Document:

EX-10.3

 Exhibit 10.3 

Execution Version 

MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT 

between 
 Seadrill
Management Ltd. 
 and 

North Atlantic Management AS 

 CONTENTS 
  

							
	Clause	  	 	  	Page	 
			
	1.	  	APPOINTMENT AND EFFECTIVE DATE	  	 	1	  
			
	2.	  	BOARD OF DIRECTORS	  	 	1	  
			
	3.	  	SERVICES	  	 	1	  
			
	4.	  	GENERAL CONDITIONS	  	 	5	  
			
	5.	  	COMPENSATION	  	 	6	  
			
	6.	  	INDEMNITY	  	 	7	  
			
	7.	  	CONFIDENTIALITY	  	 	8	  
			
	8.	  	TERMINATION	  	 	8	  
			
	9.	  	DEFAULT	  	 	9	  
			
	10.	  	FORCE MAJEURE	  	 	9	  
			
	11.	  	NOTICES	  	 	9	  
			
	12.	  	MISCELLANEOUS	  	 	10	  
			
	13.	  	GOVERNING LAW	  	 	10	  

  
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 THIS MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT (the “Agreement”) is entered into
on June 20, 2013 and is effective as of the Effective Date set forth below. 
 BETWEEN: 

 

	(1)	Seadrill Management Ltd., a company organized under the Law of England and Wales (the “Manager”), 

  

	    	and 

  

	(2)	North Atlantic Management AS, a company organized under the laws of Norway (the “Company”) 

(hereinafter jointly referred to as the “Parties” and, individually, as a “Party”). 

WHEREAS, the Manager is a wholly owned subsidiary of Seadrill Limited providing management and administrative services to Seadrill Limited and its
subsidiaries; and 
 WHEREAS, the Company is a majority owned subsidiary of Seadrill Limited; and 

WHEREAS, the Company wishes to engage the Manager to provide certain management and administrative support services to the Company on the terms set out
herein. 
 NOW THEREFORE, the Parties have agreed as follows: 
  

	1.	APPOINTMENT AND EFFECTIVE DATE 

  

	 	1.1	The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “Management Services”) to the Company and the
subsidiaries of the Company listed on Schedule 1 to this Agreement, subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment. 

 

	 	1.2	The effective date of this Agreement shall be January 1, 2013 (the “Effective Date”). 

  

	2.	BOARD OF DIRECTORS 

  

	 	2.1	The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “Board”) in providing the Management Services under this Agreement. 

 

	 	2.2	The Board may revoke any authorization granted to the Manager at any time in its sole discretion. 

  

	 	2.3	For clarity, no authority of the Board is delegated to the Manager by this Agreement. The Board of the Company expressly retains all authority granted to it pursuant to the Operating Agreement of the Company,
dated June 28, 2012 (as the same may be amended, restated, modified or supplemented from time to time, the “Operating Agreement”). 

  

	3.	SERVICES 

  

	 	3.1	The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company from time to time may specify. 

  
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	 	3.2	The Manager may, at its discretion, sub-contract any of the services to be provided by the Manager hereunder to other companies within the Seadrill Group and/or other reputable
companies as may be permitted hereunder from time to time, provided, that such company shall be sufficiently resourceful, experienced and qualified to fulfill the Manager’s duties and obligations hereunder, and, further,
provided, that the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “Seadrill Group” means Seadrill Limited or any subsidiary thereof, except the Company and its
subsidiaries. 

  

	 	3.3	Without prejudice to the generality of the foregoing, the Manager shall provide the following services to the Company: 

  

	 	3.3.1	Corporate Governance Services 

  

	 	    	The Manager shall assist the Company in the provision of general company secretarial services, including, but not limited to, keeping statutory books and records, convening meetings of the members of the Company, and
meetings of the Boards of Directors and the shareholders of the subsidiaries of the Company and preparing adequate documentation for such meetings. 

  

	 	3.3.2	Company Records 

  

	 	(a)	The Manager shall be responsible for the safekeeping and professional filing of all original corporate documents of the Company and subsidiaries of the Company. 

 

	 	(b)	The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business. 

 

	 	3.3.3	Treasury Services 

  

	 	    	Subject to the terms of any pooling arrangements which may exist in relation to the Company and its assets: 

  

	 	(a)	The Manager may be authorized to operate the Company’s bank accounts in accordance with such principles as the Board from time to time shall approve. Pursuant to such authorization, the Manager may be entitled to
open bank accounts in the Company’s name and enter into account agreements and all such other contracts or agreements as shall be required by the banks and others for this purpose. 

 

	 	(b)	The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the
purpose of collecting any overdue amounts. 

  

	 	(c)	The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s
behalf. 

  

	 	(d)	The Manager shall settle all inter-company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for
payments as shall be in existence from time to time. 

  
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	 	3.3.4	Financing 

  

	 	    	The Manager shall assist the Company in all matters relevant to the financing of the Company’s activities, including the identification of sources of potential financing, negotiation of financing arrangements, and
coordination of financing with other Seadrill Group companies for the benefit of the Company. 

  

	 	3.3.5	Operations Services 

  

	 	(a)	The Manager shall develop standards for the technical operation of the Company’s vessels (the “Vessels”) and a policy in this respect. 

 

	 	(b)	The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:

  

	 	(i)	look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect; the “Seadrill Group” means Seadrill
Limited or any subsidiary thereof, except the Company and its subsidiaries; 

  

	 	(ii)	develop and implement strategies for the long term maintenance of the Vessels; 

  

	 	(iii)	supervise and co-ordinate the policies in relation to emergency events; 

  

	 	(iv)	promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew; 

  

	 	(v)	minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and 

  

	 	(vi)	ensure compliance with industry-based best practice “norms.” 

  

	 	(c)	The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections. 

 

	 	(d)	The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers. 

  
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	 	3.3.6	Technical Supervision 

  

	 	    	The Manager shall, throughout the term of this Agreement, provide Services in relation to the technical management of the Vessels. In particular the Manager shall provide the following Services: 

 

	 	(a)	The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized
safety standards at any time. 

  

	 	(b)	The Manager shall maintain good relations with Shipping Registries where the Vessels are or are intended to be registered. 

  

	 	(c)	The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments. 

  

	 	(d)	The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every
respect. 

  

	 	3.3.7	Human Resources 

  

	 	    	The Manager shall develop a human resources policy for the Company and its subsidiaries, and, subject to supervision and approval by the Board of the Company, the Manager shall be responsible to ensure that such policy
is implemented by the Company in accordance with its terms. 

  

	 	3.3.8	Insurance 

  

	 	    	The Manager shall arrange to insure the vessels owned by the Company or its subsidiaries in accordance with the general guidelines and policies from time to time in force for coverage, insurers and terms for the
insurance of vessels controlled by the Seadrill Group. 

  

	 	    	The Manager shall provide advice and assistance to the Company in filing and managing claims under all insurance policies procured for the vessels owned by the company or its subsidiaries (the “Vessels”) and
the Company. 

  

	 	    	The Manager shall provide general advice and assistance to the Company in the procurement of other insurance as may be necessary or prudent in order to comply with legal or contractual requirements, or otherwise
prudently insure the risks of the Company. 

  

	 	3.3.9	Sale and Purchase of Assets 

  

	 	(a)	The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions. 

 

	 	(b)	In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating
existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction. 

 

	 	(c)	The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall
always be subject to the final approval of the Board. 

  
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	 	3.3.10	New Rig Construction 

  

	 	(a)	The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of
the Board of the Company. 

  

	 	(b)	The Manager shall follow up and supervise all ongoing new rig construction projects of the Company and its subsidiaries. 

  

	 	3.3.11	Accidents—Contingency Plans 

  

	 	    	The Manager shall assist the Company in handling all accidents involving its vessels. In particular, the Manager shall establish a crisis management procedure, shall assist the Company in the development of a local
crisis management procedure, and shall provide other advice and assistance in connection with crisis response, including crisis communications assistance. 

  

	 	3.3.12	Disputes 

  

	 	    	The Manager shall provide general advice and assistance in the prosecution or defense of any and all legal proceedings by or against the Company, on the Company’s behalf and follow up the same in accordance with
such instructions as shall be provided to the Manager in this respect by the Company. 

  

	 	3.3.13	Marketing Services 

  

	 	    	The Manager shall provide advice and assistance in the marketing of the Vessels, including the identification of potential customers, identification of Vessels available for charter opportunities and preparation of
bids. 

  

	 	3.3.14	General Administrative Services 

  

	 	    	The Manager shall cause certain of its officers as set forth on Schedule 2 to this Agreement and any of its additional officers or other employees as the Board may from time to time request (collectively,
the “Manager’s Employees”) to perform as officers of the Company in the capacity as set forth on Schedule 2 or provide such general administrative services as may be required by the Company including accounting
services, access to and consolidation of information in the Seadrill Group enterprise resource planning systems, and advice and assistance in the general administration and management of the business, with all of the duties of officers of the
Company as provided by the Board of Directors of the Company pursuant to the terms of the Operating Agreement, subject to the sole direction of the Board of Directors of the Company and subject to Section 7.1 hereof. 

 

	4.	GENERAL CONDITIONS 

  

	 	4.1	The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall: 

 

	 	(a)	protect and promote the Company’s interests; 

  
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	 	(b)	observe all applicable laws and regulations relevant to the Company’s activities; and 

  

	 	(c)	always act in accordance with good and professional management practice. 

  

	 	4.2	The Manager shall be entitled to provide management services to other companies or entities. 

Such entities can either be other companies in the Seadrill Group or third party entities. 

 

	 	4.3	The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such vessels and companies from time to time
under its management. 

 The Manager shall, in the performance of its services, be entitled to take into consideration its
overall responsibility in relation to all matters as may from time to time be entrusted to its management and in particular, but without prejudice to the generality of the foregoing, be entitled to allocate available supplies, manpower and services
between its management assignments in such manner as in the prevailing circumstances the Manager in good faith considers to be fair and reasonable. 
  

	 	4.4	All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to
the Company. 

  

	 	4.5	The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis-à-vis the Company hereunder. 

 Such
information shall be provided to such persons as shall be specifically authorized by the Company. Representatives of the Company’s auditor shall, in relation to the audit of the Company’s accounts, always be considered authorized. 

 

	 	4.6	The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall,
from time to time, be requested by the Company. 

  

	5.	COMPENSATION 

  

	 	5.1	The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager (the “Costs and Expenses”) in connection with the provision of the Management
Services by the Manager to the Company; provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the
Company shall be included in such Costs and Expenses. 

  

	 	5.2	The Company shall pay to the Manager a management fee equal to 8% of the Costs and Expenses (the “Management Fee”). 

 

	 	5.3	 The Management Fee shall be invoiced by the Company periodically in arrears. Within 30 days following the end of each calendar quarter, the
Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation in such detail as reasonably required. The Manager

  
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shall then deliver an invoice to the Company for such costs together with the corresponding Management Fee. The Company shall pay undisputed charges within 30 days of receipt of the
Manager’s invoice. 

  

	 	5.4	All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by
law, subject to receipt by the Company of a valid VAT invoice. 

  

	 	5.5	Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the parties, each party shall be responsible for its own costs incurred preparing and performing its obligations
under this Agreement. 

  

	6.	INDEMNITY 

  

	 	6.1	The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence
on the part of the Manager or any of its officers or employees in connection with the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the
part of the Manager, its officers or employees. 

 Notwithstanding anything herein to the contrary the Manager shall not,
under any circumstances whatsoever be liable to compensate the Company for any loss in excess of USD 2 millions. 
  

	 	6.2	The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever
kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Services or the performance of its duties hereunder.

  

	 	6.3	The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it
as a consequence thereof. 

 If the Company requires the Manager to take any action which, in the opinion of the Manager,
might make the Manager liable for the payment of any money or liable in any other way, the Manager shall be kept indemnified by the Company in an amount and form satisfactory to it as a prerequisite to take such action. 

 

	 	6.4	The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims. 

 

	 	6.5	To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company
to reimburse the Manager for making such payment or effecting such discharge. 

  

	 	6.6	The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute. agreement, the bylaws of the Company or
otherwise, and shall continue after the termination of this Agreement. 

  
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	 	6.7	To the extent the Company elects to purchase Director’s & Officer’s insurance the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.

  

	7.	CONFIDENTIALITY 

  

	 	7.1	All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company. and shall be kept confidential by the
Manager. 

  

	 	(a)	For the purpose of this Clause “Confidential Information” shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or
in connection with the performance of its obligations hereunder. 

  

	 	(b)	The provisions of this Clause 9.1 shall not apply to Confidential Information which is: 

  

	 	(a)	required to be disclosed by law or court order; or 

  

	 	(b)	is public knowledge otherwise than as a result of the conduct of the Manager. 

  

	 	7.2	The Manager shall. if so required by any of the stock exchanges on which the Company’s securities are listed, ensure that each of its employees having access to Confidential Information shall be subject to
specific confidentiality undertakings. 

  

	8.	TERMINATION 

  

	 	8.1	Each of the Parties may terminate this Agreement following 90 days prior written notice to the other Party. 

  

	 	8.2	Termination shall be without prejudice to any rights or liabilities of either Party hereto arising prior to or in respect of any act or omission occurring prior to termination. 

 

	 	8.3	In the event of termination, the Management Fee shall be pro-rated to the effective date of termination (after taking into account such additional amounts. if any, as the time spent and the responsibility
undertaken by the Manager during the relevant period immediately prior to such effective date of termination should justify). 

In addition to the pro-rated Management Fee, the Company undertakes to ensure that the Manager has sufficient funding to pay any termination
benefits due to any employees of the Manager whose employment contracts are terminated as a result of the termination of this Agreement and any other bona fide obligations undertaken by the Manager in order to provide the Services and otherwise
comply with its obligations hereunder. 
  

	 	8.4	In the event of termination of the Agreement, the Manager shall procure that all such acts are done as may be necessary to give effect to such termination. The Company shall secure and the Manager shall, subject to
payment of all amounts due to it hereunder, co-operate in the appointment of a substitute manager as the circumstances may require. 

  

	 	8.5	In the event of termination of this Agreement, the Manager shall hand over to the Company all books of account, correspondence and records relating to the affairs of the Company which are the property of the
Company and which are in its or its sub-contractors’ possession. 

  
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	9.	DEFAULT 

  

	 	9.1	If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14) days
after written notice thereof has been given to the other Party by the Company or the Manager. as the case may be, the non-defaulting Party shall have the right to terminate this Agreement with immediate effect by notice to the defaulting Party.

 The right to terminate this Agreement shall be in addition to and without prejudice to any other rights which the Parties
may have against each other hereunder. 
  

	 	9.2	Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or
property of the other Party. or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law. 

 

	10.	FORCE MAJEURE 

 The Manager shall be under no liability of any kind or nature whatsoever
in the event of a failure to perform any of the Services if such failure is directly or indirectly caused by war, war-like activities, government order, riot, civil commotion, strike or lock-out or similar actions, Acts of God, perils of the sea or
any other similar cause beyond the Manager’s control. 
  

	11.	NOTICES 

 All correspondence or notices required or permitted to be given under this
Agreement shall be given in English and sent by mail, telefax, electronic mail or delivered by hand at the following addresses: 
 If to
the Company: 
 North Atlantic Management AS 

Finnestadveien 28 
 P.O. Box 109

 4001 Stavanger 
 Norway 

Attn. Chief Executive Officer 

If to the Manager: 

Seadrill Management Ltd. 
 2nd Floor, Building 11 
 Chiswick Business Park 

566 Chiswick High Road 
 London W4
5YS 
 United Kingdom 
 Attn.
Chief Executive Officer 
 or such other address as either Party may designate to the other Party in writing. 

  
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	12.	MISCELLANEOUS 

  

	 	12.1	Neither Party shall be entitled to assign its rights and/or obligations under this Agreement unless the prior written consent of the other Party hereto have been obtained. This principle shall not apply to
the subcontracting by the Manager of certain parts of the Services hereunder pursuant to the provisions of Clause 4.1 

  

	 	12.2	Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. 14.3 No term of this Agreement is enforceable by a person who is not a party to it. 

 

	 	12.3	This Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties. 

 

	13.	GOVERNING LAW 

  

	 	13.1	This Agreement shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter
arising under or in connection with this Agreement. 

 [SIGNATURE PAGE FOLLOWS] 

  
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	For and on behalf of	 		 	For and on behalf of
	SEADRILL MANAGEMENT LTD.	 		 	NORTH ATLANTIC MANAGEMENT AS
			
	  
	 		 	  

	Signature	 		 	Signature
			
	  
	 		 	  

	Name with block letters	 		 	Name with block letters

 SIGNATURE PAGE TO 

MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT 

 SCHEDULE 1 

SUBSIDIARIES 
  

			
	 Subsidiary
	  	 Jurisdiction of Formation

		
	North Atlantic Alpha Ltd.	  	Bermuda
		
	North Atlantic Phoenix Ltd.	  	Bermuda
		
	North Atlantic Epsilon Ltd.	  	Bermuda
		
	North Atlantic Navigator Ltd.	  	Bermuda
		
	North Atlantic Elara Ltd.	  	Bermuda
		
	North Atlantic Venture Ltd.	  	Bermuda
		
	North Atlantic Linus Ltd.	  	Bermuda
		
	North Atlantic Rigel Ltd.	  	Bermuda
		
	North Atlantic Crewing Ltd.	  	Bermuda
		
	North Atlantic Norway Ltd.	  	Bermuda
		
	North Atlantic Crew AS	  	Norway
		
	North Atlantic Crewing Ltd.	  	Bermuda
		
	North Atlantic Drilling UK Ltd.	  	United Kingdom
		
	North Atlantic Support Services Limited	  	United Kingdom
		
	North Atlantic Pollux Ltd.	  	Bermuda
		
	Seadrill Norge AS	  	Norway
		
	Seadrill Norge Holding AS	  	Norway

 Schedule 1 

 SCHEDULE 2 

INITIAL MANAGER’S EMPLOYEES 
  

					
	 Name
	 	 Position at the Manager
	 	 Position at the Company

	 Rune Magnus Lundetrae
	 	CFO	 	CFO

 Schedule 2EX-10.4

 Exhibit 10.4 

THE RULES 
 APPLICABLE
TO SHARE OPTIONS 
 GRANTED BY 

NORTH ATLANTIC DRILLING LTD. 

(Approved by North Atlantic Drilling Ltd.’s board 

on February 14, 2011) 

  
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 RULES APPLICABLE TO 

THE GRANTING OF SHARE OPTIONS BY 

NORTH ATLANTIC DRILLING LTD. 
  

	1.	DEFINITIONS 

  

	1.1	In these Rules the following words and expressions shall, where the context so permits, have the following meanings: 

  

	    	“Adoption Date” means the date on which these Rules are approved by the Board; 

  

	    	“Auditors” means the auditors of the Company (acting as experts and not as arbitrators) from time to time; 

  

	    	“Board” means the board of directors of the Company or the directors present at a duly convened meeting of the board of directors or of a duly constituted committee of the board of directors at which a
quorum is present; 

  

	    	“Change of Control” means an event whereby another entity gains control over the Company (i) by imposing a merger or consolidation in which the Company is not the surviving company or (ii) by
acquiring a majority of the shares in the Company or (iii) by the vote of its own Shares or by acting in concert with other shareholders voting their Shares appoints the majority of the directors on the Board; 

 

	    	“Company” means North Atlantic Drilling Ltd., registered in Bermuda; 

  

	    	“Date of Grant” means the date on which a number of Options are granted to an Eligible Person by the Board pursuant to Clause 2 hereof; 

 

	    	“Eligible Person” means an employee who is, or who becomes, contracted to work at least 20 hours per week in the service of one or more Participating Companies or a director or officer of a
Participating Company; 

  

	    	“Grant” means the number of Options granted to an Eligible Person on a Date of Grant, as evidenced by an Option Certificate; 

 

	    	“Independent Expert” means either a firm of independent public accountants of recognised standing (who may be the regular auditors of the Company) or an internationally recognised investment bank to be
selected by the Board; 

  

	    	“Market Value” means, on any day, the average of the middle market quotations of the price of the Shares as derived from the Oslo Stock Exchange (or, if so chosen by the Board, any other stock exchange
on which the Shares are traded) for the three immediately preceding dealing days on that stock exchange; or, if the Shares are not traded on any stock exchange, means the value of the Shares as determined by the Board. 

 

	    	“Option” means a right (but not an obligation) to subscribe for a Share granted to an Eligible Person pursuant to these Rules; 

 

	    	“Option Certificate” means a certificate issued by the Company to an Option Holder evidencing his/her title to the Options covered by a Grant; 

 

	    	“Option Holder” means an Eligible Person or a former Eligible Person who is the holder of an Option Certificate representing Options which have neither been fully exercised nor ceased to be exercisable
nor lapsed and, where the context so permits, a person entitled to rights under any such Option Certificate in consequence of the death of the original Option Holder; 

 

	    	“Option Share” means a Share in respect of which an Option has been granted; 

  

	    	“Participating Company” means the Company and any Subsidiary, and Seadrill Limited and any subsidiary thereof; 

  
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	    	“Rules” means these rules as varied from time to time in accordance with Clause 8 hereof; 

  

	    	“Shares” means fully paid ordinary shares, each of par value US$1, in the capital of the Company; 

  

	    	“Share Capital” means the fully paid issued share capital of the Company; 

  

	    	“Subscription Cost” means, in relation to the exercise of the right under an Option Certificate, the product of the number of Option Shares in respect of which the Option Certificate is exercised and
the Subscription Price of such Option Shares; 

  

	    	“Subscription Price” means such price as the Board shall, from time to time, at its discretion resolve shall apply to an Option when such Option is granted provided that (i) such price is not lower
than the par value of a Share and (ii) such price shall be adjusted in accordance with the principles set forth in Clause 6 below; 

  

	    	“Subsidiary” means a company, which for the time being, is a subsidiary of the Company within the definition contained in Section 86 of the Companies Act 1981 of Bermuda; 

 

	    	“Subsisting Option” means an Option which has neither lapsed nor been exercised. 

  

	    	“Vesting Date” means the date on which an Option becomes exercisable and is the date the Board, in its discretion, may prescribe from time to time when an Option is granted, provided that such date
cannot be earlier than one day after the Date of Grant. 

  

	1.2	In these Rules except in so far as the context otherwise requires: 

  

	 	a.	words denoting the singular number shall include the plural number and words denoting the masculine gender shall include the feminine gender; and 

 

	 	b.	any reference herein to any enactment or statutory provision shall be construed as a reference to that Bermudian enactment or provision as from time to time amended extended or re-enacted. 

 

	2.	GRANT OF OPTIONS 

  

	2.1	The Board may, at any time after the Adoption Date, in its absolute discretion, resolve to make a Grant or a number of Grants to an Eligible Person or to Eligible Persons on the terms and conditions set out in these
Rules and in its resolution. 

  

	2.2	Immediately following the Date of Grant the Board shall notify the relevant Eligible Persons that they have received a Grant. 

  

	2.3	The notice given by the Board pursuant to Clause 2.2 shall be in such form, not inconsistent with these Rules, as the Board may determine and shall specify the number of Shares comprised in the Grant, any terms
applicable thereto other than as set out herein, the Date of Grant and the Subscription Price. 

  

	2.4	Not later than twelve weeks following the Date of Grant, the Option Holder may, by a notice given in writing, renounce his rights to any Grant pursuant to Clause 2.1 in which event the Option(s) covered by such Grant
shall be deemed for all purposes never to have been granted. 

  

	2.5	As soon as possible after the expiry of the twelve week notice period referred to in Clause 2.4, the Board shall issue an Option Certificate in respect of each Grant in such form, not inconsistent with these Rules, as
the Board may determine. 

  

	3.	LIMITATIONS 

  

	3.1	No Option(s) shall be granted for a period exceeding ten years from the Date of Grant. 

  

	3.2	No Option(s) shall be granted to any person unless he, at the Date of Grant, is an Eligible Person. 

  
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	4.	MAIN TERMS 

  

	4.1	No consideration shall be payable to the Company for a Grant. 

  

	4.2	An Option shall entitle the Option Holder to subscribe for a Share at a price equal to the Subscription Price at the date the Option is exercised. 

 

	4.3	An Option which has not lapsed may be exercised in whole or in part at any time provided the earliest of the following events has occurred: 

 

	 	a.	the Vesting Date; 

  

	 	b.	the death of the Option Holder; 

  

	 	c.	a Change of Control. 

  

	4.4	An Option which has vested, shall lapse on the earliest of the following events: 

  

	 	a.	such date as the Board in its discretion may prescribe at the date the Option is granted, provided that such date cannot be later than the tenth anniversary of the Date of Grant; 

 

	 	b.	the first anniversary of the Option Holder’s death; 

  

	 	c.	the first anniversary of the Option Holder’s retirement; 

  

	 	d.	three months following the Option Holder’s ceasing to be an Eligible Person, other than by reason of his death or retirement; and 

 

	 	e.	six months after the Option has become exercisable in accordance with Clause 7.1; 

  

	4.5	An Option which has not vested, shall lapse on the earliest of the following events: 

  

	 	a.	the date of an Option Holder’s death or retirement; and 

  

	 	b.	the date an Option Holder ceasing to be an Eligible Person other than by reason of his death or retirement. 

  

	5.	EXERCISE OF OPTIONS 

  

	5.1	Exercise of an Option Holder’s rights under an Option Certificate shall be effected by the Option Holder giving notice in writing to the Company specifying the number of Option Shares (not being less than 500
Shares, and being a multiple of 100 Shares, except in the case of final exercise of all outstanding rights under an Option grant) in respect of which the Option Certificate is being exercised on that occasion and accompanied by the Option
Certificate and otherwise in such form and manner as the Board, in its discretion, may prescribe from time to time, provided that such notice shall be deemed to have been exercised and to take effect on the date on which payment of the Subscription
Cost is received by the Company. 

  

	5.2	Subject to any necessary consents under regulations or enactments for the time being in force, compliance by the Option Holder with these Rules and receipt by the Company of the Subscription Cost, the Company shall, not
later than 30 (thirty) days after receipt of the notice referred to in Clause 5.1 above, allot and issue to the Option Holder the number of Option Shares specified in the notice. If the number of Option Shares over which the Option Certificate is
exercised is less than that specified therein, then the Company will issue a balance Option Certificate in respect of the remainder of such Options over which the Option Certificate is still capable of exercise. 

 

	5.3	Shares allotted in pursuance of the exercise of an Option Certificate shall rank pari passu in all respects with the Shares for the time being in issue save as regards any rights attaching by reference to a record date
prior to the date on which the Option is exercised. 

  
 4 

	6.	ADJUSTMENTS TO OPTION RIGHTS 

  

	6.1	In the event of any capitalisation or rights issue, any sub-division, consolidation or a reduction of the capital of the Company, the Board shall make appropriate adjustments with regard to: 

 

	 	a.	the aggregate number of Option Shares subject to any Option Certificate; 

  

	 	b.	the Subscription Price subject to any Option; or 

  

	 	c.	the terms of any Option Certificate. 

 PROVIDED THAT: 

 

	 	d.	any such adjustment has been confirmed in writing by an Independent Expert to be in their opinion fair and reasonable; and 

  

	 	e.	the aggregate Subscription Cost payable by an Option Holder on the exercise of all his Options under an Option Certificate is not increased; and 

 

	 	f.	the Subscription Price for any Option Share shall not be reduced below its par value. 

 Further,
the Subscription Price shall be reduced by the amount of all dividends declared by the Company per Share in the period from the Date of Grant until the date the Option Certificate is exercised, always provided that the Subscription Price never shall
be reduced below the par value of the Share. 
  

	6.2	The Board shall give notice in writing to each Option Holder affected by any adjustment made pursuant to Clause 6.1 and may, at its discretion, deliver to him a revised Option Certificate documenting the adjusted terms.

 Adjustments to the Subscription Price due to dividend payments shall be calculated as and when an Option Certificate is
exercised. 
  

	7.	WINDING-UP 

  

	7.1	If notice is given by the Board to the shareholders in the Company of a members’ resolution for the voluntary winding-up of the Company, notice of the same shall forthwith be
given by the Board to the Option Holders. 

 Each of the Option Holders shall be entitled, within three months following such
notice, to give notice in writing to the Company (such notice being accompanied by payment of the Subscription Cost) that such Option Holder wishes to be treated as if all or any of his Options had been exercised immediately before the commencement
of the winding-up. In such event the Option Holder will be entitled to participate in the assets available in the winding-up pari passu with the shareholders in the Company as if he were a shareholder in
relation to such number of Option Shares as he would have been entitled to had his Option Certificate(s) been so exercised. Subject thereto all Options shall lapse on the commencement of the winding-up. 

 

	7.2	Option rights shall lapse immediately in the event of the Company being wound-up otherwise than in the event of a voluntary winding-up. 

 

	8.	VARIATION OF THE RULES 

  

	8.1	Subject to Clause 9.2 the Board may at any time alter or add to these Rules in any respect, provided that: 

  

	 	a.	the Board may not cancel an Option except where (i) the Option Holder has breached the provisions of Clause 9.5 or (ii) the Option Holder has previously agreed; and 

 

	 	b.	(subject as herein provided) the Board may not modify the terms of an Option Certificate already granted otherwise than with the consent of the Option Holder. 

  
 5 

	8.2	The Board shall give notice in writing to each Option Holder of any alteration or addition made pursuant to this Clause 8 and may, at its discretion, deliver to each Option Holder a revised Option Certificate in respect
of his Option. 

  

	9.	GENERAL PROVISIONS 

  

	9.1	The Company shall, at all times, keep available sufficient authorised but unissued Shares to satisfy the exercise in full of all Options for the time being capable of being exercised, whether vested or not.

  

	9.2	The Board may, from time to time, make and vary such regulations and establish such procedures for the administration and implementation of Subsisting Options as it thinks fit. In the event of any dispute or
disagreement as to the interpretation of these Rules or as to the question of rights arising from or related to Option Certificates, the decision of the Board shall (except as regards any matter required to be determined by the Auditors hereunder)
be final and binding upon all persons. 

  

	9.3	The cost of the administration and implementation of the grant of Options shall be borne by the Company. 

  

	9.4	The rights and obligations of an Eligible Person under the terms on which the Eligible Person holds his office or employment with a Participating Company shall not be affected by Grants received or by any right he/she
may have to receive Grants. A Grant shall afford an Eligible Person no rights to compensation or damages in connection with the termination of such office or employment for any reason whatsoever. 

 

	9.5	The rights and obligations of an Option Holder shall be personal to the Option Holder and no Option nor the benefit thereof may be transferred, assigned, charged or otherwise alienated save that nothing in this sub-clause shall prohibit the transmission of an Option or the benefit thereof by operation of law. 

  

	9.6	For so long as the Shares are listed on the Oslo Stock Exchange or any other stock exchange, the Company shall apply to the appropriate authorities of such stock exchange(s) for all Shares subscribed for pursuant to the
exercise of an Option to be admitted for trading thereon on par with the other Shares. 

  

	9.7	Any notice or other document to be served by the Company under these Rules on an Eligible Person or Option Holder may be served personally or by e-mail or by sending it through the post in a prepaid letter addressed to
him at his address as last known to the Company. 

  

	    	Any notice or other document to be served on the Company under these Rules may be served by an Eligible Person or Option Holder by leaving it at the registered office for the time being of the Company or by e-mail or by
sending it through the post in a prepaid letter addressed to such registered office. 

  

	    	Where any notice or other document is served or sent by first class post it shall be deemed to have been received at the expiration of seven days (excluding Saturdays, Sundays or public holidays in Bermuda or Norway)
after the time when cover containing the same was put in the post properly addressed and stamped. Any notice or document sent by e-mail shall be deemed to have been received at the time of transmission to the party to which it is addressed.

  

	9.8	The Insider Trading Regulations of the Company are applicable to the Shares received as a consequence of the exercise of Options. 

  
 6

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