NORSK TILLITSMANN NORWEGIAN TRUSTEE Denne melding til obligasjonseieme er kun utarbeidet på engelsk. For informasjon vennligst kontakt Norsk Tillitsmann ASA To the bondholders in: ISIN: NO 001 058468.3-15.00 per cent InterOil Exploration & Production ASA Senior Secured Callable Bond Issue 2010/2014 Waiver request Oslo, 26 October 2011 Norsk Tillitsmann ASA is appointed as Bond Trustee for the above mentioned Bond issue issued by InterOil Exploration & Production ASA (the Issuer ). The information in this summons regarding the Issuer and market conditions are provided by the Issuer, and the Bond Trustee expressly disclaims all liability whatsoever related to such information. Reference is made to the enclosed waiver request from the Issuer. The Issuer has contacted the Bond Trustee with a request for a waiver for certain clauses o f the Bond Agreement which the Issuer or its subsidiaries are not in a position to fulfill. 1. Account pledges According to the Loan Agreement the security for the Bonds shall include a pledge over the receivables in the subsidiary incorporated in Switzerland InterOil Exploration SA (the Swiss Subsidiary ). In connection with the pledge over receivables, payments of such receivables are supposed to be made to accounts pledged to the Bond Trustee in favor o f the Bondholders. The Issuer has informed us that it will not be able to provide such pledged accounts for two bank accounts held by the Swiss Subsidiary with UBS in Switzerland, as the bank will terminate the banking relation with the Swiss Subsidiary if the accounts are pledged. The relevant accounts are (i) the CHF account with account number 260-362788.0IB, and (ii) the USD account with account number 260-362788.60M (together the Swiss Accounts ). The Issuer requests a waiver for the requirement to pledge the Swiss Accounts. In the opinion of the Bond Trustee, a waiver of the account pledges o f the two bank accounts o f the Swiss Subsidiary will have a minor negative impact on the security position of the Bonds, also through a negative impact on the pledge over receivables, however it is the impression of the Bond Trustee that Bondholders do not wish to declare the Bonds in default on the basis of not receiving the account pledges over the Swiss Accounts. Conditional upon the Issuer and the Swiss Subsidiary undertaking a negative pledge covenant encompassing all bank accounts held from time to time by the Swiss Subsidiary, the Bond Trustee is willing to waive the requirement to pledge the Swiss Accounts. 2. Production covenants With reference to the information letter from the Bond Trustee to the Bondholders dated 6 July 2011, the Issuer has notified the Bond Trustee that the credit facility (the Bank Facility Agreement ) between Citibank N.A. (the Bank ) and Interoil Peru S.A. has certain clauses regarding (i) the minimum production level on a rolling twelve and six months basis, and (ii) a minimum current ratio PO Box 1470 Vika, N-0116 Oslo Haakon VIIs gate 1, Oslo Switchboard: +47 22 87 94 00 Fax: +47 22 87 9410 www.trustee.no
NORSK TILLITSMANN NORWEGIAN TRUSTEE of current assets against current liabilities, which have proved hard to meet by Interoil Peru S.A. ((i) and (ii) collectively referred to as the Peru Shortfalls ), The Issuer informs us that the Bank is aware of and comfortable with the Peru Shortfalls, but that the Bank will not issue a formal waiver for these matters. As stated in the information letter, the Peru Shortfalls could be relevant in relation to the cross default provisions of the Bond Agreement. The Issuer requests a confirmation that the Bonds will not be declared in default due to a cross default based on the Peru Shortfalls. It is the impression of the Bond Trustee that the Bondholders do not under the current circumstances wish to declare a cross default based on the Peru Shortfalls, and consequently the Bond Trustee is willing to confirm that based on the information the Issuer has presented, the Bond Trustee does not intend, unless new information arises, to declare a cross default based on the Peru Shortfalls. Any indication in any form that the Bank is not any longer comfortable with the Peru Shortfall, or that the Bank may intend to declare a default under the Bank Facility Agreement or related documents, shall be considered such new information. 3. Conditions for the Waiver The Bond Trustee hereby informs the Bondholders that it has granted a waiver for the matters, as set out above under paragraph 1 and 2. Bondholders may submit a written protest to the decision which shall be received by the Bond Trustee within 9 November 2011, and the validity of the waiver is conditional upon that the Bond Trustee does not receive any such protests within this deadline. Yours sincerely Norsk Tillitsmann ASA / / - - 5 Ragnar ^jojief Bondholders may contact Jens Samuelsen with Norsk Tillitsmann ASA with any questions on the matter. Attached: Letter from the Issuer dated 21 October 2011, regarding the waiver request - 2 -
* INTEROIL Norsk Tillitsmann P.O. Box 1470 Vika N-0116 Oslo INTEROIL E&P ASA STRANDVEIEN 60 NO-1366 LYSAKER w w w.in t e r o il.n o T +47 6761 8650 F +47 6751 8660 INFO@INTEROIL.NO 21 October 2011 RE: NOK 310,000,000 SENIOR SECURED CALLABLE BOND ISSUE, ISIN NO. 0010584683 - WAIVER REQUEST We write to you in connection with the NOK 310,000,000 Senior Secured Callable Bond Issue with ISIN NO 0010584683 for Interoil Exploration & Production ASA dated 8 September 2010 (the Bond Agreement ) between ourselves as issuer and yourselves as trustee for the Bondholders (the Bond Trustee or the Security Agent ) and in connection with the waiver letter executed by you, in your capacity as Bond Trustee on behalf of the Bondholders, on 1 October 2010 (the Waiver Letter ; Enclosure 1) as well as our acknowledgement and acceptance of the Waiver Letter dated the same date (the Acknowledgement ; Enclosure 2). Terms defined in the Waiver Letter and the Acknowledgement shall have the same meaning when used in this letter. Under the Waiver Letter you, in your capacity as Bond Trustee on behalf of the Bondholders - subject to the terms of the Acknowledgement - agreed to waive the execution and perfection of the IOSA Security Documents as conditions precedent for the utilization according to clause 6.2.2(f) of the Bond Agreement. Under the Acknowledgement we inter alia agreed to execute or procure the execution of the IOSA Security Documents in the form attached to the Acknowledgment upon (i) the earlier of the effective date of the Judgment or the day on which the Share Certificates are retrieved and (ii) the effectiveness of the Articles Amendment. We undertook to complete the steps required from us under the Waiver Letter and the Acknowledgement within no later than 250 Business Days from the date of the Waiver Letter, i.e. by (and including) 26 September 2011. In recognition of our obligations under the Waiver Letter and the Acknowledgment we have delivered to you on 26 September 2011 the following IOSA Security Documents: IOSA Share Pledge Agreement; IOSA Receivables Assignment Agreement; and IOSA Guarantee, and all such additional documents referred therein. BANK: DNB NOR BANK ASA, 0021 OSLO USD ACCOUNT: IBAN N078 5011 04 44610 NOK ACCOUNT: IBAN NO20 1644 30 93196 SWIFT: DNBANQKKXXX COMPANY NO.: NO 988 247 006 MVA ISIN: NO0010284318 PAGE 1
We shall however not be in a position to deliver to you the IOSA Bank Accounts Pledge Agreement, since the account bank, UBS AG, 1700 Fribourg, Switzerland ( UBS ), clearly indicated to us that it will terminate the banking relation with InterOil Exploration SA ( IOSA ) in case of being notified or otherwise made aware of a pledge of the following two accounts held by IOSA with it ( UBS Accounts ): CHF account: 16 464.29 Account number: IB AN: USD account: 63.59 Account number: IBAN: * There are no further accounts held by IOSA with UBS or other banks. Considering the facts that the amounts credited to the UBS Accounts are not significant (CHF 16 464.29 / USD 63.59, both as per 13 October 2011; Enclosure 13 and that all shares in IOSA will be pledged to the Bondholders under the IOSA Share Pledge Agreement, the security pledged to the Bondholders will in all material respects remain in accordance with the IOSA Share Pledge Agreement. And the Bondholders would, by way of realizing its pledge in the shares in IOSA, have the full benefit of the amounts on the UBS Accounts. Further we also take this opportunity to raise two other issues with you relating to the Credit Agreement between Citibank N.A. and Interoil Peru S.A. (i) Section 5.03 (c) relating to a minimum current ratio of current assets against current liabilities, and (ii) Section 5.03 (e) relating to a minimum daily average production. Both items where addressed in our Compliance Certificate to you dated 16 August 2011. The minimum current ratio was, as of the second quarter 2011, 0.25. This is below the 1.25:1 requirement in the credit agreement with Citibank. The minimum daily average production for Interoil Peru S.A. in August was 4 004 and in September 3 749 BOPD. Citibank have de facto provided us with a waiver from these negative covenants by way of accepting our shortfall. We are in constant dialog with Citibank and they monitor closely our drilling and production activities and remain comfortable with our current operations, however due to bank policy, Citibank can not provide us with a written waiver for the shortfall. For the above reasons and with reference to the communication between you and us in this matter, we herewith ask for (i) a waiver of the requirement under the Waiver Letter and the Acknowledgment to deliver to you, in your capacity as Bond Trustee on behalf of the Bondholders, the IOSA Bank Accounts Pledge Agreement, and (ii) confirmation that the Bond is not in default due to the shortfalls under sections 5.03 (c) and (e) under the Credit Agreement, as long as Citibank N.A. have not declared that the Credit Agreement is in default. PAGE 2 OF 3
i n t h non. We ask that you submit this request to the Bondholders for consent, if you deem this to be required under the Bond Agreement. Kira regards, For Interoil Exploration and Production ASA then Rod PAGE 3 OF 3