Nekkar — Proxy Solicitation & Information Statement 2010

Dec 22, 2010

NORSK TILLITSMANN ASA

www.trustece.no

Dette brevet til obligasjonseierne er kun utarbeidet på engelsk. For ytterligere informasjon vennligst ta kontakt med Norsk Tillitsmann ASA på telefon +47 22 87 94 00.

To the bondholders in:

ISIN NO 001 036850.9 – FRN TTS Marine ASA Bond Issue 2007/2010 as amended

Oslo, 22 December 2010

Proposal to amend Bond Agreement – Summons to Bondholders’ Meeting

Norsk Tillitsmann ASA (“NTM” or “Norsk Tillitsmann”) acts as trustee for the holders of bonds (the “Bonds”) in the above-captioned bond issue (the “Senior Bond”) with TTS Group ASA (formerly TTS Marine ASA) as the Borrower.

All capitalized terms used herein shall have the meaning assigned to them in the loan agreement referred to above or in the summons to this Bondholders’ meeting unless otherwise stated.

The information in this summons regarding the Borrower is provided by the Borrower. NTM expressly disclaims all and any liability whatsoever related to such information.

1. BACKGROUND

The Borrower wishes to issue five year subordinated convertible bonds (the “Convertible Bond”) in the amount of MNOK 200 to be applied for refinancing of bank debt and general corporate purposes. The Convertible Bonds have been fully subscribed through the managers First Securities AS and Pareto Securities AS. A copy of the Term Sheet is attached this document.

The Convertible Bonds are subject to approval in an extraordinary general meeting of the Borrower on 10 January 2011 and is to be settled on 18 January 2011 provided all conditions for closing being met.

One of the conditions for the closing of the Convertible Bonds is that the notional amount of the Convertible Bonds – NOK 200 million – shall qualify as “Equity” in respect of the Senior Bonds from 31.12.2010 onwards, cf. the Term Sheet.

The bondholders are therefore summoned to vote over whether to amend the Bond Agreement for the Senior Bonds accordingly.

MAILING ADDRESS P.O.BOX 1470 VIKA, N-0116 OSLO LOCATION HAAKON VII GATE I, OSLO, NORWAY

phone +47 22 87 94 00 fax +47 22 87 94 10 org.nr no 963 342 624 MVA e-mail mail@trustee.no

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NORSK TILLITSMANN ASA
www.nossk.no

2. THE PROPOSED CHANGES IN THE LOAN AGREEMENT:

The Borrower puts forward the proposal (the “Amendment Proposal”) below for the Bond Agreement.

The Bond Agreement’s definition of Equity is changed from

“Equity: the aggregate book value (on a consolidated basis) of the Group’s total equity in accordance with IFRS.”

to

“Equity: the sum of (i) the aggregate book value (on a consolidated basis) of the Group’s total equity in accordance with IFRS and (ii) the principal amount of the subordinated convertible bond loan of NOK 200 million with maturity in January 2016.”

The change of definition is subject to the Borrower during the term of the Senior Bond not in any way alters the terms of the Convertible Bond in a manner that may have an adverse effect for the Borrower’s fulfillment of the obligations under the Senior Bond.

3. EVALUATION OF THE PROPOSED CHANGES

3.1. The Borrower’s evaluation

The Borrower is of the opinion that issuing the Convertible Bonds of MNOK 200 with maturity in January 2016 is beneficial to all stakeholders in the company and in particular the senior creditors, including the holders of the Senior Bonds.

Updated information on the Borrower (including a Company Presentation as of 14 December 2010) is available at Oslo Børs (www.ose.no) and at the Borrowers web page (www.ttsgroup.com).

The request is put forward to the Bondholders without further evaluation or recommendations from the Loan Trustee. The Bondholders must independently evaluate whether the proposed changes are acceptable.

4. SUMMONS FOR BONDHOLDERS’ MEETINGS

Based on the above information, Bondholders are hereby summoned to a bondholders’ meeting:

Time: 10 January 2011 at 13.00 (Oslo time)
Place: the premises of Norsk Tillitsmann ASA, Haakon VII’s gate 1, Oslo (Norway)

Agenda:

Pursuant to Clause 17.4 of the Loan Agreement, the meeting will be opened and presided over by a representative from NTM.

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NORSK TILLITSMANN ASA
www.tillitsmnn.no

1. Approval of the summons
2. Approval of the agenda
3. Election of two persons to sign the minutes together with the chairman
4. Consent to amendments to definition in the Loan Agreement:

A. Proposed resolution

The Bondholders’ meeting approves the Amendment Proposal, as set out in Clause 2 above.

B. Effectiveness and execution of the resolution:

Norsk Tillitsmann ASA is given the power of attorney to amend the Loan Agreement according to the resolution above, and to do all things necessary in connection with decisions made by the Bondholders’ meetings.

According to the Loan Agreement section 17.8, the abovementioned Proposal, being a change of one of the conditions in the Loan Agreement requires a qualified majority of 2/3 of the Loan represented at the Bondholders’ meeting voting in favor of such proposals and a minimum 5/10 of the outstanding Bonds being represented at the meeting. Bondholders may be represented in person or by proxy.

-o0o-

Please find attached a Bondholder’s Form from the Securities Depository (VPS), indicating your bondholding at the printing date. The Bondholder’s Form will serve as proof of ownership of the Bonds and of the voting rights at the Bondholders’ meeting. (If the Bonds are held in custody - i.e. the owner is not registered directly in the VPS - the custodian must confirm; (i) the owner of the Bonds, (ii) the aggregate nominal amount of the Bonds and (iii) the account number in VPS on which the Bonds are registered).

The individual Bondholder may authorize the Norsk Tillitsmann to vote on its behalf, in which case the Bondholder’s Form also serves as a proxy. A duly signed Bondholder’s Form, authorizing Norsk Tillitsmann to vote, must then be returned to Norsk Tillitsmann in due time before the meeting is scheduled (by scanned e-mail, telefax or post – please see the first page of this letter for further details).

In the event that Bonds have been transferred to a new owner after the Bondholder’s Form was made, the new Bondholder must bring to the Bondholders’ meeting or enclose with the proxy, as the case may be, evidence which the Norsk Tillitsmann as sufficient proof of the ownership of the Bonds.

For practical purposes, we request those who intend to attend the Bondholders’ meeting, either in person or by proxy other than to Norsk Tillitsmann, to notify Norsk

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NORSK TILLITSMANN ASA
www.119500.no

Tillitsmann by telephone or by e-mail (at set out at the first page of this letter) within 16:00 hours (4 pm) (Oslo time) the Banking Day before the meeting takes place.

Yours Sincerely,
Norsk Tillitsmann ASA

Karianne Bruland

Enclosure:
- VPS statement/Power of attorney form.
- Exhibit 1: Term Sheet for Convertible Bond Loan

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TERM SHEET

NOK 200,000,000 TTS GROUP ASA
CONVERTIBLE BONDS DUE 2016
CONVERTIBLE INTO COMMON SHARES OF TTS GROUP ASA
ISIN: NO0010593890

Issuer: TTS Group ASA ("TTS")
Type of Instrument: Subordinated unsecured convertible bonds (the "Bonds" or the "Bond Issue") convertible into common shares of TTS (the "Shares").
Underlying Shares: The Shares
Amount: NOK 200,000,000
Nominal Value: The Bonds will have a nominal value of NOK 1.00 each.
Coupon: 8.00% per annum
Settlement Date: 18 January 2011. Notice is expected to be given to the subscribers minimum two banking days prior to Settlement Date.
Final Maturity Date: 18 January 2016 (5 years after Settlement Date) at price 100 % of par value.
First interest payment day: 18 April 2011 (3 months after Settlement Date).
Last interest payment day: 18 January 2016 (5 years after Settlement Date).
Issue Price: 100% of par value.
Interest Payments: Interest is payable quarterly in arrears on 18 January, 18 April, 18 July, and 18 October of each year, and will accrue from and including the Settlement Date, on the basis of a 360 day year consisting of 12 months of 30 days, with interest in respect of any part of an uncompleted month being determined on the basis of a

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30 day month less the remaining number of calendar days in the month.

If coupon payment date is not a banking day, then payment is made on the first subsequent banking day.

Status of the Bond: Subordinated unsecured. The Bonds and accrued interest shall be subordinated to the senior debt of the Issuer, however the Bonds and accrued interest shall rank pari passu with any other subordinated debt of the Issuer, and shall rank ahead of all amounts payable in respect of the share capital of the Issuer. Payment of interest shall be suspended and accumulated in case of default under the Senior Unsecured Bond and the Bank Loans.

Purpose: Partly refinancing of the Bank Loans and general corporate purposes.

Reference Share Price: The Volume Weighted Average Price of the Shares on the Oslo Stock Exchange during the 5 day period leading up to and including the Launch Date.

Launch Date: The date the Issuer informs the public about the transaction.

Bondholder's Conversion Rights: Each Bondholder (the "Bondholders") may exercise one or more of his conversion right(s) at the Conversion Price at any time during the period commencing on the 40th banking day following the Settlement Date and ending on the tenth (10) banking day prior to the Final Maturity Date, or, if earlier, ending on the tenth (10) banking day prior to the date of redemption of the Bonds (the "Exercise Period").

Upon exercise the Bondholder shall be entitled to convert the principal amount excluding any accrued not paid interest into Shares, rounded down to the nearest number of Shares.

Conversion Premium: 22.5% of the Reference Share Price.

Initial Conversion Price: The Initial Conversion Price shall be NOK 7.5787 per Share, equalling the Reference Share Price plus the Conversion Premium.

Conversion Price: The Initial Conversion Price with any adjustments as determined by the Adjustment to the Conversion Price.

Adjustment to the Conversion Price: The Bond Agreement will contain standard Euromarket provisions for adjustment of the Conversion Price to avoid dilution of the Bondholder's option value (adjustment for dividends, rights issues, share splits, and any other distributions to all or any substantial part of the Issuer's shareholders, etc).

Conversion Date: The Conversion Date is the banking day ten (10) banking days after the account manager has received the relevant conversion notice.

Forced Conversion (Issuer Call Option): On or after three (3) years and twenty (20) trading days after Settlement Date, the Issuer may, provided that the Parity Value has exceeded NOK 1.50 on at least twenty (20) trading days within a

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period of thirty (30) consecutive trading days (for avoidance of doubt, the first possible thirty (30) day period referred to above to start thirty (30) trading days before 15 February 2014, and the thirty (30) day period not ending earlier than the trading day prior to the trading day which Issuer give notice of redemption to Bondholders pursuant to this clause), convert the whole Bond by forcing the Bondholders to convert their holdings of Bonds into Shares.

"Parity Value" means, in respect of any trading day, the NOK amount calculated as follows:

$$
PV = N \times VWAP
$$

where

$$
PV = \text{the Parity Value}
$$

$N =$ the number of Shares determined by dividing NOK 1.00 (being the face value of each bond) by Conversion Price in effect on such trading day (rounded down, if necessary, to the nearest whole number of Shares).

$VWAP =$ the Volume Weighted Average Price of a Share on such trading day (provided that if on any such trading day the Shares shall have been quoted cum-dividend or cum-any other entitlement, the closing price on such trading day shall be deemed to be the amount thereof reduced by an amount to the fair market value of any such dividend or entitlement per share as at the date of first public announcement of such dividend or entitlement (or, if that is not a trading day, the immediate preceding trading day)).

Clean-up Call:

The Issuer may at any time during the term of the Bonds, provided that 90 per cent or more of the original issued Bonds at the Settlement Date shall have been redeemed or converted into Shares, with twenty (20) banking days notice period call the remaining part of the Bond at 100% of par value plus accrued interest. For the sake of clarity; the Bondholder's Conversion Rights may be exercised following such redemption call provided the conversion notice is issued within the said redemption notice period.

Investor Put Option:

Upon a Change of Control Event.

Taxation:

The Issuer shall pay any stamp duty and other public fees accruing in connection with the Bonds, but not in respect of trading in the secondary market (except to the extent required by applicable laws), and shall gross up any applicable withholding tax payable pursuant to law.

Change of Control Protection:

If a Change of Control Event has occurred, each Bondholder shall at any time during the period commencing on the date on which a Change of Control Event occurs and ending sixty (60) calendar days following such date or, if later, sixty (60) calendar days period following the notification of a Change of Control Event, be entitled (at each Bondholder's sole discretion) to:

(a) require early redemption of its Bonds (put option) at 100%

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of par value plus accrued interest; or

(b) convert its Bonds at the Change of Control Conversion Price, as set out below, adjusted by the Adjustment to the Conversion Price (if applicable):

$$
COCCP = \left[ RP \times (N - n) + (CP \times n) \right] / N
$$

where:

• $COCCP$ - is the Change of Control Conversion Price
• $RP$ - Reference Share Price, NOK 7.5787
• $CP$ - is the current Conversion Price on the relevant Conversion Date
• $N$ - is the number of days from (and including) the Settlement Date to (but excluding) the Final Maturity Date.
• $n$ - is the number of days from (and including) the Settlement Date to (but excluding) the date of the Change of Control Event.

The number of Shares required to be issued shall be determined by dividing $100\%$ of par value of the Bonds by the Change of Control Conversion Price in effect on the relevant exercise date.

Change of Control Event:

If and when, subsequent to the date hereof, a shareholder of the Issuer or a group of shareholders acting in concert, directly or indirectly acquire (including by purchase, merger etc) or have the right to cast, at a general meeting of the shareholders of the Issuer, more than 50 per cent of the votes that may ordinarily be cast in a general meeting of shareholders of the Issuer.

Group:

The Issuer and its subsidiaries.

Bank Loans:

Means (i) the existing combined loan facility with Nordea Bank and Sparebanken Vest as lenders amounting to NOK 425,000,000 and (ii) the NOK 330,000,000 Overdraft Facility with Nordea Bank and Sparebanken Vest.

Senior Unsecured Bond:

Means the existing outstanding senior unsecured bond issue TTS Marine ASA 07/10 FRN NOK 400,000,000 with ISIN NO0010368509.

Other Conditions:

During the term of the Bond Issue, the Issuer shall (unless the Trustee or the Bondholders' meeting (as the case may be) in writing has agreed to otherwise) comply with the following covenants:

(a) not cease to carry on its business;

(b) not, and ensure that no member of the Group, shall:

(i) sell or dispose of all or a substantial part of its operations;

(ii) change the nature of its business; or

(iii) merge, demerge or in any other way restructure its business (other than under an intra-group reorganisation on a solvent basis, and if such reorganisation involves the Issuer, the Issuer is the sole surviving entity of that reorganisation)

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in a manner which may have a Material Adverse Effect.

Material Adverse Effect:
Material Adverse Effect means an event or circumstance which has material adverse effect on the financial condition of the Issuer and/or the Group taken as a whole with material negative effect on the Issuer’s ability to (a) perform and comply with its obligations under this Bond Agreement or (b) the validity or enforceability of this Bond Agreement.

Events of Default:
The Bond Agreement will be subject to customary event of default provisions including cross acceleration provisions in relation to financial indebtedness of the Issuer and any of its subsidiaries, subject to a NOK 20 million threshold.

Governing Law:
Disputes arising out of or in connection with the Bond Agreement which are not resolved amicably shall be resolved in accordance with Norwegian law and in the Norwegian courts for the Bond Agreement.

Registration:
The Norwegian Central Securities Depository (“VPS”). Principal and interest accrued will be credited the bondholders through VPS.

Listing:
An application will be made for the Bonds to be listed on the Oslo Stock Exchange.

Market-making:
No market-maker agreement has been made for this Bond Issue.

Managers:
Pareto Securities AS, Dronning Mauds gt. 3, NO-0115 Oslo, Norway; and First Securities AS, Filipstad Brygge 1, NO-0250 Oslo, Norway.

Trustee:
Norsk Tillitsmann ASA, Postboks 1470 Vika, NO-0116 Oslo, Norway.

Bond Agreement:
The Bond Agreement will be entered into, on standard terms and conditions for convertible bond issues under Norwegian law, by the Issuer and the Trustee acting as the bondholders’ representative. The Bond Agreement regulates the bondholders’ rights and obligations with respect to the Bond Issue. If any discrepancy should occur between this Term Sheet and the Bond Agreement, the Bond Agreement shall prevail.

Each Subscriber is deemed to have granted authority to the Trustee to finalize the Bond Agreement and the related security documents if any. Minor adjustments to the structure described in this Term Sheet may occur.

The Subscription Agreements will specifically authorize the Trustee to execute and deliver the Bond Agreement on behalf of the prospective bondholders, who will execute and deliver such Subscription Agreements prior to receiving Bond allotments. On this basis, the Issuer and the Trustee will execute and deliver the Bond Agreement and the latter’s execution and delivery is on behalf of all of the subscribers, such that they thereby will become parties to the Bond Agreement.

The Bond Agreement specifies that all bond transfers shall be subject to the terms thereof, and the Trustee and all bond transferees shall, in taking transfer of Bonds, be deemed to have

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accepted and acceded to the terms of the Bond Agreement, which specifies that all such transferees shall automatically become parties to the Bond Agreement upon completed transfer having been registered in the VPS, without any further action required to be taken or formalities to be complied with. The Bond Agreement shall be made available to the general public for inspection purposes and may, until redemption in full of the Bonds, be obtained on request to the Trustee or the Issuer, and such availability shall be recorded in the VPS particulars relating to the Bonds.

Eligible Purchasers:

The Bonds are not being offered to and may not be purchased by investors located in the United States except for "Qualified Institutional Buyers" (QIBs) within the meaning of Rule 144A under the U.S. Securities Act of 1933, as amended ("Securities Act"). In addition to the Subscription Agreement that each investor will be required to execute, each U.S. investor that wishes to purchase Bonds will be required to execute and deliver to the Issuer a certification in a form to be provided by the Issuer stating, among other things, that the investor is a QIB. The Bonds may not be purchased by, or for the benefit of, persons resident in Canada.

Transfer Restrictions:

Bondholders located in the United States will not be permitted to transfer the Bonds except (a) subject to an effective registration statement under the Securities Act, (b) to a person that the Bondholder reasonably believes is a QIB within the meaning of Rule 144A that is purchasing for its own account, or the account of another QIB, to whom notice is given that the resale, pledge or other transfer may be made in reliance on Rule 144A, (c) outside the United States in accordance with Regulation S under the Securities Act in a transaction on the Oslo Børs, and (d) pursuant to an exemption from registration under the Securities Act provided by Rule 144 there under (if available).

The Bonds may not, subject to applicable Canadian laws, be traded in Canada for a period of four months and a day from the date the Bonds were originally issued.

Subject to:

The issue of Bonds is subject to:

1. All necessary corporate and shareholder resolutions of the Bond Issue;
2. Finalised documentation (including Bond Agreement) and approval of the Bond Agreement and other related documents (if any) by the Trustee;
3. Approval from the Trustee and/or bondholders of an amendment to the bond agreement for the Senior Unsecured Bond where after the nominal amount of the Bonds shall qualify as equity as defined in the bond agreement; and
4. Approval from the providers of the Bank Loans of the following amendments to the related loan agreements:

a. No scheduled maturity prior to 31.12.2011 save for payment of up to NOK 150 million following asset sales for minimum such amount in proceeds;

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b. The Bank Loans to be fully committed and available up to 31.12.2011 (with no credit committee approval or equivalent necessary in this period);
c. Approval of amendment of the relevant loan agreements for the Bank Loans and the Senior Unsecured Bonds to incorporate the notional amount of the Bond as equity from 18.01.2011.

Paying, Transfer and Conversion Agent:
Nordea Bank Norge ASA

Bergen/Oslo, 16 December 2010

TTS Group ASA
Pareto Securities AS
First Securities AS

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