Exhibit 10.2

 

Vantage Drilling Company

c/o P.O. Box 309, Ugland House,

Grand Cayman,

KY1-1104, Cayman Islands

(“Borrower”)

  

F3 Capital

c/o Campbell Corporate Services Limited

Scotia Centre

P.O. Box 268

Grand Cayman KY1-1104

Cayman Islands

(“Lender”)

Date:                          , 2010

Dear Sirs:

1. Pursuant to the terms of the sale and purchase agreement between the Lender
and the Borrower of even date hereto (the “SPA”) in respect of the sale of 5,500
shares with a par value of US$1.00 each (the “Sale Shares”) in the capital of
Mandarin Drilling Corporation (the “Sale and Purchase Agreement”), the Lender
agreed to accept this Loan Note as part of the consideration for the Sale
Shares.

2. Subject to and conditional upon the Closing of the Sale and Purchase
Agreement in accordance with its terms, the Lender has agreed to grant to the
Borrower a loan in the principal sum of sixty million US Dollars (US$60,000,000)
(as such amount may be adjusted pursuant to Section 16 hereof, the “Loan”) on
the terms and conditions of this letter (the “Loan Note”). The Loan will be
deemed to have been advanced immediately on Closing of the Sale and Purchase
Agreement in accordance with its terms. For the purposes of this Loan Note, the
term “business day” shall mean any day (other than a Saturday, Sunday or
national or state holiday) when banks are open in London, UK and Houston, Texas
for the transaction of ordinary banking business.

3. Unless the Lender has converted the Loan in accordance with paragraph 8, or
unless the Borrower has forced the Lender to convert the Loan in accordance with
this paragraph 3, the Borrower will repay the Loan together with accrued
interest in cash on [90 months from date of Loan Note], 2017 (the “Repayment
Date”). The Borrower may repay the Loan or any part of it early, if so agreed by
Lender and subject to the immediately following sentence, but may not re-borrow
any amount so repaid. If the Lender has not converted the Loan on or before the
Repayment Date and provided that the Ordinary Shares (as hereinafter defined)
are registered under the Securities Act of 1933, as amended, pursuant to a
registration effected under the Registration Rights Agreement (as hereinafter
defined), then the Borrower may repay the Loan plus the amount of the accrued
interest through the date of conversion (the “Loan Amount”) by requiring the
Lender to convert all of the Loan Amount into such number of ordinary shares,
par value $.001 per share, of the Borrower (“Ordinary Shares”) as is equal to
the Loan Amount divided by $             (as adjusted subsequently from time to
time pursuant to Section 13 hereof, the “Conversion Price”) [the per share price
at which Ordinary Shares are issued by the Borrower subsequent to the date of
the SPA pursuant to the earlier to occur of (A) the effectiveness of a
registration statement for such Ordinary Shares filed with the Securities and
Exchange Commission and (B) the closing of a private securities offering for
such Ordinary Shares, in either case as contemplated by the SPA]; provided, that
such issuance of Ordinary Shares may only be completed following the receipt of
the Shareholder Approvals. The Borrower has reserved out of its authorized but
unissued Ordinary Shares sufficient Ordinary Shares to provide for the
conversion of this Loan Note from time to time as such Loan Note is presented
for conversion.

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4. The principal amount of the Loan outstanding from time to time will bear
interest at the rate of five per cent (5%) per annum accruing and compounding
daily. If the Loan is not repaid in full in cash prior to or on the earlier of
the Repayment Date or on the date when the Loan is declared to be due and
payable pursuant to paragraph 14, the Loan shall thereafter bear interest at the
rate of ten per cent (10%) per annum accruing and compounding daily or if an
Approval Default (as hereinafter defined) shall have occurred, the Loan shall
thereafter bear interest as determined pursuant to Section 16 hereof (as
applicable, the “Default Rate”) until the date paid or converted in accordance
with paragraph 8 or paragraph 9.

5. All New Shares (as hereinafter defined) issued in connection herewith shall
be, upon issuance, listed on the NYSE Amex Equities or such other national or
regional securities exchange or association or automated quotation system upon
which the Ordinary Shares are listed (the “Exchange”).

6. The Borrower will make all payments due under or in respect of the Loan on
the Repayment Date in US dollars to the Lender to such account as the Lender
will instruct the Borrower in writing. If any payment becomes due on a day which
is not a business day, the due date of such payment will be extended to the next
business day. The Borrower will make all payments under or in respect of the
Loan without set-off (other than as set forth herein and in the Sale and
Purchase Agreement) or counterclaim and free and clear of any withholding or
deduction for or on account of tax, except as may be required by law.

7. If any deduction or withholding from any payment is required by law, then the
Borrower shall pay to the Lender additional amounts as shall be required to
ensure that the Lender receives the amount it would have received had such
withholding or deduction not been made.

8. Following the earliest to occur of (i) an unaffiliated third party makes a
public announcement that it intends to cause the Borrower, or the Borrower
enters into an agreement, to effect a Change of Control (as hereinafter
defined), (ii) Daewoo Shipbuilding and Marine Engineering Co. Ltd. (the
“Builder”) delivers the Platinum Explorer (as hereinafter defined) to Mandarin
Drilling Corporation (“Mandarin”), as evidenced by delivery of a Certificate of
Acceptance, (iii) Builder is paid in full for all sums due to it for the
Platinum Explorer under the contract dated September 13, 2007, as amended and
supplemented from time to time, between Mandarin and the Builder, (iv) all
guarantees of Lender or any of its affiliates in favor of Builder with respect
to the Platinum Explorer are extinguished or replaced and (v) November 10, 2010,
the Lender may elect thereafter to convert the Loan Amount into fully paid
Ordinary Shares (which shares are available for registration pursuant to
Section 11) at the Conversion Price; provided, that Lender shall only be
permitted to effect such conversion into Ordinary Shares following the receipt
of the Shareholder Approvals. If at any time up to and including the Repayment
Date the Ordinary Shares of the Borrower trade on the Exchange at a price of
US$3.20 or more for a period of 10 consecutive trading days of the Exchange, the
Borrower may elect to require the Lender to convert all of the Loan Amount into
fully paid Ordinary Shares at the Conversion Price.

 

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9. In order to exercise its rights of conversion as set out in paragraph 8, the
Lender shall serve a written notice on the Borrower (the “Conversion Notice”)
stating that it wishes to convert the Loan Amount into such number of Ordinary
Shares as is equal to the quotient obtained by dividing the Loan Amount by the
Conversion Price (the “New Shares”). If at the time the Lender serves a
Conversion Notice on the Borrower there are any outstanding payments
(“Outstanding Payments”) more than 60 days past due to either (a) Vantage
Deepwater Company pursuant to the Management Agreement dated 19 December 2008
(the “Management Agreement”) between Mandarin and Vantage Deepwater Company in
respect of the ultra deepwater drillship known as “Platinum Explorer” with the
builder’s hull number 3601 (the “Platinum Explorer”); or (b) Vantage
International Management Company pursuant to the Amended and Restated Agreement
to Perform Construction Management Services that amended and restated the
Agreement to perform Construction Management Services dated 19 December 2008,
between Mandarin and Vantage International Management Company (the “Construction
Management Agreement”), the Loan Amount shall be reduced by a sum equal to the
aggregate of all Outstanding Payments and the parties to the Management
Agreement and the Construction Management Agreement, by signing this Loan Note,
agree that reducing the Loan Amount by such sum shall be good discharge for any
Outstanding Payments.

10. In order to exercise its rights under paragraph 3, the Borrower shall serve
a written notice on the Lender (the “Compulsory Conversion Notice”) stating that
the Lender is required to convert the Loan Amount into such number of Ordinary
Shares as is equal to the Loan Amount divided by the Conversion Price. If at the
time the Borrower serves a Compulsory Conversion Notice on the Lender there are
any Outstanding Payments under the terms of the Management Agreement or the
Construction Management Agreement, the Loan Amount shall be reduced by a sum
equal to the Outstanding Payments and the parties to the Management Agreement
and the Construction Management Agreement, by signing this Loan Note, agree that
reducing the Loan Amount by such sum shall be good discharge for any Outstanding
Payments.

11. The Borrower has executed and delivered to Lender a Registration Rights
Agreement as attached hereto as Exhibit A (the “Registration Rights Agreement”).

12. For the purposes of this Loan Note, the following terms shall have the
following meanings:

“Appraisal Procedure” means a procedure whereby two independent appraisers, one
chosen by the Borrower and one by the Lender, shall mutually agree upon the
determinations then the subject of appraisal. Each party shall deliver a notice
to the other appointing its appraiser within fifteen (15) business days after
the Appraisal Procedure is invoked. If within thirty (30) business days after
appointment of the two appraisers they are unable to agree upon the amount in
question, a third independent appraiser shall be chosen within ten (10) business
days thereafter by the mutual consent of such first two appraisers. The third
appraiser so appointed shall review the work of the other two appraisers and,
within fifteen (15) business days of such third appraiser’s appointment, shall
determine which one of the two appraisals most closely represents the amount in
question. Either the consensus of the first two appraisers or the determination
of the third appraiser, as appropriate, shall be binding and conclusive upon the
Borrower and the Lender. The costs of conducting any Appraisal Procedure shall
be borne by the Borrower.

 

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“Business Combination” means a merger, consolidation, statutory share exchange
or similar transaction that requires the approval of the Borrower’s
shareholders.

“Change of Control” means the direct or indirect sale, lease, transfer,
conveyance or other disposition (including, without limitation, any merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the outstanding capital stock, properties or assets of the
Borrower.

“Excluded Stock” means Ordinary Shares issued (A) pursuant to the exercise or
conversion of any options, warrants, convertible securities or other securities
issued and outstanding on the date hereof, or (B) to any employee, director,
officer or consultant of the Borrower pursuant to an approval of the Board of
Directors of the Borrower or pursuant to any plan approved by the Board of
Directors of the Borrower.

“Fair Market Value” means, with respect to any security or other property, the
fair market value of such security or other property as determined by the Board
of Directors of the Borrower, acting in good faith. If the Lender objects in
writing to the Board of Directors’ calculation of fair market value within ten
(10) business days of receipt of written notice thereof and the Lender and the
Borrower are unable to agree on fair market value during the ten (10) business
day period following the delivery of the Lender’s objection, the Appraisal
Procedure may be invoked by either party to determine Fair Market Value by
delivering written notification thereof not later than the thirtieth (30th) day
after delivery of the Lender’s objection.

“Market Price” means, with respect to a particular security, on any given day,
(a) if the security is listed on a national securities exchange, the last sale
price, regular way, of such security on such date or, in case no such sale takes
place on such day, the average of the last closing bid and ask prices, regular
way, in either case on the principal national securities exchange on which the
applicable securities are listed or admitted to trading; or (b) if not listed or
admitted to trading on any national securities exchange, or if designated as a
national market system security, the last trading price of the security on such
date; or (c) if there shall have been no trading on such date or if the security
is not so designated, the average of the reported closing bid and asked price of
security, on such date as shown by the Exchange and reported by any member firm
of the Exchange selected by the Issuer; or (d) if none of the above is
applicable, a market price per share determined in good faith by the Board of
Directors of the Borrower, which shall be deemed to be “Market Price” unless the
Lender requests that the Borrower obtain an opinion of a nationally recognized
investment banking firm chosen by the Borrower (who shall bear the expense) and
reasonably acceptable to the Lender, in which event the Market Price shall be as
determined by such investment banking firm.

 

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“Pro-Rata Repurchase” means any purchase of Ordinary Shares by the Borrower
pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or
14(e) of the United States Securities Exchange Act of 1934 or Regulation 14E
promulgated thereunder or (B) any other offer available to substantially all
holders of Ordinary Shares, in the case of both (A) or (B), whether for cash,
Ordinary Shares, other securities of the Borrower, evidences of indebtedness of
the Borrower or any other person or any other property, or any combination
thereof, effected while this Loan Note is outstanding. The “Effective Date” of a
Pro Rata Repurchase shall mean the date of acceptance of shares for purchase or
exchange by the Borrower under any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata Repurchase that
is not a tender or exchange offer.

“Shareholder Approvals” means only those shareholder approvals necessary to
(A) approve the conversion of this Loan Note into Ordinary Shares for purposes
of Section 312.03 of the NYSE Amex Company Guide or (B) increase the number of
authorized Ordinary Shares to the extent necessary to permit the conversion of
this Loan Note into Ordinary Shares.

“Trading Day” means (A) if the Ordinary Shares are not traded on any national or
regional securities exchange or association or over-the-counter market, a
business day or (B) if the Ordinary Shares are traded on any national or
regional securities exchange or association or over-the-counter market, a
business day on which such relevant exchange or quotation system is scheduled to
be open for business and on which the Ordinary Shares (i) are not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market for any period or periods aggregating one half hour or
longer; and (ii) have traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of the Ordinary Shares.

13. The Conversion Price and the number of New Shares issuable upon conversion
of this Loan Note shall be subject to adjustment from time to time as follows:

 

  (a)

Stock Splits, Subdivisions, Reclassifications or Combinations. If the Borrower
shall (i) declare and pay a dividend or make a distribution on the Ordinary
Shares in Ordinary Shares, (ii) subdivide or reclassify the outstanding Ordinary
Shares into a greater number of Ordinary Shares, or (iii) combine or reclassify
the outstanding Ordinary Shares into a smaller number of Ordinary Shares, the
number of New Shares issuable upon conversion of this Loan Note at the time of
the record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the Lender after such date shall be entitled to acquire upon conversion
the number of Ordinary Shares which the Lender would have owned or been entitled
to receive in respect of the Ordinary Shares subject to this Loan Note after
such date had this Loan Note been converted immediately prior to such date. In
such event, the Conversion Price in effect at the time of the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted to the number obtained by
dividing (x) the Loan Amount by (y) the new number of New Shares issuable upon
conversion of this Loan Note determined pursuant to the immediately preceding
sentence.

 

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  (b) Certain Issuances of New Shares or Convertible Securities. If, at any time
following the date of the SPA, the Borrower shall issue Ordinary Shares (or
rights or warrants or other securities exercisable or convertible into or
exchangeable (collectively, a “conversion”) for Ordinary Shares) (collectively,
“convertible securities”) (other than Excluded Stock or in connection with a
transaction to which subsection (a) of this paragraph 12 is applicable) without
consideration or at a consideration per share (or having a conversion price per
share) that is less than the Conversion Price then, in such event:

 

  (1)

the number of New Shares issuable upon the exercise of this Loan Note
immediately prior to the date of the agreement on pricing of such Ordinary
Shares (or of such convertible securities) (the “Initial Number”) shall be
increased to the number obtained by multiplying the Initial Number by a fraction
(i) the numerator of which shall be the sum of (x) the number of Ordinary Shares
of the Borrower outstanding on such date and (y) the number of additional
Ordinary Shares issued (or into which convertible securities may be exercised or
convert) and (ii) the denominator of which shall be the sum of (I) the number of
Ordinary Shares outstanding on such date and (II) the number of Ordinary Shares
which the aggregate consideration receivable by the Borrower for the total
number of Ordinary Shares so issued (or into which convertible securities may be
exercised or convert) would purchase at the Conversion Price; and

 

  (2)

the Conversion Price payable upon conversion of this Loan Note shall be adjusted
by multiplying such Conversion Price in effect immediately prior to the date of
the agreement on pricing of such shares (or of such convertible securities) by a
fraction, the numerator of which shall be the number of Ordinary Shares issuable
upon conversion of this Loan Note prior to such date and the denominator of
which shall be the number of Ordinary Shares issuable upon conversion of this
Loan Note immediately after the adjustment described in clause (1) above.

For purposes of the foregoing, the aggregate consideration receivable by the
Borrower in connection with the issuance of such Ordinary Shares or convertible
securities shall be deemed to be equal to the sum of the net offering price
(after deduction of any related expenses payable to third parties) of all such
securities plus the minimum aggregate amount, if any, payable upon exercise or
conversion of any such convertible securities into Ordinary Shares. Any
adjustment made pursuant to this Paragraph 12(b) shall become effective
immediately upon the date of such issuance. For purposes of the foregoing, the
consideration per share and the Conversion Price per share shall be calculated
before deduction of any expenses payable to third parties.

 

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  (c)

Other Distributions. In case the Borrower shall fix a record date for the making
of a distribution of securities, evidences of indebtedness, assets, cash, rights
or warrants (excluding dividends on the Ordinary Shares and other dividends or
distributions referred to in paragraph 13(a)) to holders of Ordinary Shares, in
each such case, the Conversion Price in effect prior to such record date shall
be reduced immediately thereafter to the price determined by multiplying the
Conversion Price in effect immediately prior to the reduction by the quotient of
(x) the Market Price of the Ordinary Shares on the last Trading Day preceding
the first date on which the Ordinary Shares trade regularly on the Exchange,
without the right to receive such distribution, minus the amount of cash and/or
the Fair Market Value of the securities, evidences of indebtedness, assets,
rights or warrants to be so distributed in respect of one Ordinary Share (such
amount and/or Fair Market Value, the “Per Share Fair Market Value”) divided by
(y) such Market Price on such date specified in clause (x); such adjustment
shall be made successively whenever such a record date is fixed. In such event,
the number of New Shares issuable upon conversion of this Loan Note shall be
increased to the number obtained by dividing the Loan Amount by the new
Conversion Price determined in accordance with the immediately preceding
sentence. In the event that such distribution is not so made, the Conversion
Price and the number of New Shares issuable upon conversion of this Loan Note
then in effect shall be readjusted, effective as of the date when the Board of
Directors of the Borrower determines not to distribute such Shares, evidences of
indebtedness, assets, rights, cash or warrants, as the case may be, to the
Conversion Price that would then be in effect and the number of Shares that
would then be issuable upon conversion of this Loan Note if such record date had
not been fixed.

 

  (d)

Certain Repurchases of Shares. In case the Borrower effects a Pro Rata
Repurchase of Ordinary Shares, then the Conversion Price shall be adjusted to
the price determined by multiplying the Conversion Price in effect immediately
prior to the Effective Date of such Pro Rata Repurchase by a fraction of which
the numerator shall be (i) the product of (x) the number of Ordinary Shares
outstanding immediately before such Pro Rata Repurchase and (y) the Market Price
of a Share on the Trading Day immediately preceding the first public
announcement by the Borrower or any of its affiliates of the intent to effect
such Pro Rata Repurchase, minus (ii) the aggregate purchase price of the Pro
Rata Repurchase, and of which the denominator shall be the product of (i) the
number of Ordinary Shares outstanding immediately prior to such Pro Rata
Repurchase, minus the number of Ordinary Shares so repurchased and (ii) the
Market Price per Share on the Trading Day immediately preceding the first public
announcement by the Borrower or any of its affiliates of the intent to effect
such Pro Rata Repurchase. In such event, the number of New Shares issuable upon
the conversion of this Loan Note shall be adjusted to the number obtained by
dividing the Loan Amount by the new Conversion Price determined in accordance
with the immediately preceding sentence.

 

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  (e)

Business Combinations. In case of any Business Combination or reclassification
of Ordinary Share (other than a reclassification of Ordinary Shares referred to
in paragraph 13(a) above), the Lender’s right to receive Ordinary Shares upon
conversion of this Loan Note shall be converted into the right to receive, upon
conversion of this Loan Note, the number of shares of stock or other securities
or property (including cash), which a holder of the New Shares issuable (at the
time of such Business Combination or reclassification) upon conversion of this
Loan Note immediately prior to such Business Combination or reclassification
would have been entitled to receive upon consummation of such Business
Combination or reclassification; and in any such case, if necessary, the
provisions set forth herein with respect to the rights and interests thereafter
of the Lender shall be appropriately adjusted so as to be applicable, as nearly
as may reasonably be, to the Lender’s right to convert this Loan Note in
exchange for any shares of stock or other securities or property pursuant to
this paragraph 13(b). In determining the kind and amount of stock, securities or
the property receivable upon conversion of this Loan Note following the
consummation of such Business Combination, if the holders of Ordinary Shares
have the right to elect the kind or amount of consideration receivable upon
consummation of such Business Combination, then the Lender shall have the right
to make a similar election (including, without limitation, being subject to
similar proration constraints) upon conversion of this Loan Note with respect to
the number of shares of stock or other securities or property which the Lender
will receive upon conversion of this Loan Note.

 

  (f)

Rounding of Calculations; Minimum Adjustments. All calculations under this
paragraph 13 shall be made to the nearest one-tenth (1/10th) of a cent or to the
nearest one-hundredth (1/100th) of a share, as the case may be. Any provision of
this paragraph 13 to the contrary notwithstanding, no adjustment in the
Conversion Price or the number of Ordinary Shares into which this Loan Note is
convertible shall be made if the amount of such adjustment would be less than
one cent ($0.01) or one-tenth (1/10th) of an Ordinary Share, but any such amount
shall be carried forward and an adjustment with respect thereto shall be made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
one cent ($0.01) or 1/10th of an Ordinary Share, or more.

 

  (g)

Timing of Issuance of Additional New Shares Upon Certain Adjustments. In any
case in which the provisions of this paragraph 13 shall require that an
adjustment shall become effective immediately after a record date for an event,
the Borrower may defer until the occurrence of such event (i) issuing to the
Lender of this Loan Note with respect to the portion so converted after such
record date and before the occurrence of such event, the additional New Shares
issuable upon such conversion by reason of the adjustment required by such event
over and above the New Shares issuable upon such conversion before giving effect
to such adjustment and (ii) paying to the Lender any amount of cash in lieu of a
fractional Ordinary Share; provided that the Borrower upon request shall deliver
to the Lender a due bill or other appropriate instrument evidencing the Lender’s
right to receive such additional Shares, and such cash, upon the occurrence of
the event requiring such adjustment.

 

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  (h)

Other Events. If any event occurs as to which the provisions of this
paragraph 13 are not strictly applicable or, if strictly applicable, would not,
in the good faith judgment of the Board of Directors of the Borrower, fairly and
adequately protect the conversion rights of this Loan Note in accordance with
the essential intent and principles of such provisions, then the Board of
Directors of the Borrower shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of the Board of Directors of the
Borrower, to protect such conversion rights as aforesaid.

 

  (i)

Statement Regarding Adjustments. Whenever the Conversion Price, the number of
New Shares into which this Loan Note is convertible or the Loan Amount shall be
adjusted as provided in this paragraph 13, the Borrower shall forthwith file at
the principal office of the Borrower a statement showing in reasonable detail
the facts requiring such adjustment and the Conversion Price that shall be in
effect and the number of New Shares into which this Loan Note shall be
convertible after such adjustment, and the Borrower shall also cause a copy of
such statement to be sent by mail, first class postage prepaid, to the Lender at
the address appearing in the Borrower’s records.

 

  (j)

Notice of Adjustment Event. In the event that the Borrower shall propose to take
any action of the type described in this paragraph 13 (but only if the action of
the type described in this paragraph 13 would result in an adjustment in the
Conversion Price or the number of New Shares into which this Loan Note is
convertible or a change in the type of securities or property to be delivered
upon conversion of this Loan Note), the Borrower shall give notice to the
Lender, in the manner set forth in this paragraph 13, which notice shall specify
the record date, if any, with respect to any such action and the approximate
date on which such action is to take place. Such notice shall also set forth the
facts with respect thereto as shall be reasonably necessary to indicate the
effect on the Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of this Loan
Note. In the case of any action which would require the fixing of a record date,
such notice shall be given at least ten (10) business days prior to the date so
fixed, and in case of all other action, such notice shall be given at least
fifteen (15) business days prior to the taking of such proposed action. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.

 

  (k)

Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent
to the taking of any action which would require an adjustment pursuant to this
paragraph 13, the Borrower shall agree to take any action which may be
necessary, including obtaining regulatory, Exchange or Shareholder Approvals or
exemptions, in order that the Borrower may thereafter validly and legally issue
as fully paid and nonassessable all New Shares that the Lender is entitled to
receive upon conversion of this Loan Note pursuant to this paragraph 13.

 

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  (l)

Adjustment Rules. Any adjustments pursuant to this paragraph 13 shall be made
successively whenever an event referred to herein shall occur. If an adjustment
in Conversion Price made hereunder would reduce the Conversion Price to an
amount below the par value of the Ordinary Shares, then such adjustment in
Conversion Price made hereunder shall reduce the Conversion Price to the par
value of the Ordinary Shares; provided that the par value of the Ordinary Shares
shall not increase while this Loan Note is outstanding.

14. (a) Transfer Notice. If, at any time while this Loan Note is outstanding and
unpaid, the Borrower proposes to sell, transfer or otherwise dispose of any
Ordinary Shares (or any securities convertible into or exchangeable for Ordinary
Shares) in any manner to one or more parties (a “Transfer”), other than a
Transfer to employees, officers or directors of the Borrower or its subsidiaries
pursuant to an employee benefit plan approved by the Borrower’s board of
directors, at a price per Ordinary Share less than the then Conversion Price,
then the Borrower shall give the Lender written notice of Borrower’s intention
to make the Transfer (the “Transfer Notice”), which Transfer Notice shall
include (i) a description of the securities to be Transferred (the “Offered
Securities”), (ii) the identity of the prospective transferee(s) and (iii) the
consideration and the material terms and conditions upon which the proposed
Transfer is to be made. The Transfer Notice shall certify that the Borrower
intends to make a bona fide offer to the prospective transferee(s) and in good
faith believes a binding agreement for the Transfer is obtainable on the terms
set forth in the Transfer Notice. The Transfer Notice shall also include a copy
of any written proposal, term sheet or letter of intent or other agreement
relating to the proposed Transfer.

(b) Lender’s Option. The Lender shall have an option (the “Lender’s Option”) for
a period of ten (10) days from receipt of a Transfer Notice (the “Lender Notice
Period”) to elect to purchase all or any portion of its pro rata portion (based
on the number of Ordinary Shares owned by the Lender (including those on an “as
converted” basis) of the outstanding Ordinary Shares of the Borrower on a
fully-diluted basis) of the Offered Securities at the same price and subject to
the same material terms and conditions as described in the Transfer Notice. The
Lender may exercise the Lender’s Option and, thereby, purchase all or any
portion of such pro rata portion of the Offered Securities by notifying the
Borrower in writing before expiration of the Lender Notice Period as to the
amount of such Offered Securities that it wishes to purchase by payment in cash
on the same terms as the Offered Securities. The Lender’s Option shall be
extinguished with respect to any offering of Offered Securities if Lender fails
to respond in writing prior to the expiration of the Lender Notice Period.

15. Notwithstanding the above provisions of this Loan Note, the Loan and all
interest on it will become due and payable by the Borrower immediately on demand
by the Lender if

(a) the Borrower fails to pay any sum under this Loan Note when due or the
Borrower is in breach of any other provision of this Loan Note, and 15 days
expire after written notice of such failure or breach is delivered by Lender to
Borrower, and such failure or breach remains uncured;

(b) an administration order for bankruptcy is made in relation to the Borrower
or a receiver or manager or administrative receiver is appointed of the Borrower
or any of the Borrower’s assets or the Borrower enters into liquidation or such
analogous proceedings as are applicable in the Cayman Islands;

 

10

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(c) any petition in bankruptcy, or for receivership, is presented;

(d) the Borrower ceases to carry on business; or

(e) (i) the Borrower shall fail to pay any principal or interest on its
indebtedness for borrowed money which is outstanding in a principal amount
exceeding $5,000,000 when the same becomes due and payable or (ii) any other
event shall occur or condition shall exist under any agreement relating to
indebtedness for borrowed money of the Borrower in excess of $5,000,000 if the
effect of such condition or event would be to accelerate, or permit the
acceleration of, the maturity of such indebtedness.

In the event such demand is made, the Loan and the Loan Note shall thereafter
bear interest at the Default Rate until such Loan and this Loan Note is repaid
in full.

16. The Borrower shall use all commercially reasonable efforts to obtain the
Shareholder Approvals as soon as practicable following the issuance of the Loan
Note. Such efforts shall include, but shall not be limited to, promptly
notifying the Exchange of the record date and meeting date for a meeting of the
shareholders, filing a preliminary proxy statement with the Securities and
Exchange Commission which is in compliance with applicable rules and regulations
of the Securities and Exchange Commission, obtaining all necessary approvals
under the laws of the Cayman Islands, and ensuring that the directors of the
Borrower endorse the approval of the Shareholder Approvals. If:

(a) a record date for a meeting of shareholders of the Borrower for the purpose
of obtaining the Shareholder Approvals shall not have occurred by ten days
following the date of this Loan Note;

(b) the Borrower shall fail, within fifteen days following the date of this Loan
Note, to have filed a preliminary proxy statement with the Securities and
Exchange Commission for the purpose of obtaining the Shareholder Approvals,
which preliminary proxy statement shall include the recommendation of the
Borrower’s board of directors that the shareholders of the Borrower approve the
Shareholder Approvals;

(c) the Borrower shall have failed to mail to its shareholders a definitive
proxy statement for the purpose of obtaining the Shareholder Approvals by three
business days following the receipt of clearance from the Securities and
Exchange Commission on such definitive proxy statement;

(d) any registration statement required by the Registration Rights Agreement in
a demand registration pursuant to Section 3 thereof is not filed with the
Securities and Exchange Commission on or prior to the applicable filing
deadlines as described therein; or

(e) any registration statement required by the Registration Rights Agreement in
a demand registration pursuant to Section 3 thereof is not declared effective by
the Securities and Exchange Commission on or prior to the applicable
effectiveness deadlines as described therein;

 

11

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(any such event in clause (a) through (e), an “Approval Default”) then (x) the
Borrower shall pay to the Lender liquidated damages in the amount of
(1) $5,000,000 upon the occurrence of such Approval Default, (2) if such
Approval Default is then continuing, $500,000 on the three-month and six-month
anniversaries of the occurrence of such Approval Default, and (3) if such
Approval Default is then continuing, $1,000,000 on the nine-month anniversary
and on each three-month anniversary thereafter, in each case which amounts shall
be added to, and thereafter be included as, principal of this Loan Note, and
(y) upon the occurrence of such Approval Default until the earlier of (1) the
date the conduct required by the Approval Default is actually performed without
regard to the due date specified therefor and (2) the payment in full of all
amounts owing under this Loan Note, the interest rate on this Loan Note shall be
increased to twelve percent (12.0%) per annum.

17. Any demand or notice in respect of this Loan Note or the Loan will be in
writing and (without prejudice to any other effective means of serving it) may
be served on the Borrower or the Lender, as the case may be, (a) personally or
by overnight commercial courier service to the Borrower’s or the Lender’s, as
applicable, registered or principal office or (b) by facsimile to the following
fax number for the Borrower: (281) 404-4749, Attention: Christopher Celano,
General Counsel, or the following fax number for the Lender: (345) 949-8613.
Notice shall be effective, in the case of a letter, on delivery, and in the case
of a facsimile, on receipt by the sender of a confirmed transmission report.

18. Time shall be of the essence in respect of the Borrower’s obligations under
or in respect of this Loan, but no failure by the Lender to exercise, or delay
by the Lender in exercising any right or remedy under or in respect of this
facility shall operate as a waiver of it, nor shall any single, partial or
defective exercise by the Lender of any such right or remedy preclude any other
or further exercise of that or any other right or remedy.

19. This Loan Note may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which will be an original but
all of which together shall constitute one and the same instrument.

20. The Lender may assign any of its rights and obligations under this Loan Note
to any party with the prior written consent of the Borrower (such consent not to
be unreasonably withheld or delayed) or may assign any of its rights and
obligations under this Loan Note to any of its affiliates. The Borrower may not
assign any of its rights or obligations under this Loan Note to any party
without the prior written consent of the Lender.

21. A person who is not a party to this Loan Note shall have no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

22. This Loan Note is governed by English law and it is agreed that both parties
shall submit to the exclusive jurisdiction of the High Court of Justice in
England in relation to any claim, or dispute or difference which may arise under
or in respect of this Loan Note.

 

12

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Yours faithfully

     

BORROWER:

SIGNED AND DELIVERED

 

)

     

as a Deed

 

)

     

by

 

)

   

By:

 

 

for and on behalf of

 

)

   

Name:

 

 

Vantage Drilling Company

 

)

   

Title:

 

 

     

LENDER:

SIGNED AND DELIVERED

 

)

     

as a Deed

 

)

     

by

 

)

   

By:

 

 

for and on behalf of

     

Name:

 

 

F3 Capital

     

Title: Director

 

13

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Solely for purposes of paragraphs 9 and 10 hereto:

SIGNED AND DELIVERED

 

)

     

as a Deed

 

)

     

by

 

)

   

By:

 

 

for and on behalf of

 

)

   

Name:

 

 

Mandarin Drilling Corporation

 

)

   

Title:

 

 

SIGNED AND DELIVERED

 

)

     

as a Deed

 

)

     

by

 

)

   

By:

 

 

for and on behalf of

 

)

   

Name:

 

 

Vantage International Management

 

)

   

Title:

 

 

Company

 

)

     

SIGNED AND DELIVERED

 

)

     

as a Deed

 

)

     

by

 

)

   

By:

 

 

for and on behalf of

 

)

   

Name:

 

 

Valencia Drilling Corporation

 

)

   

Title:

 

 

SIGNED AND DELIVERED

 

)

     

as a Deed

 

)

     

by

 

)

   

By:

 

 

for and on behalf of

 

)

   

Name:

 

 

Vantage Deepwater Company

 

)

   

Title:

 

 

 

14