Denne melding til obligasjonseierne er kun utarbeidet på engelsk. For informasjon vennligst kontakt Nordic Trustee ASA.

Transcription

1 NORDIC TRUSTEE Denne melding til obligasjonseierne er kun utarbeidet på engelsk. For informasjon vennligst kontakt Nordic Trustee ASA. To the bondholders in: ISIN: NO per cent BassDrill Beta Ltd. Second Lien Callable Bond Issue 2013/2018 Oslo, 5 September 2014 Summons to Bondholders Meeting - Request to Amend the Terms and Increase the Total Outstanding Amount under the Bond Issue Nordic Trustee ASA (the "Trustee") acts as trustee for the holders of bonds (the "Bondholders ) in the 8.5 per cent BassDrill Beta Ltd. Second Lien Callable Bond Issue with ISIN NO (the "Bonds") issued by BassDrill Beta Ltd. (the Existing Issuer ) and guaranteed by Atlantica Tender Drilling Ltd (the "Company"). All capitalized terms used herein and not otherwise defined in this summons (the "Summons") shall have the meanings assigned thereto in the agreement (as amended) for the Bond Issue (the "Bond Agreement"). The Bondholders are encouraged to read the Summons in its entirety together with the attachments. The information in this Summons regarding the Company and market conditions is provided by the Company, and the Trustee expressly disclaims any liability whatsoever related to such information. 1. BACKGROUND AND CORPORATE UPDATE _ The Company has received an attractive proposal from a group of leading offshore banks for a new 1st priority fleet loan facility of USD 350 million with cross collaterized security package related to its 3 fully owned tender drilling rig; Beta, Gamma and Delta. The aforementioned bank facility together with the proposed amended and increased bond will fully debt finance the Company s newbuild program and give the Company an overall, long term capital structure. On this basis the Company will propose to the Bondholders Meeting to amend and restate the terms of the Bond Agreement including among others having the Company assume the rights and obligations as issuer of the Bonds (change of issuer), increase security package from one rig (the Beta) to three rigs (Beta, Gamma and Delta) (change of security), restate the interest coupon (change of interest coupon) and increase the borrowing limit with a tap issue of USD 75 million (the Tap Issue ) in accordance with the Term Sheet attached as Appendix 2 hereto (the Term Sheet ).

2 NORDIC TRUSTEE As compensation to the Bondholders, the Company offers the Bondholders a one-time consent fee of 6 % (flat) of the face value of the respective Bondholders holdings of the Bonds (the Fee ). The Fee together with accrued interest up until the Amendment Date (as defined in the attached term sheet, cf. Appendix 2) will be payable to the Bondholders with record date at end of business the date of the Bondholders Meeting. Payment of such fee and accrued interest will be made 10 Business Days after the Amendment Date. Bondholders are encouraged to review this information and, if necessary, consult the Company for any further details and update of the Company s financial and operational status. 2. PROPOSAL The Company hereby propose the following to the Bondholders Meeting (the Proposal ): amend and restate the terms of the Bond Agreement, including among others having the Company assume the rights and obligations as issuer of the Bonds, increase security package from one rig (Beta) to three rigs (Beta, Gamma and Delta), restate the interest coupon and increase the borrowing limit with a tap issue of USD 75 million in accordance with the Term Sheet; the Company shall make a consent fee payment of 6 % (flat) of the face value of the respective Bondholders' holdings of the Bonds to be payable together with accrued interest up until the Amendment Date. Payment of such fee and accrued interest, with record date at end of business of the Bondholders Meeting, will be made 10 Business Days after the Amendment Date; and the Trustee is authorised and instructed to do all such steps necessary on behalf of Bondholders as may be necessary in connection with implementation of the Proposal, including but not limited to implementing and amending and restating the Bond Agreement and such other documents as set out in the Term Sheet attached as Appendix 2 hereto. 3. FURTHER INFORMATION For more detailed information, please contact Mr. Lasse Kjelsas telephone no or lasse.kjelsas@atlanticatd.com. 4. THE COMPANY'S EVALUATION OF THE PROPOSAL 4.1 The Company s evaluation The Company believes that the proposed transaction represent an attractive offer for the Bondholders taking terms and pricing of the transaction into considerations. 4.2 Non-reliance Nothing herein shall constitute a recommendation to the Bondholders by the Trustee. The Bondholders should independently evaluate the Proposal and vote accordingly. 4.3 Pre-acceptance The Company has obtained pre-acceptance for the Proposal from 68 % of the Voting Bonds. 2 (4)

3 NORDIC TRUSTEE 5. BONDHOLDERS MEETING The Bondholders are hereby summoned to a Bondholders meeting: Time: 19 September 2014 at 10:00 hours (Oslo time) Place: The premises of Nordic Trustee ASA, Haakon Vlls gt 1, 0116 Oslo (Norway) - 6th floor Agenda: 1. Approval of the Summons 2. Approval of the Agenda 3. Election of two persons to sign the minutes together with the chairman 4. Request for adoption of the Proposal: It is proposed that the Bondholders' meeting resolve the following (the Resolution ): The Bondholders hereby adopt the resolution set out in the Proposal as described in the Summons to this Bondholders Meeting. To approve the above resolution, Bondholders representing at least 1 /2 of the Voting Bonds must be represented at the meeting (in person or by proxy) and 2/3 of the Voting Bonds represented at the Bondholders' Meeting must vote in favour of the resolution. If the proposal is not adopted, the Bond Agreement will remain unchanged. Please find attached a bondholder's form from the Securities Register (VPS), indicating your bondholding at the printing date. The Bondholder's Form will serve as proof of ownership of the Bonds and of the voting rights at the Bondholders' Meeting. If the Bonds are held in custody - i.e. the owner is not registered directly in the VPS - the custodian must confirm: the owner of the bonds, the aggregate nominal value of the bonds and the account number in VPS on which the bonds are registered. The individual Bondholder may authorise the Trustee to vote on its behalf, in which case the Bondholder s Form also serve as proxy. A duly signed Bondholder's Form, authorising the Trustee to vote, must then be returned to the Trustee in due time before the meeting is scheduled (by scanned , telefax or post - please see the first page of this letter for further details). In the event that the Bonds have been transferred to a new owner after the Bondholder s Form was made, the new Bondholder must bring to the Bondholders' Meeting or enclose with the proxy, as the case may be, evidence which the Trustee accepts as sufficient proof of the ownership of the Bonds. For practical purposes, we request those who intend to attend the Bondholders' Meeting, either in person or by proxy other than to the Trustee, to notify the Trustee by telephone or by (as set out at the first page of this letter) within 16:00 hours (4 pm) (Oslo time) the Business Day before the meeting takes place. 3 (4)

4 NORDIC TRUSTEE Yours sincerely, Nordic Trustee ASA Vivian Trosch Enclosed: Appendix 1: Bondholder s form Appendix 2: Term Sheet

5 TERM SHEET U SD 150 m illion A ATLANTICA ISIN: NO Atlantica Tender Drilling Ltd. Second Lien Bond Issue due 2019 (the Bond Issue or Bonds ) Amendment Date: 23 September 2014 Issuer: Interco: Rig Owners: Atlantica Tender Drilling Ltd., a company registered in Bermuda with registration no BassDrill Beta Holding Ltd., a company registered in Malta with registration no. C55269 and 99% owned by the Issuer and 1% owned by the Manager. Means: BassDrill Beta Ltd, incorporated in Malta with registration no. C55272 and 99% directly owned by Interco and 1% owned by the Issuer (the Beta Owner ); Atlantica Gamma Ltd, incorporated in Malta with registration no. C55939 and 99% directly owned by Interco and 1% owned by the Issuer (the Gamma Owner ); and Atlantica Delta Ltd, incorporated in Malta with registration no. C59000 and 99% directly owned by Interco and 1% owned by the Issuer (the Delta Owner ). Each being a Rig Owner. Beta Charterer: Beta Operator: Manager: Guarantors: BassDrill Beta BV, a company registered in the Netherlands with registration no and 100% owned by the Beta Owner ( Beta Charterer ). BassDrill Brasil Servicos de Petroleo Ltda. a company registered in Brazil with inscription Beno / and 99,99% owned by the Beta Charterer and one (1) share, being 0.01% of the shares, held by the Manager. Atlantica Management (USA) Inc. a company registered in the state of Texas with identification no and 100% owned by the Issuer. Means collectively: (iv) the Interco; the Rig Owners; the Beta Charterer; the Beta Operator; and l

6 (v) any other guarantors under the Senior Bank Facility (if any). Group: Obligors: Rig Owner Group: Currency: Borrowing Limit: Tap Issue: Existing Amount: Coupon Rate: The Issuer and all its existing and future subsidiaries (as may be incorporated from time to time), each individually a Group Company. The Issuer and the Guarantors. Means the Rig Owners, the Beta Charterer and the Beta Operator (each a Rig Owner Group Company ). USD USD 150 million USD 75 million USD 75 million 8.00 % p.a.; quarterly interest payments Amendment Date: 23 September 2014 Notice to be given to subscribers a minimum of two (2) Business Days prior to the Amendment Date (on which date the net proceeds of the Bond Issue shall be credited to the Escrow Account). Final Maturity Date: First Coupon Payment Date: Last Coupon Payment Date: Coupon Payments: Issue Price: Nominal Value: Amendments: Status of the Bonds: The Rigs: Five (5) years after the Amendment Date. Three (3) months after the Amendment Date. Five (5) years after the Amendment Date. Interest on the Bonds will accrue from (and including) the Amendment Date and shall be payable quarterly in arrears on the Interest Payment Date in March, June, September and December each year. Day-count fraction is 30/360, Business Day Convention is unadjusted and Business Day is Oslo and New York % of par value. The Bonds will have a nominal value of USD 1. Minimum subscription and allotment amount shall be USD 200,000, and integral multiplies of USD 100,000 thereof. The existing USD 75,000,000 bond issue with the Beta Owner as issuer with ISIN NO (the Existing Beta Bond Issue ) will be amended as set out in this term sheet, including an issue of additional USD 75,000,000 (the Tap Issue ) on the terms as set out herein. The Bonds shall rank at least pari passu with all other senior obligations of the Issuer other than obligations which are mandatorily preferred by law. The Bonds shall rank ahead of any subordinated capital. The Bonds shall be secured by a combination of first priority (Escrow Account and Issuer Bond Debt Service Account) security and security on second priority basis as set out herein. Means the following (each a Rig ): a semi tender rig named BassDrill Beta built at the Yard and delivered in November 2013, registered in Panama and owned by the Beta Owner ( Beta ); a tender rig under construction named Atlantica Gamma being built at the Yard 2

7 with hull no HTB-1 and with expected delivery end Q1 2015, to be registered in Panama and to be owned by the Gamma Owner following delivery from the Yard ( Gamma ); and a semi rig under construction named Atlantica Delta being built at the Yard with hull no BT and with expected delivery end Q2 2015, to be registered in Panama and to be owned by the Delta Owner following delivery from the Yard ( Delta ). Purpose of the Bond Issue: The net proceeds from the Tap Issue (net of legal costs, fees to the Arrangers and the Trustee and any other agreed costs and expenses) shall in full, be used to part refinance Existing Beta Bank Debt. The use of the proceeds of the Bond Issue shall be evidenced to the satisfaction of the Trustee. Existing Beta Bank Debt: Senior Bank Facility: Means the USD125m first priority debt with the Beta Owner as borrower and ABN AMRO Bank N.V., Oslo Branch, NIBC Bank N.V., Pareto Bank ASA and Swedbank AB (publ), as lenders withusd116.7million currently outstanding. Means: The first priority USD 350million term loan facility to be entered into among, inter alia, the Issuer as borrower, ABN AMRO Bank N.V., Oslo Branch and DNB Bank ASA, amongst others (the Senior Banks ) as lenders. The facility will be in three tranches with the following drawdowns and purpose; i) USD 53million to part refinance Existing Beta Bank Debt (the Beta Tranche ), ii) USD 120 million to part finance the delivery of Gamma (the Gamma Tranche ) and iii) USD 177 million to part finance the delivery of Delta (the Delta Tranche ). Expected interest rate is LIBOR plus a margin of approximately 3.25% p.a. However, the margin on the Gamma Tranche will be approx. 3.75% until a drilling contract which is acceptable to the Senior Lenders is entered into for the Gamma. The Senior Bank Facility will have a tenor of 5 years from first draw down (however will mature no later than 1 month prior to the Final Maturity Date) and have quarterly repayments of USD million starting three months after first draw down (the First Drawdown ) and with additional quarterly repayments of USD 3.33 million starting the earliest of 3 months after delivery of Gamma and the next scheduled repayment in respect of the First Drawdown (the Second Drawdown ), further additional quarterly repayments of USD 4.92 million starting the earliest of 3 months after delivery of Delta and the next scheduled repayment in respect of the First Drawdown (the Third Drawdown ) and further additional quarterly repayments of USD 1.25 million starting at the first scheduled repayment after August 2017, down to an aggregate balloon payment on final maturity date of approximately USD 177 million. Notwithstanding the above, any unutilized amount under the respective drawdowns can be included in subsequent drawdowns. If any of the Construction Contracts are terminated (and not are replaced within 60 days with contracts with the same Yard for the same rigs on terms similar or more in the reasonable opinion of the Trustee, favorable to the Issuer), the Issuer shall not draw from the Senior Bank Facility the tranche related to that Rig and will cancel that tranche. If a delivered Rig in respect of which a tranche has been drawn is sold or becomes a Total Loss, an amount of Senior Bank Facility proportionate to the Market Value of that Rig, compared to the aggregate Market Value of all Rigs (or the project price of not yet delivered Rigs) must be prepaid and will be subsequently cancelled. The Trustee shall receive copies of all CP documents delivered to the Agent, related to the First Drawdown, Second Drawdown and Third Drawdown of the Senior Bank Facility. The Senior Bank Facility and Permitted Hedging shall be secured on a first 3

8 priority basis in the Rigs and certain other assets ahead of the Security for the Bond Issue, as further set out under Ranking below and in the Intercreditor Agreement, in an initial maximum aggregate amount (including security and guarantees for Permitted Hedging in a total maximum aggregate amount of USD 30 million) of a total of USD 380million (plus interest and costs under the Senior Bank Facility) pursuant to the Intercreditor Agreement. The maximum aggregate amount of USD 380 million ranking ahead of the Bond Issue will be reduced in accordance with the instalments under the Senior Bank Facility, subject to the Intercreditor Agreement; and any refinancing of Senior Bank Facility described in above, as long as maximum refinanced amount equals the outstanding amount at the time of refinancing and provided that such facility is on market terms, with no change to the amortization profile described in above or quarterly repayment dates, with no additional security or guarantees unless not also granted to the Bonds on a second priority basis and an intercreditor agreement on substantially similar terms as the Intercreditor Agreement has been entered into in respect of such refinancing. Permitted Hedging: Intercreditor Agreement: Means interest rate and currency hedging arrangements entered into by the Issuer and the Senior Banks in respect of the Senior Bank Facility and which are not of a speculative nature. The Bond Issue will rank as a senior obligation of the Issuer and pari-passu with the Senior Bank Facility, however on a second priority basis behind the Senior Bank Facility and the Permitted Hedging with regard to the Security. The Trustee shall be authorized to enter into an intercreditor agreement reasonably satisfactory to the Trustee, pursuant to which the Trustee shall appoint the Agent as security agent to hold all Security on behalf of the Agent and the Trustee so that the Bond Issue and the Senior Bank Facility may be secured under the same Security, subject to the terms of the Intercreditor Agreement. The Intercreditor Agreement may furthermore contain, inter alia, a 270 day standstill period on enforcing the Bond Issue or take any other actions against the Obligors. The Bondholders will be provided with an option to purchase first priority debt within 90 days from the Agent s notice that it is accelerating the Senior Bank Facility. The lenders under the Senior Bank Facility may, following a default under the Senior Bank Facility, defer amortization payments by USD 40 million in aggregate; provided, however, the aggregate outstanding amount of the Senior Bank Facility shall not exceed USD 380 million (adjusted for the Bank Instalments). Amortizations: Call Options: The Bonds shall be repaid in full on the Final Maturity Date at 100% of par value (plus accrued interests on redeemed amount). The Issuer may redeem the outstanding Bonds (all or nothing) at any time from and including: the Amendment Date to, but not including, the date falling 3 years after the Amendment Date at a price equivalent to the sum of: a) the present value on the relevant record date of 103.2% of par value as if such payment originally should have taken place on the Interest Payment Date falling 3 years after the Amendment Date; and b) the present value on the relevant record date of the remaining coupon payments (less any accrued but unpaid interest) through and including the date falling 3 years after the Amendment Date, both calculated by using a discount rate of 50 basis points over the comparable U.S. Treasury Rate (i.e. comparable to the remaining duration of the Bonds until the mentioned date falling 3 years after the Amendment 4

9 Date) (plus accrued interest on redeemed amount) and where relevant record date shall mean a date agreed upon between the Trustee, the Paying Agent, VPS and the Issuer in connection with such repayment; (iv) the date falling 3 years after the Amendment Date to, but not including, the date falling 4 years after the Amendment Date at a price equal to 103.2% of par value (plus accrued interest on the redeemed amount); the date falling 4 years after the Amendment Date to, but not including, the date falling 4.5 years after the Amendment at a price equal to 101.6% ofpar value (plus accrued interest on the redeemed amount); and the date falling 4.5 years after the Amendment Date to, but not including, the Final Maturity Date at a price equal to 100.8% of par value (plus accrued interest on the redeemed amount). Intra-Group Loans: The Issuer may provide internal loans to any member of the Group and any of the Guarantors may provide internal loans to its direct majority owner and/or any of its directly owned subsidiaries (each an Intra-Group Loan.) Any Group Company not being an Obligor, may not provide an internal loan to the Issuer. Any Intra-Group Loan shall be governed by a loan agreement which shall be in form and substance satisfactory to the Trustee ( Intra-Group Loan Agreement ), and stipulating, inter alia, no restrictions on repayment (as long as no Event of Default has occurred under the Senior Bank Facility or the Bond Issue) and that the Trustee (on behalf of the Bondholders) may require the Intra-Group Loans to be repaid, or discharged, immediately and in full upon acceleration of the Bonds following an Event of Default under the Bond Agreement (subject to the Intercreditor Agreement). Any such Intra-Group Loan shall be subject to security on a first priority basis for the Senior Bank Facility and the Permitted Hedging, and Security on second priority basis in favor of the Trustee (as further described under Security below). Any Intra-Group Loan shall be fully subordinated to the Obligors obligations under the Bond Agreement, however payments may be made and interest may be served under the Intra-Group Loans until an Event of Default. Yard: Delivery Dates: Construction Contracts: Drilling Contracts: Existing Drilling Contracts: Dalian Shipbuilding Industry Offshore Co. Ltd. Means the dates on which the title to the Rigs is transferred from the Yard to the respective Rig Owners in accordance with the terms of the Construction Contracts, with all relevant equipment properly owned and installed on such date. The Gamma is currently scheduled to be delivered before the end of Q and the Delta is currently scheduled to be delivered before the end of Q Means the following Construction Contracts: The contract for the construction of the Gamma at the Yard dated 1 May 2012 (the Gamma Construction Contract ) (as amended from time to time); and The contract for the construction of the Delta at the Yard dated 13 April 2013 (the Delta Construction Contract ) (as amended from time to time). Means the Existing Drilling Contracts or any other offshore drilling contract for the hire of any of the Rigs entered into between any of the Gamma Rig Owner, Delta Rig Owner or the Beta Charterer and any entities unrelated to the Group (the Clients). Means the following Drilling Contracts (as further described in the Offering Memorandum): 5

10 Beta Bareboat Charter: Alternative Charter Arrangements: Rig Management Agreement: For Beta: The Drilling Contract dated 20 September 2010 (the Petrobras Contract ) between Beta Charterer and Petroleo Brasileiro S.A. ("Petrobras"); and For Delta: The Drilling Contract dated 5 April 2013 (the Total Contract ) between the Delta Owner and Total E&P Congo ("Total"). Means the intra-group bareboat charter entered into between the Beta Rig Owner and the Beta Charterer, for the chartering of Beta. On the condition that the Bondholders will obtain a security position which, in the reasonable opinion of the Trustee, is no less favorable under such structure than as contemplated herein, Drilling Contracts and/or the intra-group bareboat charters may be entered into under a different structure than the one described above, including but not limited to the Beta Charterer or any Rig Owner entering into a sub-charter with a new charterer, the Beta Charterer novating the Beta Bareboat Charter to a new charterer or the Beta Bareboat Charter or any other bareboat charter between any Rig Owner and a new charterer being replaced by a time-charter. Means each management agreement between the relevant Rig Owner and the Manager for the yard supervision and the operational, technical, marketing and commercial management of each of the Rigs, currently being the Management Agreements dated: 1 May 2011 (as amended on 10 April 2013), in respect of the Beta; 1 May 201, in respect of the Gamma; and 13 April 2013, in respect of the Delta. Security: All amounts outstanding under the Finance Documents to the Trustee and the Bondholders, including but not limited to interest and expenses, shall be secured by the following security (the Security ) to be held by the Agent for the benefit of the senior lenders and the Bondholders on a joint basis (except for the Issuer Accounts), each document a Security Document pursuant to the terms of the Intercreditor Agreement. Pre-Settlement Security: From the Issuer: a first priority Norwegian law pledge over the Issuer s claim against the bank for the amount from time to time standing to the credit of the Issuer on the Escrow Account (as defined below) (the Escrow Account Pledge ); Pre-Disbursement Security: From all Guarantors (with second priority after the Senior Bank Facility and Permitted Hedging): an unconditional and irrevocable on-demand guarantee (Nw: pakravsgaranti) issued by each of the Guarantors (the Guarantees ); From the Issuer (with second priority after the Senior Bank Facility and Permitted Hedging except if otherwise indicated below ): a first priority pledge over the Issuer s claim against the bank for the amount from time to time standing to the credit of the Issuer in the Issuer Bond Debt Service Account (as defined below) under Norwegian law (the Issuer Bond Debt Service Account Pledge ); (iv) a share pledge granted by the Issuer over all of its shares amounting to 99% 6

11 ownership in the Interco (the 99% Interco Share Pledge ) together with (to the extent legally possible), inter alia, letters of resignation (effective upon an Event of Default) from the current board members and covenants to obtain such from future board members under Bermuda law; (v) (vi) (vii) a share pledge granted by the Issuer over all of its shares amounting to 1% in the Rig Owners (the 1% Rig Owners Share Pledge ), together with (to the extent legally possible), inter alia, letters of resignation (effective upon an Event of Default) from the current board members and covenants to obtain such from future board members under Maltese law; pledge or an assignment (or such similar security under the relevant jurisdiction) of the rights of the Issuer as lender under any Intra-Group Loan (the Assignment of Intra-Group Loan ); a pledge over any relevant Senior Bank Accounts (except for the Retention Account) together with covenant to pledge any future Senior Bank Account (the Issuer Senior Bank Accounts Pledge ); From the Interco (with second priority after the Senior Bank Facility and Permitted Hedging ): (viii) a share pledge granted by the Interco over all of its shares amounting to 99% ownership in the Rig Owners (the 99% Rig Owners Share Pledge ) together with (to the extent legally possible), inter alia, letters of resignation (effective upon an Event of Default) from the current board members and covenants to obtain such from future board members under Maltese law; (ix) (x) a pledge over the relevant Senior Bank Accounts together with covenant to pledge any future Senior Bank Account (the Interco Senior Bank Accounts Pledge ); pledge or an assignment (or such similar security under the relevant jurisdiction) of the rights of Interco as lender under any Intra-Group Loan (the Assignment of Intra-Group Loan ); From the Rig Owners (second priority after the Senior Bank Facility and Permitted Hedging): (xi) (xii) (xiii) (xiv) a share pledge granted by the Beta Owner over all of the shares (100%) in the Beta Charterer (the Beta Charterer Share Pledge ), together with (to the extent legally possible), inter alia, letters of resignation (effective upon an Event of Default) from the current board members and covenants to obtain such from future board members under Dutch law ); a pledge over any relevant Senior Bank Accounts together with covenant to pledge any future Senior Bank Account (the Rig Owner Senior Bank Accounts Pledge ); a mortgage over the Rigs, including all relevant equipment and intellectual property being part of the Rigs, under Panamanian law (or any other jurisdiction satisfactory to the Trustee) (the Rig Mortgage ), (including any deed of covenants supplemental to the Rig Mortgage and to the security thereby created as requested by the Trustee); an assignment of the rights of the Gamma Owner and the Delta Owner under any warranties or guarantees given by the Yard under the Construction Contract for Gamma and Delta under English law (the Warranty Assignment ) and the Gamma Owner and the Delta Owner shall give 7

12 notices and use reasonable efforts to obtain consent (if required thereunder) and acknowledgements of such assignment from the Yard; (xv) (xvi) (xvii) (xviii) (xix) an assignment of all rights (including termination rights) of the respective Rig Owner under each Management Agreement (the "Management Agreement Assignment"), and the Rig Owner shall give a notice and the Manager shall provide an acknowledgment wherein inter alia the Manager agrees to subordination of the Manager's claims and to step-in rights of the assignee or the nominee's assignee, as per Manager's Covenants on page 17 below. an assignment of insurances of the Rigs and the Rig Owners shall give notices of and to obtain consents and acknowledgements of such assignment from the insurers (the Assignment of Insurances"); an assignment of earnings and receivables under the Total Contract and any other Drilling Contract entered into in respect of the Gamma and Delta under respective law, subject to consent and acknowledgement of such assignment from the Client which the Gamma Rig Owner and Delta Rig Owner shall use its reasonable efforts to obtain (the Assignment of Earnings under the Drilling Contracts ); an assignment of earnings and receivables under the Beta Bareboat Charter (including step-in rights to the Beta Bareboat Charter) under English law, and the Beta Charterer. "Assignment of Earnings and "Assignment of Beta Bareboat Charter ); pledge or an assignment (or such similar security under the relevant jurisdiction) of the rights of the relevant Rig Owner as lender under any Intra-Group Loan (the Assignment of Intra-Group Loan ); From the Beta Charterer (with second priority after the Senior Bank Facility and Permitted Fledging ): (xx) (xxi) (xxii) (xxiii) an assignment of the earnings of the Beta Charterer under the relevant Drilling Contracts (including all security granted by the Clients thereunder) under respective law, subject to consent and acknowledgement of such assignment from the Client which the Charterers shall use its reasonable efforts to obtain (the Assignment of Earnings under the Drilling Contracts ); a share pledge granted by the Beta Charterer over all of its shares amounting to 99,99% ownership in the Beta Operator (the 99,99% Operator Share Pledge ), together with (to the extent legally possible), inter alia, letters of resignation (effective upon an Event of Default) from the current board members and covenants to obtain such from future board members under relevant law; a pledge over any relevant Senior Bank Accounts together with covenant to pledge any future Senior Bank Account (the Charterer Senior Bank Accounts Pledge ); pledge or an assignment (or such similar security under the relevant jurisdiction) of the rights of the Beta Charterer as lender under any Intra- Group Loan (the Assignment of Intra-Group Loan ); From the Beta Operator (with second priority after the Senior Bank Facility and Permitted Hedging ): 8

13 (xxiv) a pledge over any relevant Senior Bank Accounts together with covenant to pledge any future Senior Bank Account (the Operator Senior Bank Accounts Pledge ); From the Manager (with second priority after the Senior Bank Facility and Permitted Hedging ): (xxv) (xxvi) a share pledge granted by the Manager over all of its shares amounting to 1% ownership in the Interco (the 1% Interco Share Pledge ), together with (to the extent legally possible), inter alia, letters of resignation (effective upon an Event of Default) from the current board members and covenants to obtain such from future board members under Maltese law; and a share pledge granted by the Manager over its share in the Beta Operator (the Operator Share Pledge ), together with (to the extent legally possible), inter alia, letters of resignation (effective upon an Event of Default) from the current board members and covenants to obtain such from future board members under Brazilian law. The Pre-Settlement Security shall be established no later than on the Amendment Date. The Pre-Disbursement Security (except for the security to be provided by the Delta Owner and the Gamma Owner (the Delta Owner Security and the Gamma Owner Security respectively) which will be established on or prior to the respective Delivery Dates) shall be established prior to the first release from the Escrow Account, save for payment of fees and costs (including legal costs) due and owing related to the Bond Issue. The Trustee may, at its sole discretion, postpone the delivery of certain conditions precedent. The Rig Mortgage and the Assignment of Insurances to be delivered at delivery of the Rigs, in accordance with a closing memorandum satisfactory to the Trustee. Any other security or guarantees granted under the Senior Bank Facility shall also be granted to the Trustee (on behalf of the Bondholders) on a second priority basis. Ranking of Security: The Security shall, subject to applicable law only, rank on a second priority basis as set out in the Intercreditor Agreement, except as specified above. Quiet Enjoyment Letter: The Trustee may issue, or accept that the Agent issues, a quiet enjoyment letter if so required by the end user of the Rig containing the covenant set out below. The Trustee, or the Agent, may not interrupt the quiet use, possession and enjoyment of the Rig by the end-user, so long as no owner termination event is continuing and except as required by any applicable law binding on the Trustee or the Agent. The exercise by the Trustee of its rights under this Term Sheet or any Finance Document will not constitute such an interruption. Accounts: The Issuer shall open and maintain the below accounts with DNB Bank ASA (the Account Bank ): an Escrow Account (in connection with the settlement of the Bond Issue); and the Issuer Bond Debt Service Account. 9

14 (together the Issuer Accounts ). Escrow Account: The Issuer shall prior to the Amendment Date establish the Escrow Account in USD, and the net proceeds from the Tap Issue shall be transferred by the Arrangers to the Escrow Account on the Amendment Date. The Escrow Account shall be pledged in favor of the Trustee and blocked. The funds in the Escrow Account shall only be used by the Issuer according to the Purpose of the Bond Issue (including paying any fees and costs related to the Bond Issue) as described above or, alternatively, in the event that the Pre-Disbursement Conditions Precedent for any reason are not satisfied within 30 November 2014 used in connection with a mandatory prepayment of the entire Bond Issue at (a) par value (together with accrued interest) if such failure to comply with the Pre-Disbursement Conditions Precedent is beyond the control of the Issuer and (b) otherwise at the rate applicable as set out under M andatory Prepayment. The Issuer shall irrevocably and unconditionally instruct the Trustee and the Paying Agent to pay any fees and costs (including legal costs) due and owing related to the Bond Issue as evidenced by invoice from the Arrangers using the proceeds in the Escrow Account, to the extent such fees and costs have not been deducted from the proceeds transferred to the Escrow Account. Before any release from the Escrow Account takes place (other than payment of fees and costs as set out above), all applicable Pre-Disbursement Conditions Precedent (as described below) shall be complied with, or otherwise waived by the Trustee. Issuer Bond Debt Service Account: The Issuer shall prior to the release from the Escrow Account establish a debt service account with the Account Bank in USD. The Issuer Bond Debt Service Account shall be pledged and blocked in favour of the Trustee (on behalf of the Bondholders). The Issuer shall at the end of each month pay into the Issuer Bond Debt Service Account an amount equal to 1/3 of the Coupon Payment payable on the next Interest Payment Date. The amount deposited in the Issuer Bond Debt Service Account shall only be released for the next scheduled Coupon Payments as and when they fall due, as long as no Event of Default has occurred and is continuing. Senior Bank Accounts: Application of The Issuer, the Rig Owners, the Beta Charterer and the Beta Operator (as applicable) shall open and maintain the following accounts with the agent under the Senior Bank Facility (the Agent ) (currently being ABN AMRO Bank N.V., Oslo Branch) or DNB Bank ASA where applicable: a. Earnings Accounts (to be held by any Obligor receiving revenues from the Rigs and the Issuer), on which all revenues of the Rigs will be paid to (or in respect of the Issuer, also distributions from any other Obligor); b. Retention Account to be held by the Issuer and blocked from withdrawals, to cover the payment of the debt service (principal plus interest) under the Senior Facility Agreement on the next payment date. At the end of each month, an amount of l/3rd of the debt service payable on the next payment date shall be deposited on the Retention Account. The amount deposited on the Retention Account shall not exceed 3 months debt service; c. Operating Accounts to be opened by the Issuer or the relevant Guarantor for each Rig; and d. Any other bank account opened by any of the Obligor which is to be pledged in favour of the Agent and the Trustee in accordance with the Intercreditor Agreement, however any Obligor may open unpledged bank accounts but the total amounts standing on such accounts shall never exceed USD3 million. As long as no event of default has occurred and is continuing under the Senior Bank 10

15 Earnings: Facility or the Bond Issue and subject to the terms of the Intercreditor Agreement, all earnings under the Drilling Contracts shall be paid into the relevant Earnings Account and the following transfers and payments shall be made on a monthly basis (such payment to be made at the end of the month): the amount equal to the budgeted operating and management expenses for the Rigs according to the Rig Management Agreements and the general and administrative expenses of the Issuer shall be transferred to the relevant Operating Account; 1/3 of the quarterly amounts required for debt service required under the Senior Bank Facility; and 1/3 of the next Coupon Payment under the Bond Issue to the Bond to be transferred to the Issuer Bond Debt Service Account. The Issuer shall procure that each Rig Owners, the Beta Charterer and the Beta Operators lawfully transfers (by dividends, repayment of Intra-Group Loans or otherwise) revenue deriving from the Rigs to the Issuer sufficient for the Issuer to service its payment obligations under the Senior Bank Facility and the Bond Issue. Waterfall: Proceeds available to the Bondholders following an Event of Default which has occurred and is continuing shall be applied in the following order of priority: firstly; in respect of all costs and expenses incurred by the Trustee, and the Issuer will indemnify the Trustee for all costs and expenses in any event; secondly; in or towards payment of all sums outstanding pursuant to the Finance Documents; and finally; the balance, if any, shall be paid to the Issuer. Conditions Precedent: Disbursement of the net proceeds from the Bond Issue to the Escrow Account will be subject to certain conditions precedent as customary for these types of transactions, including (but not limited to): Pre-Settlement: (iv) (v) (vi) (vii) (viii) confirmation from the Obligors that no potential or actual Event of Default exists; the Bond Agreement, duly executed; an agreement between the Trustee and the Issuer related to expenses and fees, duly executed; the Pre-Settlement Security, duly executed and perfected by all parties thereto; copy of the latest annual financial statements/ reports for the Group on an consolidated basis; certified copies of necessary corporate resolutions of the Issuer and the other Obligors authorizing the execution of the relevant Finance Documents; all legal opinions in respect of the Bond Agreement and the Pre-Settlement Security being in form and substance satisfactory to the Trustee; required majority approval from the bondholders of the Existing Beta Bond Issue for the Amendments; 11

16 (ix) (x) copies of the Existing Drilling Contracts executed by all parties ; and the constitutional documents of each of the Obligors (for the avoidance of doubt, only applicable for Obligors executing Finance Documents presettlement), in form and substance satisfactory to the Trustee. Pre-Disbursement: (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi) (xxii) (xxiii) (xxiv) (xxv) (xxvi) a release notice from the Issuer (including a statement regarding use of funds and confirmation of no potential or actual Event of Default), duly executed; satisfactory documentation evidencing that the Issuer Bond Debt Service Account has been opened; evidence that the security under the Existing Beta Bond Issue have been released; satisfactory evidence that the Senior Bank Facility is available for drawdown subject only to customary conditions precedent for draw-down of the three tranches, and will be used according to its purpose; confirmation from the Obligors that no Financial Indebtedness, security or guarantees (other than that expressly permitted under the Finance Documents) exists for the Obligors; the Intercreditor Agreement, duly executed; all Project Documents duly executed; satisfactory evidence of title to the Rigs having been transferred to the respective Rig Owners for the Rig(s) that have been delivered from the Yard prior to disbursement, including transcript from the relevant registry; all Security Documents (except for the Gamma Owner Security and the Delta Owner Security), duly executed and perfected; all relevant process agent letters; copies of necessary corporate resolutions from the Obligors authorizing the execution of the Security Documents (other than those documents delivered Pre-Settlement); the constitutional documents of each of the Obligors (to the extent not provided pre-settlement), in form and substance satisfactory to the Trustee; all legal opinions reasonably requested by the Trustee in respect of the Security Documents in form and substance satisfactory to the Trustee; satisfactory evidence that all applicable insurances have been taken out; class certificates for Beta, without any material or overdue recommendations affecting the operation of Beta; satisfactory evidence that, including the funds in the Escrow Account, the Issuer has sufficient firm funding to refinance Existing Beta Bank Debt; (xxvii) a copy of a duly signed unconditional and irrevocable call notice for the prepayment and cancellation in full of the Existing Beta Bank Debt; and 12

17 (xxviii) any other Finance Documents (unless delivered Pre-Settlement and to the extent applicable), in acceptable form and duly executed. The Trustee may waive or postpone the delivery of certain conditions precedent at its sole discretion. General Covenants: Each of the Obligors shall undertake, inter alia, the following covenants: (iv) Arm s length transactions: not enter into any transaction with any person except on arm s length terms; Continuation of business: not cease to carry on its business or change the general nature of its business; Application of Earnings: not change the order of payments pursuant to the Application of Earnings; Project Documents: To the extent it is a party to such Project Document: a) enforce any rights that it has to ensure that each Rig is to the best of its knowledge at all times operated and maintained in accordance with the Project Documents; b) not agree to or permit any changes to the Project Documents which are likely to have a Material Adverse Effect on its ability to meet its obligations thereunder and/or its liability to meet its obligations under the Senior Bank Facility and the Bonds; and c) not agree to or permit the assignment of any of its rights under the Project Documents, other than the Security Documents in favor of the Senior Bank Facility and the Bonds. Issuer Covenants: The Issuer shall (such covenants to be included in the relevant Guarantee), inter alia: Reporting: prepare consolidated annual audited reports and consolidated unaudited quarterly reports and make such reports available on its website as soon as they become available, and no later than 130 days after the end of the financial year and not later than 90 days after the end of the relevant quarter, provided always that such preparation and publication of reports are in accordance with applicable rules and regulations. Such reports shall be prepared in accordance with US GAAP, and include a profit and loss account, balance sheet, cash flow statement, all notes and management commentary or report from the Board of Directors of the Issuer; Ownership: maintain minimum 100% (direct or indirect) ownership over all the shares and control over all the voting rights of the Interco, the Rig Owners, the Beta Operator, the Manager and the Beta Charterer; Distribution Restrictions: not declare or make any dividend payment or distribution, whether in cash or in kind, repurchase of shares or make other similar transactions (included, but not limited to total return swaps related to shares in the Issuer), or other distributions or transactions implying a transfer of value to its shareholders, until the latest of January 2016 and the delivery of both Gamma and Delta, provided always that the aggregated transfer of value from the Issuer to its shareholders shall not exceed 50.00% of Issuer s consolidated net profit after taxes based on the audited annual accounts for the previous financial year (any un-utilized portion of the permitted dividend pursuant to the above may not be carried forward to any 13

18 subsequent financial year); (iv) (v) (vi) (vii) (viii) Information of any Change of Control Event: inform the Trustee of any Change of Control Event or any event that may lead to a Change of Control as soon as the Issuer becomes aware of it; Mergers and demergers: not enter into any de-merger, merger or other corporate restructuring which might have a Material Adverse Effect; Additional rig projects: ensure that any additional construction contract for a new rig, entered into by any Group Company is entered into on a nonrecourse basis to any Group Company so that the construction contracts shall be entered into by special purpose companies (not being any of the Obligors) and no Group Company shall grant any guarantee or other financial assistance for any obligations under any such construction contract (however so that intra-group loans without available commitments may be provided to the relevant special purpose company by any Group Company which is not an Obligor); and Negative pledge: not create or permit to subsist any additional security over the shares in the Rig Manager and any of the assets subject to the Security other than the security for the Senior Bank Facility, the Permitted Hedging and the Bond Issue. Unsecured debt restriction: Any unsecured interest bearing debt from a non-related party shall have a final maturity date after the Final Maturity Date and have no amortization until the Final Maturity Date of the Bond. Interco Covenants: The Interco shall undertake (such covenants to be included in the relevant Guarantee), inter alia, the following covenants: (iv) (v) (vi) Ownership: maintain minimum 99% direct ownership over all the shares and control over all the voting rights of the Rig Owners; Mergers and demergers: not enter into any de-merger, merger or other corporate restructuring which might have a Material Adverse Effect; Additional rig projects: ensure that any additional construction contract for a new rig, entered into by any Group Company is entered into on a nonrecourse basis to any Group Company so that the construction contracts shall be entered into by special purpose companies (not being any of the Obligors) and no Group Company shall grant any guarantee or other financial assistance for any obligations under any such construction contract (however so that intra-group loans without available commitments may be provided to the relevant special purpose company by any Group Company which is not an Obligor); Negative pledge: not create or permit to subsist any additional security over any of the assets subject to the security other than the security for the Senior Bank Facility, the Permitted Hedging and the Bond Issue; and Restrictions on contractual obligations: not agree to any contractual obligation (or encumbrance) restricting its right to pay dividends or make other distributions to its shareholders or service Intra-Group Loans. Unsecured debt restriction: Any unsecured interest bearing debt from a nonrelated party shall have a final maturity date after the Final Maturity Date and have no amortization until the Final Maturity Date of the Bond. 14

19 Rig Owner Group General Covenants: Each Rig Owner Group Company (as applicable) shall undertake (such covenants to be included in the relevant Guarantee), inter alia, the following comments; (iv) (v) Mergers and demergers: not carry out any merger, de-merger or other business combination or corporate reorganization; Disposal of Assets:, not sell or otherwise dispose of all or a substantial part of its assets or operations unless the Bonds are redeemed in accordance with the Mandatory Prepayment provision; Constitutional Documents: Not amend its constitutional documents unless related to issuance of new shares in connection with conversion of debt to equity and such shares are subject to Security; Restrictions on contractual obligations: Not agree to any contractual obligation (or encumbrance) restricting its right to pay dividends or make other distributions to its shareholders or service Intra-Group Loans; and Sanctions: Not allow the Rigs to operate in Cuba, Iran, Libya, Venezuela, Myanmar, North Korea, Sudan, Syria or any other country or area being subject to Sanctions (as described below). Rig Owners Covenants: The Rig Owners shall undertake (such covenants to be included in the relevant Guarantee), inter alia, the following covenants; (iv) (v) (vi) (vii) Single purpose company: remain as a single-purpose company, owning, operating and chartering out the relevant Rig to a Client or the Beta Charterer (when related to the Beta Owner); Ownership: maintain a 100% (direct) ownership over all the shares and control over all the voting rights of the Beta Charterer; Inspection: upon request with 30 days prior notice of the Trustee, allow the technical adviser to undertake during normal business hours a technical inspection of the Rigs without interference to the daily operation of the Rigs provided that such inspections shall be limited to once every year for so long as no Event of Default is outstanding (and if an Event of Default is outstanding in which case such inspections may be conducted at any time), in each case at the expense of the Issuer; Gamma and Delta Delivery dates: on the respective Delivery Dates for Gamma and Delta, to provide all customary documents in relation to delivery of the relevant Rig, all being satisfactory to the Trustee, including, but not limited to documents evidencing insurances, ownership and the Delta Owner Security and the Gamma Owner Security as set out in this term sheet over the relevant Rig; Financial arrangement: not make any other financial or other arrangements concerning the Rig and its employment other than provided for in the Finance Documents, except as provided by (vi) below; Financial support restrictions: not grant any loans, guarantees, security or other financial assistance to any party, other than the guarantees and the security granted by it as security for the Bond Issue, Senior Bank Facility and Permitted Hedging, any Intra-Group Loans and guarantees issued for the benefit of third parties in the ordinary course of business (including guarantees relating to the ownership and employment of its Rig); Negative pledge: not create or permit to subsist any security over any of its 15

20 assets or enter into arrangements having a similar effect except for any security granted as security for the Bond Issue, any security granted as security for the Senior Bank Facility or Permitted Hedging and any lien or security arising by operation of law or incurred in the ordinary course of operation of the Rigs; (viii) (ix) Financial Indebtedness restrictions: not incur, create or permit to subsist any Financial Indebtedness other than any Intra-Group Loans and financial support permitted above; and Investment restrictions: not invest or take part in any other activity than solely related to the construction, ownership and operation of the Rigs. The Bond Agreement shall include other standard covenants as customary in the Norwegian high-yield bond market. Beta Charterer s Covenants: The Beta Charterer shall undertake (such covenants to be included in the relevant Guarantee), inter alia, the following covenants: Ownership: maintain a 99,99% (direct) ownership over all the shares and control over all the voting rights of the Beta Operator; Intra-Group Charter: at all times comply with its obligations under the Beta Bareboat Charter; Requirements to Drilling Contracts: not enter into any other drilling contract for Beta other than a Drilling Contract; (iv) Single purpose company: remain as a single-purpose company, operating and chartering Beta; (vi) Financial support restrictions: not grant any loans, guarantees, security or other financial assistance to any party, other than the guarantees and the security granted by it as security for the Bond Issue, Senior Bank Facility and Permitted Hedging, any Intra-Group Loans and guarantees issued for the benefit of third parties in the ordinary course of business (including guarantees relating to the employment of Beta); (vii) Negative pledge: not create or permit to subsist any security over any of its assets or enter into arrangements having a similar effect except for any security granted as security for the Bond Issue, any security granted as security for the Senior Bank Facility or Permitted Hedging and any lien or security arising by operation of law; (viii) Financial Indebtedness restrictions: not incur, create or permit to subsist any Financial Indebtedness other than any Intra-Group Loans and financial support permitted above; (ix) Investment restrictions: Not invest or take part in any other activity than solely related to the bareboat chartering and operation of the Beta; The Bond Agreement shall include other standard covenants as customary in the Norwegian high-yield bond market. Manager s Covenants: The Manager shall undertake (in the relevant share pledge agreement or in a separate manager undertaking (as applicable), inter alia, the following covenants: Ownership: maintain 1% direct ownership in the Interco and hold one share of the Beta Operator; 16

21 Arm s length transactions: not enter into any transaction with any person except on arm s length terms; Mergers and demergers: not carry out any merger, de-merger or other business combination or corporate reorganization; (iv) Financial support restrictions: not grant any loans, guarantees, security or other financial assistance to any party, other than the guarantees and the security granted by it as security for the Bond Issue, Senior Bank Facility and Permitted Hedging, any Intra-Group Loans and guarantees issued for the benefit of third parties in the ordinary course of business (including guarantees relating to the employment of the Rigs); (v) Negative pledge: not create or permit to subsist any security over any of its assets or enter into arrangements having a similar effect except for any security granted as security for the Bond Issue, any security granted as security for the Senior Bank Facility or Permitted Hedging and any lien or security arising by operation of law; (vi) Financial Indebtedness restrictions: not incur, create or permit to subsist any Financial Indebtedness other than any Intra-Group Loans and financial support permitted above; and fviilinvestment restrictions: not invest or take part in any other activity than solely related to the operation and management of the rigs fully or partially owned by the Group. The Manager shall further undertake (in the acknowledgment of Management Agreement Assignment to be addressed to the Agent (as security agent of the Senior Lenders and the Bondholders)) the following covenants: General Covenants: a. to comply with the covenants set out in respect of the Project Documents under the General Covenants; and b. to not terminate the Management Agreement without giving 15 days prior notice to the Agent; Subordination / Sten-in rights: If the Agent (as assignee and security agent) notifies the Manager that there has been an Event of Default under the Senior Bank Facility or the Bond Issue: a. the Manager's claims for fees or others payments due under the Management Agreement are subordinated to the rights of the Bondholders and the Senior Lenders under the Finance Documents; b. the Agent shall have the option (to be exercised when giving the notice) to step-in to the position of the Rig Owner and continue the Management Agreement. The Agent may assign its step-in right to a nominee acceptable to the Manager (the Trustee to always be deemed acceptable). For the avoidance of doubt, subordination will not apply for fees incurred by the Manager after the step-in right is exercised. The Bond Agreement shall include other standard covenants as customary in the Norwegian high-yield bond market. Beta Operator s Covenants: The Beta Operator shall undertake (such covenants to be included in the relevant Guarantee), inter alia, the following covenants: 17

22 Financial support restrictions: not grant any loans, guarantees, security or other financial assistance to any party, other than the guarantees and the security granted by it as security for the Bond Issue, Senior Bank Facility and Permitted Fledging, any Intra-Group Loans and guarantees issued for the benefit of third parties in the ordinary course of business (including guarantees relating to the employment of Beta); Negative pledge: create or permit to subsist any security over any of its assets or enter into arrangements having a similar effect except for any security granted as security for the Bond Issue, any security granted as security for the Senior Bank Facility or Permitted Hedging and any lien or security arising by operation of law; Financial Indebtedness restrictions: not incur, create or permit to subsist any Financial Indebtedness other than any Intra-Group Loans and financial support permitted above; (iv) Investment restrictions: invest or take part in any other activity than solely related to the operation of Beta; The Bond Agreement shall include other standard covenants as customary in the Norwegian high-yield bond market. Financial Covenants) : The following financial covenants shall be complied with: Book Equity: Minimum of USD 90,000,000, to be increased by USD 40,000,000 at the Second Drawdown under the Senior Bank Facility and by USD 65,000,000 at the Third Drawdown under the Senior Bank Facility. For the avoidance of doubt, total Book Equity at the Third Drawdown shall hence be minimum USD 195,000,000. Debt Service Coverage Ratio: Minimum of 1.1 Ox. Equity Ratio: Minimum of 30%. Interest Cover Ratio: Minimum 2.5x. Liquidity: The Issuer (on consolidated basis) shall have minimum Liquidity of USD 15,000,000 until the Second Drawdown under the Senior Bank Facility, 20,000,000 until the Third Drawdown under the Senior Bank Facility and thereafter the higher of USD 30,000,000 and 6% of outstanding interest bearing debt (on a consolidated basis). Senior Bank Asset Cover Ratio: minimum 140% until the 2nd anniversary of the first Drawdown and at least 150% at all times thereafter. The Financial Covenants will apply at all times, however the Interest Cover Ratio and the Debt Service Coverage Ratio shall not apply before December 31, 2014, and to be tested on a quarterly basis, commencing December 31, 2014, provided together with the quarterly financials. The Interest Cover Ratio and the Debt Service Coverage Ratio shall be calculated on a 12-months rolling basis, with the following adjustments: a. EBITDA and Interest Expenses related to any new rig (including Beta, Delta and Gamma) shall only be included in the calculations from the earliest of 6 months after the actual delivery date of the new unit or 3 months after commencement of a Drilling Contract and after which date (and until 12 months after being included in the calculations) EBITDA and Interest Expenses shall be annualized based on reported earnings from commencement of the Drilling Contract; and 18

23 b. if any rig is sold or divested, the EBITDA and Interest Expenses shall be adjusted in-line with principles outlined above, hence not being included in the calculation. Senior Bank Asset Cover Ratio means the Market Value of the Rigs relative to the aggregated outstanding amount under the Senior Bank Facility. "Debt Service Coverage Ratio" means the ratio of EBITDA to the aggregate of Interest Expenses and amortisations of debt (whether made or not, however, not to include agreed deferrals of any amortisations of debt falling due after the previous period of twelve months). "EBITDA" means the earnings before interest expenses, taxes, any Exceptional Items, any depreciation and amortisation. "Equity Ratio" means the ratio of Total Equity to Total Assets. "Exceptional Items" means any material items of an unusual or non-recurring nature which represent gains or losses including those arising on: a. disposals, revaluations, write downs or impairment of non-current assets or any reversal of any write down or impairment; and b. disposals of assets associated with discontinued operations. "Interest Cover Ratio" means the ratio of EBITDA to Interest Expenses. "Interest Expenses" means all interest and other financing charges incurred, for the avoidance of doubt including interest payments under the Bond Loan (whether, in each case, paid, payable or capitalised) (but excluding arrangement or similar fees in connection with the Facility Agreement and excluding any guarantee commissions to the extent that such commission is shown as an operating cost in the then latest financial statement delivered under the Facility Agreement and excluding the impact of any non-cash, valuation adjustments related to any interest rate swap). "Liquidity" means, at any given time, the aggregate of freely available and unencumbered cash and bank deposits with banks having a minimum credit rating of A by S&P, including cash deposited in any of the Accounts or Senior Bank Accounts but excluding the Issuer Bond Debt Service Account and the Senior Bank Retention Accounts. Market Value means the fair market value of the Rigs in USD determined as the arithmetic mean of independent valuations of the relevant vessels obtained from two independent and well-reputed sale and purchase brokers familiar with the market for the relevant vessels appointed by the Issuer and approved by the Trustee. Such valuation shall be made on the basis of a sale for prompt delivery for cash at arm s length on normal commercial terms as between a willing seller and willing buyer, on an as is where is basis, free of any existing charters or other contracts for employment. The cost of such determination shall be for the account of the Issuer. The valuation shall be made at least semi-annually, or following an Event of Default, upon the request of the Trustee. If the two valuations differ by a margin of more than 10% then a third independent sale & purchase broker shall provide a valuation and the value of the relevant Rig shall be the average of the three valuations. "Total Assets" means the aggregate book value (on a consolidated basis) of the Group's total assets in accordance with US GAAP, less any goodwill. "Total Equity" means the aggregate book value (on a consolidated basis) of the Group's equity treated as equity in accordance with US GAAP, less any goodwill. 19

24 If additional financial covenants apply to the Senior Bank Facility, the same financial covenants shall be included in the Bond Agreement Rig Covenants: Maintenance of Insurances: Standard covenants related to the Rigs including but not limited to: maintenance of insurances (see below), no sale of Rigs without redemption of the Bond Issue (see Mandatory Prepayment), maintenance of class, (iv) maintenance of flag, name and registry, (v) Rigs to be kept in a good and safe condition and repair consistent with prudent ownership and industry standards, and (vi) operation in accordance with applicable laws and regulations. The Issuer shall provide for reasonable and satisfactory maintenance of insurances of the Rigs and all relevant equipment related thereto at all times, hereunder to retain the Rigs in class. During operation of the Rigs, the Issuer shall ensure that the Charterer and/or the Rig Owners runs proper maintenance of the Rigs according to planned maintenance system. The Rigs shall also be adequately insured (including war risk) against Hull & Machinery risks for at least the full market value of the Rig as determined by a valuation performed by an independent third party expert, and 120% of the outstanding amount under the Finance Documents, a third party liability insurance as per industry standards, mortgagee interest insurance, loss of hire and requisition compensation, expropriation risk and any additional insurance required under any law or the Drilling Contracts. The Issuer shall keep a Mortgagee s Interest Insurance and Mortgagee Additional Peril Insurance on standard market terms in respect of rigs of this type. All insurances shall be maintained with reputable insurers of financial standing as approved by the Trustee The insurances and loss payee clause shall be in accordance with the Norwegian Marine Insurance Plan or other insurances with no less favorable terms. Sanctions: Change of Control: Change of Control Event: Mandatory Prepayment: Means any economic or financial sanctions or trade embargoes administered or enforced by the U.S. Department of the Treasuiy s Office of Foreign Assets Control ("OFAC"), the U.S. Departments of State or Commerce or any other US government authority, including under the Iran Sanctions Act as amended by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, or by the United Nations Security Council ("UNSC"), the European Union ("EU"), Her Majesty s Treasury ("HMT") or Norwegian or other relevant sanctions authority (collectively, "Sanctions"). Upon a Change of Control Event occurring, each Bondholder shall have a right of prepayment (Put Option) of the Bonds at a price of 101% of par value (plus accrued interest) during a period of 60 days following the notice of a Change of Control Event. Change of Control Event means any person or group (as such term is defined in the Norwegian Limited Liability Companies Act 1-3), save forany fund within the HitecVision group of private equity funds ), becomes the owner, directly or indirectly, of more than 33.3% of the outstanding shares of the Issuer or if funds within the HitecVision group of private equity funds ceases to own at least 33.4% of the outstanding shares of the Issuer. Upon a Mandatory Prepayment Event occurring, the Issuer shall not later than 30 days following the relevant Mandatory Prepayment Event (unless there is an Event of Default in which case it will be promptly), redeem (a) 100% of the outstanding Bonds if related to two or more Rigs or (b) if related to one of the Rigs (including shares in one of the Rig Owners) the bonds shall be prepaid in an amount equal to the Fair Market Value (based on valuations not older than 90 days) of the relevant Rig divided by the Fair Market Value of all Rigs plus 10% points multiplied with outstanding 20

25 Bonds, in both instances at a price according to the Call Options. For the avoidance of doubt, the aforesaid redemption prices shall be determined based on the date the Mandatory Repayment Event occurred and not based on the date of repayment. Upon the occurrence of several Mandatory Prepayment Events in relation to the sale of one Rig, the Issuer shall only be obliged to pay one redemption amount. Upon the occurrence of several Mandatory Prepayment Events, the Issuer shall only be obliged to pay one redemption amount. Total Loss Event: Means: an actual or constructive total loss of any of the Rigs in respect of any of the Rigs, any act of piracy, or any capture at sea, or any confiscation or similar intervention by a foreign state power, which has continued for more than one (1) month from the day it took place. Total Loss Prepayment: Mandatory Prepayment Event: Upon a Total Loss Event, the Issuer shall promptly once insurance proceeds are available, but in any event no later than one hundred and eighty ninety (180) days following the Total Loss Event (and in the case of above, provided the relevant Rig has not been redelivered to the full control of the relevant Rig Owner or any of the Guarantors), redeem (a) 100% of the outstanding Bonds at 100% of par value (plus accrued interest on the redeemed amount) if the Total Loss Event relates to two or more rigs or (b) in an amount equal to the Fair Market Value (based on valuations not older than 90 days) of the relevant Rig divided by the Fair Market Value of the delivered Rigs multiplied with outstanding Bonds. Except if it constitutes a Total Loss Event: any of the Rigs are sold or disposed of; (iv) (v) the Issuer ceases to be the owner (directly or indirectly) of 99% of the shares in the Interco; the Interco ceases to be the owner (directly or indirectly) of 99% of the shares in each of the Rig Owners and/or the Beta Charterer; the Construction Contracts are terminated and not are replaced within 60 days with contracts with the same Yard for the same rigs on terms similar or more in the reasonable opinion of the Trustee, favorable to the Issuer; or the Rigs, including any replacement according to (iv) above are not delivered prior to 31 March Event of Default: Unless otherwise specified, the term "Event of Default" when used in this term sheet means an event of default under the Bond Agreement. The Bond Agreement shall include standard remedy and event of default provisions, including remedy periods and cross default provisions against the Obligors with a threshold of USD 5,000,000. The Finance Documents will contain waterfall provisions in case of partial payments i.e. first to cover costs, fees and expenses of the Trustee (the "Trustee Expenses") and thereafter any other outstanding amounts under the Finance Documents. In case the Issuer does not pay the Trustee for incurred fees, then the Trustee may seek funding of the Trustee Expenses from the Bondholders, or failing them, other sources, in which case such other sources will be subrogated into the position of the Trustee, but subordinate to any further Trustee expenses. 21

26 Material Adverse Effect: Financial Indebtedness: A material adverse effect on: financial condition or operations of the Group taken as a whole, any of the Obligors' ability to perform and comply with its obligations under the Finance Documents or the validity or enforceability of any Finance Document. Any indebtedness incurred in respect of: moneys borrowed (including acceptance credit and any overdraft facility); (iv) any bond, note, debenture, loan stock or other similar instrument; the amount of any liability in respect of any lease, hire purchase contract which would, in accordance with US GAAP, be treated as a finance or capital lease; receivables sold or discounted (other than any receivables sold on a nonrecourse basis); (v ) any sale and lease-back transaction, or similar transaction which is treated as indebtedness under US GAAP; (vi) (vii) (viii) (ix) any liability under a deferred purchase agreement where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset; any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price, including without limitation currency or interest rate swaps, caps or collar transactions (and, when calculating the value of the transaction, only the marked-to-market value shall he taken into account); any amounts raised under any other transactions having the commercial effect of a borrowing or raising of money (including any forward sale or purchase agreement); or any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of any underlying liability; and (without double counting), any guarantee, indemnity or similar assurance against financial loss of any person in respect of any of the items referred to above. Project Documents: Collectively, (iv) the Construction Contracts; any Intra-Group Loan Agreement; the Rig Management Agreements; any Drilling Contracts; and (v ) the Beta Bareboat Charter. Finance Documents: Collectively, the Bond Agreement; the Security Documents; 22

27 (iv) (v) the Intercreditor Agreement; Trustee's fee letter; and any other document the Issuer and the Trustee agree to be a Finance Document. Offering Circular: Approvals: Issuer s Ownership of the Bonds: Managers: Trustee: Governing Law and Jurisdiction: Registration: Paying Agent: Taxation: Bond Agreement: The offering circular dated 3 September 2014 The Bonds will be issued in accordance with the Issuer's board approval The Issuer has the right to acquire and own the Bonds. Such Bonds may at the Issuer's discretion be retained by the Issuer, sold or discharged. DNB Bank ASA, DNB Markets, NO-0191 Oslo, Norway; and Swedbank Norge, branch of Swedbank AB (publ), P.O. Box 1441 Vika, N-0115 Oslo, Norway. Nordic Trustee ASA, Postboks 1470 Vika, NO-0116 Oslo. Norwegian law and exclusive jurisdiction of Norwegian courts (at the competent legal venue of the Trustee) for the Bond Agreement and the other Finance Documents, provided that the governing law for the Security Documents will be the appropriate local jurisdiction. The Bonds will be registered in the Norwegian Central Securities Depository (VPS). Principal and interest accrued will be credited the Bondholders through VPS. DNB Bank ASA The Issuer shall pay any stamp duty and other public fees accruing in connection with the Bonds, but not in respect of trading in the secondary market (except to the extent required by applicable law). Tax deduction and withholding tax shall be subject to standard gross-up and call provisions. The Bond Agreement will be entered into by the Issuer and the Trustee acting as the Bondholders' representative, and it shall be based on Norwegian standard. The Bond Agreement shall regulate the Bondholders' rights and obligations with respect to the Bonds. If any discrepancy occurs between this Term Sheet and the Bond Agreement, then the Bond Agreement shall prevail. The subscriber is deemed to have granted authority to the Trustee to finalize the Bond Agreement and the Finance Documents. Although minor adjustments to the structure described in this Term Sheet may occur, and the final Bond Agreement and Intercreditor Agreement must be in a form and substance satisfactory to the Bondholders, the provisions in the Bond Agreement will be substantially consistent with those set forth in this Term Sheet. The application form specifically authorizes the Trustee to execute and deliver the Bond Agreement on behalf of the prospective Bondholders, who will execute and deliver such application form prior to receiving Bond allotments. Prior to signing such application form, each Bondholder shall confirm that the Bond Agreement and Intercreditor Agreement is in a form and substance satisfactory to it. On this basis, the Issuer and the Trustee will execute and deliver the Bond Agreement and the latter's execution and delivery is on behalf of all of the subscribers, such that they thereby will become bound by the Bond Agreement. The Bond Agreement specify that all Bond transfers shall be subject to the terms thereof, and the Trustee and all Bond transferees shall, when acquiring the Bonds, be deemed to have accepted the terms of the Bond Agreement, which specifies that all such transferees shall automatically become bound by the Bond Agreement upon completed transfer having been registered by VPS, 23

28 without any further action required to be taken or formalities to be complied with. The Bond Agreement shall specify that it shall be made available to the general public for inspection purposes and may, until redemption in full of the Bonds, be obtained on request by the Trustee or the Issuer, and such availability shall be recorded in the VPS particulars relating to the Bonds. Stock Exchange Listing: M arket Making: Eligible Purchasers: Transfer Restrictions: An application will be made for the Bonds to be listed on Nordic ABM No market-maker agreement has been made for this Bond Issue. The Bonds are not being offered to and may not be purchased by investors located in the United States except for Qualified Institutional Buyers (QIBs) within the meaning of Rule 144A under the U.S. Securities Act of 1933, as amended ( Securities Act ). In addition to the Application Form that each investor will be required to execute, each U.S. investor that wishes to purchase Bonds will be required to execute and deliver to the Issuer a certification in a form to be provided by the Issuer stating, among other things, that the investor is a QIB. The Bonds may not be purchased by, or for the benefit of, persons resident in Canada. The Bonds are freely transferable and may be pledged, subject to the following: the Bondholders may be subject to purchase or transfer restrictions with regard to the Bonds, as applicable from time to time under local laws to which a Bondholder may be subject (due e.g. to its nationality, its residency, its registered address, its place(s) for doing business). Each Bondholder must ensure compliance with local laws and regulations applicable at own cost and expense; and notwithstanding the above, a Bondholder which has purchased the Bonds in contradiction to mandatory restrictions applicable may nevertheless utilize its voting rights under the Bond Agreement. Oslo, 4 September Atlantica Tender Drilling Ltd. As Issuer MARKETS DNB Markets As Manager Swedbank Swedbank Norge As Manager 24