8.


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Section 6.9 Use of Proceeds. The Debtors will apply any proceeds received pursuant to this Agreement for the purposes identified in the Disclosure Statement and the Plan.

Section 6.10 Share Legend. Each certificate evidencing any Common Shares issued in respect of the Debt Backstop Premium shall be stamped or otherwise imprinted with a legend (the “Legend”) in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [DATE OF ISSUANCE], HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.”

In the event that any such Common Shares are uncertificated, such Common Shares shall be subject to a restrictive notation substantially similar to the Legend in the share ledger or other appropriate records maintained by the Company or agent and the term “Legend” shall include such restrictive notation. The Company shall remove the Legend (or restrictive notation, as applicable) set forth above from the certificates evidencing any such shares (or the share register or other appropriate Company records, in the case of uncertified shares), upon request, at any time after the restrictions described in such Legend cease to be applicable, including, as applicable, when such shares may be sold under Rule 144 of the Securities Act. The Company may reasonably request such opinions, certificates or other evidence that such restrictions no longer apply as a condition to removing the Legend.

Section 6.11 Antitrust Approval.

(a) Each Party agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to consummate and make effective the transactions contemplated by this Agreement, the Plan and the other Transaction Agreements, including (i) if applicable, filing, or causing to be filed, the Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by this Agreement with the Antitrust Division of the United States Department of Justice and the United States Federal Trade Commission and any filings (or, if required by any Antitrust Authority, any drafts thereof) under any other Antitrust Laws that are necessary to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable (and with respect to any filings required pursuant to the HSR Act, no later than fifteen (15) Business Days following the date hereof) and (ii) promptly furnishing any documents or information reasonably requested by any Antitrust Authority.

(b) The Company and each Commitment Party that is subject to an obligation pursuant to the Antitrust Laws to notify or make any filing with respect to any transaction contemplated by this Agreement, the Plan or the other Transaction Agreements and that has notified the Company in writing of such obligation (each such Commitment Party, a “Filing Party”) agree to reasonably cooperate with each other in the preparation of and as to the appropriate time of filing such notification and its content. The Company and each Filing Party


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shall, to the extent permitted by applicable Law: (i) promptly notify each other of, and if in writing, furnish each other with copies of (or, in the case of material oral communications, advise each other orally) of any material communications from or with an Antitrust Authority; (ii) not participate in any meeting with an Antitrust Authority unless it consults with each other Filing Party and the Company, as applicable, in advance and, to the extent permitted by the Antitrust Authority and applicable Law, give each other Filing Party and the Company, as applicable, a reasonable opportunity to attend and participate thereat; (iii) furnish each other Filing Party and the Company, as applicable, with copies of all material correspondence and communications between such Filing Party or the Company and any Antitrust Authority; (iv) furnish each other Filing Party with such necessary information and reasonable assistance as may be reasonably necessary in connection with the preparation of necessary filings or submission of information to any Antitrust Authority; and (v) not withdraw its filing, if any, under the HSR Act without the prior written consent of the Requisite Commitment Parties and the Company.

(c) Should a Filing Party be subject to an obligation under the Antitrust Laws to jointly notify with one or more other Filing Parties (each, a “Joint Filing Party”) any transaction contemplated by this Agreement, the Plan or the other Transaction Agreements, such Joint Filing Party shall promptly notify each other Joint Filing Party of, and if in writing, furnish each other Joint Filing Party with copies of (or, in the case of material oral communications, advise each other Joint Filing Party orally of) any communications from or with an Antitrust Authority.

(d) The Company and each Filing Party shall use their reasonable best efforts to obtain all authorizations, approvals, consents, or clearances under any applicable Antitrust Laws and to cause the termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement at the earliest possible date after the date of this Agreement. The communications contemplated by this Section 6.11 may be made by the Company or a Filing Party on an outside counsel-only basis or subject to other agreed upon confidentiality safeguards. The obligations in this Section 6.11 shall not apply to filings, correspondence, communications or meetings with Antitrust Authorities unrelated to the transactions contemplated by this Agreement, the Plan or the other Transaction Agreements.

Section 6.12 Alternative Transactions. Notwithstanding anything to the contrary in this Agreement, the Debtors shall not, and shall instruct and direct their respective Representatives not to, seek or solicit any discussions or negotiations with respect to, any Alternative Transaction; provided, however, that nothing in this Section 6.12 shall limit the Debtors’ ability to engage in marketing efforts, discussions, and/or negotiations with any party regarding the Exit Facilities to be consummated on the Effective Date; provided, further, that (a) if any Debtor receives an unsolicited proposal or expression of interest regarding any Alternative Transaction, the Debtors shall be permitted to discuss or negotiate the terms of such proposal or expression of interest and shall promptly notify counsel to the Commitment Parties, orally and in writing, of any such proposal or expression of interest, with such notice to include the material terms thereof, including (unless prohibited by a separate agreement) the identity of the person or group of persons involved, and (b) the Debtors shall promptly furnish the Advisors with copies of any


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written offer, oral offer, or any other information that they receive relating to the foregoing and shall promptly inform the Advisors of any material changes to such proposals.

Section 6.13 Reorganized Company.

(a) The Requisite Commitment Parties may request at any time prior to the Disclosure Statement hearing that the Company be organized in a different corporate form or that a Person other than the Company (a “New Parent”) serve as the parent entity of the Debtors and the issuer of equity interests in the Rights Offering and the Debt Raise (in each case, a “Company Restructuring”). Provided that such a Company Restructuring does not cause the Company to fail to satisfy any Milestone or does not otherwise pose a material impediment to consummation of the Plan, the Company and the Commitment Parties shall work in good faith to effect a Company Restructuring that is reasonably acceptable to the Company and the Requisite Commitment Parties.

(b) The Company shall use best efforts to attempt to obtain a listing of the Common Shares on the NYSE or NASDAQ on the Effective Date, or, if such a listing is not reasonably possible, on the OTCQX Premier (if the OTCQX Premier is not possible, the OTCQX, and if the OTCQX is not possible, the OTCQB) and will use best efforts to obtain a NYSE or NASDAQ listing as soon as possible following the Effective Date; provided, however, the foregoing covenant shall not apply to the extent (i) the Company Board determines that such listing is not in the best interests of the Company, (ii) the holders of 73%, on a pro forma basis, of the Common Shares (without giving effect to the Agreed Dilution), determine otherwise or (iii) the listing shall cause a potential termination event under the Restructuring Support Agreement to be reasonably likely to occur. The Company hereby agrees to provide the Commitment Parties and the Advisors with reasonably detailed updates on a periodic basis with respect to its efforts to obtain a listing pursuant to this Section 6.13(b).

(c) If a Company Restructuring is agreed to be implemented in accordance with Section 6.13(a), then this Agreement and the Equity Backstop Agreement shall be amended as necessary to reflect such determination, and the Debtors shall use reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to effectuate the Company Restructuring, including, if applicable, causing the New Parent to enter into and become a party to this Agreement and the Equity Backstop Agreement and become fully bound by the agreements and obligations of the Debtors hereunder and thereunder and make the representations and warranties made by the Debtors hereunder and thereunder.

Section 6.14 Withdrawal of Commitment Party. In the event there is any waiver or extension of the Outside Date beyond the End Date pursuant to Section 9.2(a)(i), then any Commitment Party that did not consent thereto (each, a “Non-Consenting Commitment Party”) may elect, within seven (7) days of such waiver or extension, as applicable, to withdraw as a Commitment Party by delivering written notice to the Company and the Advisors of such election; provided that, at any time on or before the expiration of such period, any Commitment Party that has not made such election shall be entitled to request from the Company the amount of the aggregate Commitments of all other Non-Consenting Commitment Parties that have made such elections at such time and the Company shall within one (1) Business Day advise such


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Commitment Party of such aggregate amount. Upon such election, (a) the Commitment Parties (other than the Non-Consenting Commitment Parties) shall automatically assume the Commitments of the Non-Consenting Commitment Parties on a pro rata basis according to such Commitment Parties’ Commitment Percentages (relative to the aggregate Commitments provided by the Commitment Parties (other than the Non-Consenting Commitment Parties)) at the time of the election by the Non-Consenting Commitment Party to withdraw (provided, that following the delivery of a notice by a Non-Consenting Commitment Party under this Section 6.14, the Commitment Parties shall have at least five (5) Business Days to make arrangements to assume the Commitments of the Non-Consenting Commitment Party) and (b) the Non-Consenting Commitment Parties shall automatically cease to be a party to this Agreement and the Equity Backstop Agreement and will no longer have any rights as a Commitment Party (and, for the avoidance of doubt, the Non-Consenting Commitment Parties shall not be entitled to receive any portion of the Premiums). Any Commitments assumed by a Commitment Party in accordance with this Section 6.14 shall be included, among other things, in the determination of (x) the Commitment Percentage of such Commitment Party for purposes of Section 2.3(c), Section 3.1, Section 3.2 and Section 9.4 and (y) the Commitment of such Commitment Party for purposes of the definition of “Requisite Commitment Parties.”

Section 6.15 Continued Volcker Compliance. None of the Debtors or their Subsidiaries nor their respective “Affiliates” (as defined in Section 2(k) of the BHC Act) shall: (a) take any action to acquire or retain an ownership interest in or to sponsor, or fail to take any action necessary to prevent themselves from acquiring or retaining an ownership interest in or sponsoring, a Covered Fund for purposes the Volcker Rule, (b) engage in proprietary trading as defined in the Volcker Rule, (c) provide a line of credit, guarantee or other form of credit support or backstop in favor of a Covered Fund, or (d) provide services in favor of a Covered Fund, except, in each case, as otherwise permitted under an exemption or exclusion from the Volcker Rule.

Section 6.16 DTC Eligibility; CUSIP; Transferability. The Company shall use reasonable best efforts to promptly (a) make, when applicable from time to time after the Closing, all Common Shares eligible for deposit, clearance and settlement with DTC in accordance with applicable DTC rules and procedures, (b) obtain “restricted” and “unrestricted” CUSIP identifiers for the Common Shares and (c) ensure that the Common Shares can be transferred pursuant to Rule 144A and/or Regulation S, as applicable, including compliance with the requirements under Rule 144(A)(d)(4). The Common Shares shall not be subject to any transfer restrictions, including, without limitation, any rights of first offer or rights of first refusal provisions, other than customary provisions relating to the protection of net operating losses, if any, to be agreed upon by the Requisite Commitment Parties and any restrictions resulting from the operation of state or federal securities laws.

Section 6.17 Commitment Party Termination; Replacement of Terminating Commitment Parties

(a) Upon the exercise of a Partial Noteholder Termination, the Commitment Parties and their respective Related Purchasers (other than any Terminating Commitment Parties) shall have the right and opportunity (but not the obligation), within ten (10) days after


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receipt of written notice from the Company to all Commitment Parties of such Partial Noteholder Termination, which notice shall be given promptly following the occurrence of such Partial Noteholder Termination and to all Commitment Parties substantially concurrently (such period, the “Terminating Commitment Party Replacement Period”), to make arrangements for one or more of the remaining Commitment Parties and/or their respective Related Purchasers (other than the Terminating Commitment Parties) to fund all or any portion of the Available Amount (such funding, a “Terminating Commitment Party Replacement”) on the terms and subject to the conditions set forth in this Agreement and in such amounts as may be agreed upon by all of the Commitment Parties electing to fund all or any portion of the Available Amount (such Commitment Parties the “Replacing Terminating Commitment Parties”). Any Available Amount funded by a Replacing Terminating Commitment Party (and any commitment associated therewith) shall be included, among other things, in the determination of (x) the Commitment Percentage of such Replacing Terminating Commitment Party for purposes of Section 2.2(c), Section 3.1 and Section 3.2 and (y) the Commitment of such Replacing Terminating Commitment Party for purposes of the definition of “Requisite Commitment Parties.” In the event the Commitment Parties and their respective Related Purchasers (other than any Terminating Commitment Parties), fail to make arrangements for one or more of the Commitment Parties and/or their respective Related Purchasers (other than the Terminating Commitment Parties) to fund all of the Available Amount as described in this Section 6.17(a) within the Terminating Commitment Party Replacement Period, then each of the Company and the Requisite Commitment Parties shall have the right to terminate this Agreement.

(b) Notwithstanding anything in this Agreement to the contrary, if this Agreement is terminated with respect to a Commitment Party that is a Terminating Commitment Party hereunder, it shall not be entitled to any of the Premiums applicable to such Terminating Commitment Party (and if (x) the Closing occurs notwithstanding such a termination with respect to a Commitment Party, and (y) the aggregate Commitments that are actually funded are less than the aggregate Commitments, then the aggregate amount of the Premiums, if applicable, payable by the Debtors shall be reduced ratably); provided, that, for the avoidance of doubt, such reduction shall not reduce the amount of the Premiums payable to each Commitment Party and each Replacing Terminating Commitment Party that is not a Terminating Commitment Party).

(c) Nothing in this Section 6.17 shall be deemed to require a Commitment Party to fund more than its Commitment.

ARTICLE VII

CONDITIONS TO THE OBLIGATIONS OF THE PARTIES

Section 7.1 Conditions to the Obligations of the Commitment Parties. The obligations of each Commitment Party to consummate the transactions contemplated hereby shall be subject to (unless waived in accordance with Section 7.2) the satisfaction of the following conditions prior to or at the Closing:

(a) Debt Backstop Order. The Bankruptcy Court shall have entered the Debt Backstop Order, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support


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Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion), and such Order shall be a Final Order, provided that if the Requisite Commitment Parties do not notify the Company that the Debt Backstop Order is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, the Debt Backstop Order shall be deemed satisfactory in satisfaction of this condition.

(b) Plan Solicitation Order. The Bankruptcy Court shall have entered the Plan Solicitation Order, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion), and such Order shall be a Final Order, provided that if the Requisite Commitment Parties do not notify the Company that the Plan Solicitation Order is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, the Plan Solicitation Order shall be deemed satisfactory in satisfaction of this condition.

(c) Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order, which shall be in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties), and such Order shall be a Final Order, provided that if the Requisite Commitment Parties do not notify the Company that the Confirmation Order is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, the Confirmation Order shall be deemed satisfactory in satisfaction of this condition.

(d) Rights Offering. The Rights Offering shall have been conducted, in all material respects, in accordance with the Plan Solicitation Order, the Rights Offering Procedures and this Agreement, as applicable.

(e) Effective Date. The Effective Date shall have occurred, or shall be deemed to have occurred concurrently with the Closing, as applicable, in accordance with the terms and conditions in the Plan and in the Confirmation Order.

(f) [Reserved].

(g) Expense Reimbursement. The Debtors shall have paid all Expense Reimbursements accrued through the Closing Date pursuant to Section 3.3; provided, that invoices for such Expense Reimbursement must have been received by the Debtors at least three (3) Business Days prior to the Closing Date in order to be required to be paid as a condition to Closing.

(h) Antitrust Approvals. All applicable waiting periods under any Antitrust Laws, or imposed by any Antitrust Authority, in connection with the transactions contemplated by this Agreement shall have been terminated or expired and all authorizations, approvals, consents or clearances under the Antitrust Laws or otherwise required by a Governmental Entity in connection with the transactions contemplated by this Agreement shall have been obtained.


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(i) No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the transactions contemplated by this Agreement;

(j) Representations and Warranties.

(i) The representations and warranties of the Debtors contained in Sections 4.11 (Absence of Certain Changes) and 4.29 (Investment Company Act) shall be true and correct in all respects on and as of the Closing Date with the same effect as if made on and as of the Closing Date (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date).

(ii) The representations and warranties of the Debtors contained in Sections 4.1 (Organization and Qualification), 4.2 (Corporate Power and Authority), 4.3 (Execution and Delivery; Enforceability), 4.4 (Authorized and Issued Equity Interests), 4.5 (Issuance), 4.6(b) (No Conflict), 4.14 (Labor Relations), 4.19 (Environmental), 4.21 (Employee Benefit Plans) and 4.27 (No Broker’s Fees) shall be true and correct in all material respects on and as of the Closing Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date).

(iii) The representations and warranties of the Debtors contained in this Agreement other than those referred to in clauses (i) and (ii) above shall be true and correct (disregarding all materiality or Material Adverse Effect qualifiers) on and as of the Closing Date after giving effect to the Plan with the same effect as if made on and as of the Closing Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except where the failure to be so true and correct does not constitute, individually or in the aggregate, a Material Adverse Effect.

(k) Covenants. The Debtors shall have performed and complied, in all material respects, with all of their respective covenants and agreements contained in this Agreement that contemplate, by their terms, performance or compliance prior to the Closing Date.

(l) Material Adverse Effect. Since the date of this Agreement, there shall not have occurred, and there shall not exist, any Event that has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

(m) Officer’s Certificate. The Commitment Parties shall have received on and as of the Closing Date a certificate of the chief executive officer or chief financial officer of the Company confirming that the conditions set forth in Sections 7.1(j) (Representations and Warranties), (k) (Covenants), (l) (Material Adverse Effect) and (t) (Syndicated Exit Facility) have been satisfied and a certificate of the chief financial officer of the Company with respect to


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solvency matters, in form and substance reasonably acceptable to the Requisite Commitment Parties.

(n) Funding Notice. The Commitment Parties shall have received the borrowing request in accordance with the terms of the Backstop Facility Documents, and in any case, at least seven (7) Business Days prior to the requested funding (which notice may be delivered no earlier than the date the Marketing Period ends).

(o) ABL Exit Facility and the Syndicated Exit Facilities. Each of the ABL Exit Facility and the Syndicated Exit Facility shall have become effective, shall be for the amount set forth for such facility in the Restructuring Support Agreement, if applicable, and shall otherwise be in form and substance substantially in accordance with the Restructuring Support Agreement or as otherwise set forth in the Plan and reasonably acceptable to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion).

(p) Key Contracts. Except as otherwise provided in the Restructuring Term Sheet or the Restructuring Support Agreement, the Debtors shall have assumed all executory contracts and unexpired leases other than those identified on a schedule of rejected contracts included in the Plan Supplement, which shall be in form and substance reasonably acceptable to the Debtors and the Requisite Commitment Parties and otherwise consistent with the Restructuring Support Agreement and the Restructuring Term Sheet, including as specified in “Employee Matters” and “Indemnification of Prepetition Directors, Officers, Managers, et al.” in the Restructuring Term Sheet.

(q) Restructuring Support Agreement. The Restructuring Support Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms.

(r) Equity Backstop Agreement. The Equity Backstop Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms and the closing of the transactions contemplated thereunder has occurred or shall occur substantially simultaneously with the Closing.

(s) DIP Orders. The Debtors shall not have proposed or supported entry of any DIP Order that is not in form and substance reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Applicable Requisite Commitment Parties in their sole discretion), provided that if the Requisite Commitment Parties do not notify the Company that any DIP Order is not satisfactory within seven (7) days of its entry by the Bankruptcy Court, such DIP Order shall be deemed satisfactory in satisfaction of this condition.

(t) Syndicated Exit Facility. The Debtors shall have used commercially reasonable efforts to obtain third party financing for the maximum amount of the Syndicated Exit Facility for a period of no less than 10 calendar days (the “Marketing Period”), or such shorter


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period as needed to obtain such third party financing, such Marketing Period commencing at such time as the Debtor: (i) using commercially reasonable best efforts, has prepared marketing materials customary for either (a) a loan syndication and/or (b) a debt securities offering or placement that includes all information of the type suitable and necessary for such loan syndication and/or debt securities offering or placement, as applicable, and engaged on a best efforts basis or otherwise commercial and/or investment banks with respect to the marketing of such loan syndication and/or debt securities offering or placement, as applicable, (ii) used commercially reasonable best efforts to procure public corporate and corporate family ratings (but not specific rating in either case) for the Debtors (if not already available) and public ratings (but no specific rating) for such loans and/or debt securities, as applicable, as are being marketed from each of S&P Global Ratings and Moody’s Investors Service, Inc. and (iii) used commercially reasonable best efforts to commence meetings with prospective lenders and/or investors with respect to the marketing of such loans and/or debt securities, as applicable, resulting in total proceeds to the Debtors in an aggregate amount equal to the Commitments.

Section 7.2 Waiver of Conditions to Obligations of Commitment Parties. All or any of the conditions set forth in Section 7.1 may only be waived in whole or in part with respect to all Commitment Parties by a written instrument executed by the Requisite Commitment Parties in their sole discretion and if so waived, all Commitment Parties shall be bound by such waiver; provided that any such waiver that would have the effect of amending, restating, modifying, or changing this Agreement or any of such Commitment Party’s rights hereunder in a manner that would otherwise require any Commitment Party’s consent pursuant to Section 10.8 (other than any such consent predicated on Section 10.8(c)(v) shall also require the consent of such Commitment Party.

Section 7.3 Conditions to the Obligations of the Debtors. The obligations of the Debtors to consummate the transactions contemplated hereby with the Commitment Parties is subject to (unless waived by the Debtors) the satisfaction of each of the following conditions:

(a) Debt Backstop Order. The Bankruptcy Court shall have entered the Debt Backstop Order in form and substance satisfactory to the Debtors, and such Order shall be a Final Order.

(b) Plan Solicitation Order. The Bankruptcy Court shall have entered the Plan Solicitation Order in form and substance satisfactory to the Debtors, and such Order shall be a Final Order.

(c) Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order in form and substance satisfactory to the Debtors, and such Order shall be a Final Order.

(d) Effective Date. The Effective Date shall have occurred, or shall be deemed to have occurred concurrently with the Closing, as applicable, in accordance with the terms and conditions in the Plan and in the Confirmation Order.

(e) Antitrust Approvals. All applicable waiting periods under any Antitrust Laws, or imposed by any Antitrust Authority in connection with the transactions contemplated


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by this Agreement shall have been terminated or expired and all authorizations, approvals, consents or clearances under the Antitrust Laws or otherwise required by any Governmental Entity in connection with the transactions contemplated by this Agreement shall have been obtained.

(f) No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the transactions contemplated by this Agreement.

(g) Representations and Warranties. The representations and warranties of the Commitment Parties contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same effect as if made on and as of the Closing Date (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date), except where the failure to be so true and correct would not, individually or in the aggregate, prevent or materially impede the Commitment Parties from consummating the transactions contemplated by this Agreement.

(h) Covenants. The Commitment Parties shall have performed and complied, in all material respects, with all of their covenants and agreements contained in this Agreement and in any other document delivered pursuant to this Agreement, except where the failure to perform or comply would not, individually or in the aggregate, prevent or materially impede the Commitment Parties from consummating the transactions contemplated by this Agreement.

(i) Exit Facilities. Each Exit Facility shall have become effective, shall be for the amount set forth for such Exit Facility in the Restructuring Support Agreement, if applicable, and shall otherwise be in form and substance substantially in accordance with the Restructuring Support Agreement, or as otherwise set forth in the Plan and reasonably acceptable to the Debtors (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company in its sole discretion).

(j) Restructuring Support Agreement. The Restructuring Support Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms.

(k) Equity Backstop Agreement. The Equity Backstop Agreement remains in full force and effect in accordance with its terms and shall not have been terminated in accordance with its terms and the closing of the transactions contemplated thereunder has occurred or shall occur substantially simultaneously with the Closing.

ARTICLE VIII

INDEMNIFICATION AND CONTRIBUTION

Section 8.1 Indemnification Obligations. Following the entry of the Debt Backstop Order, the Company and the other Debtors (the “Indemnifying Parties” and each, an “Indemnifying Party”) shall, jointly and severally, indemnify and hold harmless each


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Commitment Party and its Affiliates, equity holders, members, partners, general partners, managers and its and their respective Representatives and controlling persons (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and costs and expenses (other than Taxes of the Commitment Parties except to the extent otherwise provided for in this Agreement) arising out of a claim asserted by a third-party (collectively, “Losses”) that any such Indemnified Person may incur or to which any such Indemnified Person may become subject arising out of or in connection with this Agreement, the payment of the Premiums or the use of the proceeds of the Debt Raise, or any claim, challenge, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, whether or not such proceedings are brought by the Company, the other Debtors, their respective equity holders, Affiliates, creditors or any other Person, and reimburse each Indemnified Person upon demand for reasonable documented (with such documentation subject to redaction to preserve attorney client and work product privileges) legal or other third-party expenses incurred in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including in connection with the enforcement of the indemnification obligations set forth herein), irrespective of whether or not the transactions contemplated by this Agreement or the Plan are consummated or whether or not this Agreement is terminated; provided, that the foregoing indemnity will not, as to any Indemnified Person, apply to Losses (a) as to a Defaulting Commitment Party, its Related Parties or any Indemnified Person related thereto, caused by a Commitment Party Default by such Commitment Party, or (b) to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from the fraud, bad faith, willful misconduct or gross negligence of such Indemnified Person.

Section 8.2 Indemnification Procedure. Promptly after receipt by an Indemnified Person of notice of the commencement of any claim, challenge, litigation, investigation or proceeding (an “Indemnified Claim”), such Indemnified Person will, if a claim is to be made hereunder against the Indemnifying Party in respect thereof, notify the Indemnifying Party in writing of the commencement thereof; provided, that (a) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure and (b) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have to such Indemnified Person otherwise than on account of this Article VIII. In case any such Indemnified Claims are brought against any Indemnified Person and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein, and, at its election by providing written notice to such Indemnified Person, the Indemnifying Party will be entitled to assume the defense thereof, with counsel reasonably acceptable to such Indemnified Person; provided, that if the parties (including any impleaded parties) to any such Indemnified Claims include both such Indemnified Person and the Indemnifying Party and based on advice of such Indemnified Person’s counsel there are legal defenses available to such Indemnified Person that are different from or additional to those available to the Indemnifying Party, such Indemnified Person shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Indemnified Claims. Upon receipt of notice from the Indemnifying Party to such Indemnified Person of its election to so assume the defense of such Indemnified Claims with


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counsel reasonably acceptable to the Indemnified Person, the Indemnifying Party shall not be liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection with the defense thereof or participation therein (other than reasonable costs of investigation) unless (i) such Indemnified Person shall have employed separate counsel (in addition to any local counsel) in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the Indemnifying Party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Indemnified Claims (in addition to one local counsel in each jurisdiction in which local counsel is required)), (ii) the Indemnifying Party shall not have employed counsel reasonably acceptable to such Indemnified Person to represent such Indemnified Person within a reasonable time after the Indemnifying Party has received notice of commencement of the Indemnified Claims from, or delivered on behalf of, the Indemnified Person, (iii) after the Indemnifying Party assumes the defense of the Indemnified Claims, the Indemnified Person determines in good faith that the Indemnifying Party has failed or is failing to defend such claim and provides written notice of such determination and the basis for such determination, and such failure is not reasonably cured within ten (10) Business Days of receipt of such notice, or (iv) the Indemnifying Party shall have authorized in writing the employment of counsel for such Indemnified Person.

Section 8.3 Settlement of Indemnified Claims. In connection with any Indemnified Claim for which an Indemnified Person is assuming the defense in accordance with this Article VIII, the Indemnifying Party shall not be liable for any settlement of any Indemnified Claims effected by such Indemnified Person without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed). If any settlement of any Indemnified Claims is consummated with the written consent of the Indemnifying Party or if there is a final judgment for the plaintiff in any such Indemnified Claims, the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Person from and against any and all Losses by reason of such settlement or judgment to the extent such Losses are otherwise subject to indemnification by the Indemnifying Party hereunder in accordance with, and subject to the limitations of, this Article VIII. The Indemnifying Party shall not, without the prior written consent of an Indemnified Person (which consent shall be granted or withheld, conditioned or delayed in the Indemnified Person’s sole discretion), effect any settlement of any pending or threatened Indemnified Claims in respect of which indemnity or contribution has been sought hereunder by such Indemnified Person unless (a) such settlement includes an unconditional release of such Indemnified Person in form and substance satisfactory to such Indemnified Person from all liability on the claims that are the subject matter of such Indemnified Claims and (b) such settlement does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

Section 8.4 Contribution. If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless from Losses that are subject to indemnification pursuant to Section 8.1, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Person as a result of such Loss in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, but also the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Person, on the other


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hand, as well as any relevant equitable considerations. It is hereby agreed that the relative benefits to the Indemnifying Party, on the one hand, and all Indemnified Persons, on the other hand, shall be deemed to be in the same proportion as (a) the total value received or proposed to be received by the Company pursuant to this Agreement and the Plan bears to (b) the Premiums paid or proposed to be paid to the Commitment Parties. The Indemnifying Parties also agree that no Indemnified Person shall have any liability based on their comparative or contributory negligence or otherwise to the Indemnifying Parties, any Person asserting claims on behalf of or in right of any of the Indemnifying Parties, or any other Person in connection with an Indemnified Claim.

Section 8.5 Treatment of Indemnification Payments. The provisions of this Article VIII are an integral part of the transactions contemplated by this Agreement and without these provisions the Commitment Parties would not have entered into this Agreement. The Debt Backstop Order shall provide that the obligations of the Debtors under this Article VIII shall constitute allowed administrative expenses of the Debtors’ estate under sections 503(b) and 507 of the Bankruptcy Code and are payable without further Order of the Bankruptcy Court, and that the Debtors may comply with the requirements of this Article VIII without further Order of the Bankruptcy Court.

Section 8.6 No Survival. All representations, warranties, covenants and agreements made in this Agreement shall not survive the Closing Date except for covenants and agreements that by their terms are to be satisfied after the Closing Date, which covenants and agreements shall survive until satisfied in accordance with their terms.

ARTICLE IX

TERMINATION

Section 9.1 Consensual Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date by mutual written consent of the Debtors and the Requisite Commitment Parties.

Section 9.2 Automatic Termination; Termination by the Commitment Parties.

(a) Notwithstanding anything to the contrary in this Agreement, unless and until there is an unstayed Order of the Bankruptcy Court providing that the giving of notice under and/or termination of this Agreement in accordance with its terms is not prohibited by the automatic stay imposed by section 362 of the Bankruptcy Code, and except as otherwise provided in this Section 9.2, at which point this Agreement may be terminated by the Requisite Commitment Parties upon written notice to the Debtors upon the occurrence of any of the following Events, this Agreement shall terminate automatically without any further action or notice by any Party at 5:00 p.m., New York City time on the fifth (5th) Business Day following the occurrence of any of the following Events; provided that, the Requisite Commitment Parties may waive such termination or extend any applicable dates in accordance with Section 10.8:

(i) the Closing Date has not occurred by 11:59 p.m., New York City time on August 29, 2019 (as it may be extended pursuant to this Section 9.2(a)(i)


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or Section 2.3(a), the “Outside Date”), unless prior thereto the Effective Date occurs and the Rights Offering has been consummated; provided, that the Outside Date may be waived or extended with the prior written approval of the Requisite Commitment Parties; provided, further, that if any Commitment Party does not consent to a waiver or extension of the Outside Date beyond 5:00 p.m., New York City time on December 31, 2019 (the “End Date”) within seven (7) days of a written request being made either by the Debtors or by any other Commitment Party for such a waiver or extension (which request was made no later than the date seven (7) days prior to the Outside Date and has not been withdrawn) and such waiver or extension is duly approved by the Requisite Commitment Parties (provided, that, each such waiver or extension of the Outside Date beyond the End Date shall not extend the Outside Date by more than thirty (30) days), such Commitment Party shall be deemed a Non-Consenting Commitment Party who has elected to withdraw from its Commitment pursuant to Section 6.14 (Withdrawal of Commitment Party) and shall no longer be a party to this Agreement, the Equity Backstop Agreement or the Restructuring Support Agreement (and, for the avoidance of doubt, such Commitment Party shall not be entitled to receive any portion of the Premiums);

(ii) the Restructuring Support Agreement is terminated as to all parties thereto in accordance with its terms;

(iii) the Required Consenting First Lien Noteholders, the Required Consenting 1.5L Noteholders or the Required Consenting Crossholder Noteholders (as such terms are defined in the Restructuring Support Agreement) exercise their respective termination rights under the Restructuring Support Agreement (a “Partial Noteholder Termination”), provided, that, any such termination of this Agreement on account thereof shall only be effective with respect to the Commitment Parties included within the group of Noteholders (the Consenting 1.5L Noteholders, the Consenting Crossholder Noteholders or the Consenting First Lien Noteholders, each as defined in the Restructuring Support Agreement) that exercised their termination rights under the Restructuring Support Agreement (the “Terminating Commitment Parties”);

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

(v) the Company or any of the other Debtors files any motion, application or adversary proceeding (or any of the Company or any of the other Debtors supports any such motion, application, or adversary proceeding filed or commenced by any third party) challenging the validity or enforceability, or seeking avoidance or subordination, of the Notes Claims (as defined in the Equity Backstop Agreement), provided that, in the event that this Agreement is to be terminated by the Requisite Commitment Parties under this subsection upon written notice to the Debtors in accordance with this Section 9.2(a), the Company or any of the other Debtors shall have until 5:00 p.m., New York City time on the


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fifth (5th) Business Day following receipt of such notice to withdraw such motion, application or adversary proceeding or otherwise cure before the Requisite Commitment Parties are permitted to terminate pursuant to this Section 9.2(a)(v);

(vi) (A) the Bankruptcy Court approves or authorizes an Alternative Transaction; or (B) any of the Debtors enters into any Contract providing for the consummation of any Alternative Transaction or files any motion or application seeking authority to propose, join in or participate in the formation of, any actual or proposed Alternative Transaction;

(vii) an acceleration of the obligations or termination of commitments under the DIP Facility; or

(viii) any of the Milestones have not been achieved, extended, or waived within three (3) Business Days after the date of such Milestone as set forth in the Restructuring Support Agreement.

(b) This Agreement may be terminated by the Requisite Commitment Parties upon written notice to the Company upon the occurrence of any of the following Events, provided that such Events have not been cured by the Company or the other Debtors by 5:00 p.m., New York City time on the fifth (5th) Business Day following the receipt of such notice by the Debtors:

(i) (A) the Company or the other Debtors shall have breached any representation, warranty, covenant or other agreement made by the Company or the other Debtors in this Agreement or any such representation or warranty shall have become inaccurate and such breach or inaccuracy would, individually or in the aggregate, cause a condition set forth in Section 7.1(j) (Representations and Warranties), Section 7.1(k) (Covenants) or Section 7.1(l) (Material Adverse Effect) not to be satisfied, (B) the Commitment Parties shall have delivered written notice of such breach or inaccuracy to the Debtors, (C) notwithstanding anything to the contrary in Section 9.2(b), such breach or inaccuracy is not cured by the Company or the other Debtors by the tenth (10th) Business Day after receipt of such notice, and (D) as a result of such failure to cure, any condition set forth in Section 7.1(j) (Representations and Warranties), Section 7.1(k) (Covenants), or Section 7.1(l) (Material Adverse Effect) is not capable of being satisfied; provided, that, this Agreement shall not terminate automatically pursuant to this Section 9.2(b)(i) if the Commitment Parties are then in willful or intentional breach of this Agreement;

(ii) any Law or final and non-appealable Order shall have been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan, the Debt Raise or the Rights Offering or the transactions contemplated by this Agreement or the other Transaction Agreements, in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors in a manner reasonably satisfactory to the Requisite Commitment Parties (provided, that to the


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extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion);

(iii) the Company or any other Debtor (A) amends or modifies, or files a pleading seeking authority to amend or modify, the Definitive Documentation in a manner that is materially inconsistent with this Agreement; (B) suspends or revokes the Transaction Agreements; or (C) publicly announces its intention to take any such action listed in sub-clauses (A) or (B) of this subsection;

(iv) any of the BCA Approval Order, Plan Solicitation Order, Debt Backstop Order, RSA Order or Confirmation Order is terminated, reversed, stayed, dismissed, vacated, or reconsidered, or any such Order is modified or amended after entry without the prior written consent (not to be unreasonably withheld, conditioned or delayed, provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion) of the Requisite Commitment Parties in a manner that prevents or prohibits the consummation of the transactions contemplated by this Agreement or the other Transaction Agreements in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors in a manner reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion); or

(v) any of the Orders approving this Agreement, the Equity Backstop Agreement, the Restructuring Support Agreement, the Rights Offering Procedures, the Plan or the Disclosure Statement or the Confirmation Order are reversed, stayed, dismissed, vacated or reconsidered or modified or amended without the acquiescence or written consent (not to be unreasonably withheld, conditioned or delayed, provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion) of the Requisite Commitment Parties (and such action has not been reversed or vacated within thirty (30) calendar days after its issuance) in a manner that prevents or prohibits the consummation of the Restructuring Transactions contemplated in this Agreement or any of the Definitive Documents Agreements in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors reasonably satisfactory to the Requisite Commitment Parties (provided, that to the extent inconsistent with the Restructuring Support Agreement or this Agreement, any economic treatment provided thereunder shall be acceptable to the Company and the Applicable Requisite Commitment Parties in their sole discretion), or


58 US-DOCS\106840112.7 RLF1 21160830v.1

(vi) pursuant to the terms of Section 6.17.

Section 9.3 Termination by the Debtors.

This Agreement may be terminated by the Debtors upon written notice to each Commitment Party upon the occurrence of any of the following Events, subject to the rights of the Debtors to fully and conditionally waive, in writing, on a prospective or retroactive basis the occurrence of such Event:

(a) any Law or final and non-appealable Order shall have been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the Rights Offering or the transactions contemplated by this Agreement or the other Transaction Agreements, in each case, on substantially the terms provided for therein, in a way that cannot be remedied in all material respects by the Debtors in a manner reasonably satisfactory to the Requisite Commitment Parties;

(b) subject to the right of the Commitment Parties to arrange a Commitment Party Replacement in accordance with Section 2.3(a) (which will be deemed to cure any breach by the replaced Commitment Party pursuant to this subsection (b)), (i) any Commitment Party shall have breached any representation, warranty, covenant or other agreement made by such Commitment Party in this Agreement or any such representation or warranty shall have become inaccurate and such breach or inaccuracy would, individually or in the aggregate, cause a condition set forth in Section 7.3(g) (Representations and Warranties) or Section 7.3(h) (Covenants) not to be satisfied, (ii) the Debtors shall have delivered written notice of such breach or inaccuracy to such Commitment Party, (iii) such breach or inaccuracy is not cured by such Commitment Party by the tenth (10th) Business Day after receipt of such notice, and (iv) as a result of such failure to cure, any condition set forth in Section 7.3(g) (Representations and Warranties) or Section 7.3(h) (Covenants) is not capable of being satisfied; provided, that the Debtors shall not have the right to terminate this Agreement pursuant to this Section 9.3(b) if any Debtor then in willful or intentional breach of this Agreement;

(c) the BCA Approval Order, Plan Solicitation Order, Debt Backstop Order, RSA Order or Confirmation Order is terminated, reversed, stayed, dismissed, vacated, or reconsidered, or any such Order is modified or amended after entry without the prior acquiescence or written consent (not to be unreasonably withheld, conditioned or delayed) of the Debtors in a manner that prevents or prohibits the consummation of the Restructuring Transactions contemplated in this Agreement or any of the Definitive Documents in a way that cannot be remedied by the Commitment Parties subject to the reasonable satisfaction of the Debtors;

(d) the Restructuring Support Agreement is terminated as to all parties in accordance with its terms;

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

(f) any of the Orders approving any Exit Facility, this Agreement, the Equity Backstop Agreement, the Restructuring Support Agreement, the Rights Offering Procedures, the


59 US-DOCS\106840112.7 RLF1 21160830v.1

Plan or the Disclosure Statement or the Confirmation Order are reversed, stayed, dismissed, vacated or reconsidered or modified or amended without the acquiescence or consent (not to be unreasonably withheld, conditioned or delayed) of the Debtors (and such action has not been reversed or vacated within thirty (30) calendar days after its issuance) in a manner that prevents or prohibits the consummation of the Restructuring Transactions contemplated in this Agreement or any of the Definitive Documents in a way that cannot be remedied by the Commitment Parties subject to the reasonable satisfaction of the Debtors;

(g) the board of directors or managers or similar governing body, as applicable, of any Debtor determines that continued performance under this Agreement (including taking any action or refraining from taking any action) would be inconsistent with the exercise of its fiduciary duties under applicable law (as reasonably determined by such board or body in good faith after consultation with legal counsel; or

(h) pursuant to the terms of Section 6.17.

Section 9.4 Effect of Termination.

(a) Upon termination of this Agreement pursuant to this Article IX, this Agreement shall forthwith become void and there shall be no further obligations or liabilities on the part of the Parties; provided, that (i) the obligations of the Debtors to pay the Expense Reimbursement pursuant to Article III and to satisfy their indemnification obligations pursuant to Article VIII shall survive the termination of this Agreement and shall remain in full force and effect, in each case, until such obligations have been satisfied, (ii) the provisions set forth in Article VIII, this Section 9.4 and Article X shall survive the termination of this Agreement in accordance with their terms and (iii) subject to Section 10.11 (Damages), nothing in this Section 9.4 shall relieve any Party from liability for its fraud, gross negligence or any willful or intentional breach of this Agreement. For purposes of this Agreement, “willful or intentional breach” means a breach of this Agreement that is a consequence of an act undertaken by the breaching Party with the knowledge that the taking of such act would, or would reasonably be expected to, cause a breach of this Agreement.

(b) If this Agreement is terminated pursuant to Section 9.3(g) (Fiduciary Out), Section 9.2(b)(iii) (Revocation of Agreement), Section 9.2(a)(vi) (Alternative Transaction) or Section 9.2(a)(ii) as a result of the Company terminating the Restructuring Support Agreement pursuant to Section 7(b)(vii) thereof (Fiduciary Out), then the Debtors shall pay the Premiums in accordance with Section 3.1 to the Commitment Parties or their designees on the date of termination, by wire transfer of immediately available funds to such accounts as the Commitment Parties may designate within three (3) Business Days following consummation of an Alternative Transaction.

(c) If this Agreement is terminated pursuant to a Debtor Breach Termination Event, and a definitive agreement with respect to an Alternative Transaction that is subsequently consummated is executed within twelve (12) months after the date of the effectiveness of such termination of this Agreement, then the Debtors shall pay the Premiums in accordance with Section 3.1 to the Commitment Parties or their designees on the date of termination, by wire transfer of immediately available funds to such accounts as the Commitment Parties may


60 US-DOCS\106840112.7 RLF1 21160830v.1

designate within three (3) Business Days following the consummation of such Alternative Transaction.

(d) To the extent that all amounts due in respect of the Premiums pursuant to Section 9.4(b) have actually been paid by the Debtors to the Commitment Parties in connection with a termination of this Agreement, the Commitment Parties shall not have any additional recourse against the Debtors for any obligations or liabilities relating to or arising from this Agreement, (other than obligations and liabilities pursuant to Section 8.1, any Expense Reimbursement and any other obligation or liability that expressly survives the termination of this Agreement; it being understood and agreed that obligations and liabilities under the other Financing Documentation shall survive the termination of this Agreement) except for liability for intentional fraud, gross negligence or willful or intentional breach of this Agreement pursuant to Section 9.4(a). The Premiums payable pursuant to this Section 9.4 shall constitute an allowed administrative expense claim of the Debtors’ estates pursuant to sections 503(b) and 507 of the Bankruptcy Code.

(e) Except as set forth in this Section 9.4, the Premiums shall not be payable upon the termination of this Agreement.

ARTICLE X

GENERAL PROVISIONS

Section 10.1 Notices. All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via electronic facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the Parties at the following addresses (or at such other address for a Party as may be specified by like notice):

(a) If to the Company or any of the other Debtors:

Hexion Holdings LLC 180 East Broad Street Columbus, Ohio 43215 Attn: Douglas Johns with copies (which shall not constitute notice) to:


61 US-DOCS\106840112.7 RLF1 21160830v.1

Latham & Watkins LLP 885 Third Avenue New York, New York 10022 Attention: George Davis ([email protected]) Andrew Parlen ([email protected]) - and - Latham & Watkins LLP 330 North Wabash, Suite 2800 Chicago, IL 60611 Attention: Caroline Reckler ([email protected])


(b) If to the Commitment Parties:

To each Commitment Party at the addresses or e-mail addresses set forth below the Commitment Party’s signature in its signature page to this Agreement.

with a copy, solely in the case of Commitment Parties that are members of the Crossholder Ad Hoc Group (which shall not constitute notice) to:

Milbank LLP 55 Hudson Yards New York, New York 10001 Attn: Samuel Khalil ([email protected]) Matthew Brod ([email protected]) Scott Golenbock ([email protected]) with a copy, solely in the case of Commitment Parties that are members of the First Lien Ad Hoc Group (which shall not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, New York 10036 Attention: Ira S. Dizengoff, Esq. ([email protected])

Philip C. Dublin, Esq. ([email protected]) Daniel Fisher, Esq. ([email protected]) Naomi Moss, Esq. ([email protected])

with a copy, solely in the case of Commitment Parties that are members of the 1.5 Lien Ad Hoc Group (which shall not constitute notice) to:

Jones Day 250 Vesey Street New York, NY 10281


62 US-DOCS\106840112.7 RLF1 21160830v.1

Attention: Sidney P. Levinson ([email protected]) Jeremy D. Evans ([email protected])

Section 10.2 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of

the rights, interests or obligations under this Agreement shall be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of the Debtors and the Requisite Commitment Parties, other than an assignment by a Commitment Party expressly permitted by Section 2.3 and any purported assignment in violation of this Section 10.2 shall be void ab initio. Except as provided in Article VIII with respect to the Indemnified Persons, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person any rights or remedies under this Agreement other than the Parties. Notwithstanding anything to the contrary herein, each Party hereto recognizes, acknowledges and agrees that this Agreement binds only the desk or business unit that executes this Agreement and shall not be binding on any other desk, business unit or affiliate, unless such desk, business unit or affiliate separately becomes a Party hereto.

Section 10.3 Prior Negotiations; Entire Agreement.

(a) This Agreement (including the agreements attached as Exhibits to and the documents and instruments referred to in this Agreement), the Equity Backstop Agreement and the Restructuring Support Agreement constitute the entire agreement of the Parties and supersede all prior agreements, arrangements or understandings, whether written or oral, among the Parties with respect to the subject matter of this Agreement, except that the Parties hereto acknowledge that any confidentiality agreements heretofore executed among the Parties will each continue in full force and effect.

(b) Notwithstanding anything to the contrary in the Plan (including any amendments, supplements or modifications thereto) or the Confirmation Order (and any amendments, supplements or modifications thereto) or an affirmative vote to accept the Plan submitted by any Commitment Party, nothing contained in the Plan (including any amendments, supplements or modifications thereto) or Confirmation Order (including any amendments, supplements or modifications thereto) shall alter, amend or modify the rights of the Commitment Parties under this Agreement unless such alteration, amendment or modification has been made in accordance with Section 10.8.

Section 10.4 Governing Law; Venue. 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 OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY AGREES FOR ITSELF THAT ANY LEGAL ACTION, SUIT, OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER ARISING UNDER, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT, OR PROCEEDING, SHALL BE BROUGHT IN THE BANKRUPTCY COURT, OR IF THE BANKRUPTCY COURT DOES NOT HAVE


63 US-DOCS\106840112.7 RLF1 21160830v.1

JURISDICTION TO HEAR SUCH ACTION, SUIT OR PROCEEDING, ANY STATE OR FEDERAL COURT LOCATED IN NEW YORK COUNTY, NEW YORK, AND BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF THE PARTIES IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OF PROCEEDING TO AN ADDRESS PROVIDED IN WRITING BY THE RECIPIENT OF SUCH MAILING, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

Section 10.5 Binding Agreement. Each party hereto agrees that this Agreement is a binding and enforceable agreement with respect to the subject matter contained herein or therein (including an obligation to negotiate in good faith).

Section 10.6 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE AMONG THE PARTIES UNDER THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE.

Section 10.7 Counterparts. This Agreement may be executed by facsimile, portable document format (pdf) or other electronic transmission, in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the Parties and delivered to each other Party (including via facsimile or other electronic transmission), it being understood that each Party need not sign the same counterpart.

Section 10.8 Waivers and Amendments; Rights Cumulative; Consent. This Agreement may be amended, restated, modified, or changed only by a written instrument signed by the Debtors and the Requisite Commitment Parties (other than a Defaulting Commitment Party); provided that, in addition, each Commitment Party’s prior written consent shall be required for any amendment that would have the effect of: (a) modifying such Commitment Party’s Commitment Percentage or Commitment, (b) extending the End Date; (c) amending any of the following: (i) Section 2.3 (Assignment of Commitment Rights), (ii) Section 3.2 (Payment of Premiums), (iii) Section 6.14 (Withdrawal of Commitment Party), (iv) this Section 10.8; (v) Article IX (Termination) or (vi) the definition of “Requisite Commitment Parties” or of “Applicable Requisite Commitment Parties”; (d) releasing all or substantially all of the collateral described in the Backstop Term Sheet; (e) releasing all or substantially all of the value of the guaranties described in the Backstop Term Sheet; (f) decreasing the interest rate described in the Backstop Term Sheet; (g) extending the maturity date described in the Backstop Term Sheet; (h) amending the optional prepayment provisions described in the Backstop Term Sheet; or (i) otherwise having a materially adverse and disproportionate effect on such Commitment Party; provided, further, that a written instrument signed by the Debtors and the Requisite Commitment Parties (other than a Defaulting Commitment Party) shall be required to amend, restate, modify


64 US-DOCS\106840112.7 RLF1 21160830v.1

or change any provision that gives the Requisite Commitment Parties consent rights with respect to any matter. The terms and conditions of this Agreement may be waived (i) by the Debtors only by a written instrument executed by the Debtors and (ii) by the Commitment Parties only by a written instrument executed by the Requisite Commitment Parties (provided that each Commitment Party’s prior written consent shall be required for any waiver having the effects referred to in the first proviso of this Section 10.8). No delay on the part of any Party in exercising any right, power or privilege pursuant to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any Party of any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. Except as otherwise provided in this Agreement, the rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any Party otherwise may have at law or in equity. For the avoidance of doubt, nothing in this Agreement shall affect or otherwise impair the rights, including consent rights, of the Commitment Parties under the Restructuring Support Agreement or any other Definitive Document.

Section 10.9 Headings. The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

Section 10.10 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to an injunction or injunctions without the necessity of posting a bond to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Unless otherwise expressly stated in this Agreement, no right or remedy described or provided in this Agreement is intended to be exclusive or to preclude a Party from pursuing other rights and remedies to the extent available under this Agreement, at law or in equity.

Section 10.11 Damages. Notwithstanding anything to the contrary in this Agreement, none of the Parties will be liable for, and none of the Parties shall claim or seek to recover, any punitive, special, indirect or consequential damages or damages for lost profits. Notwithstanding anything to the contrary in this Agreement, the applicable Commitment Party agrees that it is jointly and severally liable for any damages caused by any breach of this Agreement by any of its Related Purchasers in the event such Commitment Party has Transferred all or a portion of its Commitment hereunder to any Related Purchaser(s) pursuant to Section 2.3 hereof.

Section 10.12 No Reliance. No Commitment Party or any of its Related Parties shall have any duties or obligations to the other Commitment Parties in respect of this Agreement, the Plan or the transactions contemplated hereby or thereby, except those expressly set forth herein. Without limiting the generality of the foregoing, (a) no Commitment Party or any of its Related Parties shall be subject to any fiduciary or other implied duties to the other Commitment Parties, (b) no Commitment Party or any of its Related Parties shall have any duty to take any discretionary action or exercise any discretionary powers on behalf of any other Commitment Party, (c) no Commitment Party or any of its Related Parties shall have any duty to the other


65 US-DOCS\106840112.7 RLF1 21160830v.1

Commitment Parties to obtain, through the exercise of diligence or otherwise, to investigate, confirm, or disclose to the other Commitment Parties any information relating to the Company or any of its Subsidiaries that may have been communicated to or obtained by such Commitment Party or any of its Affiliates in any capacity, (d) no Commitment Party may rely, and each Commitment Party confirms that it has not relied, on any due diligence investigation that any other Commitment Party or any Person acting on behalf of such other Commitment Party may have conducted with respect to the Company or any of its Affiliates or any of their respective securities, and (e) each Commitment Party acknowledges that no other Commitment Party is acting as a placement agent, initial purchaser, underwriter, broker or finder with respect to any Common Shares it obtains pursuant to this Agreement.

Section 10.13 Publicity. At all times prior to the Closing Date or the earlier termination of this Agreement in accordance with its terms, the Debtors and the Commitment Parties shall consult with each other prior to issuing any press releases (and provide each other a reasonable opportunity to review and comment upon such release) or otherwise making public announcements with respect to the transactions contemplated by this Agreement, it being understood that nothing in this Section 10.13 shall prohibit any Party from filing any motions or other pleadings or documents with the Bankruptcy Court in connection with the Chapter 11 Cases. Except as required by applicable Law or as ordered by the Bankruptcy Court or other court of competent jurisdiction, no Party or its advisors shall disclose to any Person (including, for the avoidance of doubt, any other Party) the Commitment of any Commitment Party set forth on the Commitment Schedule hereto without such Commitment Party’s prior written consent.

Section 10.14 Settlement Discussions. This Agreement and the transactions contemplated herein are part of a proposed settlement of a dispute between the Parties. Nothing herein shall be deemed an admission of any kind. Pursuant to Section 408 of the U.S. Federal Rules of Evidence and any applicable state rules of evidence, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any Legal Proceeding, except to the extent filed with, or disclosed to, the Bankruptcy Court in connection with the Chapter 11 Cases (other than a Legal Proceeding to approve or enforce the terms of this Agreement).

Section 10.15 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that certain of the Parties may be partnerships or limited liability companies, each Party covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any Party’s Affiliates, or any of such Party’s Affiliates’ or respective Related Parties in each case other than the Parties to this Agreement and each of their respective successors and permitted assignees under this Agreement, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any of the Related Parties, as such, for any obligation or liability of any Party under this Agreement or any documents or instruments delivered in connection herewith for any claim based on, in respect of or by reason of such obligations or liabilities or their creation; provided, however, nothing in this Section 10.15 shall relieve or otherwise limit the liability of any Party hereto, any Related Purchaser, or any of their respective successors or permitted assigns for any breach or violation of its obligations under this


66 US-DOCS\106840112.7 RLF1 21160830v.1

Agreement or such other documents or instruments. For the avoidance of doubt, prior to the Effective Date, none of the Parties will have any recourse, be entitled to commence any proceeding or make any claim under this Agreement or in connection with the transactions contemplated hereby except against any of the Parties, any Related Purchaser, or their respective successors and permitted assigns, as applicable.

[Signature Page Follows]


[Signature page to Equity Backstop Commitment Agreement] US-DOCS\106840112.7 RLF1 21160830v.1

IN WITNESS WHEREOF, the undersigned Parties have duly executed this Agreement as of the date first above written.

HEXION HOLDINGS LLC

By: ____________________________________________ Name: Title:

[DEBTORS]

By: ____________________________________________ Name: Title:


[Signature page to Equity Backstop Commitment Agreement] US-DOCS\106840112.7 RLF1 21160830v.1

[COMMITMENT PARTIES]

By: ____________________________________________ Name: Title:

Notice Information [Address]

[Email address]

[Attention to:]


US-DOCS\106840112.7 RLF1 21160830v.1

Schedule 1

Commitment Schedule

Commitment Party Commitment

Total


US-DOCS\106840112.7 RLF1 21160830v.1

Exhibit A

Backstop Term Sheet


EXHIBIT F


Hexion Holdings LLC (DE)

Hexion Deer Park LLC(DE)

Hexion CI Hldg. Co. (China) LLC

(DE)

Hexion Nimbus Asset Holdings

LLC(DE)

Hexion Nimbus Inc.(DE)

Lawter International Inc. (DE)

NL Coop Holdings LLC

(DE)

Hexion International

Inc. (DE)

Hexion HSM Holdings LLC

(DE)

Hexion 2 U.S. Finance Corp

(DE)

The West India Company

(NJ)

Cuban Amer. Mercantile

Corp.(DE)

Nor. Am. Sugar Indus.

Incorporated(DE)

Hexion Investments

Inc.(DE)

Hexion International

Cooperatif U.A. (Netherlands)*

Hexion International Holdings B.V. (Netherlands)

Hexion Holding B.V.

(Netherlands)

Hexion Canada Inc.

(Canada)

Hexion Nova Scotia Finance

ULC(Canada)**

Hexion B.V. (Netherlands)

Hexion GmBH (Germany)

Borden Chemical UK

Limited(UK)

Hexion UK Limited(UK)

Other Foreign Subsidiaries

Other Foreign Subsidiaries

Notes Issuer/Guarantor

Debtor

ABL Borrower

Indirect holding

Hexion LLC (DE)

Hexion Inc. (NJ)**

Notes*Hexion International Coopoeratif U.A.. is 65% owned by NL Coop Holdings LLC and 35% owned by Hexion Inc.**Hexion Inc. is issuer of all outstanding Notes; Hexion Nova Scotia Finance ULC is co‐issuer of the 2L Notes

Hexion VAD LLC (DE)


RLF1 21301966v.1

EXHIBIT G

FINANCIAL PROJECTIONS


RLF1 21301966v.1

A. Introduction

The Debtors1 have prepared the Projections (as defined below) to assist the Bankruptcy Court2 in determining whether the Plan meets the “feasibility” requirements of section 1129(a)(11) of title 11 of the United States Code (the “Bankruptcy Code”). The Debtors believe that the Plan meets such requirements. In connection with the negotiation and development of the Plan, and for the purpose of determining whether the Plan meets the feasibility standard outlined in the Bankruptcy Code, the Debtors analyzed their ability to satisfy their financial obligations while maintaining sufficient liquidity and capital resources during the Projection Period (as defined below). With this consideration in mind, the Debtors’ management and advisors prepared consolidated financial projections (the “Projections”) for the six-month period ending December 31, 2019 and for the fiscal years ending December 31, 2020 through December 31, 2023 (the “Projection Period”). The Projections have been prepared on a consolidated basis, consistent with the Company’s financial reporting practices, and include all Debtor and non-Debtor entities (hereafter defined as the “Company”).

The Debtors do not, as a matter of course, publish their projections, strategies, or forward-looking

projections of the financial position, results of operations, and cash flows. Accordingly, the Debtors do not anticipate that they will, and disclaim any obligation to, furnish updated projections to the holders of Claims or equity interests after the date of this Disclosure Statement, or to include such information in documents required to be filed with the Securities and Exchange Commission (“SEC”) or to otherwise make such information public. The assumptions disclosed herein are those that the Debtors believe to be significant to the Projections and are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

The Projections present, to the best of the Debtors’ knowledge and belief, the Reorganized Debtors’

projected balance sheet, results of operations, and cash flows for the Projection Period and reflect the Debtors’ assumptions and judgments of the projections based on an emergence date of July 1, 2019 (the “Emergence Date”). The impact of the restructuring transaction and the recapitalization of the Company’s capital structure is shown on the predecessor company balance sheet, using a date of June 30, 2019.

Although the Debtors believe these assumptions are reasonable under current circumstances, such

assumptions are subject to inherent uncertainties, including but not limited to, material changes to the economic environment, underlying commodity prices, transportation fees and spreads, supply and demand of underlying commodities, the competitive environment and other factors affecting the Company’s businesses. The likelihood, and related financial impact, of a change in any of these factors cannot be predicted with certainty. Consequently, actual financial results could differ materially from the Projections. The Projections assume the Plan will be implemented in accordance with its stated terms. The Projections should be read in conjunction with the assumptions and qualifications contained herein. Capitalized terms not otherwise

1 The Debtors in these cases are defined as Hexion Holdings LLC; Hexion LLC; Hexion Inc.; Lawter International Inc.; Hexion CI Holding Company (China) LLC; Hexion Nimbus Inc.; Hexion Nimbus Asset Holdings LLC; Hexion Deer Park LLC; Hexion VAD LLC; Hexion 2 U.S. Finance Corp.; Hexion HSM Holdings LLC; Hexion Investments Inc.; Hexion International Inc.; North American Sugar Industries Incorporated; Cuban-American Mercantile Corporation; The West India Company; NL Coop Holdings LLC; and Hexion Nova Scotia Finance, ULC (N/A). 2 All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Plan.


2

US‐DOCS\107801664.2RLF1 21301966v.1

defined herein shall have the meanings ascribed to such terms in either the Disclosure Statement or the Plan, as applicable. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”) IN THE UNITED STATES. FURTHERMORE, THE PROJECTIONS HAVE NOT BEEN AUDITED OR REVIEWED BY A REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM. THE PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS WHICH MAY NOT BE REALIZED AND ARE SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES WHICH ARE BEYOND THE CONTROL OF THE DEBTORS. CONSEQUENTLY, THE PROJECTIONS SHOULD NOT BE REGARDED AS A REPRESENTATION OR WARRANTY BY THE DEBTORS, OR ANY OTHER PERSON, AS TO THE ACCURACY OF THE PROJECTIONS OR THAT THE PROJECTIONS WILL BE REALIZED. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PRESENTED IN THE PROJECTIONS. HOLDERS OF CLAIMS OR EQUITY INTERESTS MUST MAKE THEIR OWN ASSESSMENT AS TO THE REASONABLENESS OF SUCH ASSUMPTIONS AND THE RELIABILITY OF THE PROJECTIONS IN MAKING THEIR DETERMINATION OF WHETHER TO ACCEPT OR REJECT THE PLAN.

B. Summary of Significant Assumptions

The Projections were developed by the Debtors’ management using detailed assumptions for revenues and costs of each business unit. The Debtors considered the following factors in developing the Projections:

i. Current and projected market conditions in each of the Company’s respective markets and business segments;

ii. Capital expenditure levels to support management’s growth assumptions; iii. A de-levered capital structure with interest rates and other costs at rates consistent with the

current market; iv. Working capital levels consistent with historic trends; v. No material acquisitions or divestitures; and

vi. The Debtors’ emergence from chapter 11 on the Emergence Date.

Sales volumes were forecasted at the business unit level based on compounded annual growth rates ranging from 1.0% to 3.0%. These ranges were based on global GDP forecasts, third party market research reports focused on key regions and segments the Company competes in, and the Company’s own internal projections.

The Projections also assume a compounded annual growth rate for price increases across the Company’s products of 0.4% to 1.1%. These price increases are primarily driven by inflationary increases in raw material costs which are effectually a pass-through cost. Raw material costs per metric ton were forecasted based on compounded annual growth rates ranging from 0.5% to 1.5%. Margin over materials remains fairly constant during the span of the Projections.

The Projections have been prepared using accounting policies consistent with those applied in the Company’s historical financial statements. Such accounting policies include the


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following: (i) The Projections include the accounts of the Debtors and their majority-owned non-Debtor

subsidiaries in which minority shareholders hold no substantive participating interest. Intercompany accounts and transactions are eliminated in consolidation.

(ii) Assets and liabilities of foreign affiliates are translated at the exchange rates in effect as of January 31, 2019. Income, expenses and cash flows are translated at constant currency rates during the year.

(iii) Accounts receivable are stated at fair value and do not include adjustments for rebates or other customer discounts, which are recorded in other liabilities. Accounts receivables are presented net of allowances for bad debt.

(iv) Inventories are stated at book value and are accounted for on a first-in, first-out method. Projected costs include direct material, direct labor and applicable manufacturing overheads, which are based on normal production capacity. An allowance is provided for excess and obsolete inventories based on management’s review of inventories on hand compared to estimated future usage and sales. Inventories are presented net of an allowance for excess and obsolete inventory.

(v) Land, buildings and machinery and equipment are stated at net book value. Depreciation is calculated on a straight-line basis over the estimated remaining useful lives of the properties as of the Emergence Date (the average estimated useful lives for buildings and machinery are 20 years and 15 years, respectively). Assets under capital leases are amortized over the lesser of their useful life or the lease term. Major renewals and betterments are capitalized. Maintenance, repairs, minor renewals and turnarounds (periodic maintenance and repairs to major units of manufacturing facilities) are expensed as incurred. The Debtors capitalize certain costs, such as software coding, installation and testing that are incurred to purchase or create and implement computer software for internal use. Amortization is recorded on a straight-line basis over the estimated useful life periods, which range from 1 to 5 years.

(vi) Separately identifiable intangible assets that are used in the operations of the business (e.g., patents and technology, customer lists and contracts) are recorded at cost (fair value at the time of acquisition). Costs to renew or extend the term of identifiable intangible assets are expensed as incurred. Intangible assets with determinable lives are amortized on a straight-line basis over the shorter of the legal or useful life of the assets, which range from 1 to 30 years. Goodwill is carried at fair value and not amortized in the Projections.

(vii) The foregoing assumptions and resulting computations were made solely for purposes of preparing the Projections. The FASB has issued Accounting Standards Codification (‘‘ASC’’) Topic 852 Reorganizations (‘‘FASB ASC 852’’). The Debtors will be required to determine the amount by which their reorganization value as of the Emergence Date exceeds, or is less than, the fair value of their assets as of the Emergence Date. Such determination will be based upon the fair values as of that time, which could be materially higher or lower than the values assumed in the foregoing computations and may be based on, among other things, a different methodology with respect to the valuation of Debtors’ reorganization value. In all events, such valuation, as well as the determination of the fair value of Debtors’ assets and the determination of their actual liabilities, will be made as of the Emergence Date, and the changes between the amounts of any or all of the foregoing


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items as assumed in the Projections and the actual amounts thereof as of the Emergence Date may be material.

The Projections have been prepared to reflect a simplified ‘‘fresh-start’’ presentation, assuming the Debtors emerge on the Assumed Emergence Date. The Projections assume enterprise value, net debt, and reorganization equity value for the Company of approximately $3,100 million, $1,726 million3, and $1,374 million respectively. The Projections reflect an upward adjustment to goodwill and other intangible assets of approximately $1,943 million, accounting for the reorganization value of assets and liabilities in excess of amounts allocable to identifiable assets.

(viii) Assumptions and projections contained herein are derived from the Debtors’ business plan as of January 2019.

(ix) The Projections assume that COD income resulting from the execution of the Plan will result in the extinguishment of net operating loss carryforwards in the U.S. and certain other tax attributes on the Company’s balance sheet. During the Projection Period, the Company may be required to pay cash tax amounts that are materially higher than those incurred in previous years. Management may also explore and implement alternative structures to minimize post-emergence taxes.

(x) The Projections assume the Debtors emerge under the Recapitalization Structure, as discussed in section XII.B of the Disclosure Statement. Under the Recapitalization Structure, the Debtors are not expected to recognize any taxable income or loss upon emergence. However, the execution of the Plan under the Recapitalization Structure will result in the extinguishment of substantially all of the net operating loss carryforwards in the U.S. and potentially certain of the Debtors’ other tax attributes, resulting in greater tax obligations than in prior years. The Projections contemplate the Debtors incurring between $35 million to $55 million of annual cash tax payments in the U.S. and the non-Debtors incurring approximately $20 million to $30 million of annual cash tax payments related to the foreign operations during the Projection Period. The Debtors and their advisors have analyzed an alternative tax structure in the U.S. which contemplates a taxable sale of the U.S. assets and the stock or assets of the Debtors’ foreign subsidiaries (in each case for U.S. income tax purposes). The Alternative Structure, as discussed in section XII.B.3 of the Disclosure Statement, could result in material additional taxable income and cash tax liability for the year ending December 31, 2019 with reduced taxes in subsequent years. Under the Alternative Structure, the Debtors will receive higher depreciation and amortization deductions due to a stepped-up basis in their assets for U.S. tax purposes, which would be expected to result in lower future U.S. tax liabilities as compared with the Recapitalization Structure. The Debtors may elect to retroactively implement the Alternative Structure for a period of time following the Emergence Date. The Debtors and their advisors are still reviewing the different tax options and the impact on the reorganized entities. The Debtors may elect to pursue the Alternative Structure if

3 Assumes pro forma New Long-Term Debt of $1,641 million, foreign debt & sale leasebacks of $186 million, and pro forma cash of $100 million as of July 1, 2019.


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determined that, among other factors, it is more desirable than the Recapitalization Structure on a net present value basis and that any cash tax liability paid for the year ending December 31, 2019 would not materially impact the operations of the business.

C. Business Description

The Company operates two major business divisions: Forest Products Division (“FPD”) and Epoxy, Phenolic, and Coating Resins Division (“EPCD” or “Epoxy”). As reflected in the exhibit below, the Company’s business divisions are divided into business units which are managed by product. The Forest Products Division generated 44% of the Company’s 2018 sales and 56% of EBITDA before corporate overhead allocations. The EPCD Division generated 56% of the Company’s 2018 sales and 44% of EBITDA before corporate overhead allocations. The Forest Products Division supplies resins, adhesives, wax emulsions, and other ancillary products. The Epoxy division manufacturers epoxy specialty resins, modifiers and curing agents which serve as a critical component in a variety of end markets including construction, wind turbines, automotive, industrial and oil sectors.

Division Business Unit

Forest Products Division Formaldehyde

Forest Product Resins / Wood Adhesives

Epoxy, Phenolic & Coating Resins Division

Base Epoxy Resins

Epoxy Specialty Resins

Versatics

Phenolic Specialty Resins

Oilfield Products


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Home Construction

17%

General Construction

16%

Wind Energy10%

Industrial/Marine10%

Furniture8%

Automotiv e7%

Oil and Gas6%

Consumer/Durable Goods

3%

Electronics3%

Architectural2%

Other18%

Income Statement Assumptions - Revenue

A. Sales

To develop the Projections, the Debtors evaluated market conditions by business unit and by region, projected demand growth and price elasticity in each product category. Key factors considered in determining volume forecasts included: (i) reviewing estimated global GDP and inflationary growth, (ii) analyzing third party market research reports, (iii) assessing global and regional market supply and demand trends, and (iv) identifying the Company’s competitive position in each segment.

The Company operates in competitive markets and the most significant competitive factor that impacts demand for certain products is selling price. As a result, the forecast includes a minimal compounded annual growth rate for price of 0.4% to 1.1% to account for the competitive landscape.

The Company’s business is diversified across both end market and geographies, limiting its exposure to purchasing shifts from one geography or industry. The Company’s revenue is relatively balanced between the United States (44% of 2018 revenue) and the rest of the world (56%) with Europe being the largest market outside of the U.S. for the Company. No single industry accounts for more than 17% of the Company’s sales.

Total Revenue by Geography & Industry*

By Geography By End Market

* Based on 2018 revenue of $3.8 billion

The Company has a diverse customer base of over 3,100 customers in approximately 85 countries creating a strong global footprint. In 2018, the Company’s largest customer accounted for approximately 2% of net sales, and the top ten customers accounted for approximately 15% of net sales. Neither of the overall business units nor any of the reporting segments depend on any single customer or a particular group of customers; therefore, the loss of any single customer would not have a material adverse effect on either of the two business units or the Company as a whole.


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Income Statement Assumptions - Expenses

A. Cost of Goods Sold

The Company’s cost of goods sold is primarily related to raw material costs and the manufacturing costs associated with the processing of materials to convert them into finished goods.

Cost of goods sold as a percentage of sales during the Projection Period is approximately 79% to 80% for the Forest Products Division and 83% to 84% for the Epoxy Division. The primary raw materials for the Forest Products Division are methanol, phenol, and urea. The primary raw materials for the Epoxy Division are phenol, propylene, acetone, chlorine and nonene. The three largest raw material inputs represent approximately 50% of the total raw materials spend.

Key raw materials typically benchmark to underlying raw material input costs; such as underlying oil and gas prices. There is significant volatility in natural gas and crude oil markets, but resin pricing contracts are typically structured to adjust pricing at monthly intervals to reflect changes in input costs. Raw material price changes in the Projections are assumed to be passed through to the customer. Inflation in raw material prices is not projected to impact unit margins due to the Company’s ability to pass those costs through to the customers and, as a result, margin over materials per unit remains fairly constant throughout the projected period. The Projections assume a compounded annual growth rate for raw material costs per metric ton of 0.5% to 1.5%; except for the “Oilfield” business unit, which is expected to decline at 2.0%.

Manufacturing Costs include wages and benefit costs, process costs, maintenance costs, utility costs and other costs that are directly attributable to the production of the Company’s products. Manufacturing costs have both a fixed and variable cost component.

i. Variable costs are related to raw material volumes processed and utility costs at the respective manufacturing plants. Variable cost increases are primarily driven by the Company’s ability to efficiently utilize its production capacity. Variable costs are projected to grow at net compounded annual growth rates of approximately 1.0% to 2.0%.

ii. The majority of fixed costs are related to wages and benefits paid to the Company’s plant employees and maintenance of the Company’s facilities. The Projections do not contemplate a material change to the Company’s manufacturing footprint or labor force. Fixed costs are projected to grow at net compounded annual growth rate of approximately 1.0% to reflect the impact of inflation, partially offset by productivity gains.

Distribution costs include costs related to the transportation of raw materials to the Company’s manufacturing facilities and for the shipment of finished goods to the Company’s customers. The Company may incur additional distribution costs of transporting raw materials from one plant to another in order to manage its production requirements and meet customer demands. Distribution costs are projected to grow at a net compounded annual growth rate of approximately 4.0%.


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B. Sales, General and Administrative

SG&A costs include all direct and indirect selling, marketing and administrative costs of the Company. Selling expense includes marketing expense, employee wages and benefits for the Sales team, commissions, and office expense. General and administrative expense includes administrative employee wages and benefits, travel, rent, corporate overhead, insurance, information technology costs, office related expenses, and other expenses. Research & development costs are also included in SG&A. R&D is a key aspect of the Company’s success in developing new product offerings and expanding the application of existing products. Without the investment in R&D, the Company would be in a competitive disadvantage which would negatively impact the Company’s top-line growth.

SG&A costs are primarily fixed and projected at the business unit level. The Projections assume a compounded annual growth rate of 2.0% for SG&A expenses due to inflation.

C. Depreciation and Amortization Depreciation and amortization expenses are forecast using straight-line depreciation methods

for fixed assets, operating leases, and intangible assets during the Projection Period. Depreciation for new machinery & equipment purchased during the Projection Period is forecasted on a straight-line basis over a period of 15 years. Depreciation for existing property, plant and equipment is based on the book value of those assets, spread on a straight-line basis over the remaining useful life for each of those assets. Amortization is based on the expected life of each of the Company’s operating leases and intangible assets and is forecasted on a straight-line basis during the Projection Period. No new intangible assets are recorded after the Emergence Date. Goodwill is not assumed to be amortized in the Projections.

D. Extinguishment of Debt Extinguishment of debt is primarily comprised of obligations pursuant to the Plan.

Extinguishment of debt includes the compromise of $945 million of value related to the First Lien Notes, $225 million of value related to the impairment of the 1.5 Lien Notes, $574 million of value related to the impairment of the Second Lien Notes, and $262 million of value related to the Borden Debentures.

E. Restructuring Expenses Restructuring expenses include the Debt Backstop Premium, Additional Debt Backstop

Premium, Equity Backstop Premium (collectively, the “Backstop Premiums”), financing fees, and professional fees. It is assumed the Backstop Premiums will be paid in cash upon emergence as opposed to be being paid in shares at the election of holders per the Restructuring Support Agreement.

F. Interest Interest expense is primarily based upon projected debt levels and applicable interest rates

for the debt obligations outlined in the Plan.

$ in millions TotalBackstop Premiums $104Financing & Professional Fees 80 Total Fees $184


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G. Taxes Projections assume that COD income resulting from the execution of the Plan will result in

the extinguishment of substantially all of the net operating loss carryforwards in the U.S. as well as certain other tax attributes on the Debtors’ balance sheet. Projected tax expense is based on the Debtors emerging under the Recapitalization Structure, as discussed in section XII.B of the Disclosure Statement. The Recapitalization Structure is not expected to result in the Debtors recognizing any taxable income or loss upon emergence. The Projections include, on an annual basis, a range of approximately $20 million to $30 million of foreign cash taxes and approximately $35 million to $55 million of cash taxes in the United States.

Balance Sheet Assumptions

A. Cash & Cash Equivalents The Projections contain anticipated minimum cash balances required to provide liquidity for

the Company’s operations. Repayments using excess cash flow are projected to be made on the New Long-Term Debt.

B. Accounts Receivable

Growth in Accounts Receivable during the Projected Period is driven by expected revenue growth. The Projections assume that year-end days sales’ outstanding is approximately 43 days on average.

C. Inventory The Projections assume days inventory outstanding to be approximately 48 days on average

during the Projected Period.

D. Other Current Assets Other current assets primarily include pre-paid expenses, maintenance parts inventory, and

operating leases.

E. Property, Plant & Equipment Changes in property, plant, and equipment are primarily driven by capital spending plans,

which are needed to support the Company’s revenue growth. The Projections assume capital expenditures of $100 to $120 million per year to fund growth initiatives, maintenance, and environmental, health, and safety investments. All new assets acquired during the Projected Period are depreciated on a straight-line basis over 15 years.

F. Other Long-Term Assets Other long-term assets primarily include investments in subsidiaries, long-term deferred tax

obligations, capitalized financing fees and operating leases. As of the petition date, the Company had approximately $100 million in operating leases ($45M in the U.S.), which are recorded on the balance sheet effective January 1, 2019, due to the implementation of the new Accounting Standard on Leases (ASC 842).


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G. Net Intangible Assets Net intangible assets include goodwill, patents, trademarks, royalties, and other intangibles.

Intangibles are projected to amortize over the remainder of their useful life. No amortization of goodwill is assumed.

H. Accounts Payable The Projections assume contraction occurred in the Company’s days payable during the

bankruptcy proceedings with improvement expected in the second half of 2019 and early 2020. The Company’s days payable is projected to improve to approximately 34 days on average by the end of 2020. Pre-petition trade payables are assumed to be paid in full shortly after the Emergence Date or when such obligations become due.

I. Accrued Expenses and Other Liabilities This primarily includes accrued employee payroll and benefits, accrued interest, accrued

utility expense, rebates, group insurance reserves, and accrued taxes.

J. Debt Upon consummation of the Plan, the Debtors are assumed to have the following debt

obligations: (i) $350 million New ABL Credit Facility to provide liquidity for general

operating purposes at an estimated rate of LIBOR + 2.50% or 5.25% all-in during the Projection Period and an unused line fee of 0.50% per annum;

(ii) $1.641 billion New Long-Term Debt at an estimated interest rate of 6.00%; (iii) $2.5 million Settlement Note due March 2020; (iv) Approximately $127 million of foreign debt in Brazil, Australia, Korea, and

China at various interest rates; and (v) Approximately $59M of sale leaseback debt.

K. Other Long-Term Liabilities

Other long-term liabilities primarily include pension obligations, OPEB, non-qualified employee plans, environmental reserves, and deferred tax obligations.

L. Shareholder Equity

Shareholder equity at the Emergence Date includes the effect of $300 million of New Common Equity issued through the Rights Offering as well as the conversion of the First Lien Notes, 1.5 Lien Notes, Second Lien Notes, and Borden Debentures into new equity.


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Cash Flow Assumptions

A. Cash Flow from Operations During the Projection Period, it is expected that net working capital will be a $109 million

source of cash. In the six (6) months and 18 months following the Emergence Date, the Company expects to generate $105 million and $135 million, respectively, from working capital as it restores vendor terms to pre-petition levels and seasonality. From December 31, 2021 to December 31, 2023, net working capital is projected to be a use of cash of approximately $26 million primarily driven by increased revenue over the Projection Period. Key components of working capital usage include higher accounts receivable related to higher sales and a buildup of inventory, partially offset by an improvement in accounts payable due to improving vendor terms.

B. Cash Flow from Investing

Cash usage is primarily driven by the increase in capital spending from approximately $100 million in full-year 2019 to $120 million by the end of 2022 and 2023. The investment in capital expenditures includes both growth capital as well as maintenance capital expenditures at the manufacturing plants.

C. Cash Flow from Financing Activities Usage of cash primarily reflects repayments on the New Long-Term Debt, foreign debt &

sale leasebacks and borrowings or repayments on the ABL Credit Facility. Projected amounts drawn on the ABL Credit Facility at the Emergence Date are assumed to be repaid through free cash flow generated by normalization of post-emergence working capital and seasonality.


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The ‘‘SOURCES AND USES’’ set forth below presents the estimated sources and uses of funds for the consummation of the restructuring transactions contemplated in the Plan (the “Restructuring Transactions”). The actual amounts are subject to adjustment and may differ at the time of the consummation of the Restructuring Transactions, depending on several factors, including differences in estimated transaction fees and expenses, differences between actual and projected operating results and any differences in the contemplated debt financing or equity rights offering when consummated.

Hexion Holdings LLC, et al., Projected Pro Forma Estimated Cash Sources and Uses at the Assumed Emergence Date

(UNAUDITED) (DOLLARS IN MILLIONS)

(a) Reflects the gross value of New Common Equity issued pursuant to the Rights Offering. (b) Repayment of pre-petition First Lien Notes, net of the adequate protection payment of $67

million made in April, to reduce the outstanding amount of the debt. (c) See note regarding transaction fees under Restructuring Expenses. Debt Backstop Premiums or

Equity Backstop Premiums may be paid in shares or cash, at the election of the holders per the Restructuring Support Agreement. The Additional Backstop Premium will be paid in cash pursuant to the terms in the Debt Backstop Agreement.

(d) Payment of pre-petition trade payable assumes the payment of outstanding trade payable amounts not paid during the pendency of the Chapter 11 cases pursuant to certain orders of the Bankruptcy Court allowing the Debtors to pay certain prepetition claims (the “First Day Orders”). To the extent the Debtors pay fewer claims under the First Day Orders than is currently projected, this amount will increase, while the amount of cash at emergence will increase and be used to pay the additional unsecured claims. To the extent the Debtors choose to assume trade payable liabilities at the transaction date rather than satisfy those liabilities in cash, the amount of cash used from the balance sheet would decrease.

Sources Notes

New Common Equity issued in Rights Offering (a) 300$ New Long-Term Debt 1,641 Rollover of Foreign Debt & Sale Leasebacks 186 Release of Utility Deposit 1 Borrowings under New ABL Credit Facility 98 Adequate Protection Payment to First Lien Notes (b) 67 Cash on Balance Sheet 69

Total Sources 2,363$

UsesRepayment of First Lien Notes (b) 1,450$ Repayment of DIP Term Loan Facility 350 Repayment of DIP ABL Facility 62 Rollover of Foreign Debt & Sale Leasebacks 186 Payment of Backstop Premiums (c) 104 Payment of Financing & Professional Fees (c) 80 Payment of Pre-petition Trade Payable (d) 31 Cash to Balance Sheet 100

Total Uses 2,363$


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The Projected Pro Forma Consolidated Balance Sheet as of the Emergence Date presents: (a) the projected consolidated financial position of the Debtors as of June 30, 2019, prior to the consummation of the transactions contemplated in the Plan; (b) the pro forma adjustments to such projected consolidated financial position required to reflect the Restructuring Transactions; and (c) the pro forma projected consolidated financial position of Debtors as of the Assumed Emergence Date, after giving effect to the Restructuring Transactions. The Restructuring Transactions set forth in the columns captioned ‘‘Plan Settlement,’’ “New Debt”, “New Equity” and ‘‘Fresh-Start’’ reflect the anticipated effects of the Restructuring Transactions.

Hexion Holdings LLC, et al., Projected Pro Forma Consolidated Balance Sheet (UNAUDITED)

(DOLLARS IN MILLIONS)

Pre-Emergence(i) Plan New New Fresh Start Pro Forma

6/30/2019 Settlement(ii) Debt(iii) Equity(iv) Adjustments(v)6/30/2019

($ in millions)

AssetsCash & Cash Equivalents 69$ (110)$ 140$ -$ -$ 100$ Accounts Receivable, net 495 - 495 Inventories 384 - 384 Other Current Assets 112 (1) - 110

Total Current Assets 1,060$ (111)$ 140$ -$ -$ 1,089$

PP&E, net 817$ -$ 817$ Other Long-Term Assets 148 104 - 252 Intangible Assets, net 131 1,943 2,074

Total Assets 2,156$ (111)$ 244$ -$ 1,943$ 4,232$

Liabilities & EquityTrade Payables 300$ (31)$ -$ 269$ Accrued Expenses & Other Current Liabilities 275 (92) (3) - 180

Total Current Liabilities 575$ (123)$ (3)$ -$ -$ 449$

ABL Credit Facility 62$ 36$ -$ 98$ DIP Term Loan Facility 350 (200) (150) - - New Long-Term Debt - 1,641 - 1,641 Settlement Note - 3 - 3 Foreign Debt & Sale Leasebacks 186 - 186

Liabilities Subject to CompromiseFirst Lien Notes 2,425 (1,042) (1,233) (150) - - 1.5 Lien Notes 225 (225) - - Second Lien Notes 574 (574) - - Borden Debentures 262 (262) - -

Total Debt 4,085$ (2,104)$ 247$ (300)$ -$ 1,928$

Other Long-Term Liabilities 482 - 482 Total Liabilities 5,141$ (2,227)$ 244$ (300)$ -$ 2,858$

Existing Shareholder's Equity (2,985)$ 2,116$ 1,943$ 1,074$ New Common Equity - 300 - 300

Total Shareholder's Equity (2,985)$ 2,116$ -$ 300$ 1,943$ 1,374$

Total Liabilities & Shareholder's Equity 2,156$ (111)$ 244$ -$ 1,943$ 4,232$


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(i) The pre-emergence balance sheet reflects forecasted results for the period ending June 30, 2019 prior to the execution of the transactions contemplated in the Plan.

(ii) Plan settlement reflects the cash payments required pursuant to the Plan including the payment of administrative claims and secured claims. The Plan also assumes that a portion of the First Lien Notes and all of the 1.5 Lien Notes and Second Lien Notes will be converted into equity. As part of the Plan, approximately $2.1 billion of debt will be extinguished.

(iii) Reflects the issuance of New Long-Term Debt totaling $1.641 billion. Proceeds from the transaction will be used to partially fund the cash payments to the First Lien noteholders of $1.45 billion (less the adequate protection payment), pay the Backstop Premiums, financing & professional fees, and repay the DIP Term Loan Facility in conjunction with the proceeds from the Rights Offering. It is assumed the Debt Backstop Premium, Additional Debt Backstop Premium, and Equity Backstop Premium will be paid in cash upon emergence.

(iv) Reflects the issuance of $300 million of New Common Equity issued on the Emergence Date pursuant to the Rights Offering.

(v) At the time of filing this Exhibit G to the Disclosure Statement, the Debtors had not completed a fair value assessment of its assets and liabilities. The Projections adjust the Debtors’ equity and goodwill balances to reflect an equity value that eliminates the equity of existing stockholders.


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The ‘‘PROJECTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS’’ presents the projected consolidated results of operations of the Company for the period commencing July 1, 2019 through December 31, 2019, after giving effect to the Restructuring Transactions to occur on the Emergence Date, and for the fiscal years ending December 31, 2020, 2021, 2022 and 2023.

Hexion Holdings LLC, et al., Projected Pro Forma Consolidated Statement of Operations

(UNAUDITED) (DOLLARS IN MILLIONS)

Partial YearJuly - Dec

Period Ending 2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023($ in millions)

Net Revenue 2,026$ 4,130$ 4,263$ 4,395$ 4,531$ Cost of Sales, excluding Depreciation (1,662) (3,381) (3,484) (3,581) (3,679)

Gross Profit 365$ 749$ 780$ 815$ 853$

SG&A Expense (116)$ (248)$ (252)$ (256)$ (259)$ Depreciation & Amortization (62) (131) (138) (146) (154)

Operating Profit 186$ 369$ 390$ 413$ 439$

Interest Expense (80) (107) (96) (83) (72)

Other Income / (Expense) (18) (52) (52) (53) (53) Earnings Before Taxes 88$ 210$ 241$ 276$ 314$

Income Tax Expense1 (27) (60) (67) (81) (90) Net Income 61$ 150$ 174$ 195$ 224$

Segment EBITDA2,3 248$ 500$ 528$ 559$ 593$

1) Assumes emergence under a Recapitalization Structure as outlined in the Disclosure Statement section XII.B2) EBITDA is calculated as Operating Profit plus Depreciation & Amortization.3) Full Year 2019 Segment EBITDA is forecasted to be $470 million.


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The ‘‘PROJECTED PRO FORMA CONSOLIDATED BALANCE SHEETS’’ presents the projected consolidated financial position of the Company as of June 30, 2019, after giving effect to the consummation of the Restructuring Transactions, and as of each fiscal year ending December 31, 2019, 2020, 2021, 2022 and 2023.

Hexion Holdings LLC, et al., Projected Pro Forma Consolidated Balance Sheet (UNAUDITED)


Pro FormaPeriod Ending 6/30/2019 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023($ in millions)

AssetsCash & Cash Equivalents 100$ 168$ 254$ 257$ 255$ 256$ Accounts Receivable, net 495 492 498 507 517 526

Inventories 384 350 344 353 362 370 Other Current Assets 110 95 95 99 101 103

Total Current Assets 1,089$ 1,106$ 1,192$ 1,215$ 1,234$ 1,254$

PP&E, net 817$ 820$ 808$ 784$ 759$ 727$ Other Long-Term Assets 252 233 191 149 110 71 Intangible Assets, net 2,074 2,070 2,060 2,056 2,055 2,054

Total Assets 4,232$ 4,229$ 4,251$ 4,205$ 4,158$ 4,105$

Liabilities & EquityTrade Payables 269$ 315$ 348$ 359$ 365$ 373$

Accrued Expenses & Other Current Liabilities 180 198 177 149 128 109 Total Current Liabilities 449$ 513$ 526$ 508$ 493$ 482$

ABL Credit Facility 98$ -$ -$ -$ -$ -$

New Long-Term Debt1 1,641 1,641 1,516 1,316 1,091 831 Foreign Debt & Sale Leasebacks 186 176 165 154 144 133 Other Long-Term Liabilities 484 464 459 467 475 479

Total Liabilities 2,858$ 2,794$ 2,666$ 2,445$ 2,204$ 1,926$

Shareholder's Equity 1,374$ 1,435$ 1,585$ 1,759$ 1,954$ 2,179$

Total Liabilities & Shareholder's Equity 4,232$ 4,229$ 4,251$ 4,205$ 4,158$ 4,105$

1) Includes voluntary repayments on the New Long-Term Debt excluding impact of any non-call provisions or soft-call premiums.


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The ‘‘PROJECTED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS’’ presents the projected cash flows of the Company commencing July 1, 2019 through December 31, 2019, after the consummation of the Restructuring Transactions, and for the fiscal years ending December 31, 2020, 2021, 2022 and 2023.

Hexion Holdings LLC, et al., Projected Pro Forma Consolidated Statement of Cash Flows (UNAUDITED)


Partial YearJuly - Dec

Period Ending 2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023($ in millions)

Cash Flow from OperationsNet Income 61$ 150$ 174$ 195$ 224$ Add: Depreciation & Amortization 62 131 138 146 154

Add: Other Non-Cash Charges1 9 21 21 21 21 Changes in Working Capital 105 30 (10) (8) (8)

Net Cash Flow from Operating Activities 237$ 332$ 323$ 354$ 391$

Cash Flow from InvestmentsCapital Expenditures (60) (110) (110) (120) (120)

Net Cash Flow from Investing Activities (60)$ (110)$ (110)$ (120)$ (120)$

Cash Flow from Financing Activities

Debt Borrowing / (Repayment)2 (108)$ (136)$ (211)$ (236)$ (271)$

Net Cash Flow from Financing Activities (108)$ (136)$ (211)$ (236)$ (271)$

Net Increase/(Decrease) in Cash & Cash Equivalents 69$ 86$ 2$ (2)$ 1$

Beginning Cash Balance 100$ 168$ 254$ 257$ 255$ Net Increase/(Decrease) in Cash & Cash EquivalentsEnding Cash Balance 168$ 254$ 257$ 255$ 256$

1) Other Non-Cash Charges include the amortization of financing transaction fees related to the Restructuring.

2) Includes voluntary repayments on the New Long-Term Debt to maintain a minimum cash balance of approximately $250 million. Excludes impact of any non-call provisions or soft-call premiums.


Exhibit H

LIQUIDATION ANALYSIS

[see attached]


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LIQUIDATION ANALYSIS

Section 1129(a)(7) of title 11 of the United States Code (the “Bankruptcy Code”) requires that (i) all members of each impaired class have accepted the plan; or (ii) each holder of an allowed claim or interest of each impaired class of claims or interests will under the plan receive or retain on account of such claim or interest, property of a value, as of the effective date of the plan, that is not less than the amount that such holder would so receive or retain if the debtor were liquidated under chapter 7 of the Bankruptcy Code on such date. This is referred to as the “Best Interest Test.”

In connection with the confirmation of the Plan, the Debtors1 have prepared a hypothetical liquidation analysis (the “Liquidation Analysis”) to demonstrate compliance with the Best Interest Test. The Liquidation Analysis indicates an estimated range of recovery values which may be obtained by the classes of claims upon disposition of the Debtors’ assets, pursuant to a chapter 7 liquidation, as an alternative to the Debtors’ proposed Plan. As illustrated by the Liquidation Analysis, unimpaired classes receiving full recoveries under the Plan would in fact be impaired classes in a hypothetical liquidation. Further, no holder of a claim or interest would receive or retain property under the Plan of a value that is less than such holder would receive in a chapter 7 liquidation scenario as illustrated by the Liquidation Analysis. Therefore, the Debtors believe that the Plan satisfies the Best Interest Test set forth in section 1129(a)(7) of the Bankruptcy Code.

The Liquidation Analysis relies upon several assumptions set forth herein, including, but not limited to, (a) the DIP Term Loan will be repaid from collateral provided by non-Debtors; (b) no secured party will assert adequate protection claims; and (c) the “Principal Properties” consist of 27 plants in the U.S. and include associated property and equipment.2 Such adequate protection claims, if they arose, would be secured by junior liens on DIP Term Loan collateral including the Principal Properties. Altering these assumptions however would not change the fundamental outcome of the Liquidation Analysis, namely that no creditor would receive property of a greater value through a chapter 7 liquidation than such creditor will receive pursuant to the Plan. These assumptions, and others set forth herein, are made solely for purposes of this Liquidation Analysis. Outside the context of this Liquidation Analysis, the legal conclusions underlying these assumptions would likely be subject to dispute among various parties in interest. This Liquidation Analysis takes no position, express or implied, on the merits of any such disputes.

The Liquidation Analysis represents an estimate of recovery values based upon a hypothetical liquidation of the Debtors’ estates if the Debtors’ current chapter 11 cases were converted to chapter 7 of the Bankruptcy Code on July 1, 2019 (the “Liquidation Date”) and a chapter 7 trustee (the “Trustee”) were appointed to convert all assets into cash. In this hypothetical scenario, the Trustee would satisfy claims through proceeds generated from the disposition of the assets of the Debtors by either: (i) selling certain assets, specifically the operations of certain non-Debtor affiliates, as going concerns, or (ii) ceasing operations and selling the individual assets of the Debtors piecemeal, including certain of the non-Debtor affiliates. The amount of proceeds available from the liquidation of the assets encumbered by prepetition liens would be the sum of the net proceeds from the disposition of the Debtors’ assets that are encumbered by prepetition liens, plus any cash held as of the Liquidation Date, less the cost of disposition, including wind down costs, trustee, and other professional fees (the “Liquidation Expenses”) attributable to the disposition of such assets (“Net Prepetition Encumbered Proceeds”). The amount of proceeds available from the liquidation of the assets not encumbered by prepetition liens (and therefore effectively

1 Capitalized terms used but not defined herein shall have the meanings set forth in the Joint Chapter 11 Plan of Reorganization of Hexion

Holdings LLC and Its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code set forth as Disclosure Statement, Exhibit 1 (the “Plan”).

2 If the equipment is excluded, the recovery shown to administrative, priority, and general unsecured claims would be lower.


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unencumbered after repayment of the DIP Term Loan and the DIP ABL secured by liens on such assets) would be the sum of the net proceeds from the disposition of such assets after Liquidation Expenses attributable to the liquidation of such assets (“Net Prepetition Unencumbered Proceeds”). This Liquidation Analysis assumes that the Net Prepetition Encumbered Proceeds and Net Prepetition Unencumbered Proceeds would be distributed in accordance with section 726 of the Bankruptcy Code. The Net Prepetition Encumbered Proceeds would be applied: (i) first, to the outstanding amount of the DIP ABL and the First Lien Notes based on their respective priorities in the prepetition collateral;3 (ii) second, to the 1.5 Lien Notes; and (iii) to the Second Lien Notes to the extent there is excess collateral. The Net Prepetition Unencumbered Proceeds would be applied: (i) first, to administrative expense claims from the chapter 11 cases; (ii) second, to the employee priority claims, priority tax claims, and other priority claims; and (iii) third, to creditors and other stakeholders in strict order of priority pursuant to section 726 of the Bankruptcy Code.

The Liquidation Analysis is based on book values as of February 28, 2019 unless otherwise noted. The book values are intended to be representative of the Debtors’ assets and liabilities as of the Liquidation Date.

This Liquidation Analysis assumes: (i) the cessation of the operations and sale of the U.S. Debtors’ assets; (ii) that for the foreign non-Debtor entities outside of the United States, the greater of proceeds generated from either (a) a forced sale of the businesses as a going concern to a strategic or financial buyer or (b) the liquidation of individual assets using a similar methodology as used for the Debtors; (iii) a twelve to eighteen month liquidation process under the direction of the Trustee to allow for the orderly wind-down of the Debtors’ estates (“Liquidation Timeline”);4 (iv) continued access to the DIP ABL and DIP Term Loan Facility or alternative financing at comparable terms during the course of the Liquidation Timeline; and (v) the continuation of certain accounting, treasury, IT and other management services necessary to wind-down the estates. The Liquidation Analysis does not include estimates for: (i) the tax consequences, either foreign or domestic, that may be triggered upon the liquidation and sale of assets; (ii) social costs or other government-imposed impediments arising from the sale or liquidation of non-U.S. assets; (iii) environmental claims resulting from the shut down or sale of the Company’s manufacturing facilities; (iv) damages as a result of breach or rejection of obligations incurred and leases and executory contracts assumed or entered into; or (v) recoveries resulting from any potential preference, fraudulent transfer or other litigation or avoidance actions. More specific assumptions are detailed in the Notes below.

The determination of the proceeds from the hypothetical liquidation of assets is an uncertain process involving the extensive use of estimates and assumptions which, although considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies beyond the control of the Debtors or the Trustee. These values have not been subject to any review, compilation or audit by any independent accounting firm. In addition, various liquidation decisions upon which certain assumptions are based are subject to change. As a result, the actual amount of claims against the Debtors’ estates could vary significantly from the estimates stated herein, depending on the claims asserted during the pendency of the chapter 7 case. ACCORDINGLY, NEITHER THE DEBTORS NOR THEIR ADVISORS MAKE ANY REPRESENTATION OR WARRANTY THAT THE ACTUAL RESULTS OF A LIQUIDATION OF THE DEBTORS WOULD OR WOULD NOT APPROXIMATE

3 The First Lien Notes have priority over the DIP Facilities in regards to certain collateral, namely, intercompany proceeds and generally,

prepetition encumbered long-term assets.

4 A four to six-month wind-down is estimated for a rapid sale of the non-Debtor foreign entities sold as going concerns. Due to the complexity of the individual assets and plants, the liquidation of individual assets would take a twelve to eighteen-month process.


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THE ESTIMATES OR PROJECTED RESULTS SET FORTH HEREIN. THE ACTUAL LIQUIDATION VALUE OF THE DEBTORS IS SPECULATIVE AND RESULTS COULD VARY MATERIALLY FROM ESTIMATES PROVIDED HEREIN.

ASSET RECOVERY5

1. Cash, Cash Equivalents and Short-Term Investments include cash in the Debtors’ domestic bank accounts, cash equivalents, and investments that mature within 90 days or less.6 Cash in foreign bank accounts is accounted for in the liquidation value of the non-Debtor entities (see Note 7). The estimated recovery for this category of assets is 100%.

2. Accounts Receivable includes all third-party trade accounts receivable. The liquidation of accounts receivable assumes that certain personnel from the Debtors would be maintained after the Liquidation Date to oversee an aggressive collection effort of outstanding trade accounts receivable for the Debtors and non-Debtor legal entities undergoing a liquidation of their individual assets in an orderly wind-down. The analysis takes into account collectability estimates for aged receivables as well as incremental claims for damages resulting from customer disruptions, attempts by customers to setoff outstanding amounts owed to the Debtors against such claims, and concessions that might be required to facilitate the collection of certain accounts. Recoveries range from 74% to 87%.

3. Inventory includes raw material, work-in-process and intermediary products (“WIP”), and finished goods. The basis for the analysis is book value of inventory at February 28, 2019. The recovery rates were based upon a third-party inventory valuation which analyzed raw materials, WIP, and finished goods, and determined liquidated values for each inventory category. Recovery rates were based upon the ratio of net orderly liquidation value (“NOLV”) to net book value. The valuation assumptions include the following:

(i) Inventory assumed to be liquidated through an orderly sale process over a period of eight weeks.

(ii) Sales would be on a cash-only basis.

(iii) Finished goods would primarily be sold to the Debtors’ current customer base, with discounts offered to account for lack of warranty and the “as is where is” nature of the inventory. Incremental discounting would be offered to motivate customers to purchase inventory in excess of normal procurement patterns. Buyers would be responsible for shipping costs.

(iv) The analysis assumes that none of the WIP would be converted into finished goods.

(v) Raw materials assume a sale of commodity type feedstocks at recovery rates equal to prevailing market rates at the time of the sale, less cash discounts for lack of warranty.

5 Recoveries are the same for all Debtors except where noted. Debtors with no asset value on the balance sheet have not been presented in the

accompanying exhibits as there is no recorded or estimated unrecorded value.

6 The cash balance is the projected cash balance at the Liquidation Date for Hexion Inc. Hexion Nova Scotia Finance, ULC is as of March 31, 2019.


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The estimated recovery rate is 44% to 51% for raw materials, 49% to 58% for WIP, and 70% to 82% for finished goods. The overall inventory recovery rate is 56% to 66%.

4. Other Current Assets includes deferred charges, parts and samples, consignment inventory revenue recognition adjustment (ASC 606),7 prepaid raw materials, and other miscellaneous prepaid expenses. With the exception of the consignment inventory revenue recognition adjustment and prepaid raw materials, no recovery is estimated for these other current assets. The Debtors estimate to recover approximately $9.5 to $11.1 million from the consignment inventory amount and prepaid raw materials.

5. Property, Plant, and Equipment includes buildings, land, machinery & equipment, and construction in process. The estimated recoveries were based upon a third-party fixed asset valuation which analyzed personal property and real estate, and determined liquidated values for each category.8 The liquidation values are based upon appraised methodologies used for similar types of assets:

(i) High Range – Real property is sold to a buyer and liquidated equipment remains in place.

(ii) Low Range – 50% of equipment is removed and sold individually, 50% of equipment is sold in place, and existing personal property and fixtures are not utilized on an ongoing basis. The analysis assumes that there would be considerable deinstallation costs to remove the assets, as infrastructure would need to be removed and machinery would need to be cleaned and purged of contents. Real property recovery is reduced by 20%.

The average estimated recovery rate is 164% to 205% for real estate, 63% to 119% for personal property, and 25% to 35% for construction in progress. Both the low and the high recoveries were reduced by 2% to account for transactional costs that were not included within the third-party estimates of value.

6. Other Long-Term Assets include deferred charges, deposits, long term prepaids, and a long-term receivable. With the exception of the long-term receivable, other long-term assets are estimated to have no value in a liquidation scenario.9 The Debtors’ estimate to recover approximately $440,000 to $600,000 from the long-term receivable.

7. Due to/from Affiliates10 include intercompany trade and intercompany loans between Debtors and non-Debtor entities, which would have value upon the sale or liquidation of the non-Debtor assets. As of the Liquidation Date, the Debtors are projected to have a net intercompany receivable balance of approximately $830 million due from various non-Debtor entities. The Liquidation Analysis assumes that all Foreign Entities11 either (a) cease operations and are liquidated, with recovery methodologies for the assets at amounts similar to those of the Debtors, or (b) are sold as going concerns in a forced sale process (depending upon which approach generates the greater amount of proceeds). For purposes of this

7 This amount relates to ASC 606 addressing revenue recognition. Product has been shipped to the consignee, but has not been sold to the

ultimate customer. Revenue has been recorded, however this amount neither sits in inventory nor A/R.

8 The report valuation date is as of February 1, 2019, and bifurcates values between the Principal Properties and other property.

9 Hexion Investments Inc. has a long-term receivable amount of $241 thousand related to trademark royalties receivable from a joint venture from 2010 which is estimated to have no value.

10 The discussions regarding affiliates and investment in subsidiaries relate to the foreign entities that are direct and indirect subsidiaries of Debtor NL Coop Holdings LLC. The other non-Debtor entities which are direct subsidiaries of Hexion Inc. have de minimis value and are assumed to contribute no equity value to Debtor Hexion Inc.

11 Foreign Entities are defined as Hexion International Cooperatief U.A. and direct and indirect subsidiaries.


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Liquidation Analysis, it is assumed that intercompany trade claims and intercompany loans and notes are not otherwise subject to recharacterization or avoidance.

Intercompany trade primarily reflects product sales and other business-related transactions between legal entities. Intercompany notes primarily reflect loan transactions between legal entities. The intercompany claims are treated pari passu to other unsecured claims.

Foreign Entities sold in a forced sale process are valued based upon a distressed multiple of EBITDA (4.5x – 5.5x) to calculate gross proceeds. The gross proceeds for the liquidated entities were estimated as follows: Cash 100%; Accounts Receivable 68% to 80%; recovery ranges for inventory and property plant and equipment were based on the third-party appraisals. Wind-down/transaction costs for foreign entities were estimated to be 10% of gross proceeds recovered.

Proceeds from the disposition of assets of each of the Foreign Entities, net of applicable liquidation costs, are then applied to satisfy all direct claims against such Foreign Entity with residual value, if any, being distributed to the parent of that Foreign Entity. Any such residual value that is distributed to the DIP Term Loan borrower is applied first to satisfy the DIP Term Loan.

The social costs and environmental claims which could arise in connection with the liquidation of foreign entities may be substantial. However, such costs are difficult to estimate and therefore have not been reflected in the liquidation values for non-U.S. entities. Because of this, the recovery rates in an actual liquidation may be substantially less than those presented.

8. Investments in Subsidiaries12 include equity value, if any, attributed to the equity of Hexion International Holdings Cooperatief U.A., after the settlement of the DIP Term Loan, intercompany trade payables, loan amounts due to / from affiliates, and all other liabilities of the Foreign Entities. Paragraph 8 should be read in conjunction with the information contained in paragraph 7. No recovery is estimated for investments in subsidiaries due to insufficient value in the Foreign Entities to repay all intercompany amounts outstanding as well as borrowings under the DIP Term Loan.

9. Goodwill & Intangibles comprise primarily of patents, trademarks, and other intellectual property (“IP”). The valuation methodology assumes cash flow from royalties at a fair market royalty rate of 1.0% for patents and unpatented technology and 0.5% for trademarks, which rates are applied to the future revenues associated with the IP. In order to estimate a fair market value for the IP, the Debtors then calculated the net present value of the projected cash flows by discounting such cash flows at a rate of 14% annually. The Debtors then applied a further discount of 25% to 50% to this value to reflect the distressed nature of a sale of the IP in connection with a liquidation.

LIQUIDATION EXPENSES

Conversion of these chapter 11 cases to cases under chapter 7 of the Bankruptcy Code would result in additional costs to the Debtors, including compensation of the Trustee, retained counsel, and other professionals.

While the Final DIP Order waives any rights to surcharge the DIP Lenders’ and prepetition secured lenders’ pursuant to section 506(c) of the Bankruptcy Code, the Liquidation Analysis assumes that the DIP

12 The discussions regarding affiliates and investment in subsidiaries relate to the Foreign Entities that are direct and indirect subsidiaries of

Debtor NL Coop Holdings LLC. The other non-Debtor entities which are direct subsidiaries of Hexion Inc. have de minimis value and are assumed to contribute no equity value to Debtor Hexion Inc. Furthermore, no equity value is contributed to Hexion Inc. from its direct subsidiary Debtors as there is insufficient value to cover obligations at these entities.


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Lenders and the Debtors’ prepetition secured lenders would agree to an additional “carve-out” from their collateral or other modification of the Final DIP Order in order to fund expenses of liquidation. Therefore, costs specifically related to the liquidation of individual assets and all other costs associated with the liquidation are netted against the recovery value of those assets, except where noted.

The chapter 7 costs include the following:

10. Trustee Fees are estimated at approximately 1% of gross proceeds of both encumbered and unencumbered assets.

11. Wind-Down Costs contemplate the orderly wind-down and liquidation of the Debtors’ U.S. operations during the Liquidation Timeline. To maximize recoveries on remaining assets, minimize the amount of Claims, and generally ensure an orderly liquidation, the Trustee will need to retain a number of individuals currently employed at the Debtors. These individuals will primarily be responsible for operating and maintaining the Debtor’s assets, collecting outstanding receivables, facilitating the liquidation of the Debtors’ assets, providing historical knowledge and insight to the Trustee regarding the Debtors’ businesses and the chapter 11 cases, and concluding the administrative wind-down of the business after the disposition of the Debtors’ assets. Wind-down costs primarily consist of reduced general and administrative costs required to operate the Debtors’ assets during the wind-down process; employment of certain factory personnel and key management to wind-down the operations and to prepare and facilitate the sale of assets, including machinery and equipment; incentive and / or severance payments to retain necessary personnel; and additional interest expense associated with the Trustee’s financing needs with respect to the liquidation.

Total wind-down expenses are estimated at approximately $49.7 million to $54.8 million.

12. Professional Fees include the cost of financial advisors, attorneys, and other professionals retained by the Trustee in connection with the wind-down of the estates (e.g. claims reconciliation, legal fees, tax and accounting fees, etc.). The professional fees are estimated as 1.5% of gross proceeds from both encumbered and unencumbered assets, excluding any recoveries from intercompany claims.13

SECURED CLAIMS

For the purpose of this analysis, the Net Prepetition Encumbered Proceeds first pay down the DIP ABL and First Lien Notes based upon their respective collateral priorities. Next, Net Prepetition Encumbered Proceeds are assumed to pay down prepetition secured claims pursuant to the priority set forth in the various inter-creditor agreements between the Debtors’ prepetition lenders. As noted, the Liquidation Analysis assumes that both (a) the DIP Term Loan is repaid from collateral that is not property of the Debtors and (b) there are no adequate protection claims paid from the prepetition unencumbered collateral for the benefit of any prepetition secured party.

13 Wind-down costs related to foreign non-Debtors are already accounted for at the foreign entity level.


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The recoveries related to secured collateral can be found in the table below.

13. DIP ABL Facility and DIP Term Loan collectively comprise $700 million in debtor-in-possession financing (the “DIP Facilities”). The DIP Facilities consist of a $350 million asset-based revolving loan (of which $111.3 million is estimated to be drawn at the Liquidation Date including $49 million in letters of credit)14 and a $350 million term loan. The DIP Facilities are secured by senior, super-priority non-priming liens on the respective collateral for each facility.

14. 10.375% First Lien Notes include $560 million of 10.375% First-Priority Senior Secured Notes due 2022 issued pursuant to an Indenture dated as of February 8, 2017, with Wilmington Trust, National Association, as indenture trustee and certain Debtors as guarantors.15

15. 10.000% First Lien Notes include $315 million of 10.000% First-Priority Senior Secured Notes due 2020 issued pursuant to an Indenture dated as of April 15, 2015, with Wilmington Trust, National Association, as indenture trustee and certain Debtors as guarantors.16

16. 6.625% First Lien Notes include $1.55 billion of 6.625% First-Priority Senior Secured Notes due 2020 issued pursuant to an Indenture dated as of March 14, 2012, with Wilmington Trust, National Association, as indenture trustee and certain Debtors as guarantors.17

14 Does not include $10 million carve-out for Chapter 11 professionals.

15 The guarantors included Hexion Inc., HSC Capital Corporation, Lawter International Inc., Oilfield Technology Group Inc., Hexion CI Holding Company (China) LLC, Hexion International Inc., Hexion Investments Inc., and NL Coop Holdings LLC. HSC Capital Corporation and Oilfield Technology Group Inc. were no longer entities as of the Filing Date. Further supplemental indentures updated the guarantors.

16 The guarantors included Hexion Inc., HSC Capital Corporation, Lawter International Inc., Oilfield Technology Group Inc., Hexion CI Holding Company (China) LLC, Borden Chemical Foundry LLC, Hexion International Inc., Hexion Investments Inc., and NL Coop Holdings LLC. HSC Capital Corporation, Borden Chemical Foundry LLC, and Oilfield Technology Group Inc. were no longer entities as of the Filing Date. Further supplemental indentures updated the guarantors.

17 The guarantors included Hexion U.S. Finance Corp., Momentive Specialty Chemicals Inc., Momentive Specialty Chemicals Investments Inc., Momentive International Inc., Momentive CI Holding Company (China) LLC, HSC Capital Corporation, Lawter International Inc., Oilfield Technology Group Inc., Borden Chemical Foundry LLC, and NL Coop Holdings LLC. Hexion U.S. Finance Corp., Momentive Specialty Chemicals Inc., Momentive Specialty Chemicals Investments Inc., Momentive International Inc., Momentive CI Holding Company (China)

Summary of Recoveries to Secured Claims($ in 000s)

Estimated Allowed Claims Estimated Recovery

Lower Higher Lower Higher

DIP ABL and DIP Term Loan FacilitiesDIP ABL $121,300 $121,300 $121,300 100.0% $121,300 100.0%DIP Term Loan 350,000 350,000 350,000 100.0% 350,000 100.0%Total 471,300 471,300 471,300 471,300

Senior SecuredFirst Lien Notes 2,429,465 2,429,465 251,490 10.4% 521,802 21.5%1.5 Lien Notes 230,156 230,156 0 0.0% 0 0.0%Second Lien Notes 593,533 593,533 0 0.0% 0 0.0%Total $3,253,154 $3,253,154 $251,490 $521,802


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17. 13.75% 1.5 Lien Notes include $225 million of 13.75% Second-Priority (junior to First Lien Notes) Senior Secured Notes due 2022 issued pursuant to an Indenture dated as of February 8, 2017, with Wilmington Trust, National Association, as indenture trustee and certain Debtors as guarantors.18

18. 9.00% Second Lien Notes include $574 million of 9.00% Second-Priority (junior to 1.5 Lien Notes) Senior Secured Notes due 2020 issued pursuant to an Indenture dated as of November 5, 2010, with Wilmington Trust Company as indenture trustee and certain Debtors as guarantors.19

ADMINISTRATIVE AND PRIORITY CLAIMS

19. Total Administrative and Priority Claims include proceeds that would be available to satisfy administrative and priority creditors under chapter 7 proceedings first, with any remaining proceeds going to satisfy claims of general unsecured creditors including deficiency claims of secured creditors. These administrative and priority claims include post-petition accounts payable, claims arising under section 503(b)(9) of the Bankruptcy Code, and unpaid tax and employee obligations. The conversion to chapter 7 may also result in other administrative claims that are difficult to forecast, including damages resulting from non-delivery of customer product and post-petition contract termination damages. The value of these claims is not included in the Liquidation Analysis.

Please see the table below highlighting recoveries to administrative, priority, and general unsecured claims.

LLC HSC Capital Corporation, Borden Chemical Foundry LLC, and Oilfield Technology Group Inc. were no longer entities as of the Filing Date. Further supplemental indentures updated the guarantors.

18 The guarantors included Hexion Inc., HSC Capital Corporation, Lawter International Inc., Oilfield Technology Group Inc., Hexion CI Holding Company (China) LLC, Hexion International Inc., Hexion Investments Inc., and NL Coop Holdings LLC. HSC Capital Corporation and Oilfield Technology Group Inc. were no longer entities as of the Filing Date. Further supplemental indentures updated the guarantors.

19 The guarantors included Hexion U.S. Finance Corp., Hexion Nova Scotia Finance, ULC, Momentive Specialty Chemicals Inc., Hexion CI Holding Company (China) LLC, HSC Capital Corporation, Lawter International Inc., Oilfield Technology Group Inc., Borden Chemical Foundry LLC, Borden Chemical Investments, Inc., Borden Chemical International, Inc., and NL Coop Holdings LLC. Hexion U.S. Finance Corp., Momentive Specialty Chemicals Inc., HSC Capital Corporation, Oilfield Technology Group Inc., Borden Chemical Foundry LLC, Borden Chemical Investments, Inc., and Borden Chemical International, Inc. were no longer entities as of the Filing Date. Further supplemental indentures updated the guarantors.

Summary of Recoveries to Administrative, Priority, and General Unsecured Claims($ in 000s)

Estimated Allowed Claims Estimated RecoveryLower Higher Lower Higher

Administrative and Priority ClaimsAdministrative Claims $135,405 $135,405 $135,405 100.0% $135,405 100.0%Priority Claims 50,676 50,676 50,676 100.0% 50,676 100.0%Total 186,080 186,080 186,080 186,080

General Unsecured Claims9.2% Borden Debentures 73,882 73,882 14 0.0% 3,465 4.7%7.875% Borden Debentures 190,686 190,686 35 0.0% 8,942 4.7%First Lien Deficiency Claims 2,177,975 1,907,665 400 0.0% 89,439 4.7%1.5 Lien and Second Lien Deficiency Claims 823,689 823,689 151 0.0% 38,618 4.7%All Other General Unsecured Claims 173,500 173,500 39 0.0% 8,079 4.7%Total $3,439,731 $3,169,421 $639 0.0% $148,543 4.7%


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GENERAL UNSECURED CLAIMS

20. 9.2% Borden Debentures include $73.6 million of 9.2% unsecured debentures due 2021 issued pursuant to an Indenture dated as of December 15, 1987, with the Bank of New York as indenture trustee and Borden, Inc. as guarantor.20

21. 7.875% Borden Debentures include $188.9 million of 7.875% unsecured debentures due 2023 issued pursuant to an Indenture with the Bank of New York as indenture trustee and Borden, Inc. as guarantor.21

22. General Unsecured Claims include unsecured trade claims, intercompany payables, secured lender deficiency claims, and employee benefits claims in excess of the allowed priority cap. If the Debtors enter chapter 7 proceedings, the Debtors estimate that incremental claims could arise by reason of the breach or rejection of obligations incurred under leases and executory contracts (including vendor and customer contracts) assumed or entered into by the Debtors prior to the filing of the chapter 7 cases; however, the value of those claims have not been estimated for the purpose of this Liquidation Analysis.

20 Borden, Inc. was no longer an entity as of the Filing Date. Further supplemental indentures updated the guarantors.

21 Borden, Inc. was no longer an entity as of the Filing Date. Further supplemental indentures updated the guarantors.


I. CALCULATION OF NET ESTIMATED PROCEEDS AVAILABLE FOR DISTRIBUTION

II. ALLOCATION OF NET ESTIMATED PROCEEDS AVAILABLE FOR DISTRIBUTION TO SECURED CLAIMS

III. ALLOCATION OF NET ESTIMATED PROCEEDS AVAILABLE FOR DISTRIBUTION TO ADMINISTRATIVE, PRIORITY, AND GENERAL UNSECURED CLAIMS


Exhibit I

VALUATION ANALYSIS

[see attached]


1

VALUATION ANALYSIS

THE VALUATION INFORMATION CONTAINED HEREIN IS NOT A PREDICTION OR GUARANTEE OF THE ACTUAL MARKET VALUE THAT MAY BE REALIZED THROUGH THE SALE OF ANY SECURITIES TO BE ISSUED PURSUANT TO THE PLAN. THIS VALUATION IS PRESENTED SOLELY FOR THE PURPOSE OF PROVIDING ADEQUATE INFORMATION AS REQUIRED BY SECTION 1125 OF THE BANKRUPTCY CODE TO ENABLE THE HOLDERS OF CLAIMS OR INTERESTS ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN TO MAKE AN INFORMED JUDGMENT ABOUT THE PLAN AND SHOULD NOT BE USED OR RELIED UPON FOR ANY OTHER PURPOSE, INCLUDING THE PURCHASE OR SALE OF CLAIMS AGAINST OR INTERESTS IN THE DEBTORS.

At the Debtors’ request, Moelis & Company LLC (“Moelis”) performed a valuation analysis of the Reorganized Debtors.

Based upon and subject to the review and analysis described herein, and subject to the assumptions, limitations and qualifications described herein, Moelis’ view, as of May 13, 2019, was that the estimated going concern enterprise value of the Reorganized Debtors, as of an assumed Effective Date for purposes of Moelis’ valuation analysis of July 1, 2019 (the “Assumed Effective Date”), would be in a range between $2,900 million and $3,300 million. The midpoint of our enterprise valuation range is $3,100 million. Based upon our range of estimated going concern enterprise value of the Reorganized Debtors of between $2,900 million and $3,300 million and assumed net debt of $1,7271 million as provided by the Debtors, the imputed estimate of the range of equity value for the Reorganized Debtors, as of the Assumed Effective Date, is between approximately $1,173 million and $1,573 million, with a midpoint estimate of $1,373 million.

Moelis’ views are necessarily based on economic, monetary, market, and other conditions as in effect on, and the information made available to Moelis as of the date of its analysis. It should be understood that, although subsequent developments may affect Moelis’ views, Moelis does not have any obligation to update, revise, or reaffirm its estimate.

Moelis’ analysis is based, at the Debtors’ direction, on a number of assumptions, including, among other assumptions, that (i) the Debtors will be reorganized in accordance with the Plan which will be effective on the Assumed Effective Date, (ii) the Reorganized Debtors will achieve the results set forth in the Debtors’ management’s Projections (as defined in this Disclosure Statement and attached as Exhibit G to this Disclosure Statement) for 2019 through 2023 provided to Moelis by the Debtors, (iii) the Reorganized Debtors’ capitalization and available cash will be as set forth in the Plan and this Disclosure Statement, and (iv) the Reorganized Debtors will be able to obtain all future financings, on the terms and at the times, necessary to achieve the results set forth in the Projections. Moelis makes no representation as to the achievability or reasonableness of such assumptions. In addition, Moelis assumed that there will be no material change in economic, monetary, market, and other conditions as in effect on, and the information made available to Moelis, as of the Assumed Effective Date.

Moelis assumed, at the Debtors’ direction, that the Projections prepared by the Debtors’ management were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Debtors’ management as to the future financial and operating performance of the Reorganized Debtors. The future results of the Reorganized Debtors are dependent upon various factors, many of which are beyond the control or knowledge of the Debtors, and consequently are inherently difficult to project. The Reorganized Debtors’ actual future results may

1 Assumes pro forma new debt of $1,641 million, foreign debt and sale leasebacks of $186 million and pro forma cash of $100 million as of July 1, 2019 (which is subject to a post-petition working capital normalization timing adjustment).


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differ materially (positively or negatively) from the Projections and, as a result, the actual enterprise value of the Reorganized Debtors may be materially higher or lower than the estimated range herein. Among other things, failure to consummate the Plan in a timely manner may have a materially negative impact on the enterprise value of the Reorganized Debtors.

The estimated enterprise value in this section represents a hypothetical enterprise value of the Reorganized Debtors as the continuing operators of the business and assets of the Debtors, after giving effect to the Plan, based on consideration of certain valuation methodologies as described below. The estimated enterprise value in this section does not purport to constitute an appraisal or necessarily reflect the actual market value that might be realized through a sale or liquidation of the Reorganized Debtors, their securities or their assets, which may be materially higher or lower than the estimated enterprise value range herein. The actual value of an operating business such as the Reorganized Debtors’ business is subject to uncertainties and contingencies that are difficult to predict and will fluctuate with changes in various factors affecting the financial condition and prospects of such a business.

In conducting its analysis, Moelis, among other things: (i) reviewed certain publicly available business and financial information relating to the Reorganized Debtors that Moelis deemed relevant; (ii) reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities, and prospects of the Reorganized Debtors, including the Projections, furnished to Moelis by the Debtors; (iii) conducted discussions with members of senior management and representatives of the Debtors concerning the matters described in clauses (i) and (ii) of this paragraph, as well as their views concerning the Debtors’ business prospects before giving effect to the Plan, and the Reorganized Debtors’ business and prospects after giving effect to the Plan; (iv) reviewed publicly available financial and stock market data for certain other companies in lines of business that Moelis deemed relevant; (v) reviewed publicly available financial data for certain transactions that Moelis deemed relevant; (vi) reviewed a draft of the Plan dated April 24, 2019; and (vii) conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate. In connection with its review, Moelis did not assume any responsibility for independent verification of any of the information supplied to, discussed with, or reviewed by Moelis and, with the consent of the Debtors, relied on such information being complete and accurate in all material respects. In addition, at the direction of the Debtors, Moelis did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, tax-related or otherwise) of the Reorganized Debtors, nor was Moelis furnished with any such evaluation or appraisal. Moelis also assumed, with the Debtors’ consent, that the final form of the Plan does not differ in any respect material to its analysis from the final draft that Moelis reviewed.

The estimated enterprise value in this section does not constitute a recommendation to any Holder of a Claim or Interest as to how such Holder of a Claim or Interest should vote or otherwise act with respect to the Plan. Moelis has not been asked to and does not express any view as to what the trading value of the Reorganized Debtors’ securities would be when issued pursuant to the Plan or the prices at which they may trade in the future. The estimated enterprise value set forth herein does not constitute an opinion as to fairness from a financial point of view to any Holder of a Claim or Interest of the consideration to be received by such Holder of a Claim or Interest under the Plan or of the terms and provisions of the Plan.


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Valuation Methodologies

In preparing its valuation, Moelis performed a variety of financial analyses and considered a variety of factors. The following is a brief summary of the material financial analyses performed by Moelis, which consisted of (a) a discounted cash flow analysis, (b) a selected publicly traded companies analysis, and (c) a selected precedent transactions analysis. This summary does not purport to be a complete description of the analyses performed and factors considered by Moelis. The preparation of a valuation analysis is a complex analytical process involving various judgmental determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to particular facts and circumstances, and such analyses and judgments are not readily susceptible to summary description. As such, Moelis’ valuation analysis must be considered as a whole. Reliance on only one of the methodologies used, or portions of the analysis performed, could create a misleading or incomplete conclusion as to enterprise value.

A. Discounted Cash Flow Analysis. The discounted cash flow (“DCF”) analysis is an enterprise valuation methodology that estimates the value of an asset or business by calculating the present value of expected future cash flows to be generated by that asset or business plus a present value of the estimated terminal value of that asset or business. Moelis’ DCF analysis used the Projections’ estimated debt-free, after-tax free cash flows through December 31, 2023. These cash flows were then discounted at a range of estimated weighted average costs of capital (“Discount Rate”) for the Reorganized Debtors. In determining the estimated terminal value of the Reorganized Debtors, Moelis relied upon the perpetuity growth method which estimates a range of values of the Reorganized Debtors at the end of the Projection period based on applying a perpetuity growth rate to final year cash flows. The range of growth rates was selected based on estimates of a global chemical market growth rate and domestic and international GDP growth rates.

To determine the Discount Rate, Moelis used the estimated cost of equity and the estimated after-tax cost of debt for the Reorganized Debtors, assuming a targeted, long-term, debt-to-total capitalization ratio (based on debt-to-capitalization ratios of the selected publicly traded companies). Moelis calculated the cost of equity based on (i) the capital asset pricing model, which assumes that the expected equity return is a function of the risk-free rate, equity risk premium, and the correlation of the stock performance of the selected publicly traded companies to the return on the broader market, and (ii) an adjustment related to the estimated equity market capitalization of the Reorganized Debtors, which reflects the historical equity risk premium of small, medium, and large equity market capitalization companies.

B. Selected Publicly Traded Companies Analysis. The selected publicly traded companies analysis is based on the enterprise values of selected publicly traded diversified chemical companies that have operating and financial characteristics comparable in certain respects to the Reorganized Debtors. For example, such characteristics may include similar size and scale of operations, end-market exposure, product mix (specialty vs. commodity), go-to-market strategies, competitive dynamics, operating margins, growth rates, and geographical exposure. Under this methodology, certain financial multiples that measure financial performance and value are calculated for each selected company. Moelis then determined a reference range utilizing such multiples, based on its experience and judgement, which it applied to certain of the Reorganized Debtors’ financial metrics to imply an estimated enterprise value for the Reorganized Debtors. Moelis used, among other measures, enterprise value (defined as market value of equity, plus book value of debt and book value of preferred stock and minority interests, less cash, subject to adjustments for underfunded pension and retirement obligations and other items where appropriate) for each selected company as a multiple of such company’s publicly available consensus projected EBITDA for fiscal years 2019 and 2020.

Although the selected companies were used for comparison purposes, no selected publicly traded company is either identical or directly comparable to the business of the Reorganized Debtors. Accordingly, Moelis’


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comparison of selected publicly traded companies to the business of the Reorganized Debtors and analysis of the results of such comparisons was not purely mathematical, but instead involved considerations and judgments concerning differences in operating and financial characteristics and other factors that could affect the relative values of the selected publicly traded companies and the Reorganized Debtors. The selection of appropriate companies for this analysis is a matter of judgment and subject to limitations due to sample size and the public availability of meaningful market-based information.

C. Selected Precedent Transactions Analysis. The selected precedent transactions analysis is based on the implied enterprise values of companies and assets involved in publicly disclosed merger and acquisition transactions for which the targets had operating and financial characteristics comparable in certain respects to the Reorganized Debtors. Under this methodology, a multiple is derived using the enterprise value of each such target, calculated as the consideration paid and the net debt assumed in the merger or acquisition transaction relative to a financial metric, in this case, EBITDA for the Reorganized Debtors, respectively, for the last twelve month period for which financial results have been publicly announced. Moelis then determined a reference range utilizing such multiples, based on its experience and judgement, which it applied to certain of the Reorganized Debtors’ financial metrics to imply an estimated enterprise value range for the Reorganized Debtors. Moelis analyzed various merger and acquisition transactions that have occurred in the chemicals sector since 2012. Moelis limited its analysis to transactions since 2012, because the sector environment in the period prior to 2012 was materially different than the environment today.

Other factors not directly related to a company’s business operations can affect a valuation in a transaction, including, among others factors, the following: (a) circumstances surrounding a merger transaction may introduce diffusive quantitative results into the analysis (e.g., a buyer may pay an additional premium for reasons that are not solely related to competitive bidding); (b) the market environment is not identical for transactions occurring at different periods of time; (c) circumstances pertaining to the financial position of the company may have an impact on the resulting purchase price (e.g., a company in financial distress may receive a lower price due to perceived weakness in its bargaining leverage); and (d) the ongoing tax environment at the time of the transaction.


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Reorganized Debtors - Valuation Considerations

The estimated enterprise value in this section is not necessarily indicative of actual value, which may be significantly higher or lower than the ranges set forth herein. Accordingly, none of the Debtors, Moelis or any other person assumes responsibility for the accuracy of such estimated enterprise value. Depending on the actual financial results of the Debtors or changes in the economy and the financial markets, the enterprise value of the Reorganized Debtors as of the Assumed Effective Date may differ from the estimated enterprise value set forth herein as of an Assumed Effective Date of July 1, 2019. In addition, the market prices, to the extent there is a market, of Reorganized Debtors’ securities will depend upon, among other things, prevailing interest rates, conditions in the economy and the financial markets, the investment decisions of prepetition creditors receiving such securities under the Plan (some of whom may prefer to liquidate their investment rather than hold it on a long-term basis), and other factors that generally influence the prices of securities.
