BOND AGREEMENT between North Atlantic Drilling Ltd. (Issuer) and Norsk Tillitsmann ASA (Bond Trustee) on behalf of the Bondholders in the bond issue

Exhibit 10.6

ISIN NO 001 060617.1

BOND AGREEMENT

between

North Atlantic Drilling Ltd. (Issuer)

and

Norsk Tillitsmann ASA

(Bond Trustee)

on behalf of

the Bondholders

in the bond issue

7.75 per cent North Atlantic Drilling Ltd. Callable Senior Unsecured Bond Issue 2011/2018

Norsk Tillitsmann ASA

TABLE OF CONTENTS


1	Interpretation	3
2	The Bonds	8
3	Listing	9
4	Registration in a Securities Register	9
5	Purchase and transfer of Bonds	10
6	Conditions Precedent	10
7	Representations and Warranties	11
8	Status of the Bonds and security	13
9	Interest	13
10	Maturity of the Bonds, Change of Control and Call Option	14
11	Payments	15
12	Issuer’s acquisition of Bonds	16
13	Covenants	16
14	Fees and expenses	19
15	Events of Default	20
16	Bondholders’ Meeting	22
17	The Bond Trustee	25
18	Miscellaneous	26

Norsk Tillitsmann ASA

This agreement has been entered into on 31 March, 2011 between

(1) North Atlantic Drilling Ltd. (Bermuda Company No 45094/Norwegian Company No 996 732 851) (the “Issuer”), and

(2) Norsk Tillitsmann ASA (a company incorporated in Norway with Company No. 963 342 624) as bond trustee (the “Bond Trustee”).

1	Interpretation

1.1

Definitions

In this Bond Agreement the following terms shall have the following meanings (certain terms relevant for Clauses 13 and 18.2 and other Clauses may be defined in the relevant Clause):

“Account Manager” means a Bondholder’s account manager in the Securities Register.

“Attachment” means any attachment to this Bond Agreement.

“Bond Agreement” means this bond agreement, including any Attachment to which it refers, and any subsequent amendments and additions agreed to in writing by the Parties.

“Bond Issue” means the bond issue constituted by the Bonds.

“Bondholder” means holder of Bond(s), as registered in the Securities Register, from time to time.

“Bondholders’ Meeting” means meetings of Bondholders, as set forth in Clause 16.

“Bonds” means the securities issued by the Issuer pursuant to this Bond Agreement, representing the Bondholders’ underlying claim on the Issuer.

“Book Equity” means the aggregate book value (on a consolidated basis) of the Group’s total equity treated as equity in accordance with GAAP minus any senior liability or perpetual liability with a step-up treated as equity under GAAP, as set out in the then most recent Financial Statements (or, if more recent, the latest Quarterly Financial Reports) of the Issuer.

“Business Day” means any day on which Norwegian commercial banks are open for general business and can settle foreign currency transactions, being any day on which the Norwegian Central Bank’s Settlement System is open.

“Business Day Convention” means that no adjustment will be made, notwithstanding the period end date occurring on a day that is not a Business Day, and if such date is not a Business Day, payments of interest will be made on the first following day that is a Business Day (No Adjustments of Business Day).

Norsk Tillitsmann ASA

“Cash and Cash Equivalents” means at the date of calculation (on a consolidated basis for the Group), the aggregate amount of the Group’s:

(i)

cash in hand or on deposit with any bank or financial institution located in any member state of the OECD or the United States of America;

(ii)

cash equivalents (as reported in its Financial Statements in accordance with GAAP); and

(iii)

monies available for drawing under committed and undrawn credit lines with minimum 12 months remaining duration,

in all cases free of any Encumbrance and otherwise at the unrestricted disposal of the relevant member of the Group by which it is owned.

“Change of Control Event” means an event where any person or group, other than Seadrill Limited, and/or other companies controlled directly or indirectly by Seadrill Limited, becomes the owner, directly or indirectly, of more than 50% of the outstanding shares of the Issuer.

“Contemplated Bank Facility” means the secured bank loan facility in the amount of USD 2,000,000,000 which the Issuer contemplates to enter into with DnB NOR Bank ASA as agent and certain lenders.

“EBITDA” means the earnings before interest expenses, taxes, depreciation and amortization of the Group on a consolidated basis for the previous period of twelve (12) months as such term is defined in accordance with GAAP consistently applied. However, in the event the Issuer or a member of the Group acquires Units or Unit owning entities with historical EBITDA available for the relevant Units’ previous ownership, such EBITDA shall be included for covenant purposes in this Bond Agreement, and if necessary, be annualized to represent a twelve (12) months historical EBITDA. In the event the Issuer or a member of the Group acquires Units or Unit owning companies without historical EBITDA available, the Issuer is entitled to base a twelve (12) month historical EBITDA calculation on future projected EBITDA only subject to any new Unit having a firm charter contract in place at the time of such EBITDA calculation. Further, it is agreed that EBITDA shall include any realized gains and/or losses in respect of the disposal of Units or the disposal of shares in Unit owning companies.

“Encumbrance” means any encumbrance, mortgage, pledge, lien, charge (whether fixed or floating), assignment by way of security, finance lease, sale and repurchase or sale and leaseback arrangement, sale of receivables on a recourse basis or security interest or any other agreement or arrangement having the effect of conferring security other than a Permitted Security or an Encumbrance arising pursuant to a netting, set-off, cash management, cash pooling or consolidation or combination of accounts in accordance with the Group’s banking arrangements.

Norsk Tillitsmann ASA

“Event of Default” means the occurrence of an event or circumstance specified in Clause 15.1.

“Excess Value” means difference between the book value of the Units in the Financial Statements or Quarterly Financial Reports (as the case may be) and their Market Value on the date of such accounts.

“Exchange” means Oslo Stock Exchange or another recognized stock exchange, where the Issuer may in its discretion apply for listing of the Bonds.

“Finance Documents” means (i) this Bond Agreement, (ii) the agreement between the Bond Trustee and the Issuer referred to in Clause 14.2, (iii) any other document (whether creating a security interest or not) which is executed at any time by the Issuer in relation to any amount payable under this Bond Agreement.

“Financial Indebtedness” means any indebtedness incurred in respect of:

(a)

moneys borrowed, including acceptance credit;

(b)

any bond, note, debenture, loan stock or other similar instrument;

(c)

the amount of any liability in respect of any lease, hire purchase contract which would, in accordance with GAAP, be treated as a finance or capital lease;

(d)

receivables sold or discounted (other than any receivables sold on a non-recourse basis);

(e)

the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset;

(f)

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 xxxx-to-market value shall be taken into account);

(g)

any amounts raised under any other transactions having the commercial effect of a borrowing or raising of money, whether recorded in the balance sheet or not (including any forward sale of purchase agreement);

(h)

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 institutions; and

(i)

(without double counting) any guarantee, indemnity or similar assurance against financial loss of any person in respect of any of the items referred to in ( a) through (i) above.

“Financial Statements” means the audited unconsolidated and consolidated annual accounts of the Issuer for any financial year, drawn up in accordance with applicable law and GAAP, such accounts to include a profit and loss account, balance sheet, cash flow statement and in each case with the relevant notes thereto and report from the Board of Directors.

“GAAP” means the generally accepted accounting practice and principles in the United States of America.

Norsk Tillitsmann ASA

“Group” means the Issuer and its direct and indirect Subsidiaries, and a “Group Company” means any of them.

“Interest Cover Ratio” means the ratio of the Group’s consolidated EBITDA to interest expenses for the previous period of twelve (12) months (provided however that interest expense with respect to debts relating to any Unit which has been in operation for a period of less than 12 months shall not be taken into account).

“Interest Payment Date” means September 30 and March 31 each year including the Maturity Date. Any adjustment will be made according to the Business Day Convention.

“Issue Date” means March 31, 2011.

“Issuer’s Bonds” means Bonds owned by the Issuer, any party or parties who has decisive influence over the Issuer, or any party or parties over whom the Issuer has decisive influence.

“Manager” means the manager for the Bond Issue.

“Market Adjusted Equity” means the Book Equity, adjusted for any Excess Value (plus or minus, as the case may be).

“Market Adjusted Equity Ratio” means the ratio of Market Adjusted Equity to Market Adjusted Total Assets.

“Market Adjusted Total Assets” means the Total Assets, adjusted for any Excess Value (plus or minus, as the case may be).

“Market Value” means the aggregate fair market value of the Units in USD determined as the arithmetic mean of independent valuations of each of the Units, 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, obtained from two independent and well-reputed sale and purchase brokers familiar with the market for the Units, appointed by the Issuer and approved by the Bond Trustee. Such valuation shall be made at least once a year, in connection with the presentation of the Issuer’s Financial Statements or upon request by the Bond Trustee. The cost of such valuation shall be for the account of the Issuer.

“Material Adverse Effect” means a material adverse effect on: (a) the business, financial condition or operations of the Issuer and the Group taken as a whole, (b) the Issuer’s ability to perform and comply with its obligations under this Bond Agreement; or (c) the validity or enforceability of this Bond Agreement.

“Material Subsidiary” means:

(i)

any Subsidiary whose total consolidated assets represent at least 5% of the total consolidated assets of the Group, or

Norsk Tillitsmann ASA

(ii)

any Subsidiary whose total consolidated net sales represent at least 5% of the total consolidated net sales of the Group, or

(iii)

any other Subsidiary to which is transferred either (A) all or substantially all of the assets of another Subsidiary which immediately prior to the transfer was a Material Subsidiary or (B) sufficient assets of the Issuer that such Subsidiary would have been Material Subsidiary had the transfer occurred on or before the relevant date.

“Maturity Date” means 31 March, 2018.

“NOK” means Norwegian kroner, being the lawful currency of Norway.

“Outstanding Bonds” means the aggregate value of the total number of Bonds not redeemed or otherwise discharged.

“Party” means a party to this Bond Agreement (including its successors and permitted transferees).

“Paying Agent” means any legal entity as appointed by the Issuer and approved by the Bond Trustee who acts as paying agent on behalf of the Issuer with respect to the Bonds.

“Payment Date” means a date for payment of principal or interest.

“Permitted Security” means the security to be granted by the Issuer as collateral for the Contemplated Bank Facility.

“Quarter Date” means each 31 March, 30 June, 30 September and 31 December.

“Quarterly Financial Reports” means the unaudited and consolidated management accounts of the Issuer as of each Quarter Date, such accounts to include a profit and loss account, balance sheet, cash flow statement and management commentary.

“Securities Register Act” means the Norwegian Act relating to Registration of Financial Instruments of 5 July 2002 No. 64.

“Securities Register” means the securities register in which the Bonds are registered.

“Subsidiary” means an entity over which another entity or person has a controlling influence due to (i) direct and indirect ownership of shares or other ownership interests, and/or (ii) agreement, understanding or other arrangement. An entity shall always be considered to be the subsidiary of another entity or person if such entity or person has such number of shares or ownership interests so as to represent the majority of the votes in the entity, or has the right to vote in or vote out a majority of the directors in the entity.

“Taxes” means all present and future taxes, levies, imposts, duties, charges, fees, deductions and withholdings, and any restrictions and or conditions resulting in a charge together with interest thereon and penalties in respect thereof and “Tax” and “Taxation” shall be construed accordingly.

Norsk Tillitsmann ASA

“Total Assets” means the aggregate book value (on a consolidated basis) of the Group’s total assets which are treated as assets in accordance with GAAP, as set out in the then most recent Financial Statement (or, if more recent, the latest Quarterly Financial Reports) of the Issuer.

“Units” means any and all of the mobile offshore units owned by any member of the Group.

“USD” means United States Dollars, being the lawful currency of the United States of America.

“US Securities Act” means the U.S. Securities Act of 1933, as amended.

“Voting Bonds” means Outstanding Bonds less Issuer’s Bonds.

1.2	Construction

In this Bond Agreement, unless the context otherwise requires:

(a)

headings are for ease of reference only;

(b)

words denoting the singular number shall include the plural and vice versa;

(c)

references to Clauses are references to the Clauses of this Bond Agreement;

(d)

references to a time is a reference to Oslo time unless otherwise stated herein;

(e)

references to a provision of law is a reference to that provision as it may be amended or re-enacted, and to any regulations made by the appropriate authority pursuant to such law, including any determinations, rulings, judgments and other binding decisions relating to such provision or regulation; and

(f)

references to a “person” shall include any individual, firm, partnership, joint venture, company, corporation, trust, fund, body corporate, unincorporated body of persons, or any state or any agency of a state or association (whether or not having separate legal personality).

2	The Bonds

2.1

Binding nature of the Bond Agreement

2.1.1

The Bondholders are, through their subscription, purchase or other form of acquisition of Bonds bound by the terms of the Bond Agreement and the other Finance Documents, as the initial Bondholders have granted authority to the Bond Trustee to finalize and execute the Bond Agreement on their behalf while all Bond transfers are subject to the terms of this Bond Agreement and all Bond transferees are, in accepting delivery of Bonds, deemed to have accepted the terms of the Bond Agreement and the other Finance Documents and will automatically become bound by the Bond Agreement and the other Finance Documents upon completed transfer having been registered in the Securities Register, without any further action required to be taken or formalities to be complied with, see also Clause 18.1.

2.1.2

The Bond Agreement is available to anyone and may be obtained from the Bond Trustee or the Issuer. The Issuer shall ensure that the Bond Agreement is available to the general public throughout the entire term of the Bonds.

Norsk Tillitsmann ASA

2.2	The Bonds

2.2.1

The Issuer has resolved to issue a series of Bonds in the maximum amount of USD 500,000,000 (fivehundredmillion).

The Bonds will each be in denominations of USD 100,000 and rank pari passu.

The Bond Issue will be described as “7.75 per cent North Atlantic Drilling Ltd. Callable Unsecured Bond Issue 2011/2018”.

The International Securities Identification Number (ISIN) of the Bond Issue will be NO 001 060617.1.

The tenor of the Bonds is from and including the Issue Date to the Maturity Date.

2.3

Purpose and utilization

2.3.1

The net proceeds of the Bonds shall part-finance the Issuer’s acquisition of existing Units and newbuild Units, directly or indirectly by acquiring Unit owning entities, or a combination thereof, and for general corporate purposes.

3	Listing

3.1	The Issuer may apply for listing of the Bonds on the Exchange in its discretion.

3.2	If the Bonds are listed, the Issuer shall ensure that the Bonds remain listed until they have been discharged in full.

4	Registration in a Securities Register

4.1	The Bond Issue and the Bonds shall prior to disbursement be registered in the Securities Register according to the Securities Register Act and the conditions of the Securities Register.

4.2	The Issuer shall promptly arrange for notification to the Securities Register of any changes in the terms and conditions of this Bond Agreement. The Bond Trustee shall receive a copy of the notification.

4.3	The Issuer is responsible for the implementation of correct registration in the Securities Register. The registration may be executed by an agent for the Issuer provided that the agent is qualified according to relevant regulations.

4.4	The Bonds have not been registered under the US Securities Act, and the Issuer is under no obligation to arrange for registration of the Bonds under the US Securities Act.

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5	Purchase and transfer of Bonds

5.1	Subject to the restrictions set forth in this Clause 5, the Bonds are freely transferable and may be pledged.

5.2

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.

5.3	Notwithstanding the above, a Bondholder which has purchased the Bonds in contradiction to mandatory restrictions applicable may nevertheless utilize its voting rights under this Bond Agreement.

6	Conditions Precedent

6.1	Disbursement of the net proceeds of the Bonds to the Issuer will be subject to the Bond Trustee having received the following documents, in form and substance satisfactory to it, at least two Business Days prior to the Issue Date:

(a)

the Finance Documents duly executed by all parties thereto;

(b)

certified copies of all necessary corporate resolutions to issue the Bonds and execute the Finance Documents and authorising a specified person or persons to execute the Finance Documents on the Issuer’s behalf;

(c)

certified copies of (i) the Certificate of Incorporation or other similar official document for the Issuer, evidencing that it is validly existing and (ii) the by-laws of the Issuer,

(d)

confirmation that the requirements set forth in Chapter 7 of the Norwegian Securities Trading Act (implementing the EU prospectus directive (2003/71 EC) concerning prospectuses have been fulfilled;

(e)

to the extent necessary, any public authorisations required for the Bond Issue;

(f)

confirmation from the Paying Agent that the Bonds have been registered in the Securities Register;

(g)

written confirmation in accordance with Clause 7.3 (if required);

(h)

documentation on granting of authority to the Bond Trustee as set in Clause 2.1;

Norsk Tillitsmann ASA

(i)

copies of any written documentation made public by the Issuer or the Manager in connection with the Bond Issue; and

(j)

any legal opinions on the laws of Norway and Bermuda reasonably required by the Bond Trustee.

6.2	Subject to the conditions set out above the net proceeds of the Bond Issue will be made available to the Issuer at the Issue Date.

6.3	The Bond Trustee may, in its reasonable opinion, waive the deadline or requirements for documentation as set forth in Clause 6.1.

6.4	Disbursement of the net proceeds of the Bonds to the Issuer is subject to the Bond Trustee’s written notice to the Issuer, the Manager and the Paying Agent that the documents have been controlled and that the required conditions precedent are fulfilled or waived.

6.54	On the Issue Date, subject to receipt of confirmation from the Bond Trustee pursuant to Clause 6.4, the Manager shall make the net proceeds from the first tranche of the Bond Issue available to the Issuer.

7	Representations and Warranties

7.1	The Issuer represents and warrants to the Bond Trustee (on behalf of the Bondholders) that:

(a)

Status

The Issuer is a public limited liability company, duly incorporated and validly existing under the law of the jurisdiction in which it is incorporated, and has the power to own its assets and carry on its business as it is currently being conducted.

(b)

Power and authority

The Issuer has the power to enter into and perform, and has taken all necessary corporate action to authorize its entry into, performance and delivery of the Finance Documents to which it is a party and the transactions contemplated thereby.

(c)

Valid, binding and enforceable obligations

The Finance Documents constitute (or will constitute, when executed by the respective parties thereto) legal, valid and binding obligations of the Issuer, enforceable in accordance with their terms, and (save as provided for therein) no further registration, filing, payment of tax or fees or other formalities are necessary to render the said documents enforceable against the Issuer.

(d)

Non-conflict with other obligations

The entry into and performance by the Issuer of the Finance Documents to which it is a party and the transactions contemplated thereby do not and will not conflict with (i) any present law or regulation or present judicial or official order; (ii) its by-laws or other constitutional documents; or (iii) any document or agreement which is binding on the Issuer or any of its assets.

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(e)

No Event of Default

No Event of Default exists, and no other circumstances exist which constitute or (with the giving of notice, lapse of time, determination of materiality or the fulfillment of any other applicable condition, or any combination of the foregoing) would constitute a default under any document which is binding on the Issuer or any of its assets, in each case which may have a Material Adverse Effect.

(f)

Authorizations and consents

All authorizations, consents, licenses or approvals of any governmental authorities required for the Issuer in connection with the execution, performance validity or enforceability of any Finance Document, and the transactions contemplated thereby, ‘have been obtained and are valid and in full force and effect. All authorizations, consents, licenses or approvals of any governmental authorities required for the Issuer to carry on its business as presently conducted and as contemplated by this Bond Agreement, have been obtained and are in full force and effect.

(g)

Litigation

No litigation, arbitration or administrative proceeding of or before any court, arbitral body or agency is pending or, to the best of the Issuer’s knowledge, threatened against the Issuer which, if adversely determined, might reasonably be expected to have a Material Adverse Effect.

(i)

No Material Adverse Effect

Since the date of its incorporation, there has been no change in the business, assets or financial condition of the Issuer that is likely to have a Material Adverse Effect.

(j)

No misleading information

All documents and information which have been provided to the subscribers or the Bond Trustee by the Issuer or with the agreement of the Issuer in connection with the Bond Issue represent the latest available financial information concerning the Group, and there has been no change in the Group’s financial position since the date of its incorporation which could have a Material Adverse Effect.

(k)

Environmental compliance

The Issuer and each Subsidiary are in material compliance with any relevant applicable environmental law or regulation and no circumstances have occurred which would prevent such compliance in a manner which has or is likely to have a Material Adverse Effect.

(l)

No withholdings

The Issuer is under present law not required to make any deduction or withholding from any payment which it may become obliged to make to the Bond Trustee (on behalf of the Bondholders) or the Bondholders under this Bond Agreement.

(m)

Pari passu ranking

The Issuer’s payment obligations under this Bond Agreement or any other Finance Document to which it is a party rank at least pari passu with the claims of its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

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7.2	The representations and warranties set out in Clause 7.1 are made on the date of this Bond Agreement, and shall be deemed to be repeated on the Issue Date.

7.3	The Bond Trustee may prior to disbursement require a written statement from the Issuer confirming compliance with Clause 7.1.

7.4

In the event of misrepresentation when a statement is made by the Issuer, the Issuer shall indemnify the Bond Trustee for any economic losses suffered, both prior to the disbursement of the Bonds, and during the term of the Bonds, as a result of its reliance on the representations and warranties provided by the Issuer herein.

8	Status of the Bonds and security

8.1	The Bonds shall be senior debt of the Issuer. The Bonds shall rank at least pari passu with all other obligations of the Issuer (save for such claims which are preferred by bankruptcy, insolvency, liquidation or other similar laws of general application) and shall rank ahead of subordinated debt.

8.2	The Bonds are unsecured.

9	Interest

9.1	The Issuer shall pay interest on the face value of the Bonds from, and including, the Issue Date at a fixed rate of 7.75 per cent per annum (the “Fixed Rate”).

9.2	Interest payments shall be made in arrears on each Interest Payment Date, the first Interest Payment Date falls on 30 September, 2011.

9.3	The relevant interest payable amount shall be calculated based on a period from, and including, one Interest Payment Date to, but excluding, the next following applicable Interest Payment Date.

9.4

The day count fraction in respect of the calculation of the payable interest amount shall be “30/360”, which means that the number of days in the calculation period in respect of which payment is being made divided by 360 (the number of days to be calculated on the basis of a year of 360 days with twelve 30-days months (unless (i) the last day of the calculation period is the 31st day of a month but the first day of the calculation period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 30-day month, or (ii) the last day of the calculation period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month)).

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9.5	The payable interest amount per Bond for a relevant calculation period shall be calculated as follows:

Interest

Amount

Face

Value

Fixed

Rate

Fixed Rate

Day Count Fraction

10	Maturity of the Bonds, Change of Control and Call Option

10.1	Maturity

The Bonds shall mature in full on the Maturity Date, and shall be repaid at par (100%) by the Issuer.

10.2

Change of control – Put Option

10.2.1

Upon the occurrence of a Change of Control Event each Bondholder shall have a right of early repayment (a “Put Option”) of its Bonds at a price of 101 % of par plus accrued interest.

10.2.2

The Put Option must be exercised within 60 days (sixty days) after the Issuer has given notification to the Bondholders of a Change of Control Event. Such notification shall be given as soon as possible after a Change of Control Event has taken place.

The Put Option may be exercised by the Bondholders by giving written notice of the request to its Account Manager. The Account Manager shall notify the Paying Agent of the pre-payment request. The settlement date of the Put Option shall be the fifth – 5 – Business Days following the expiry of the 60 day period set out above.

10.2.3

On the settlement date of the Put Option, the Issuer shall pay to each of the Bondholders holding Bonds to be pre-paid, the principal amount of each such Bond (including any premium pursuant to Clause 10.2.1) and any unpaid interest accrued up to and including the settlement date.

10.3

Call Option

The Issuer may at any time from and including the Interest Payment Date in March, 2015, call (all or nothing) the Outstanding Bonds (the “Call Option”) on the following payment terms;

(i)

with settlement date any time from the Interest Payment Date in March 2015 to, but not included, the Interest Payment Date in March 2016, at a price equal to 103.00% of par value (plus accrued interest on redeemed amount);

(ii)

with settlement date any time from the Interest Payment Date in March 2016 to, but not including, the Interest Payment Date in 2016, at a price equal to 102.00 % of par value (plus accrued interest on redeemed amount); and

(iii)

with settlement date any time from the Interest Payment Date in March 2017 to, but not included, the Maturity Date at a price equal to 101.00 % of par value (plus accrued interest on redeemed amount).

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On the settlement date of the Call Option, the Issuer shall pay to each of the Bondholders holding Bonds to be redeemed, in respect of each such Bond, the principal amount of such Bond (including any premium as stated above) and any unpaid interest accrued up to the settlement date.

Bonds redeemed by the Issuer in accordance with this clause shall be discharged against the then Outstanding Bonds.

Should the Issuer exercise the Call Option, the Bond Trustee and the Bondholders must be informed of this (the Bondholders in writing via the Securities Depository) no later than twenty (20) Business Days before the date of redemption.

11	Payments

11.1

Payment mechanics

11.1.1

The Issuer shall pay all amounts due to the Bondholders under the Bonds and this Bond Agreement by crediting the bank account nominated by each Bondholder in connection with its securities account in the Securities Register.

11.1.2

Payment shall be considered to have been made once the amount has been credited to the bank which holds the bank account nominated by the Bondholder in question, but if the paying bank and the receiving bank are the same, payment shall be considered to have been made once the amount has been credited to the bank account nominated by the Bondholder in question, see however Clause 11.2.

11.2

Currency

11.2.1

Except as otherwise expressly provided, all amounts payable under this Bond Agreement and any other Finance Document shall be payable in the same currency in which the Bonds are denominated. If, however, the Bondholder has not given adequate instruction as set out in this Clause 11, within 5 Business Days prior to a Payment Date, the cash settlement will be exchanged into NOK and credited to the NOK bank account registered with the Bondholder’s account in the Securities Register.

11.2.2

Amounts payable in respect of costs, expenses, taxes and other liabilities shall be payable in the currency in which they are incurred.

11.3

Set-off and counterclaims

11.3.1

The Issuer may not apply or perform any counterclaims or right of set-off against any payment obligations pursuant to this Bond Agreement or any other Finance Document.

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11.4

Interest in the event of late payment

11.4.1

In the event that payment of interest or principal is not made on the relevant Payment Date, the amount outstanding shall bear interest from the Payment Date at an interest rate equivalent to the interest rate according to Clause 9 plus 5.00 percentage points,

11.4.2

The interest charged under this Clause 11.4 shall be added to the defaulted amount on each respective Interest Payment Date relating thereto until the defaulted amount has been repaid in full.

11.4.3

The outstanding amounts shall bear interest as stated above until payment is made, whether or not the Bonds are declared to be in default pursuant to Clause 15.1 (a), cf. Clauses 15.2 – 15.4.

11.5

Irregular payments

11.5.1

In case of irregular payments, the Bond Trustee may instruct the Issuer or Bondholders of other payment mechanisms than those described in Clause 11.1 or 11.2 above. The Bond Trustee may also obtain payment information regarding Bondholders’ accounts from the Securities Register or Account Managers.

12	Issuer’s acquisition of Bonds

12.1	The Issuer has the right to acquire and own Bonds (Issuer’s Bonds). Issuer’s Bonds may at the Issuer’s discretion be retained by the Issuer, sold or discharged.

13	Covenants

13.1

General

13.1.1

The Issuer covenants and agrees with the Bond Trustee (on behalf of the Bondholders), the covenants set out in this Clause 13.

13.1.2

The covenants in this Clause 13 shall remain in force from the date of this Bond Agreement and until such time as no amounts are outstanding under this Bond Agreement and any other Finance Document, unless the Bond Trustee (or the Bondholders’ Meeting, as the case may be), has agreed in writing to waive any covenant, and then only to the extent of such waiver, and on the terms and conditions set forth in such waiver.

13.2

Information Covenants

13.2.1

The Issuer shall

(a)

without being requested to do so, immediately inform the Bond Trustee of any Event of Default as well as of any circumstances which the Issuer reasonably expects to lead to an Event of Default;

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(b)

without being requested to do so, inform the Bond Trustee of any other event which have, or which the Issuer should understand may have, a Material Adverse Effect;

(c)

without being requested to do so, inform the Bond Trustee if the Issuer intends to sell or dispose of all or a substantial part of its assets or operations, or change the nature of its business;

(d)

without being requested to do so, the Issuer shall, on a consolidated basis, produce Financial Statements and Quarterly Financial Reports and make them available on its website in the English language (alternatively by sending them to the Bond Trustee) as soon as they become available, and not later than 180 days after the end of the financial year for Financial Statements and 60 days after the end of the relevant quarter for Quarterly Financial Reports;

(e)

at the request of the Bond Trustee, report the balance of Issuer’s Bonds;

(f)

without being requested to do so, send the Bond Trustee copies of any creditors’ notifications of the Issuer, including but not limited to; mergers, de-mergers and reduction of the Issuer’s share capital or equity;

(g)

without being requested to do so, send a copy to the Bond Trustee of its notices to the Exchange (if listed) which are of relevance for the Issuer’s liabilities pursuant to this Bond Agreement;

(h)

without being requested to do so, inform the Bond Trustee of changes in the registration of the Bonds in the Securities Register; and

(i)

within a reasonable time, provide such information about the Issuer’s financial condition as the Bond Trustee may reasonably request.

13.2.2

The Issuer shall at the request of the Bond Trustee provide the documents and information necessary to maintain the listing and quotation of the Bonds on the Exchange (if listed) and to otherwise enable the Bond Trustee to carry out its rights and duties pursuant to this Bond Agreement and the other Finance Documents, as well as applicable laws and regulations.

13.2.3

The Issuer shall in connection with the issue of its Financial Statements under Clause 13.2.1. (d), confirm to the Bond Trustee in writing the Issuer’s compliance with the covenants in Clause 13.5. Such confirmation shall be undertaken in a compliance certificate, substantially in the format set out in Attachment 1 hereto, signed by the Chief Executive Officer or the Chief Financial Officer of the Issuer or any other authorized representative of the Issuer. In the event of non-compliance, the compliance certificate shall describe the non-compliance, the reasons therefore as well as the steps which the Issuer has taken and will take in order to rectify the non-compliance.

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13.3

General Covenants

(a)

Pari passu ranking

The Issuer’s obligations under this Bond Agreement and any other Finance Document shall at all times rank at least pari passu with the claims of all its other unsubordinated creditors save for those whose claims are preferred solely by any bankruptcy, insolvency, liquidation or other similar laws of general application.

(b)

Mergers

The Issuer shall not, and shall ensure that no Subsidiary shall, carry out any merger or other business combination or corporate reorganization involving consolidating the assets and obligations of the Issuer with any other company or entity not being a member of the Group if such transaction would have a Material Adverse Effect. The Issuer shall notify the Bond Trustee of any such transaction, providing relevant details thereof, as well as, if applicable, its reasons for believing that the proposed transaction would not have a Material Adverse Effect.

(c)

De-mergers

The Issuer shall not carry out any de-merger or other corporate reorganization involving splitting the Issuer into two or more separate companies or entities, if such transaction would have a Material Adverse Effect. The Issuer shall notify the Bond Trustee of any such transaction, providing relevant details thereof, as well as, if applicable, its reasons for believing that the proposed transaction would not have a Material Adverse Effect.

(d)

Continuation of business

(i)

The Issuer shall not cease to carry on its business.

(ii)

The Issuer shall procure that no material change is made to the general nature or scope of the business of the Group from that carried on at the date of this Bond Agreement, or as contemplated by this Bond Agreement.

(e)

Disposal of business

The Issuer shall not, and shall ensure that no Subsidiary shall, sell or otherwise dispose of all or a substantial part of the Group’s assets or operations, unless

(i)

the transaction is carried out at fair market value, on terms and conditions customary for such transactions; and

(ii)

such transaction would not have a Material Adverse Effect.

13.4

Corporate and operational matters

(a)

Intra-group transactions

All transactions between any companies in the Group shall be on commercial terms, and shall comply with all applicable provisions of applicable corporate law relevant for such transactions.

(b)

Transactions with shareholders, directors and affiliated companies

The Issuer shall cause all material transactions between any Group Company and (i) any shareholder thereof not being part of the Group, (ii) any director or senior member of management of any company in the Group, (iii) any company in which any company in the Group holds more than 10 per cent of the shares, or (iv) or any

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company, person or entity controlled by or affiliated with any of the foregoing, to be entered into on commercial terms, not less favourable to the Group Company than would have prevailed in arms’ length transaction with a third party.

(c)

Compliance with laws

The Issuer shall (and shall ensure that all Group Companies shall) comply in all material respects with all laws and regulations it or they may be subject to from time to time (including any environmental laws and regulations).

(d)

Stock Exchange Listing

The Issuer shall, if it in its discretion has applied for listing of the Bonds on the Exchange, use its best endeavours to ensure that its shares shall remain listed on the Exchange after the listing has been accepted.

13.5

Financial Covenants

13.5.1

The Issuer shall ensure that the Group, at all times and on a consolidated basis, maintains:

a Market Adjusted Equity Ratio of at least 25 %; and

Cash and Cash Equivalents which at least amount to USD 50,000,000,

to be tested on a quarterly basis.

13.5.2

The Issuer shall ensure that the Group, on a consolidated basis, does not incur any new Financial Indebtedness if, as a result, the Interest Cover Ratio will be less than 2.0:1.

14	Fees and expenses

14.1

The Issuer shall cover all its own expenses in connection with this Bond Agreement and the compliance with its obligations under this Bond Agreement, including preparation of the Finance Documents and any registration or notifications relating thereto, listing of the Bonds on the Exchange (if applicable), and the registration and administration of the Bonds in the Securities Register.

14.2

The expenses and fees payable to the Bond Trustee shall be paid by the Issuer and are set forth in a separate agreement between the Issuer and the Bond Trustee. Fees and expenses payable to the Bond Trustee which, due to Issuer’s insolvency or similar, are not reimbursed in any other way may be covered by making an equivalent reduction in the payments to the Bondholders.

14.3

The Issuer shall cover all public fees in connection with the Bonds and the Finance Documents. Any public fees levied on the trade of Bonds in the secondary market shall be paid by the Bondholders, unless otherwise decided by law or regulation, and the Issuer is not responsible for reimbursing any such fees.

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14.4

In addition to the fee due to the Bond Trustee pursuant to Clause 14.2 and normal expenses pursuant to Clauses 14.1 and 14.3, the Issuer shall, on demand, cover extraordinary expenses incurred by the Bond Trustee in connection with the Bonds, as determined in a separate agreement between the Issuer and the Bond Trustee.

14.5	The Issuer is responsible for withholding any withholding tax imposed by applicable law on any payments to the Bondholders.

15	Events of Default

15.1	The Bonds may be declared by the Bond Trustee to be in default upon occurrence of any of the following events (which shall be referred to as an “Event of Default”) if:

(a)

Non-payment

The Issuer fails to fulfill any payment obligation under this Bond Agreement or any Finance Document, unless, in the opinion of the Bond Trustee, it is clear that such failure will be remedied, and payment in full is made, within 5 – five – Business Days following the original due date.

(b)

Breach of Financial Covenants

The Issuer is in breach of the covenants under clause 13.5 (Financial covenants) of this Bond Agreement, unless such breach is remedied within 30 – thirty – days after notice of such breach is given to the Issuer by the Bond Trustee.

(c)

Breach of other obligations

The Issuer is in breach of any other covenant or obligation under this Bond Agreement or any of the Finance Documents (including for the avoidance of doubt any financial covenants), unless, in the reasonable opinion of the Bond Trustee, such breach is capable of remedy and is remedied within 10 – ten – days after notice of such breach is given to the Issuer by the Bond Trustee.

(d)

Cross default

For the Issuer or any Material Subsidiary, the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iv) below exceeds a total of USD 15 million, or the equivalent thereof in other currencies;

(i)

any Financial Indebtedness is not paid when due nor within any originally applicable grace period,

(ii)

any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described),

(iii)

any commitment for any Financial Indebtedness is cancelled or suspended by a creditor as a result of an event of default (however described), or

(iv)

any creditor becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described).

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(e)

Misrepresentations

Any representation, warranty or statement (including statements in compliance certificates) made under this Bond Agreement is or proves to have been incorrect, inaccurate or misleading in any material respect when made or deemed to have been made.

(f)

Insolvency

The Issuer or any Material Subsidiary is subject to:

(i)

the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) other than solvent liquidation or reorganisation,

(ii)

a composition, compromise, assignment or arrangement with any creditor, having a Material Adverse Effect,

(iii)

the appointment of a liquidator (other than in respect of a solvent liquidation), receiver, administrative receiver, administrator, compulsory manager or other similar officer of any of its assets; or

(iv)

enforcement of any security over any of its assets,

(g)

Creditors’ process

The Issuer or any Material Subsidiary has a substantial proportion of its assets impounded, confiscated, attached or subject to distraint, or is subject to enforcement of any security over any of its assets.

(h)

Impossibility or illegality

It is or becomes impossible or unlawful for the Issuer to fulfill or perform any of the terms of any Finance Documents to which it is a party.

(i)

Material Adverse Effect

Any other event or series of events occurs which, in the reasonable opinion of the Bond Trustee, after consultations with the Issuer, has a Material Adverse Effect.

15.2	In the event that one or more of the circumstances mentioned in Clause 15.1 occurs and is continuing, the Bond Trustee can, in order to protect the interests of the Bondholders, declare the Outstanding Bonds including accrued interest and expenses to be in default and due for immediate payment.

The Bond Trustee may at its discretion, on behalf of the Bondholders, take every measure necessary to recover the amounts due under the Outstanding Bonds, and all other amounts outstanding under the Bond Agreement and any other Finance Document.

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15.3	In the event that one or more of the circumstances mentioned in Clause 15.1 occurs and is continuing, the Bond Trustee shall declare the Outstanding Bonds including accrued interest and costs to be in default and due for payment if:

(a)

the Bond Trustee receives a demand in writing to declare the Outstanding Bonds in default from Bondholders representing at least 1/5 of the Outstanding Bonds, and the Bondholders’ Meeting has not decided on other solutions, or

(b)

the Bondholders’ Meeting has decided to declare the Outstanding Bonds in default and due for payment.

In either case the Bond Trustee shall on behalf of the Bondholders take every measure necessary to recover the amounts due under the Outstanding Bonds. The Bond Trustee can request satisfactory security for any possible liability and anticipated expenses, from those Bondholders who requested that the declaration of default be made pursuant to sub clause (a) above and/or those who voted in favour of the decision pursuant to sub clause (b) above.

15.4

In the event that the Bond Trustee pursuant to the terms of Clauses 15.2 or 15.3 declares the Outstanding Bonds to be in default and due for payment, the Bond Trustee shall immediately deliver to the Issuer a notice demanding payment of interest and principal due to the Bondholders under the Outstanding Bonds including accrued interest and interest on overdue amounts and expenses.

16	Bondholders’ Meeting

16.1

Authority of the Bondholders’ Meeting

16.1.1

The Bondholders’ Meeting represents the supreme authority of the Bondholders community in all matters relating to the Bonds. If a resolution by or an approval of the Bondholders is required, resolution of such shall be passed at a Bondholders’ Meeting. Resolutions passed at Bondholders’ Meetings shall be binding upon and prevail for all Bonds.

16.2

Procedural rules for Bondholders’ Meetings

16.2.1

A Bondholders’ Meeting shall be held at the request of:

(a)

the Issuer,

(b)

Bondholders representing at least 1/10 of Outstanding Bonds,

(c)

the Exchange, if the Bonds are listed, or

(d)

the Bond Trustee.

16.2.2

The Bondholders’ Meeting shall be summoned by the Bond Trustee. A request for a Bondholders’ Meeting shall be made in writing to the Bond Trustee, and shall clearly state the matters to be discussed.

16.2.3

If the Bond Trustee has not summoned a Bondholders’ Meeting within 10 – ten – Business Days after having received such a request, then the requesting party may summon the Bondholders’ Meeting itself.

16.2.4

Summons to a Bondholders Meeting shall be dispatched no later than 10 – ten – Business Days prior to the Bondholders’ Meeting. The summons and a confirmation of each Bondholder’s holdings of Bonds shall be sent to all Bondholders registered in the Securities Register at the time of distribution. The summons shall also be sent to the Exchange for publication.

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16.2.5

The summons shall specify the agenda of the Bondholders’ Meeting. The Bond Trustee may in the summons also set forth other matters on the agenda than those requested. If amendments to this Bond Agreement have been proposed, the main content of the proposal shall be stated in the summons.

16.2.6

The Bond Trustee may restrict the Issuer to make any changes of Voting Bonds in the period from distribution of the summons until the Bondholders’ Meeting, by serving notice to it to such effect.

16.2.7

Matters that have not been reported to the Bondholders in accordance with the procedural rules for summoning of a Bondholders’ Meeting may only be adopted with the approval of all Voting Bonds.

16.2.8

The Bondholders’ Meeting shall be held on premises designated by the Bond Trustee. The Bondholders’ Meeting shall be opened and shall, unless otherwise decided by the Bondholders’ Meeting, be chaired by the Bond Trustee. If the Bond Trustee is not present, the Bondholders’ Meeting shall be opened by a Bondholder, and be chaired by a representative elected by the Bondholders’ Meeting.

16.2.9

Minutes of the Bondholders’ Meeting shall be kept. The minutes shall state the numbers of Bondholders represented at the Bondholders’ Meeting, the resolutions passed at the meeting, and the result of the voting. The minutes shall be signed by the chairman and at least one other person elected by the Bondholders’ Meeting. The minutes shall be deposited with the Bond Trustee and shall be available to the Bondholders.

16.2.10

The Bondholders, the Bond Trustee and – provided the Bonds are listed – representatives of the Exchange, have the right to attend the Bondholders’ Meeting. The chairman of the Bondholder’s Meeting may grant access to the meeting to other parties, unless the Bondholders’ Meeting decides otherwise. Bondholders may attend by a representative holding proxy. Bondholders have the right to be assisted by an advisor. In case of dispute the Bond Trustee shall decide who may attend the Bondholders’ Meeting.

16.2.11

Representatives of the Issuer have the right to attend the Bondholders’ Meeting. The Bondholders’ Meeting may resolve that the Issuer’s representatives may not participate in particular matters. The Issuer has the right to be present under the voting.

16.3

Resolutions passed at Bondholders’ Meetings

16.3.1

At the Bondholders’ Meeting each Bondholder may cast one vote for each Voting Bond owned by such Bondholder at close of business on the day prior to the date of the Bondholders’ Meeting in accordance with the records registered in the Securities Register. Whoever opens the Bondholders’ Meeting shall adjudicate any question concerning which Bonds shall count as Issuer’s Bonds. Issuer’s Bonds shall not have any voting rights.

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16.3.2

In all matters, the Issuer, the Bond Trustee and any Bondholder have the right to demand vote by ballot. In case of parity of votes, the chairman of the Bondholder’s Meeting shall have the deciding vote, regardless of the chairman being a Bondholder or not.

16.3.3

In order to form a quorum, at least half (1/2) of the Voting Bonds must be represented at the Bondholder’s Meeting, see however Clause 16.4. Even if less than half (1/2) of the Voting Bonds are represented, the Bondholders’ Meeting shall be held and voting completed but any resolution made shall not be valid.

16.3.4

Resolutions shall be passed by simple majority of the Voting Bonds represented at the Bondholders’ Meeting, unless otherwise set forth in clause 16.3.5.

16.3.5

In the following matters, a majority of at least 2/3 of the Voting Bonds represented at the Bondholders’ Meeting is required:

(a)

amendment of the terms of this Bond Agreement regarding the interest rate, the tenor, redemption price and other terms and conditions affecting the cash flow of the Bonds;

(b)

transfer of rights and obligations of this Bond Agreement to another issuer replacing the Issuer, or

(c)

change of the Bond Trustee.

16.3.6

The Bondholders’ Meeting may not adopt resolutions which may give certain Bondholders or others an unreasonable advantage at the expense of other Bondholders.

16.3.7

The Bond Trustee shall ensure that resolutions passed at the Bondholders’ Meeting are properly implemented.

16.3.8

The Issuer, the Bondholders and the Exchange shall be notified of resolutions passed at the Bondholders’ Meeting.

16.4

Repeated Bondholders’ Meeting

16.4.1.

If the Bondholders’ Meeting does not form a quorum pursuant to Clauses 16.3.3 or 16.3.5, a repeated Bondholders’ Meeting may be summoned to vote on the same matters. The attendance and the voting result of the first Bondholders’ Meeting shall be specified in the summons for the repeated Bondholders’ Meeting.

16.4.2

When a matter is tabled for discussion at a repeated Bondholders’ Meeting, a valid resolution may be passed even though less than half (1/2) of the Voting Bonds are represented.

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17	The Bond Trustee

17.1

The role and authority of the Bond Trustee

17.1.1

The Bond Trustee shall monitor the compliance by the Issuer of its obligations under this Bond Agreement and applicable laws and regulations which are relevant to the terms of this Bond Agreement, including supervision of timely and correct payment of principal or interest, inform the Bondholders, the Paying Agent and the Exchange of relevant information which is obtained and received in its capacity as Bond Trustee (however, this shall not restrict the Bond Trustee from discussing matters of confidentiality with the Issuer), arrange Bondholders’ Meetings and make the decisions and implement the measures resolved pursuant to this Bond Agreement. The Bond Trustee is not obligated to assess the Issuer’s financial situation beyond what is directly set forth in this Bond Agreement.

17.1.2

The Bond Trustee may take any step necessary to enforce the rights of the Bondholders in all matters pursuant to the terms of this Bond Agreement. The Bond Trustee may postpone taking action until such matter has been put forward to the Bondholders’ Meeting.

17.1.3

Except as provided for in Clause 17.1.5 the Bond Trustee may make decisions binding for all Bondholders concerning this Bond Agreement, including amendments to the Bond Agreement and waivers or modifications of certain provisions, which in the opinion of the Bond Trustee, do not have a Material Adverse Effect on the rights or interests of the Bondholders pursuant to this Bond Agreement.

17.1.4

Except as provided for in Clause 17.1.5, the Bond Trustee may reach decisions binding for all Bondholders in circumstances other than those mentioned in Clause 17.1.3 provided prior notification has been made to the Bondholders. Such notice shall contain a proposal of the amendment and the Bond Trustee’s evaluation. Further, such notification shall state that the Bond Trustee may not reach a decision binding for all Bondholders in the event that any Bondholder submit a written protest against the proposal within a deadline set by the Bond Trustee. Such deadline may not be less than five (5) Business Days following the dispatch of such notification.

17.1.5

The Bond Trustee may not reach decisions pursuant to Clauses 17.1.3 or 17.1.4 for matters set forth in Clause 16.3.5 except to rectify obvious incorrectness, vagueness or incompleteness.

17.1.6

The Bond Trustee may not adopt resolutions which may give certain Bondholders or others an unreasonable advantage at the expense of other Bondholders.

17.1.7

The Issuer, the Bondholders and the Exchange shall be notified of decisions made by the Bond Trustee pursuant to Clause 17.1 unless such notice obviously is unnecessary.

17.1.8

The Bondholders’ Meeting can decide to replace the Bond Trustee without the Issuer’s approval, as provided for in Clause 16.3.5.

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17.2

Liability and indemnity

17.2.1

The Bond Trustee is liable only for direct losses incurred by the Bondholders or the Issuer as a result of negligence or willful misconduct by the Bond Trustee in performing its functions and duties as set forth in this Bond Agreement. The Bond Trustee is not liable for the content of information provided to the Bondholders on behalf of the Issuer.

17.2.2

The Issuer is liable for, and shall indemnify the Bond Trustee fully in respect of, all losses, expenses and liabilities incurred by the Bond Trustee as a result of negligence or willful misconduct by the Issuer (including its directors, management, officers, employees, agents and representatives) to fulfill its obligations under the terms of this Bond Agreement and any other Finance Documents, including losses incurred by the Bond Trustee as a result of the Bond Trustee’s actions based on misrepresentations made by the Issuer in connection with the establishment and performance of this Bond Agreement and the other Finance Documents.

17.3

Change of Bond Trustee

17.3.1

Change of Bond Trustee shall be carried out pursuant to the procedures set forth in Clause 16. The Bond Trustee shall continue to carry out its duties as Bond Trustee until such time that a new bond trustee is elected.

17.3.2

The fees and expenses of a new bond trustee shall be covered by the Issuer pursuant to the terms set out in Clause 14, but may be recovered wholly or partially from the Bond Trustee if the change is due to a breach of the Bond Trustee’s duties pursuant to the terms of this Bond Agreement or other circumstances for which the Bond Trustee is liable.

17.3.3

The Bond Trustee undertakes to co-operate so that the new bond trustee receives without undue delay following the Bondholders’ Meeting the documentation and information necessary to perform the functions as set forth under the terms of this Bond Agreement.

18	Miscellaneous

18.1

The community of Bondholders

18.1	By virtue of holding Bonds, which are governed by this Bond Agreement (which pursuant to Clause 2.1.1 is binding upon all Bondholders), a community exists between the Bondholders, implying, inter alia, that;

(a)

the Bondholders are bound by the terms of this Bond Agreement,

(b)

the Bond Trustee has power and authority to act on behalf of the Bondholders,

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(c)

the Bond Trustee has, in order to manage the terms of this Bond Agreement, access to the Securities Register to review ownership of Bonds registered in the Securities Register,

(d)

this Bond Agreement establishes a community among Bondholders meaning that;

(i)

the Bonds rank pari passu between each other,

(ii)

the Bondholders may not, based on this Bond Agreement, act directly towards the Issuer and may not themselves institute legal proceedings against the Issuer, however not restricting the Bondholders to exercise their individual rights derived from the Bond Agreement.

(iii)

the Issuer may not, based on this Bond Agreement, act directly towards the Bondholders,

(iv)

the Bondholders may not cancel the Bondholders’ community, and that

(v)

the individual Bondholder may not resign from the Bondholders’ community.

18.2

Defeasance

18.2.1

The Issuer may, at its option and at any time, elect to have certain obligations discharged (see Clause 18.2.2) upon complying with the following conditions (“Covenant Defeasance”);

(a)

the Issuer shall have irrevocably pledged to the Bond Trustee for the benefit of the Bondholders cash or government obligations accepted by the Bond Trustee (the “Defeasance Pledge”) in such amounts as will be sufficient for the payment of principal (including if applicable premium payable upon exercise of a call option) and interest on the Outstanding Bonds to Maturity Date (or redemption upon exercise of a notified call option);

(b)

the Issuer shall, if required by the Bond Trustee, provide a legal opinion reasonable acceptable to the Bond Trustee to the effect that the Bondholders will not recognize income, gain or loss for Norwegian income tax purposes as a result of the Defeasance Pledge and Covenant Defeasance, and will be subject to such income tax on the same amount and in the same manner and at the same times as would have been the case if the Defeasance Pledge had not occurred;

(c)

no Event of Default shall have occurred and be continuing on the date of establishment of the Defeasance Pledge, or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 181^st day after the date of establishment of the pledge,

(d)

neither the Defeasance Pledge nor the Covenant Defeasance results in a breach or violation of any material agreement or instrument binding upon the Issuer, or the articles of association or other corporate documents of the Issuer;

(e)

the Issuer shall have delivered to the Bond Trustee a certificate signed by its Chief Executive Officer or another authorized representative that the

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Defeasance Pledge was not made by the Issuer with the intent of preferring the Bondholders over any other creditors of the Issuer or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuer or others;

(f)

the Issuer shall have delivered to the Bond Trustee any certificate or legal opinion reasonably required regarding the Covenant Defeasance or Defeasance Pledge (including certificate from its Chief Executive Officer or another authorized representative and a legal opinion from its legal counsel to the effect that all conditions for Covenant Defeasance have been complied with; and that the Defeasance Pledge (i) will not be subject to any rights of creditors of the Issuer, (ii) will constitute a valid, perfected and enforceable security interest in favour of the Bond Trustee for the benefit of the Bondholders, and (iii) after the 181^st day following the establishment, the funds and assets so pledged will not be subject to the effects of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors rights generally under the laws of the jurisdiction where 1) the Defeasance Pledge was established and 2) the corporate domicile of the Issuer.

18.2.2

Upon the exercise by the Issuer of its option under Clause 18.2.1:

(a)

the Issuer shall be released from its obligations under all provisions in Clause 13, except 13.2.1 (a), (e), (h) and (i).

(b)

the Issuer shall not (and shall ensure that all Group Companies shall not) take any actions that may cause the value of the security interest created by this Covenant Defeasance to be reduced, and shall at the request of the Bond Trustee execute, or cause to be executed, such further documentation and perform such other acts as the Bond Trustee may reasonably require in order for the security interests to remain valid, enforceable and perfected by the Bond Trustee for the account of the Bondholders;

(c)

any security interests other than the Defeasance Pledge shall be discharged, and the Bond Trustee shall take all steps reasonably possible for it to cause such discharge to be effected, by way of deletion of the relevant security document from the relevant register, notice to third parties or as otherwise required;

(d)

all other provisions of the Bond Agreement shall remain fully in force without any modifications.

18.2.3

All amounts covered by the Defeasance Pledge shall be applied by the Bond Trustee, in accordance with the provisions of this Bond Agreement, to the payment to the Bondholders of all sums due to them under this Bond Agreement on the due date thereof.

Any funds and interest thereon not required for the payment of principal, premium and interest to the Bondholders (including any expenses, fees etc. due to the Bond Trustee hereunder) shall be returned to the Issuer.

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18.3

Limitation of claims

18.3.1

All claims under the Bonds and this Bond Agreement for payment, including interest and principal, shall be subject to the time-bar provisions of the Norwegian Limitation Act of May 18, 1979 No. 18.

18.4

Access to information

18.4.1

The Bond Agreement is available to anyone and copies may be obtained from the Bond Trustee or the Issuer. The Issuer shall ensure that the Bond Agreement is available in copy form to the general public until all Bonds have been fully discharged.

18.4.2

The Bond Trustee shall, in order to carry out its functions and obligations under the Bond Agreement, have access to the Securities Register for the purposes of reviewing ownership of the Bonds registered in the Securities Register.

18.5

Amendments

18.5.1

All amendments of this Bond Agreement shall be made in writing, and shall unless otherwise provided for by this Bond Agreement, only be made with the approval of all parties hereto.

18.6

Notices, contact information

18.6.1

Written notices, warnings, summons etc to the Bondholders made by the Bond Trustee shall be sent via the Securities Register with a copy to the Issuer and the Exchange. Information to the Bondholders may also be published at the web site xxx.xxxxxxxx.xx.

18.6.2

The Issuer’s written notifications to the Bondholders shall be sent via the Bond Trustee, alternatively through the Securities Register with a copy to the Bond Trustee and the Exchange.

18.6.3

Unless otherwise specifically provided, all notices or other communications under or in connection with this Bond Agreement between the Bond Trustee and the Issuer shall be given or made in writing, by letter or telefax. Any such notice or communication addressed shall be deemed to be given or made as follows:

(a)

if by letter, when delivered at the address of the relevant Party;

(b)

if by telefax, when received.

However, a notice given in accordance with the above but received on a day which is not a business day in the place of receipt, or after 3:00 p.m. on such a business day, shall only be deemed to be given at 9:00 a.m. on the next business day in that place.

18.6.4

The Issuer and the Bond Trustee shall ensure that the other party is kept informed of changes in postal address, e-mail address, telephone and fax numbers and contact persons.

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18.7

Dispute resolution and legal venue

18.7	This Bond Agreement and all disputes arising out of, or in connection with this Bond Agreement between the Bond Trustee, the Bondholders and the Issuer, shall be governed by Norwegian law.

All disputes arising out of, or in connection with this Bond Agreement between the Bond Trustee, the Bondholders and the Issuer, shall be exclusively resolved by the courts of Norway, with the Oslo District Court as exclusive legal venue.

*****

This Bond Agreement has been executed in two originals, of which the Issuer and the Bond Trustee retain one each.


Issuer				Bond Trustee

By: Position:				By: Position:

Norsk Tillitsmann ASA

Attachment 1

COMPLIANCE CERTIFICATE

Norsk Tillitsmann ASA

X.X. Xxx 0000 Xxxx

X-0000 Xxxx

Xxxxxx


Fax:		+ 00 00 00 00 00
E-mail:		xxxx@xxxxxxx.xx

[date]

Dear Sirs,

North Atlantic Drilling Ltd. Bond Agreement 2011/2018 – ISIN 001 060617.1

We refer to the Bond Agreement for the above mentioned Bond Issue made between Norsk Tillitsmann ASA as Bond Trustee on behalf of the Bondholders, and the undersigned as Issuer under which a Compliance Certificate shall be issued. This letter constitutes the Compliance Certificate for the period [PERIOD].

Capitalised words and expressions are used herein as defined in the Bond Agreement.

With reference to Clause 13.2.3 we hereby certify that:

1.	all information contained herein is true and accurate and there has been no change which would have a Material Adverse Effect on the financial condition of the Issuer since the date of the last accounts or the last Compliance Certificate submitted to you;

2.	in accordance with Clause 13.5, and calculated on a consolidated basis in respect of the Group, as of [date],

the Market Adjusted Equity Ratio is [ ]; and

the Group holds Cash and Cash Equivalents in the amount of USD [ ].

3.	all other covenants set out in Clause 13 are satisfied; and

4.	copies of our latest consolidated [annual audited/quarterly unaudited] accounts are enclosed.

Yours faithfully,

North Atlantic Drilling Ltd.

Name of authorized person

Enclosure: [copy of any written documentation]

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BOND AGREEMENT between North Atlantic Drilling Ltd. (Issuer) and Norsk Tillitsmann ASA (Bond Trustee) on behalf of the Bondholders in the bond issue

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