TERM SHEET FOR PROPOSED AMENDMENT TO SETTLEMENT AGREEMENT BETWEEN PARAGON OFFSHORE PLC AND NOBLE CORPORATION PLC

The Parties propose that the Amendment to Tax Sharing Agreement be amended to provide that, during the Mexican Tax Indemnity Deferral Period, Paragon shall be entitled to deliver a Paragon Note (as defined below), in lieu of cash, to Noble in payment of any amount that Paragon owes Noble in respect of Specified Mexican Taxes and Reimbursable Expenses (as defined below) under the Amendment to Tax Sharing Agreement up to an aggregate amount of $5 million.

For the avoidance of doubt, (i) Paragon shall not be entitled to deliver to Noble any Paragon Note in payment of any amount in respect of Specified Mexican Taxes or Reimbursable Expenses to the extent the aggregate principal amount(s) of such Paragon Note and all other Paragon Notes, if any, previously delivered to Noble in payment of any amount in respect of Specified Mexican Taxes and Reimbursable Expenses would exceed $5 million, (ii) the amounts that may be paid with a Paragon Note include amounts owed for all out-of-pocket costs and expenses (e.g. professional fees, court costs, third-party storage fees, etc.) required to be reimbursed to Noble by Paragon (“Reimbursable Expenses”), and (iii) Paragon shall be required to pay any amount or amounts that Paragon owes Noble during the Mexican Tax Indemnity Deferral Period in respect of Specified Mexican Taxes and Reimbursable Expenses under the Amendment to Tax Sharing Agreement in excess of an aggregate of $5 million.

“Mexican Tax Indemnity Deferral Period” means the first four years after the Paragon Plan Closing (as defined in the Settlement Agreement).

“Paragon Notes” means one or more promissory notes issued by Paragon and payable to Noble with the following terms:

•    Term: All remaining principal and accrued but unpaid interest shall be due and payable on the earliest of the (i) liquidation or dissolution of Paragon, (ii) the sale of all or substantially all of the assets of Paragon, (iii) the voluntary or involuntary bankruptcy of Paragon following the Effective Date¹ of the Plan, (iv) any acceleration of any other debt facility in excess of a de minimis amount under which Paragon is an obligor or guarantor, or (v) the fourth anniversary of the Effective Date.

•    Amortization: No amortization other than mandatory upon maturity.

•    Interest Rate: The Paragon Notes shall bear interest at either: 12% if paid in cash or, at the election of Paragon, 15% if paid in kind.

•    Default Interest Rate: All past due amounts (principal and interest) to bear interest at the applicable Interest Rate in effect plus 200 basis points.

•    Interest Payments: Payments of interest only will be due semiannually, in arrears, on each of June 1 and December 31 in cash, until maturity; provided, that Paragon shall have the option to pay any such interest on a payment in kind basis by issuing an additional Paragon Note with a principal amount equal to the amount of interest accrued at the applicable payment in kind interest rate.

•    Prepayment: Prepayable, in whole or in part, at any time without penalty.

•    Other provisions: The Paragon Notes will contain other customary provisions common in commercial promissory notes including provisions regarding default, acceleration, governing law, enforcement and payment instructions.

Effective as of the Effective Date, the Parties will modify applicable provisions of the Amendment to Tax Sharing Agreement to be consistent with the terms hereof. Otherwise, the Amendment to Tax Sharing Agreement will remain as provided in the Settlement Agreement, without modification thereto.

The Parties intend to seek to negotiate the Amendment on terms substantially consistent with the terms in this Term Sheet and, upon execution of such Amendment by the Parties, Paragon shall seek approval of the Settlement Agreement, as amended by the Amendment, with the Bankruptcy Court in a Chapter 11 proceeding.

Notwithstanding anything herein to the contrary, the Parties' obligations under “Amendment to Tax Sharing Agreement”, “Paragon Notes”, “Negotiation and Settlement of Certain Tax Liabilities” and “Implementation” are subject to consummation of the Plan, which will incorporate the terms of this proposed settlement.

Each Party will reasonably cooperate with respect to any public announcement or other public disclosure regarding this Term Sheet or the matters addressed hereby.

The enforceable obligations of the Parties under this Term Sheet shall be construed and enforced in accordance with, and the rights of the Parties thereunder shall be governed by, the laws of the State of New York, without giving effect to the conflict of laws principles thereof.