Securities Note. FRN StormGeo Holding AS Senior Secured Bond Issue 2014/2017 ISIN: NO Bergen, 10 July 2014

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1 Securities Note FRN StormGeo Holding AS Senior Secured Bond Issue 2014/2017 ISIN: NO Bergen, 10 July 2014 Prepared according to Commission Regulation (EC) No 809/ Annex XIII

2 2/19 Important notice The Securities Note has been prepared in connection with listing of the securities at Oslo Børs. The Prospectus has been reviewed and approved by the Norwegian FSA in accordance with sections 7-7 and 7-8, cf. section 7-3 of the Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information given in this Prospectus. The approval given by the Norwegian FSA only relates to the Issuer's descriptions pursuant to a pre-defined check list of requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or otherwise covered by this Prospectus. New information that is significant for the Issuer or its subsidiaries may be disclosed after the Securities Note has been made public, but prior to the expiry of the subscription period. Such information will be published as a supplement to the Securities Note pursuant to Section 7-15 of the Norwegian Securities Trading Act. On no account must the publication or the disclosure of the Securities Note give the impression that the information herein is complete or correct on a given date after the date on the Securities Note, or that the business activities of the Issuer or its subsidiaries may not have been changed. Only the Issuer is entitled to procure information about conditions described in the Securities Note. Information procured by any other person is of no relevance in relation to the Securities Note and cannot be relied on. Unless otherwise stated, the Securities Note is subject to Norwegian law. In the event of any dispute regarding the Securities Note, Norwegian law will apply. In certain jurisdictions, the distribution of the Securities Note may be limited by law, for example in the United States of America or in the United Kingdom. Verification and approval of the Securities Note by Finanstilsynet implies that the Securities Note may be used in any EEA country. No other measures have been taken to obtain authorisation to distribute the Securities Note in any jurisdiction where such action is required. Persons that receive the Securities Note are ordered by the Issuer to obtain information on and comply with such restrictions. This Securities Note is not an offer to sell or a request to buy bonds. The content of the Securities Note does not constitute legal, financial or tax advice and bond owners should seek legal, financial and/or tax advice. Contact the Issuer to receive copies of the Securities Note. This Securities Note should be read together with the Registration Document dated 10 July The documents together constitute a prospectus. L_ _V

3 3/19 1 RISK FACTORS PERSONS RESPONSIBLE INFORMATION CONCERNING THE SECURITIES DEFINITIONS ADDITIONAL INFORMATION Appendix 1: Bond Agreement Appendix 2: Security Agreement Appendix 3: Bank Account Charge StormGeo Ltd. Appendix 4: Guarantee and Indemnity Seaware AB Appendix 5: Guaranty ImpactWeather Inc. Appendix 6: Guaranty Applied Weather Technology Inc. L_ _V

4 4/19 1 RISK FACTORS 1.1 Liquidity Bond trading will always be limited by market liquidity. The Issuer cannot guarantee that the Bonds will be tradable at any price levels. 1.2 Mandatory prepayment events may lead to a prepayment of the Bonds in circumstances where an investor may not be able to reinvest the prepayment proceeds at an equivalent rate of interest In accordance with the terms and conditions of the Bond Agreement, the Bonds are subject to mandatory prepayment by the Issuer on the occurrence of certain specified events. Following any early redemption after the occurrence of a Mandatory Prepayment Event, it may not be possible for Bondholders to reinvest such proceeds at an effective interest rate as high as the interest rate on the Bonds and may only be able to do so at a significantly lower rate. It is further possible that the Issuer will not have sufficient funds at the time of the Mandatory Prepayment Event to make the required redemption of Bonds. 1.3 The Issuer s ability to service its indebtedness depends on many factors beyond its control The Issuer s ability to make scheduled payments on or to refinance its obligations under, the Bonds will depend upon the Issuer s financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which may be beyond the Issuer s control. 1.4 Volatility of prices due to market fluctuations Any investment in the Issuer s debt is associated with an element of risk, and the price of the Issuer s debt may be subject to significant fluctuations caused by a number of market factors, ultimately market interest rates and risk premium, many of which may be outside the Issuer s control and independent of its operational and financial development. 1.5 The Issuer may not have sufficient funds to make the required redemption of Bonds upon a Change of Control Event Upon the occurrence of a Change of Control Event (as defined in section 3 below), each individual Bondholder shall have a right of pre-payment of the Bonds at a price of 101% of par value plus accrued interest. However, it is possible that the Issuer will not have sufficient funds at the time of the Change of Control Event to make the required redemption of Bonds. The Issuer s failure to redeem tendered Bonds would constitute an event of default under the Bond Agreement. 1.6 The Bonds may be subject to optional redemption by the Issuer In accordance with the terms and conditions of the Bond Agreement, the Bonds are subject to optional redemption by the Issuer at a price equal to 103% of par value, plus accrued interest on the redeemed amount. This feature is likely to limit the market value of the Bonds. During any period when the Issuer may elect to redeem the Bonds, the market value of the Bonds generally will not rise substantially above the price at which they can be redeemed. This may also be true prior to any redemption period. L_ _V

5 5/19 2 PERSONS RESPONSIBLE StormGeo Holding AS, registered business address Nordre Nøstekaien 1, 5011 Bergen, Norway, accepts responsibility for the information contained in the Prospectus. The Company hereby declares that, having taken all reasonable care to ensure that such is the case, the information contained in the Prospectus is, to the best of our knowledge, in accordance with the facts and contains no omissions likely to affect its import. 10 July 2014 StormGeo Holding AS L_ _V

6 6/19 3 INFORMATION CONCERNING THE SECURITIES ISIN: NO The reference name of the Bond Issue: FRN StormGeo Holding AS Senior Secured Bond Issue 2014/2017 Issuer: Guarantors: Security type: Currency: Outstanding Amount: Nominal value: Securities form: StormGeo Holding AS StormGeo AS, StormGeo Ltd., Seaware AB, ImpactWeather Inc., Applied Weather Technology Inc. Bond issue with floating rate NOK NOK 500 million The Bonds will have a nominal value of NOK 1,000,000 each. Minimum subscription and allocation amount shall be NOK 1,000,000. The Bonds are electronically registered in book-entry form with the Norwegian Securities Depository ("VPS") Issue Date: 31 January 2014 Interest bearing from and including: Interest bearing to: Issue Date Maturity Date Maturity Date: 31 January 2017 Interest Payment Date: Date of interest adjustment: Issue price: Coupon Rate: 30 April, 31 July, 31 October and 31 January each year and the Maturity Date 30 April, 31 July, 31 October and 31 January each year 100% of par value 3 month NIBOR % p.a., quarterly interest payments Current rate: 7.51% from and including 30 April 2014 up to and including 30 July 2014 Yield: Investors wishing to invest in the Bonds after the Issue Date must pay the market price for the Bonds in the secondary market at the time of purchase. Depending on the development in the bond market in general and the development of the Issuer, the price of the Bonds may have increased (above par) or decreased (below par). As the Bonds have a floating reference rate, it is the market's L_ _V

7 7/19 expectations of risk premium, i.e. margin that affects the price. If the price has increased, the yield for the purchaser in the secondary market, given that the reference rate does not change, will be lower than the interest rate of the Bonds and vice versa. At par, the yield will be 7.51% from and including 30 April 2014 up to and including 30 July Day count fraction: Business Day Convention: Business Day: Act/360 Modified Following Business Day Convention As determined in "Oslo" Amortization: The Bonds shall be repaid in full on Maturity Date at price % (par) Change of Control Clause: Change of Control Event: Upon a Change of Control Event occurring, each Bondholder shall have a right of pre-payment (Put Option) of the Bonds at a price of 101% of par value (plus accrued interest). Please see clause 10.3 of the Bond Agreement, attached hereto as Appendix 1, for further details. A Change of Control Event occurs if and when any person or a group of persons acting in concert, other than Reiten & Co or DNV, directly or indirectly, acquires Decisive Influence over the Issuer. "Decisive Influence" means a person having, as a result of an agreement or through the ownership of shares or interests in another person: (i) a majority of the voting rights in that other person; or (ii) a right to elect or remove a majority of the members of the board of directors of that other person. When determining the relevant person's number of voting rights in the other person or the right to elect and remove members of the board of directors, rights held by the parent company of the relevant person and the parent company's Subsidiaries shall be included. Call Option: Mandatory Prepayment: The Issuer may redeem the Bond Issue in whole or in parts ("Call Option") at any time from and including the first Interest Payment Date in January 2016 to, but not including, the Maturity Date at a price equal to % of par value (plus accrued interest on redeemed amount). Please see clause 10.2 of the Bond Agreement, attached hereto as Appendix 1, for further details. Upon a Mandatory Prepayment Event occurring, the Issuer shall within ten Business Days redeem 100% of the Bonds at a price corresponding to 101% of par value. "Mandatory Prepayment Event" means an event where the acquisition of the Target is for any reason not completed within 31 L_ _V

8 8/19 March 2014, or (if occurring earlier) the parties to the SPA have agreed that the acquisition of the Target will not be completed. Status of the Bonds and Security: Guarantees: The Bonds shall constitute senior debt obligations of the Issuer. The Bonds shall rank at least pari passu with all other obligations of the Issuer (save for such claims which are preferred by bankruptcy, insolvency, liquidation or other similar laws of general application) and shall rank ahead of subordinated debt. Please see clause 8 of the Bond Agreement, attached hereto as Appendix 1, for further details. The unconditional on-demand guarantees on a joint and several basis from the Guarantors securing the Issuer s obligations under the Bonds. The liability of StormGeo AS, StormGeo Ltd. and Seaware AB under the Guarantees shall be limited to NOK 800,000,000 plus any unpaid amount of interest, fees, liability, premium and expenses in respect of the Bonds. The Guarantees can be found in the following Appendices: Appendix 2: Security Agreement, clause 8 (for StormGeo AS) Appendix 3: Bank Account Charge, clause 1 (for StormGeo Ltd.) Appendix 4: Guarantee and Indemnity (for Seaware AB) Appendix 5: Guaranty (for ImpactWeather Inc.) Appendix 6: Guaranty (for Applied Weather Technology Inc.) Covenants: Financial Covenants: Events of Default: Defeasance: See clause 13 of the Bond Agreement, attached hereto as Appendix 1. See clause 14 of the Bond Agreement, attached hereto as Appendix 1. See clause 16 of the Bond Agreement, attached hereto as Appendix 1. See clause 19.2 of the Bond Agreement, attached hereto as Appendix 1. Listing and admission to trading: The Issuer shall apply for listing of the Bonds on Oslo Børs within 6 months of the Issue Date. Purpose and utilization: The net proceeds of the Bonds shall be employed (in the following order) as: (a) part financing of the purchase price for the acquisition of the Target; (b) funding of the NOK Interest Retention Account; (c) repayment of the Existing Debt; and L_ _V

9 9/19 (d) general corporate purposes of the Group. Approvals: Limitation of claims: Bond Agreement: Bondholders' Meeting: The Bonds have been issued in accordance with the Issuer s Board approval dated 20 January All claims under the Bonds and the Bond Agreement for payment, including interest and principal, shall be subject to the time-bar provisions of the Norwegian Limitation Act of May 18, 1979 No. 18, p.t. 3 years for interest rates and 10 years for principal. The Bond Agreement, attached hereto as Appendix 1, has been entered into between the Issuer and the Bond Trustee. The Bond Agreement sets out the Bondholders rights and obligations in the Bonds. The Bond Trustee has entered into the Bond Agreement on behalf of the Bondholders and been granted authority to act on behalf of the Bondholders to the extent provided for in clause 18 of the Bond Agreement. When Bonds are purchased, the Bondholder is deemed to have accepted the Bond Agreement and shall be bound by its terms. The Bondholders Meeting represents the supreme authority of the Bondholders community in all matters relating to the Bonds, and has the power to make all decisions altering the terms and conditions of the Bonds, including, but not limited to, any reduction of principal or interest and any conversion of the Bonds into other capital classes. The Bondholders Meeting cannot resolve that any overdue payment of any instalment shall be reduced unless there is a pro rata reduction of the principal that has not fallen due, but may resolve that accrued interest (whether overdue or not) shall be reduced without a corresponding reduction of principal. If a resolution by or an approval of the Bondholders is required, such resolution shall be passed at a Bondholders Meeting, see however Clause 18.1 of the Bond Agreement, attached hereto as Appendix 1. Resolutions passed at Bondholders Meetings shall be binding upon all Bondholders and prevail for all the Bonds. At the Bondholders Meeting each Bondholder may cast one vote for each Voting Bond owned at close of business on the day prior to the date of the Bondholders Meeting in accordance with the records registered in the VPS. The Bond Trustee may, at its sole discretion, accept other evidence of ownership. Whoever opens the Bondholders Meeting shall adjudicate any question concerning which Bonds shall count as the Issuer s Bonds. The Issuer s Bonds shall not have any voting rights. For this purpose, a Bondholder that has a Bond that is nominee registered shall be deemed as the Bondholder of such Bond (instead of the nominee) provided that the Bondholder presents relevant evidence stating that the relevant Bondholder is the Bondholder of the Bond and the amount of Bonds held by such Bondholder. In order to form a quorum, at least half (1/2) of the Voting Bonds must as a main rule be represented at the meeting, see however Clause 17.4 of the Bond Agreement attached hereto as Appendix 1. As a main rule, resolutions shall be passed by simple L_ _V

10 10/19 majority of the Voting Bonds represented at the Bondholders Meeting. However, a majority of at least 2/3 of the Voting Bonds represented at the Bondholders Meeting is required for any waiver or amendment of any terms of the Bond Agreement. For more details, please see clause 17 of the Bond Agreement, attached hereto as Appendix 1. NIBOR: Calculation Agent: Bond Trustee: Joint Lead Managers: Paying Agent: VPS account manager: Market-making: Legislation under which the Bonds have been created: Transfer restrictions: Means the interest rate which (a) is published on Oslo Børs webpage (or through another system or on another website replacing the said system or website respectively) approximately (on days on which the Norwegian money market has shorter opening hours (New Year s Eve and the Wednesday before Maundy Thursday), the data published by the banks at 10 a.m. shall be used), or, if such publication does not exist, (b) at that time corresponds to (i) the average of the quoted lending rates of Norwegian commercial banks on the interbank market in Oslo or, if only one or no such quotes are provided, (ii) the assessment of the Bond Trustee of the interest rate, which in the Bond Trustee s determination is equal to what is offered by Norwegian commercial banks, for the applicable period in the Oslo interbank market. If any such rate is below zero, NIBOR will be deemed to be zero. Bond Trustee Nordic Trustee ASA, P.O. Box 1470 Vika, N-0116 Oslo, Norway SpareBank 1 SR-Bank Markets, 4001 Stavanger, Norway; and Swedbank, Filipstad brygge 1, NO-0115 Oslo, Norway. Sparebank 1 SR-Bank Markets, 4001 Stavanger, Norway. Sparebank 1 SR-Bank Markets, 4001 Stavanger, Norway. No market-maker agreement has been made for this Bond Issue. Norwegian law 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, and (d) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (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. L_ _V

11 11/19 Governing laws: Fees and expenses: The Bonds and the Bond Agreement are governed by the laws of Norway, with the District Court of Oslo as sole legal venue. Total expenses related to the admission to trading is approximately NOK ,-. L_ _V

12 12/19 4 DEFINITIONS Bond Agreement: Means the Bond Agreement between the Issuer and the Bond Trustee on behalf of the Bondholders dated 30 January 2014, attached hereto as Appendix 1. Bond Issue / Bonds FRN StormGeo Holding AS Senior Secured Bond Issue 2014/2017 ISIN NO Bondholder: Means a person registered as a holder of Bond(s) in the VPS, from time to time. DNV: Means DNV GL AS, business registration number , DNV GL Group AS, business registration number or Stiftelsen Det Norske Veritas, business registration number or any company or entity controlled by or under common control with said entities. Group: Outstanding Bonds: Prospectus: Registration Document: Reiten & Co: Means the Issuer and all its (directly and indirectly owned) Subsidiaries from time to time Means the Bonds not redeemed or otherwise discharged. The Registration Document together with the Securities Note The Registration Document dated on the same date hereof for the StormGeo Holding AS Senior Secured Bond Issue 2014/2017 Means Reiten & Co Capital Partners VII LP or any other fund managed by Reiten & Co AS, business registration number or a company controlled by or under common control with Reiten & Co AS. Securities Note: This document dated 10 July 2014 SPA: Subsidiary: Target: Voting Bonds: Means the share purchase agreement dated 20 January 2014 for StormGeo Inc.'s acquisition of the Target. Means a company over which another company has Decisive Influence. Means Applied Weather Technology Inc. incorporated in the state of California under the laws of the United States. Means the Outstanding Bonds less the Issuer s Bonds. L_ _V

13 13/19 5 ADDITIONAL INFORMATION The involved persons in StormGeo Holding AS or in the Guarantors have no interest, nor conflicting interests that are material to the Issue. StormGeo Holding AS has mandated Sparebank 1 SR-Bank Markets and Swedbank to act as Joint Lead Managers of the Issue. The Joint Lead Managers have acted as advisors to StormGeo Holding AS in relation to the pricing of the loan. L_ _V

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121 APPENDIX 5: GUARANTY IMPACTWEATHER INC. L_ _V

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135 APPENDIX 6: GUARANTY APPLIED WEATHER TECHNOLOGY INC. L_ _V

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