RESTRUCTURING SUPPORT AGREEMENT

Obligations of the Company. Until the Termination Date (as defined below), the Company, jointly and severally, agrees to take any and all necessary and appropriate actions in furtherance of the Restructuring contemplated under this Support Agreement and the Term Sheet, including (i) to commence reorganization cases (the “Chapter 11 Cases”) by filing voluntary petitions under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York, White Plains (the “Bankruptcy Court”); (ii) to file and seek approval on an interim and final (to the extent applicable) basis of “first day” motions (including a motion seeking approval of a post-petition credit facility (the “DIP Facility”) and use of cash pledged as collateral, all of which shall be in form and substance acceptable to the Requisite Investors (as defined below); (iii) to file with the Bankruptcy Court and seek approval of a joint chapter 11 plan of reorganization consistent with the terms of the Term Sheet (the “Plan”), and a related disclosure statement (the “Disclosure Statement”), the Plan and Disclosure Statement, including any amendments, modifications and supplements thereto, with the consent of the Requisite Investors, all of which shall be in form and substance satisfactory to the Requisite Investors; (iv) to the extent exigencies permit, to provide copies of any and all materials and pleadings to be filed in the Chapter 11 Cases to counsel for the Plan Support Parties in advance of filing with the Bankruptcy Court and such materials and pleadings shall be in form and substance reasonably satisfactory to the Requisite Investors; (v) to provide copies of any financial reporting information or any other

Obligations of Apollo Entities and Consenting Noteholders. Until the Termination Date, each Apollo Entity and Consenting Noteholder, severally and not jointly, in its capacity as a holder of Second Lien Notes, or in any other capacity, hereby agrees to: (i) when, and to the extent, solicited, and subject to the acknowledgements set forth in Section 7 hereof, vote all Second Lien Notes, or any other Holdings (as defined below), now or hereafter beneficially owned by such holder or for which such holder now or hereafter serves as the nominee, investment manager or advisor for beneficial holders, if applicable, and for which such holder has voting power, in favor of the Plan and not change or withdraw (or cause to be changed or withdrawn) such vote; (ii) not object to, or support any other person’s efforts to oppose or object to, in each case, directly or indirectly, confirmation of the Plan, this Support Agreement, the Restructuring or any of the transactions contemplated herein; (iii) not object to, directly or indirectly, the “first day” motions and other motions consistent with this Support Agreement and the Term Sheet, filed by the Company in furtherance of the Restructuring, including motions to preserve or extend exclusivity to dates consistent with the dates provided for in Section 2.1 hereof, if applicable; (iv) refrain from taking any action that is materially inconsistent with, or that would materially delay or impede approval, confirmation or consummation of the Restructuring or the Plan, or that is otherwise inconsistent with the terms of this Support Agreement and the Term Sheet or any of the transactions contemplated herein; and (v) not, directly or indirectly, propose, support, solicit, encourage, initiate or participate in any offer or proposal from, or enter into any agreement with, any person or entity concerning any actual or proposed Alternative Transaction. Notwithstanding anything else in this Support Agreement, in the event of a termination of this Support

This Support Agreement shall be governed by and construed in accordance with the laws of the State of New York and without regard to any conflicts of law provision or principle that would require or permit the application of the law of any other jurisdiction. By its execution and delivery of this Support Agreement, each Party hereby irrevocably and unconditionally agrees for itself that, subject to Section 8.7(c) hereof, any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Support Agreement or for

RIGHTS OFFERING

This Term Sheet describes, among other things, the proposed rights offering (the “Rights Offering”) for [    ]% of the shares (the “Rights Offering Shares”) of New Common Stock (as defined below) issued and outstanding on the Effective Date (as defined below) for an aggregate purchase price of $600 million (the “Rights Offering Amount”) at a price per share (the “Per Share Price”) to be determined using an enterprise value of $2.2 billion (the “Enterprise Value”) and the pro forma restructured capital structure and applying a 15% discount (the “Discount to Equity Value”) to the equity value thereto (after giving effect to the Rights Offering).

The Rights Offering shall be implemented in connection with a plan of reorganization in chapter 11 cases to be filed by Holdings and certain of its affiliates (collectively, the “Debtors”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), which plan of reorganization shall be consistent with this Term Sheet and otherwise in form and substance acceptable to the Requisite Investors (inclusive of the Plan Supplement referred to below, the “Plan of Reorganization”).

The issuance of the Subscription Rights (as defined below) and the issuance of shares of New Common Stock upon the exercise thereof shall be exempt from the registration requirements of the securities laws as a result of section 1145 of the Bankruptcy Code or Section 4(a)(2) of the Securities Act of 1933. A shelf registration statement will be filed for the resale of such shares as described in the section titled “Registration of New Common Stock” herein.

Subject to the terms of the Backstop Commitment Agreement (as defined below), in connection with the Rights Offering, each Investor (as defined below) commits (such commitment, the “Backstop Commitment”) to purchase (on a several and not joint basis) the Rights Offering Shares (based on the Per Share Price) that are not purchased by the Second Lien Noteholders (as defined below) as part of the Rights Offering based initially on a percentage to be set forth in the Backstop Commitment Agreement, which percentage shall be based on the amount of Second Lien Notes (as defined below) held by such Investor relative to the aggregate amount of Second Lien Notes held by all Investors on the date the RSA is executed by the Investors (such percentage, the “Backstop Commitment Percentage”). The amount of each Investor’s Backstop Commitment may be adjusted in accordance with the terms herein.

The “Investors” (individually, an “Investor”) are the members of the Ad Hoc Group and certain of their affiliates, and Apollo Global Management, LLC and certain of its affiliated funds who hold Second Lien Notes (collectively, “Apollo”).

All amounts payable to the Investors in their capacities as such for the Backstop Commitment Premium (as defined below) shall be paid pro rata based on the amount of their respective Backstop Commitments on the Effective Date.

“Requisite Investors” means (a) members of the Ad Hoc Group holding at least a majority of the aggregate Backstop Commitments provided by all members of the Ad Hoc Group as of the date on which the consent of such members is solicited and (b) Apollo; provided that in the case of a consent to changes in respect of the Enterprise Value, the Discount to Equity Value, and the Backstop Commitment Premium, in each case, solely with respect to the Rights Offering (the “Specific Economic Terms”), “Requisite Investors” means solely members of the Ad Hoc Group holding at least a majority of the aggregate of the Backstop Commitments provided by all members of the Ad Hoc Group as of the date on which the consent of such members is solicited.

If there is a change to a Specific Economic Term or to the maturity of the Backstop Commitment, then any non-consenting Investor, including Apollo, if applicable, (a “Non-Consenting Investor”) may elect, within 7 calendar days of such change being made, to withdraw from its Backstop Commitment. If one or more Non-Consenting Investors elect to withdraw from the Backstop Commitment, then such Non-Consenting Investor(s) shall no longer be a party to the Backstop Commitment Agreement or the RSA.

Each Investor that is a member of the Ad Hoc Group other than any Non-Consenting Investors shall assume the Backstop Commitment(s) of any Non-Consenting Investor(s) (on a pro rata basis based on the Backstop Commitments of all Investors that are members of the Ad Hoc Group other than such Non-Consenting Investor(s) at the time of such election to withdraw).

“New Common Stock” means the common stock to be issued by the reorganized Company pursuant to the Plan of Reorganization and outstanding upon the occurrence of the effective date of the Plan of Reorganization consistent with the terms hereof (the “Effective Date”). At the option of the Requisite Investors, the New Common Stock may be issued by Momentive Performance Materials, Inc. (“MPM”), Holdings or a newly formed standalone entity, which is unaffiliated with Momentive Specialty Chemicals Inc. (“MSC”) (other than on account of any New Common Stock issued to Apollo pursuant to the Plan of Reorganization) and of which the reorganized Company (or reorganized MPM if so determined by the Requisite Investors) is a wholly owned subsidiary. In any case, reorganized MPM, reorganized Holdings or the new holding entity (the entity issuing the New Common Stock, the “Reorganized Company”) shall issue all of its equity interests in accordance with the terms herein and such entity shall directly or indirectly own 100% of each of the other Reorganized Debtors.

The Reorganized Company shall be a standalone entity that is unaffiliated with MSC (other than on account of any New Common Stock issued to Apollo pursuant to the Plan of Reorganization); provided, however, that the form of such entity shall be satisfactory to the Requisite Investors and the Debtors.

Upon consummation of the Plan of Reorganization, shares of New Common Stock will be issued (x) in connection with the Rights Offering, and (y) as distributions to creditors under the Plan of Reorganization, plus such additional shares of New Common Stock as may be required to be issued on the Effective Date in connection with the payment of the Backstop Commitment Premium, and as acceptable to the Requisite Investors, and in each case, only as specifically set forth herein.

The Debtors shall implement the Rights Offering through customary subscription documentation and procedures that are in form and substance acceptable to the Debtors and the Requisite Investors. The offering period for the Rights Offering (the “Offering Period”) shall be acceptable to the Requisite Investors.

The number of shares of New Common Stock issued to the Investors pursuant to the Backstop Commitments (the “Backstop Shares”) will be determined by the rights agent (an agent appointed by the Debtors, and acceptable to the Requisite Investors, to administer the Rights Offering) consistent with the terms hereof.

Subscription Rights for the Rights Offering will be exercisable during the Offering Period by completing and returning to the rights agent the applicable subscription form and paying the Per Share Price by wire transfer of immediately available funds to an account designated by the rights agent prior to the expiration of the Offering Period.

If the Rights Offering is terminated for any reason, the funded amounts will be refunded to the applicable participant, without interest, as soon as practicable following termination of the Rights Offering.

The exercise of a Subscription Right will be irrevocable unless the Rights Offering is not consummated by the date on which the Backstop Commitment Agreement is terminated. There will be no oversubscription rights under the Rights Offering.

The Investors and the Debtors shall enter into an agreement, consistent with this Term Sheet and otherwise in form and substance acceptable to the Requisite Investors and the Debtors, setting forth the terms and conditions of the Backstop Commitments (the “Backstop Commitment Agreement”).

The Debtors will pay the Investors a backstop premium equal to 5.0% of the Rights Offering Amount, without application of the Discount to Equity Value, which, so long as the Plan of Reorganization is consummated in accordance with the terms hereof, shall be paid in New Common Stock (the “Backstop Commitment Premium”), free and clear of all withholding or deduction for any applicable taxes; provided, that to the extent the Backstop Commitment Agreement is terminated in accordance with the terms thereof (other than as a result of a breach thereof by the Investors), the Backstop Commitment Premium shall be paid in cash.

The Backstop Commitment Premium (to the extent required to be paid in cash as set forth above) and the Expense Reimbursement (as defined below) shall constitute allowed administrative expenses of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code, by order of the Bankruptcy Court entered within 60 days of the Petition Date (as defined below).

The Debtors will pay (i) the reasonable documented fees and expenses of the Ad Hoc Group related to counsel, financial advisor, and consultants and other professionals for specialized areas of expertise as circumstances warrant, retained by the Ad Hoc Group, that have been and are incurred in connection with negotiation, preparation and implementation of the Rights Offerings, the Plan of Reorganization and any related efforts, (ii) the reasonable documented fees and expenses of Apollo related to one counsel and one financial advisor, retained by Apollo, that have been and are incurred solely with respect to Apollo’s capacity as an Investor, and (iii) the reasonable documented fees and expenses of each member of the Ad Hoc Group not to exceed $1 million in the aggregate for all such members, including the reasonable documented fees and expenses of professionals, including consultants, retained by each Investor, that have been incurred prior to April 1, 2014, in connection with performing diligence with respect to the Second Lien Notes (such payment obligations, collectively, the “Expense Reimbursement”).

The Expense Reimbursement accrued through the date on which the BCA Approval Order (as defined below) is entered shall be paid within one business day of such date. Thereafter, the Expense Reimbursement shall be payable by the Debtors as required by the Backstop Commitment Agreement.

New Common Stock issued to the Investors and the Second Lien Noteholders pursuant to the Plan of Reorganization and the Rights Offering. The Reorganized Company shall agree to use its reasonable best efforts to maintain continuously an effective resale registration statement until the second anniversary of the Effective Date.

On or following the second anniversary of the Effective Date, holders of not less than 25% of the outstanding shares of New Common Stock shall have the right to cause the Reorganized Company to file a registration statement registering for an initial public offering of shares of New Common Stock held by such Investors, to use its reasonable best efforts to consummate an initial public offering of such New Common Stock and to use its reasonable best efforts to cause the New Common Stock to be listed on the New York Stock Exchange or The Nasdaq Global Market or any successor exchange.

On the Effective Date, the Debtors will provide registration rights, including demand registration rights exercisable following the Reorganized Company’s IPO, piggy-back registration rights and other customary rights, to each stockholder that owns a minimum percentage of the outstanding New Common Stock or that cannot sell all of its shares under Rule 144 of the Securities Act without restriction in a single sale, subject to restrictions and conditions to be in form and substance satisfactory to the Debtors and the Requisite Investors.

The number of demand registrations, the threshold and timing for exercising a demand registration, holdback and blackout provisions and other customary terms will be as negotiated between the Debtors and the Investors in connection with the execution of the Backstop Commitment Agreement, which terms shall be customary for this type of transaction and set forth in a term sheet attached to the Backstop Commitment Agreement.

The Reorganized Company shall provide quarterly financials and hold quarterly earnings calls.

The Debtors shall file as part of the Plan Supplement a form of registration rights agreement (the “Registration Rights Agreement”), to which each holder of New Common Stock receiving control or restricted securities will be a party, governing such registration rights, which agreement shall be in form and substance consistent with such term sheet and otherwise acceptable to the Requisite Investors and the Debtors. The Registration Rights Agreement will provide that no provision therein may be amended except in a written instrument signed by the holders of 66 2/3% of the shares held by the stockholders who are parties to the Registration Rights Agreement; provided, that the rights described in the first two paragraphs of this section cannot be limited or removed without the approval of (i) Apollo and (ii) holders of at least 50.1% of the shares of New Common Stock not held by Apollo.

Second Lien Note Claims (as defined below) shall be freely transferable by the Investors, subject to the terms and conditions of the RSA.

If any Investor (the “Transferring Investor”) transfers, directly or indirectly, any Second Lien Note Claims, whether through a derivative instrument or

otherwise, then each other Investor that is a member of the Ad Hoc Group (a “Non-Transferring Investor”) may elect, within 5 business days of receipt of written notice of such transfer, to assume its Assumable Share of the Assumable Amount of the Transferring Investor’s Backstop Commitment. To the extent that not all Non-Transferring Investors have elected to assume their Assumable Share of the Assumable Amount, each Non-Transferring Investor that elected to assume its Assumable Share of the Assumable Amount may elect to assume the remaining portion of the Assumable Amount on a pro rata basis by amount of Backstop Commitment at the time of such election with all other Non-Transferring Investors so electing to assume such remaining portion. If, as a result of Non-Transferring Investors assuming the Assumable Share of the Transferring Investor’s Backstop Commitment, the Transferring Investor no longer has any Backstop Commitment, then the Transferring Investor shall no longer be a party to the Backstop Commitment Agreement.

Each Transferring Investor shall provide notice of all transfers and acquisitions, whether direct or indirect, of Second Lien Note Claims, whether through a derivative instrument or otherwise, made by it and the aggregate principal amount of Second Lien Note Claims held by it immediately following such transfer or acquisition to the Company, Milbank, Tweed, Hadley & McCloy LLP, Houlihan Lokey Capital, Inc., Akin Gump Strauss Hauer & Feld LLP, and Lazard Frères & Co. LLC, in each case, within 2 business days of the date of such transfer or acquisition.

“Assumable Amount” means, with respect to any transfer of Second Lien Note Claims by a Transferring Investor, an amount equal to the applicable Assumable Percentage multiplied by such Transferring Investor’s Backstop Commitment.

“Assumable Percentage” means, with respect to any Transferring Investor, the ratio (expressed as a percentage) of (i) an amount equal to the difference between (A) the aggregate principal amount of Second Lien Note Claims held by such Transferring Investor on the Measuring Date and (B) the aggregate principal amount of Second Lien Note Claims held by such Transferring Investor immediately following such transfer to (ii) the aggregate principal amount of Second Lien Note Claims held by such Transferring Investor on the RSA Execution Date; provided, however, that (x) if, following any transfer of Second Lien Note Claims, a Transferring Investor holds more in aggregate principal amount of Second Lien Note Claims than the Trigger Amount, then such ratio shall be 0% and (y) if, following any transfer of Second Lien Note Claims, a Transferring Investor holds less in aggregate principal amount of Second Lien Note Claims than the Fall Away Amount, then such ratio shall be 100%.

“Assumable Share” means, with respect to any Non-Transferring Investor, the proportion that the amount of such Non-Transferring Investor’s Backstop Commitment at the time of the applicable election bears to the aggregate Backstop Commitments of all Non-Transferring Investors at the time of the applicable election.

“RSA Execution Date” means the date of execution of the RSA by the Investors.

“Fall Away Amount” means, with respect to any Transferring Investor, an amount equal to the aggregate principal amount of Second Lien Note Claims held by such Transferring Investor on the RSA Execution Date less $20 million.

“Trigger Amount” means, with respect to any Transferring Investor, an amount equal to the aggregate principal amount of Second Lien Note Claims held by such Transferring Investor on the RSA Execution Date less $5 million.

“Measuring Date” means (i) on the RSA Execution Date and until immediately following the first time a Transferring Investor holds less in aggregate principal amount of Second Lien Note Claims than the Trigger Amount, the RSA Execution Date and (ii) thereafter, with respect to any transfer, the date following the RSA Execution Date but prior to the time of such transfer upon which such Transferring Investor held the least in aggregate principal amount of Second Lien Note Claims.

Subscription Rights are not directly or indirectly, separately transferable or detachable from the Second Lien Note Claims, whether through a derivative instrument or otherwise.

Each Investor’s Backstop Commitment shall be non-transferable; provided, however, that an Investor may transfer its Backstop Commitment between and among (i) its affiliated investment funds or (ii) any special purpose vehicle that is wholly-owned by such Investor or its affiliated investment funds, created for the purpose of holding such Backstop Commitment or holding debt or equity of the Debtors, and with respect to which the Investor either (i) has provided an equity support letter or a guarantee of such special purpose vehicle’s Backstop Commitment or (ii) otherwise remains obligated to fund the applicable Backstop Commitment until the consummation of the Plan of Reorganization; provided further, however, that any such special purpose vehicle shall not be related to or affiliated with any portfolio company of such Investor or any of its affiliates or affiliated funds (other than solely by virtue of its affiliation with an Investor), and the sale of the equity of such special purpose vehicle shall be subject to the same transferability restrictions set forth herein. For the avoidance of doubt, an Investor may not transfer its Backstop Commitment to one or more of the portfolio companies of such Investor or any of its affiliates or affiliated funds.

The Backstop Commitment Agreement shall provide that the Investors agree that any Investor that fails to timely fund its Backstop Commitment (a “Defaulting Investor”) will be liable for the consequences of its breach and that the parties to the Backstop Commitment Agreement can enforce rights of damages and/or specific performance upon the failure to timely fund by the Defaulting Investor.

The Backstop Commitment Agreement shall contain customary representations and warranties on the part of the Debtors, including:

•   Corporate organization and good standing;

•   Requisite corporate power and authority with respect to execution and delivery of transaction documents;

•   Due execution and delivery and enforceability of transaction documents;

•   Due issuance and authorization of New Common Stock;

•   No governmental consents (other than Bankruptcy Court approval);

•   No conflicts; and

•   Other representations and warranties to be agreed upon by the Company and the Requisite Investors.

The Backstop Commitment Agreement shall contain customary representations and warranties on the part of the Investors, to be provided severally and not jointly, including:

•   Corporate organization and good standing;

•   Requisite corporate power and authority with respect to execution and delivery of transaction documents;

•   Due execution and delivery and enforceability of transaction documents;

•   Acknowledgement of no registration under the Securities Act;

•   Acquiring Backstop Shares, if any, for investment purposes, and not with a view to distribution in violation of the Securities Act;

•   No consents or approvals;

•   Accredited investor or qualified institutional buyer;

•   Due diligence has been performed; and

•   Other representations and warranties to be agreed upon by the Company and the Requisite Investors.

to preserve intact their current material business organizations, keep available the services of their current officers and employees and preserve their material relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with the Company or its subsidiaries and (y) shall not, and shall not permit its subsidiaries to, enter into any transactions which are material to the Company, other than transactions in the ordinary course of business that are consistent with the parameters described in the Backstop Commitment Agreement. Amendments to the SSA or modifications to the Allocation Percentage (as referred to below) shall not be considered to be in the ordinary course of business.

The Backstop Commitments will be subject to customary conditions precedent (the “Conditions Precedent”), including:

(i)       the Bankruptcy Court shall have entered orders, in each case, in form and substance acceptable to the Requisite Investors, (x) approving a disclosure statement with respect to the Plan of Reorganization and approving the procedures with respect to the Rights Offering and the solicitation with respect to the Plan of Reorganization which are in form and substance acceptable to the Requisite Investors (the “Solicitation Order”), (y) authorizing the Company (on behalf of itself and the other Debtors) to execute and deliver the Backstop Commitment Agreement and authorizing and approving the payment of the Backstop Commitment Premium and the Expense Reimbursement and the indemnification provisions contained therein (the “BCA Approval Order”), and (z) authorizing and approving the RSA (the “RSA Approval Order”) and its assumption by the Company;

(ii)      the Bankruptcy Court shall have entered an order, in form and substance satisfactory to the Requisite Investors, confirming the Plan of Reorganization (the “Confirmation Order”) and no order staying the Confirmation Order shall be in effect;

(iii)     the effective date of the Plan of Reorganization shall have occurred in accordance with the terms and conditions therein and in the Confirmation Order;

(iv)     (X) a CEO, CFO and General Counsel shall be employed, either on an interim or permanent basis, each of whom is an employee solely of the Reorganized Company and is not affiliated with or employed by any competitor of the Reorganized Company, including MSC, and the selection of whom is satisfactory to the Requisite Investors, and (Y) the Reorganized Company’s charter shall provide that the Reorganized Company shall not be a party to a merger or other business combination transaction (whether effected by way of merger, sale of a majority of the equity, or the sale of all or substantially all of the assets of the Reorganized Company and its subsidiaries) until a permanent CEO has been appointed and who has reviewed the proposed terms and conditions of such transaction;

(v)      the Registration Rights Agreement shall have been executed and shall be effective by its terms; the Backstop Commitment Agreement shall have been executed and shall be effective by its terms;

(vi)     the Debtors shall have paid all Expense Reimbursements pursuant to, and in accordance with, the Backstop Commitment Agreement;

(vii)    any applicable HSR waiting period shall have expired and all other regulatory consents and notices shall have been obtained or filed;

(viii)  there has been no Material Adverse Change (to be defined in the Backstop Commitment Agreement, which definition shall be in form and substance acceptable to the Company and the Requisite Investors, but will not include the bankruptcy filing or any events arising out of or related to the bankruptcy filing); and

(ix)     other customary conditions precedent to be in form and substance satisfactory to the Requisite Investors and the Debtors.

Upon the occurrence of a Termination Event (as defined below), all of the Investors’ obligations under the Backstop Commitment Agreement and the RSA shall automatically terminate, unless such Termination Event is otherwise waived or extended by the Requisite Investors.

A “Termination Event” shall mean the occurrence of any of the following:

(i)       11:59 p.m. (New York City time) on April 13, 2014, unless the Debtors have commenced cases under chapter 11 of the Bankruptcy Code (the date of such commencement, the “Petition Date”);

(ii)      3 days after the Petition Date, unless prior thereto the Bankruptcy Court enters an interim order authorizing the Debtors to enter into the DIP Financing (as defined below) and use cash collateral, and scheduling a final hearing with respect to such matters;

(iii)     11:59 p.m. (New York City time), April 28, 2014, unless the Backstop Commitment Agreement has been executed and filed with the Bankruptcy Court by such time and date;

(iv)     60 days after the Petition Date, unless prior thereto the Bankruptcy Court enters the RSA Approval Order, the BCA Approval Order, and procedures with respect to the Rights Offering, in each case in form and substance mutually satisfactory to the Debtors and the Requisite Investors;

(v)      60 days after the Petition Date, unless prior thereto the Bankruptcy Court enters a final order authorizing the Debtors to enter into the DIP Financing and use cash collateral;

(vi)     75 days after the Petition Date, unless prior thereto the Bankruptcy Court has entered the Solicitation Order, in form and substance mutually satisfactory to the Debtors and the Requisite Investors;

(vii)    75 days after the Petition Date, unless prior thereto, the amendment to the SSA contemplated under “Shared Services Agreement” below is agreed to with MSC, which amendment shall be assumed pursuant to the Plan of Reorganization, unless such date is waived or extended by Investors other than Apollo holding a majority of the Backstop Commitments by amount of Investors other than Apollo;

(viii)  120 days after the Petition Date, unless prior thereto the Bankruptcy Court enters the Confirmation Order;

(ix)     180 days after the Petition Date, unless prior thereto the effective date of the Plan of Reorganization has occurred and the Rights Offering has been consummated; provided, however, if any Investor fails to consent to a waiver or extension of such 180-day period within 7 calendar days of such request being made, such Investor shall be deemed to be a Non-Consenting Investor who has elected to withdraw from its Backstop Commitment in accordance with the terms and conditions set forth above and shall no longer be a party to the Backstop Commitment Agreement or the RSA.;

(x)      the Backstop Commitment Agreement is terminated in accordance with its terms or there is a material breach of the Backstop Commitment Agreement by the Debtors (to the extent not otherwise cured or waived in accordance with the terms thereof);

(xi)     the RSA to which the Debtors and the Investors are party is terminated in accordance with its terms;

(xii)    the Solicitation Order, the BCA Approval Order or the RSA Approval Order is reversed, stayed, dismissed, vacated or reconsidered or is modified or amended without the Requisite Investors’ prior written consent;

(xiii)  the Debtors, directly or indirectly, take any action that is inconsistent with, or is intended or is reasonably likely to interfere with or impede or delay consummation of, the RSA, the Restructuring (as defined in the RSA), the transactions embodied in this Term Sheet, the Rights Offering, or the Plan of Reorganization, including, but not limited to, soliciting or causing or allowing any of its agents or representatives to solicit, encouraging or initiating any offer or proposal from, or entering into any agreement with, any person or entity concerning any actual or proposed chapter 11 plan or restructuring transaction (including, for the avoidance of doubt, a transaction premised on one or more asset sales under section 363 of the Bankruptcy Code or pursuant to a plan) other than the Restructuring, or filing any pleading or document with respect to, or proposing, joining in, or participating in the formation of, any actual

or proposed chapter 11 plan or restructuring transaction other than the Restructuring, including, without limitation, (a) any chapter 11 plan, reorganization, restructuring, or liquidation involving Holdings or any of the Debtors, (b) the issuance, sale, or other disposition of any equity or debt interests, or any material assets, of Holdings or any of the Debtors, or (c) a merger, sale, consolidation, business combination, recapitalization, refinancing, share exchange, rights offering, debt offering, equity investment, or similar transaction (including the sale of all or substantially all of the assets of Holdings or the Debtors whether through one or more transactions) involving Holdings or any of the Debtors (an “Alternative Transaction”) or the Bankruptcy Court approves or authorizes an Alternative Transaction at the request of any party in interest;

(xiv)   one or more of the Apollo Entities materially breaches its obligations under the RSA or one or more of the Consenting Noteholders materially breaches its obligations under the RSA, such that the non-breaching Consenting Noteholders and the non-breaching Apollo Entities at any time hold collectively less than 66 2/3% of the principal amount of all Second Lien Notes;

(xv)    the amendment or modification of the RSA, the DIP Financing, the Backstop Commitment Agreement, the Rights Offering procedures, the Plan of Reorganization, the Disclosure Statement or any documents related to the Plan of Reorganization, notices, exhibits or appendices, or any of the Definitive Documentation (as defined in the RSA), without the consent of the Requisite Investors;

(xvi)   (a) an Event of Default (as that term is defined in the DIP Financing) of the DIP Financing that is not waived by the lenders thereunder, (b) an acceleration of the obligations or termination of commitments under the DIP Financing, (c) the termination or revocation or other challenge of any interim or final debtor in possession financing and/or cash collateral order entered in the Debtors’ chapter 11 cases, or (d) a modification or amendment of any interim or final debtor in possession financing and/or cash collateral order entered in the Debtors’ chapter 11 cases that is not satisfactory, in their sole discretion, to the Requisite Investors;

(xvii) any of the orders approving the RSA, the DIP Financing (including the use of cash collateral), the Backstop Commitment Agreement, the Rights Offering procedures, the Plan of Reorganization or the Disclosure Statement, or the Confirmation Order are reversed, stayed, dismissed, vacated or reconsidered or modified or amended without the consent of the Requisite Investors or a motion for reconsideration, reargument or rehearing is granted;

(xviii)any court of competent jurisdiction or other competent governmental or regulatory authority issues a final, non-appealable order making illegal or otherwise preventing or prohibiting the consummation of the transactions contemplated in this Term Sheet or any of the Definitive Documentation in a way that cannot be remedied by the Debtors subject to the satisfaction of the Requisite Investors;

(xix)   any of the chapter 11 cases shall be dismissed or converted to a chapter 7 case, or a chapter 11 trustee with plenary powers, or an examiner with enlarged powers relating to the operation of the businesses of the Debtors (powers beyond those set forth in section 1106(a)(3) and (4) of the Bankruptcy Code) shall be appointed in any of the chapter 11 cases or the Debtors shall file a motion or other request for such relief or the Debtors’ exclusivity period shall be terminated;

(xx)    a filing by the Debtors of any motion, application or adversary proceeding challenging the validity, enforceability, perfection or priority of or seeking avoidance of the liens securing the obligations referred to in the indenture for the Second Lien Notes or the documents related thereto or, other than as contemplated by the Restructuring, any other cause of action against and/or seeking to restrict the rights of holders of Second Lien Notes in their capacity as such, or the prepetition liens securing the Second Lien Notes (or if the Debtors support any such motion, application or adversary proceeding commenced by any third party or consents to the standing of any such third party);

(xxi)   the occurrence of a Material Adverse Change (to be defined in the “Backstop Commitment Agreement, , which definition shall be in form and substance acceptable to the Debtors and the Requisite Investors, but will not include the bankruptcy filing or any events arising out of or related to the bankruptcy filing); and

(xxii) other termination events that are in form and substance acceptable to the Requisite Investors and the Debtors.

The Plan of Reorganization shall provide that all holders of allowed administrative expense claims are satisfied in full in cash, unless a holder thereof (with the consent of the Requisite Investors) agrees otherwise.

The Plan of Reorganization shall provide that all holders of allowed priority tax claims are satisfied in full in cash, unless a holder thereof (with the consent of the Requisite Investors) agrees otherwise.

The Plan of Reorganization shall provide that all holders of allowed priority non-tax claims are satisfied in full in cash, unless a holder thereof (with the consent of the Requisite Investors) agrees otherwise.

The Cash Flow Facility will be repaid in full on the Effective Date.

“Existing ABL” means the credit facility established by that certain Asset-Based Revolving Credit Agreement dated as of April 24, 2013, to which MPM is a party.

“Cash Flow Facility” means the credit facility established by that certain Second Amended and Restated Credit Agreement dated as of April 24, 2013, to which MPM is a party.

The Plan of Reorganization shall provide each holder of First Lien Note Claims with (i) if the class of First Lien Note Claims votes to accept the Plan of Reorganization (or such class is presumed to have accepted the Plan of Reorganization), cash distributions on the Effective Date in an amount equal to such holder’s First Lien Pro Rata Share of the First Lien Cash Pool or (ii) if such class votes to reject the Plan of Reorganization, replacement notes with a present value equal to the allowed amount of such holder’s First Lien Note Claim (which may include any make-whole claim, prepayment penalty or “Applicable Premium” (as defined in the indenture for the First Lien Notes) allowed, if at all, by the Bankruptcy Court).

“First Lien Cash Pool” means an amount of cash equal to the aggregate allowable amount of First Lien Note Claims (excluding any make-whole claim, prepayment penalty, “Applicable Premium” or similar claim).

“First Lien Note Claims” means claims arising under the indenture, dated as of October 25, 2012, pursuant to which MPM has issued certain notes (such notes, “First Lien Notes”).

“First Lien Pro Rata Share” means, with respect to any holder of First Lien Notes, the proportion that the principal amount of First Lien Notes held by such holder on the Record Date bears to the aggregate principal amount of all First Lien Notes outstanding on the Record Date.

“Record Date” means a date to be agreed on by the Debtors and the Requisite Investors.

The Plan of Reorganization shall provide each holder of 1.5 Lien Note Claims with (i) if the class of 1.5 Lien Note Claims votes to accept the Plan of Reorganization (or such class is presumed to have accepted the Plan of Reorganization), cash distributions on the Effective Date in an amount equal to such holder’s 1.5 Lien Pro Rata Share of the 1.5 Lien Cash Pool or (ii) if such class votes to reject the Plan of Reorganization, replacement notes with a present value equal to the allowed amount of such holder’s 1.5 Lien Note Claim (which may include any make-whole claim, prepayment penalty or “Applicable Premium” (as defined in the indenture for the 1.5 Lien Notes) allowed, if at all, by the Bankruptcy Court).

“1.5 Lien Cash Pool” means an amount of cash equal to the aggregate allowable amount of 1.5 Lien Note Claims (excluding any make-whole claim, prepayment penalty, “Applicable Premium” or similar claim).

“1.5 Lien Note Claims” means claims arising under the indenture, dated as of May 25, 2012, pursuant to which MPM has issued certain notes (such notes, “1.5 Lien Notes”).

“1.5 Lien Pro Rata Share” means, with respect to any holder of 1.5 Lien Notes, the proportion that the principal amount of 1.5 Lien Notes held by such holder on the Record Date bears to the aggregate principal amount of all 1.5 Lien Notes outstanding on the Record Date.

The Plan of Reorganization shall provide that all outstanding claims (the “Second Lien Note Claims” and the holders thereof, the “Second Lien Noteholders”) arising under the indenture, dated as of November 5, 2010, pursuant to which the Company has issued certain second lien notes (such notes, the “Second Lien Notes”) shall be allowed in full in accordance with the terms of such indenture without defense, offset, counterclaim or reduction.¹

In addition, the Plan of Reorganization shall provide that:

(a)    each Second Lien Noteholder shall receive its Pro Rata Share of 100% of the New Common Stock issued and outstanding upon the occurrence of the Effective Date (the “Direct Distribution Shares”) subject to dilution by New Common Stock issued under the Rights Offering (including the Backstop Commitment Premium) and any management incentive plan approved by the Board (as defined below) and as specifically set forth herein; and

(b)    in addition to the Direct Distribution Shares, each Second Lien Noteholder shall have the right to participate in the Rights Offering and receive its Pro Rata Share of the Rights Offering Shares (the “Subscription Rights”).

“Pro Rata Share” means, with respect to any Second Lien Noteholder, the proportion that the principal amount of the Second Lien Notes held by such Second Lien Noteholder on the Record Date bears to the aggregate principal amount of all Second Lien Notes outstanding on the Record Date.

The Plan of Reorganization shall provide that each holder of a trade or similar unsecured claim shall receive payment in full in cash in the ordinary course of business or on the Effective Date.

The Plan of Reorganization shall provide that holders of Subordinated Note Claims shall not receive any distributions on account thereof.

“Subordinated Note Claims” means claims arising under the indenture, dated as of December 4, 2006, pursuant to which MPM has issued certain notes.

The unsecured portion of the Second Lien Note Claims shall be preserved, allowed in an amount not less than $950 million (to be adjusted, if necessary, for the Reorganized Company’s emergence sources and uses, ultimate participation in the rights offering and dilution from a management incentive plan) and not waived by the Second Lien Noteholders, and Second Lien Noteholders shall retain the right to receive the benefits of any turnover provisions, including with respect to the Subordinated Note Claims, and any turnovers related thereto.

The Plan of Reorganization shall provide that holders of PIK Note Claims shall receive their pro rata share of the cash at Holdco (after payment of expenses of Holdco), which amount shall not exceed $9 million in the aggregate (prior to payment of expenses of Holdco).

“PIK Note Claims” means claims arising under that certain 11.00% Senior Discount Note due June 4, 2017, issued by Holdings.

The Plan of Reorganization shall provide that no distribution shall be made on account of intercompany claims and such intercompany claims shall be reinstated or cancelled as of the Effective Date at the election of the Requisite Investors; provided that such cancellation or reinstatement, as applicable, shall have no adverse effect on the distributions to the holders of Second Lien Notes, and any such cancellation or reinstatement that has such an adverse effect shall be null and void ab initio.

The Plan of Reorganization shall provide that existing equity interests in Holdings or MPM, as the case may be, and allowed claims subordinated pursuant to section 510(b) of the Bankruptcy Code are cancelled on the Effective Date and that the holders thereof shall receive or retain no distributions on account thereof.

The Plan of Reorganization shall contain customary release and exculpation provisions.

CORPORATE GOVERNANCE, SHARED SERVICES AGREEMENT

AND MANAGEMENT AGREEMENTS

Notwithstanding anything to the contrary in, or any amendment to, the Plan of Reorganization, the Backstop Commitment Agreement, the RSA or any of the Definitive Documentation (as defined in the RSA), or any supplement, exhibit, annex or other attachment to such documents, on the Effective Date, the Board of Directors of the Reorganized Company (the “Board”) shall consist of:

•   4 designees of Apollo (the “Apollo Designees”);

•   3 designees of the Ad Hoc Group (including 1 Oaktree designee, with all other designees selected by the vote of members of the Ad Hoc Group holding at the time of such vote a majority of the aggregate amount of the Backstop Commitments held by the Ad Hoc Group);

•   The CEO (or acting CEO) of the Reorganized Company; and 3 independent directors (one to be mutually agreed upon by Apollo and

the Ad Hoc Group, one to be nominated by Apollo subject to the consent of the Ad Hoc Group (it being understood that if the Ad Hoc Group does not consent for two candidates, such consent will not be required) and one to be nominated by the Ad Hoc Group (it being understood that if Apollo does not consent for two candidates, such consent will not be required).

The initial members of the Board shall be identified as part of a supplement to the Plan of Reorganization in form and substance satisfactory to each Investor (the “Plan Supplement”) and will each serve for a two year term (except that if an IPO is consummated or a stock exchange listing occurs before the end of the first year they shall have a one year term). During such initial term, the size of the Board shall be fixed and directors can only be removed for cause. Following the end of such term, directors of the Reorganized Company will be elected in accordance with applicable law. For the avoidance of doubt, (a) a director appointed, recommended or nominated by Apollo shall only be considered “independent” for purposes of this Term Sheet if he or she is not affiliated with Apollo and does not serve on the board of directors of, and is not employed by or affiliated with, any Apollo portfolio company and (b) a director appointed, recommended or nominated by a member of the Ad Hoc Group or the members of the Ad Hoc Group, collectively, shall only be considered “independent” for purposes of this term sheet if he or she is independent from each member of the Ad Hoc Group pursuant to the standard for independence under NYSE rules.

The Reorganized Company’s charter will provide that the provisions regarding the appointment of a permanent CEO and Board size and removal during the initial Board term cannot be amended prior to the consummation of a stock exchange listing or an IPO of the Reorganized Company.

Notwithstanding the foregoing, for so long as the counterparty to the SSA is a Related Party, the amendment, termination, modification, or waiver of or enforcement or exercise of any rights under the SSA will be directed by management and require the approval of a majority of the directors who are not appointed by or otherwise affiliated with such Related Party or its affiliates; provided, that independent directors appointed by such Related Party or its affiliates shall be entitled to vote on such amendment, termination, modification, waiver, enforcement or exercise so long as they remain independent of such Related Party.

The Reorganized Company’s charter, bylaws and any other constituent document with provisions relating to affiliate transactions will provide that such affiliate transactions provisions cannot be amended without the approval of all holders of New Common Stock, except that such provisions may be modified in connection with a stock exchange listing or IPO with the approval of both (i) a majority of the directors excluding the Apollo Designees and (ii) holders of a majority of the New Common Stock, disregarding any shares beneficially owned by Apollo or any of its affiliates, including any funds under management or portfolio companies of Apollo or its affiliates; provided, that independent directors appointed by Apollo shall be entitled to vote on such amendment so long as they remain independent of such Related Party.

Stockholders who hold more than 2.5% of the outstanding shares of New Common Stock will have preemptive rights with respect to the issuance of any new equity or convertible securities by the Reorganized Company or any of its subsidiaries, subject to customary exceptions, in order to maintain ownership percentage. Preemptive rights shall automatically terminate upon an IPO or stock exchange listing and shall otherwise remain in existence.

On the Effective Date, the following individuals, who shall have been identified on or prior to the start of the confirmation hearing, shall be appointed as executives of the Reorganized Company:

•   CEO – A person to be selected on either an interim or permanent basis by and acceptable to the Requisite Investors.

•   CFO – A person to be selected on either an interim or permanent basis by and acceptable to the Requisite Investors.

•   General Counsel – A person to be selected on either an interim or permanent basis by and acceptable to the Requisite Investors.

•   Others, if any, to be determined with the consent of the Requisite Investors and acceptable to the Requisite Investors

The compensation of such individuals (and other costs and expenses associated with the employment of such individuals), their respective counterparts at MSC, and their respective predecessors shall not, as of the Effective Date, be a cost to

be allocated using the Allocation Percentage (as such concept is defined and applied in the Amended and Restated Shared Services Agreement dated as of March 17, 2011, between MPM and MSC (the “SSA”)).

As of the Effective Date, the SSA shall be amended, with the agreement of MSC, such that (i) the notice period required to terminate the SSA for convenience shall be 30 days, (ii) the period of time for which each party as Service Provider shall be obligated to provide termination assistance shall be for a period designated by the Recipient, up to a maximum of 12 months, with a Recipient option to extend that termination assistance period by up to an additional 60 days, and (ii) the termination assistance provisions of the SSA obligate each Service Provider (as such term is defined in the SSA) to provide, at a minimum, the following termination support:

•   Continuing to provide the SSA services during the transition until the Recipient is ready to assume responsibility;

•   Cooperating with the Recipient and its designees by granting access to personnel providing the services and information about the resources utilized to provide the services (e.g., IT equipment, software licenses, subcontractors);

•   Formulating an exit plan (which the Recipient has a right to review and approve) to meet milestones required to transition services in the manner and on the timeline specified by the Recipient;

•   Transferring to the Recipient all data and other information relating to the Recipient’s business; and

•   Supporting transition-related testing and parallel runs undertaken by the Recipient during the transition.

As of the Effective Date, the SSA shall be amended in a manner in form and substance acceptable to the Requisite Investors to include an exhibit that sets forth a high-level termination assistance project plans to establish core support requirements, lines of communication, and work streams for use should the SSA or the SSA services be terminated.

Up to 7.5% of New Common Stock shall be reserved for issuance under a new management incentive plan to be established by the Board and administered by the Reorganized Company.

New Common Stock issued pursuant to the Plan of Reorganization, in connection with the Rights Offering and in satisfaction of the Backstop Commitment Premium shall be subject to dilution by New Common Stock issued under such new management incentive plan established by the Board.

OTHER PLAN OF REORGANIZATION TERMS

In connection with the commencement of the Chapter 11 Cases, the Debtors shall seek authority of the Bankruptcy Court to obtain DIP financing, which financing shall be in form and substance acceptable to the Requisite Investors (such financing, “DIP Financing”).