EXHIBIT 10.8
 NOK 350,000,000
 LOAN AGREEMENT
 DEEPOCEAN SHIPPING II AS
as Borrower
 and
 THE BANKS AND FINANCIAL INSTITUTIONS
LISTED IN SCHEDULE 3
as Original Lenders
 and
 SPAREBANK 1 SR-BANK
as Agent
 dated 21 December 2007




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##### 



INDEX
 CLAUSE SUBJECT
    
    PAGE1.
    
    PURPOSE
    
    
    32.
    
    DEFINITIONS
    
    
    33.
    
    REPRESENTATIONS AND WARRANTIES
    
    
    104.
    
    CONDITIONS PRECEDENT
    
    
    135.
    
    THE LOAN
    
    
    136.
    
    CURRENCY
    
    
    137.
    
    INTEREST AND GUARANTEE COMMISSION
    
    
    148.
    
    REDUCTION AND REPAYMENT
    
    
    159.
    
    PREPAYMENT
    
    
    1510.
    
    PAYMENTS
    
    
    1611.
    
    SECURITY
    
    
    1612.
    
    CHANGES IN CIRCUMSTANCES
    
    
    1713.
    
    UNDERTAKINGS
    
    
    1814.
    
    EVENTS OF DEFAULT
    
    
    2315.
    
    INDEMNITIES
    
    
    2516.
    
    AGENCY
    
    
    2617.
    
    FEES AND EXPENSES
    
    
    2718.
    
    MISCELLANEOUS
    
    
    2819.
    
    TRANSFER
    
    
    2920.
    
    AMENDMENTS AND WAIVERS
    
    
    3021.
    
    NOTICES
    
    
    3022.
    
    LAW AND JURISDICTION
    
    
    31
 SCHEDULES
 1.
    
    Utilisation Request2
    
    Interest Period Notice3.
    
    Lenders and Commitments4.
    
    Condition Precedent Documents5.
    
    Compliance Certificates6.
    
    Transfer Certificate7.
    
    Calculation of Effective Interest
 2




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##### 



THIS LOAN AGREEMENT
 1.
    
    DEEPOCEAN SHIPPING II AS, registration no. 992 035 870, of Stoltenberggata 1, NO-5527
Haugesund, Norway as Borrower;2.
    
    THE BANKS AND FINANCIAL INSTITUTIONSlisted in Schedule 3 as Original Lenders;3.
    
    SPAREBANK 1 SR-BANK, registration no. 937 895 321, acting through its offices at Sørhauggaten
150, P. O. Box 453, NO-5501 Haugesund, Norway as Agent.
 NOW IT IS HEREBY AGREED AS FOLLOWS
 1.
    
    PURPOSE1.1
    
    Purpose
  2.
    
    DEFINITIONS2.1
    
    Definitions
  Acceptance Date
    
    means 21.12.2007, being the date of acceptance of the Offer Letter.Accounting
Principles
    
    means Norwegian GAAP, IFRS and all other International Accounting
Standards and Interpretations issued by International Accounting Standards
Board (or any predecessor or successor thereto) in force from time to
time.Agent
    
    means Sparebank 1 SR-Bank, registration no. 937 895 321, acting through
its offices at Sørhauggaten 150, P. O. Box 453, NO-5501 Haugesund, Norway
as agent on behalf of the Lenders, and any successor of it appointed
pursuant to clause 16.Agreement
    
    means this loan agreement, as amended at any time.Assignment
Agreement
    
    means a first priority assignment of the Insurances of even date herewith,
entered into between the Borrower and the Agent in agreed form.Availability
Period
    
    means the period commencing on the date hereof and expiring on the
1st February 2007.Banking Day
    
    means a day upon which banks and financial institutions are open for
transactions contemplated by this Agreement and additionally in relation
to payments hereunder the place for provision of funds or due paymentBill of Sale
    
    means in relation to the Vessel a bill of sale executed or to be executed
by the Guarantor setting out the legal transfer of the Vessel from the
Guarantor to the Borrower.Book Assets
    
    means on consolidated basis the Borrowers book value of all assets, as
 3




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determined by the Accounting Principles.Book Equity
    
    means on consolidated basis the Borrowers book value of equity, as
determined by the Accounting Principles.Book Equity Ratio
    
    means Book Equity divided by Book Assets.Borrower
    
    means DeepOcean Shipping II AS, registration no. 992 035 870, of
Stoltenberggata 1, NO-5527 Haugesund, Norway.Charge over
Inventory
    
    means a first priority charge over the Borrowers inventory dated on or
about the date hereof in the amount of NOK 350,000,000, entered into
between the Borrower and the Agent and registered with the Registry of
Moveable Property (Løsøreregisteret).Charge over
Machinery and
Plant
    
    means a first priority charge over the Borrowers machinery and plant
dated on or about the date hereof in the amount of NOK 350,000,000,
entered into between the Borrower and the Agent and registered with the
Registry of Moveable Property (Løsøreregisteret).Classification
Society
    
    means Det norske Veritas or such other classification society acceptable
to the Lenders.Commitment
    
    means the sum of NOK 350,000,000, or the Equivalent Amount thereof in the
Optional Currency, and in relation to each Lender the amount of the
Commitment which each Lender agrees to advance to the Borrower as its
several liability as set opposite its name in Schedule 3.Compliance
Certificate
    
    means a document, substantially in the form of Schedule 5 hereto, to be
issued by the Guarantor demonstrating compliance with the financial
covenants as described in clause 14.1.11.Currencies
    
    means NOK and the Optional Currency, and Currency means any of them.Current Assets
    
    means on consolidated basis the Guarantors current assets, as determined
by the Accounting Principles.Current
Liabilities
    
    means on consolidated basis the Guarantors current liabilities, as
determined by the Accounting Principles, excluding the next 12 months
instalments on any long-term loans.Earnings
    
    means all moneys whatsoever from time to time due or payable to the
Borrower arising out of any use or operation of the Vessel including (but
without limiting the generality of the foregoing) all freight, hire and
passage moneys, income arising under pooling arrangements, compensation
payable to the Borrower in the event of requisition of the Vessel for
hire, remuneration for salvage and towage services, demurrage and
detention moneys and damages for breach (or payments for variation or
termination) of a charterparty or other contract for the employment of the
Vessel.EBITDA
    
    means on consolidated basis the Guarantors earnings before interest,
taxes, depreciation, amortisation and any gain or loss from sale of assets
or other extraordinary gains or losses.Equivalent Amount
    
    means at any date specified herein
the equivalent amount in the Optional Currency of an amount in NOK or vice versa as converted at the Exchange
Rate.
 4




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Exchange Rate
    
    means the exchange rate between NOK and the Optional Currency to be ruling
in the relevant foreign exchange market at or about 11 a.m. (London time)
on a particular day.Event of Default
    
    means any of the events or circumstances described in clause 14.Factoring
Agreement
    
    means a first priority factoring agreement dated on or about the date
hereof in the amount of NOK 350,000,000, entered into between the Borrower
and the Agent and registered with the Registry of Moveable Property
(Løsøreregisteret).Finance Documents
    
    means this Agreement and the Security Documents.Financial
Indebtedness
    
    means any obligation for payment or repayment of money including leasing
obligations whether as principal or as surety and whether present or
future, actual or contingent and financial obligations related to vessels
chartered in by the Borrower.Group
    
    means the Guarantor and its subsidiaries.Guarantee
    
    means an unconditional and irrevocable guarantee executed by the Guarantor
in favour of the Agent guaranteeing the Borrowers obligations pursuant to
this Agreement.Guarantor
    
    means Deep Ocean ASA, registration no. 980 722 805, of Stoltenberggata 1,
NO-5527 Haugesund, Norway.Insurances
    
    means in relation to the Vessel, its Earnings or otherwise in relation to
its all policies and contracts of insurances, including all entries in
protection and indemnity or war risk associations, which are from time to
time taken out or entered into, and (where the context permits) all
benefits thereof, including all claims of money or of any nature and
returns of premium.Interest Payment
Date
    
    means the last Banking Day of each Interest Period.Interest Period
    
    means each period for the calculation of interest as described in clause 7.Interest Period
Notice
    
    means a notice in form and substance of Schedule 2 hereto.ISM Code
    
    means the International Safety Management Code for the Safe Operation of
Ships and for Pollution Prevention.ISPS Code
    
    means the International Ship and Port Facility Security (ISPS) Code as
adopted by the International Maritime Organizations (IMO) Diplomatic
Conference of December 2002.Lenders
    
    means:
 (i)
    
    any Original Lender; and
 5




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(ii)
    
    any bank, financial institution, trust, fund or other entity, which
has become a party hereto in accordance with Clause 19.1,which, in each case, has not ceased to be a party hereto in accordance
with the terms of this Agreement.
 Leverage Ratio
    
    means Net Interest Bearing Debt divided by EBITDA.LIBOR
    
    means for any Interest Period:
 (i)
    
    the rate per annum equal to the offered quotation for deposits in GBP
or USD ascertained by the Agent to be the rate established by the British
Bankers Association and appearing on the Reuters page LIBOR 01, published
or reported by Reuters through its monitor service or any equivalent
successor to such service at or about 11:00 hours a.m. (London time) on
the applicable Quotation Date; or(ii)
    
    if no such rate is available, the rate per annum at which the Lenders
are able to acquire the relevant currency for the relevant Interest Period
in the London Interbank Euro-currency Market at about 11:00 hours a.m.
(London time) on the applicable Quotation Date, as conclusively certified
by the Agent to the Borrower.
 Loan
    
    means a multicurrency term loan in the amount of NOK 350,000,000, or the
equivalent thereof the Optional Currency.Majority Lenders
    
    means Lenders whose aggregate Commitments or participation in the Loan (as
the case may be depending on whether utilisation has taken place) exceed
66.67% of the total Commitment under this Agreement.Management
Agreement
    
    means any management agreement entered or to be entered into between the
Manager and the Borrower for the technical and commercial management of
the Vessel.Manager
    
    meansMargin
    
    means 0.75 per cent per annum.Market Value
    
    means the fair market value of the Vessel in NOK, determined annually, as
the arithmetic average of independent valuations of the Vessel obtained
from two independent and well reputed shipbrokers, appointed by the Agent
at the Borrowers cost. Such valuations to be made with or without
physical inspection of the Vessel (as the Agent may require), on the basis
of a sale for prompt delivery for cash at arms length on normal
commercial terms as between a willing buyer and seller, on an as is where
is basis, free of any existing charter or other contract of employment
and/or pool arrangements.Maturity Date
    
    means 1 December 2014.MoA
    
    means a memorandum of agreement dated [           ], entered into
between the Borrower and the Guarantor, whereby the Borrower has agreed to
purchase the Vessel from the Guarantor.Mortgage
    
    means a first priority mortgage dated on or about the date hereof in the
 6




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amount of NOK 420,000,000, and deed of covenants collateral thereto, over
the Vessel, executed by the Borrower in favour of the Agent and registered
in the Ship Registry.Net Interest
Bearing Debt
    
    means on consolidated basis the Guarantors aggregate amount of interest
bearing debt, including financial lease obligations, less any unencumbered
cash and bank deposits at the disposal of the Guarantor.NIBOR
    
    means the rate offered for comparable deposits in NOK for a period equal
to the Interest Period on the Quotation Date in respect of the relevant
Interest Period, (i) appearing on the Reuters Screen Page NIBP (or such
other Screen Page or service as may replace the Reuters Screen Page NIBP),
or (ii) should it not be possible to determine NIBOR by such method, then
NIBOR shall be the weighted arithmetic mean (rounded to four decimals) of
the rate offered to each Lender for deposits in NOK in the interbank swap
market.NOK
    
    means the lawful currency of Norway.Offer Letter
    
    means a firm offer letter titled (Finansieringstilbud) in respect of the
Loan issued by the Agent and accepted by the Borrower and the Guarantor.Optional Currency
    
    means USD.Original Financial
Statements
    
    means (i) in relation to the Borrower its consolidated audited financial
statements for the year ended 2007 and (ii) in relation to the Guarantor
its consolidated audited financial statements for the year ended 2006.Original Lenders
    
    means the banks and financial institutions listed in Schedule 3.Original NOK
Amount
    
    means NOK 350,000,000.Outstanding
Indebtedness
    
    means the aggregate of all sums of money at any time and from time to time
owing to the Lenders under or pursuant to the Finance Documents.Permitted Security
    
    means:Interest
 (i)
    
    any Security Interest created pursuant to the Security Documents; and(ii)
    
    any lien arising by operation of law and in the ordinary course of
trading and not as a result of any default or omission of the Borrower.
 Potential Event of
Default
    
    means any event which, with the giving of notice and/or the passage of
time and/or the satisfaction of any materiality test, would constitute an
Event of Default.Proportionate
Share
    
    means at any time the portion which a Lenders Commitment (whether
advanced or not) bears to the aggregate Commitment of all the Lenders
(whether advanced or not).Quotation Date
    
    means in relation to an Interest Period:
 (i)
    
    the day which is two Banking Days prior to the first day of such
Interest Period, or, if different, the day on which quotations would
 7




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##### 



ordinarily be given in the Norwegian or London interbank market (as
relevant) for deposits in a Currency for delivery on the first day of that
period, or(ii)
    
    if on that date the relevant banks and financial institutions are not
open for international business, the next preceding day on which banks in
the interbank market, or such other place for provision of funds
hereunder, are open for international business.
 Repayment Date
    
    means a date on which a repayment instalment is required to be made
pursuant to clause 8.Security Documents
    
    means the security documents set out in clause 11 and any other document
that may have been or shall from time to time hereafter be executed as
security for the Borrowers obligations under or pursuant to this
Agreement.Security Interest
    
    means any mortgage, pledge, lien, charge, assignment by way of security,
finance lease, sale-and-repurchase or sale- and-leaseback arrangement,
sale of receivables on a recourse basis or security interest or any other
agreement or arrangement having the effect of conferring security, except
for liens arising solely by operation of law and/or in the ordinary course
of business.Security Period
    
    means the period commencing on the date of this Agreement and ending on
the day the Outstanding Indebtedness has been paid in full to the Lenders.Share Pledge
    
    means a pledge of 100% of the shares in the Borrower of even date
herewith, executed by DO Bergen AS in favour of the Agent guaranteeing the
Borrowers obligations pursuant to this Agreement.Ship Registry
    
    means the Ship Registry of the Isle of Man, or such other ship registry as
the Lenders may approve.Subsidiary
    
    means in relation to a company (the Parent Company) any company or
corporation:
 (i)
    
    of which more than one half of the issued share capital is
beneficially owned, directly or indirectly, by the Parent Company; or(ii)
    
    which is controlled, directly or indirectly, by the Parent Company; or(iii)
    
    which is a Subsidiary of another Subsidiary of the Parent Company,
 and for these purposes, a company or corporation shall be treated as being
controlled by the Parent Company if the Parent Company is able to direct
its affairs and/or to control the composition of its board of directors or
equivalent body.Swap Agreement
    
    means any master agreement, ISDA or otherwise, and any swap transaction
made pursuant to such master agreement, entered or to be entered into
between the Borrower and the Swap Bank.Swap Bank
    
    means the Agent in its capacity as swap arranger.Taxes
    
    means any taxes, levies, duties, charges, fees deductions and withholdings
levied or imposed by any governmental or other taxing authority
whatsoever.
 8




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##### 



Total Loss
    
    means:
 (i)
    
    an actual, constructive, compromised or agreed total loss of the
Vessel; or(ii)
    
    any expropriation, confiscation, requisition or acquisition of the
Vessel, whether for full consideration, a consideration less than its
proper value, a nominal consideration or without any consideration, which
is effected by any government or official authority or by any person or
persons claiming to be or to represent a government of official authority,
excluding a requisition for hire for a fixed period against payment of
market hire, not exceeding one year without any right to extension; or(iii)
    
    any condemnation of the Vessel by any tribunal or by any person or
persons claiming to be a tribunal.
 Total Loss Date
    
    means:
 (i)
    
    in the case of an actual loss of the Vessel, the date on which it
occurred or, if that is unknown, the date when the Vessel was last heard
of;(ii)
    
    in the case of a constructive, compromised, agreed or arranged total
loss of the Vessel, the earliest of: (i) the date on which a notice of
abandonment is given to the insurers and (ii) the date any compromise,
arrangement or agreement is made with the Vessels insurers in which the
insurers agree to treat the Vessel as a total loss; and(iii)
    
    in the case of any other type of total loss, on the date (or the
most likely date) on which it appears to the Agent that the event
constituting the total loss occurred.
 Transaction
Documents
    
    means the Bill of Sale and the Moa.USD
    
    means the lawful currency of the United States of America.Utilisation Date
    
    means, in respect of any Utilisation, the date, being a Banking Day,
specified in a Utilisation Request on which the Borrower has requested the
Loan to be disbursed.Utilisation
Request
    
    means a notice substantially in the relevant form set out in Schedule 1.Vessel
    
    means MV Deep Endeavour, official no. 737872, registered in the name of
the Borrower in the Ship Registry.Working Capital
Ratio
    
    means Current Assets divided by Current Liabilities.
 2.2
    
    Clause headings
  9




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##### 



2.3
    
    References
  (i)
    
    references to clauses are to be construed as references to clauses of this Agreement;(ii)
    
    references to (or to any specified provision of) this Agreement or any other document shall
be construed as references to (or to that specified provision of) this Agreement or that
document as from time to time amended, varied or supplemented;(iii)
    
    words importing the plural shall include the singular and vice versa.3.
    
    REPRESENTATIONS AND WARRANTIES
  3.1
    
    Corporate Status
  3.2
    
    Corporate power
  3.3
    
    No conflict
  (i)
    
    contravene or violate any provision of any applicable law, statute, rule or regulation in
force at the date of this Agreement or any order, judgment, decree or permit to which it is
subject (including the Council Directive 2001/97/EC of the European Parliament and of the
Council of 4 December 2001 amending Council Directive 91/308/EEC of the Council of the
European Community implemented to combat money laundering); or(ii)
    
    conflict with, or result in any breach of the terms of, or constitute a default under any
agreement or other instrument to which it is a party or by which it is bound; or(iii)
    
    contravene or conflict with any of its constitutional or corporate documents.3.4
    
    No litigation
  3.5
    
    Legal validity and enforceability
  10




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##### 



3.6
    
    Authorisation
  (i)
    
    the execution, validity or enforceability of the Finance Documents;(ii)
    
    the compliance with the provisions hereof and thereof;(iii)
    
    the performance of the obligations hereunder and thereunder; and(iv)
    
    the transactions contemplated hereby and thereby,
  3.7
    
    Information
  3.8
    
    Financial Indebtedness
  3.9
    
    No default(i)
    
    No Event of Default or Potential Event of Default has occurred and is continuing;(ii)
    
    No other event has occurred which (with the giving of notice, lapse of time, determination of
materiality or the fulfilment of any other applicable condition, or any combination of the
foregoing), might constitute an event of default under any document which is binding on the
Borrower or any of its assets, and which may result in a material adverse effect on its
business or condition or a material adverse effect on its ability to perform its obligations
under the Finance Documents (as the case may be); and(iii)
    
    No material amendments or waivers have been made under any of the Transaction Documents, and
no event of default has occurred or is threatening thereunder.3.10
    
    No security
  3.11
    
    Winding up
  11




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##### 



3.12
    
    No immunity
  3.13
    
    Material adverse change
  3.14
    
    Pari passu ranking
  3.15
    
    No deduction of tax
  3.16
    
    Taxation(i)
    
    It is not materially overdue in the filing of any Tax returns.(ii)
    
    No claims or investigations are being, or are reasonably likely to be, made or conducted
against it with respect to Taxes.(iii)
    
    It is resident for Tax purposes only in the jurisdiction of its incorporation.3.17
    
    Original Financial Statements(i)
    
    The Original Financial Statements were prepared in accordance with the Accounting Principles
consistently applied, unless expressly disclosed to the Agent in writing to the contrary.(ii)
    
    The un-audited Original Financial Statements fairly represent its and the Guarantors
financial condition and results of operations, unless expressly disclosed to the Agent in
writing to the contrary.(iii)
    
    There has been no material adverse change in its or the Guarantors assets, business or
financial condition since the date of the Original Financial Statements, other than those
which the Lenders have been informed of.(iv)
    
    The most recent financial statements delivered pursuant to clause 13.1.4:
 a.
    
    have been prepared in accordance with the Accounting Principles as
applied to the Original Financial Statements; andb.
    
    give a true and fair view of (if audited) or fairly represent (if
un-audited) its and the Guarantors consolidated (if appropriate) financial
condition as at the end of, and results of operations, consolidated (if
appropriate), for, the period to which they relate.
 (v)
    
    Since the date the most recent financial statements delivered pursuant to Clause 13.1.4 there
has been no material adverse change in its or the Guarantors business, assets, operation or
financial condition.3.18
    
    Repetition of representations and warranties
  12




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##### 



4.
    
    CONDITIONS PRECEDENT4.1
    
    General
  5.
    
    THE LOAN5.1
    
    Loan
  5.2
    
    Disbursement
  5.3
    
    Obligations of the Lenders
  5.4
    
    Notification to the Lenders of receipt of the Utilisation Request
  5.5
    
    Cancellation of commitment
  6.
    
    CURRENCY6.1
    
    Request for the Optional Currency
  13




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##### 



6.2
    
    Non-availability
  6.3
    
    Disagio
  (i)
    
    if on any Repayment Date, or when reasonably requested by the Agent, the aggregate of the
portion of the Loan nominated in NOK and the Equivalent Amount of the portion of the Loan
nominated in the Optional Currency exceeds 105% of the Original NOK Amount, reduced by any
prepayments and/or repayments and/or reductions made prior to or to be made on such date, the
Borrower shall on such Repayment Date pay any total excess amount in the NOK to the Agent,
said payment to be made on demand by the Agent;(ii)
    
    if on any Repayment Date the aggregate of the portion of the Loan nominated in NOK and the
Equivalent Amount of the portion of the Loan nominated in the Optional Currency is less than
the Original NOK Amount, reduced by any repayments and/or prepayments and/or reductions made
prior to or to be made on such date, the difference between the Original NOK Amount and the
Equivalent Amount of the Loan shall not be applied to reduce forthcoming repayment instalments
falling due and shall not be advanced to the Borrower by the Agent, provided however, that if
there is any difference when the last repayment instalment is due such difference shall be
applied against payment of such repayment instalment and/or the balloon payment.6.4
    
    Interest Payment  Optional Currency
  7.
    
    INTEREST AND GUARANTEE COMMISSION7.1
    
    Interest Period
  7.2
    
    First Interest Period
  7.3
    
    Interest Period Notice
  7.4
    
    No selection of Interest Period
  14




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##### 



7.5
    
    Separate Interest Period
  7.6
    
    Semi-annual payment of interest
  7.7
    
    Payment of interest
 .
 7.8
    
    Calculation of interest
  7.9
    
    Default interest
  8.
    
    REDUCTION AND REPAYMENT8.1
    
    Repayment of the Term Loan
   9.
    
    PREPAYMENT9.1
    
    Voluntary prepayment
  9.2
    
    Mandatory prepayment(i)
    
    In the event that the Vessel shall suffer a Total Loss, the Borrower shall immediately upon
receipt of the insurance proceeds, and latest within 90 days, utilize the insurance proceeds
towards prepaying the Outstanding Indebtedness.
 15




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##### 



(ii)
    
    In the event that the Borrower sells the Vessel, the Borrower shall utilize the sales
proceeds towards prepaying the Outstanding Indebtedness on the date of completion of such
sale.9.3
    
    Application of partial prepayment
  10.
    
    PAYMENTS10.1
    
    Method of payments
  10.2
    
    Place and account of payment
  10.3
    
    Payment on non-Banking Day
  10.4
    
    Grossing up
  10.5
    
    Lenders right to set-off
  11.
    
    SECURITY
 11.1
    
    Securities
  (i)
    
    the Mortgage;(ii)
    
    the Charge over Inventory;(iii)
    
    the Charge of Machinery and Plant;(iv)
    
    the Factoring Agreement;
 16




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##### 



(v)
    
    the Share Pledge; and(vi)
    
    the Guarantee.
 11.2
    
    Swap Agreements
  12.
    
    CHANGES IN CIRCUMSTANCES
 12.1
    
    Illegality
  12.2
    
    Increased cost
 (a)
    
    If by reason of (a) changes in any existing law, rule or regulation, or (b) the adoption of
any new law, rule or regulation, or (c) any change in the interpretation or administration of
(a) or (b) above by any governmental authority, or (d) compliance with any directive or
request (including Basel rules) from any governmental authority (whether or not having the
force of law);
 (i)
    
    a Lender incurs a cost as a result of it having entered into this Agreement
and/or performing the obligations hereunder; or(ii)
    
    there is an increase in the cost to a Lender of maintaining or funding its
portion of the Loan; or(iii)
    
    a Lender becomes liable for any new taxes (other than on net income)
calculated by reference to the Loan;
 the Lender shall give the Agent notice which in turn shall give the Borrower notice within
a reasonable time of the Lenders intention to claim compensation under this clause 12.2
and the Lender shall specify the form and amount of such compensation. Such Lenders
determination of the amount of compensation to be made under this clause 12.2 shall,
absent manifest error, be conclusive. The Borrower shall be entitled to prepay the Loan,
or a portion thereof, in accordance with clause 9.1 at any time following receipt of
notice from such Lender as aforesaid on giving not less than fifteen (15) Banking Days
irrevocable written notice. In such event the Borrower shall nevertheless compensate such
Lender for such requested indemnification for the period up to and including the date of
prepayment.(b)
    
    If any Lender is required to comply with any capital allocation requirements which would
result in any increased costs for such Lender pursuant to clause (a) above, then any such cost
or liability shall be payable by the Borrower to such Lender.
 17




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##### 



12.3
    
    Market disruption
  12.4
    
    Force majeure
  13.
    
    UNDERTAKINGS
 13.1
    
    Positive Undertakings
  13.1.1
    
    Notification of default
  13.1.2
    
    Authorisation
  (i)
    
    obtain, comply with and do all that is necessary to maintain in full force and effect; and
 (ii)
    
    supply certified copies to the Agent of,
  13.1.3
    
    Financial statement
  (i)
    
    within 120 days after the close of each financial year, two (2) copies of its and the
Guarantors consolidated annual audited financial statements, prepared in accordance with the
Accounting Principles;(ii)
    
    within the end of each financial year, its and the Guarantors yearly cash flow projections,
for the next year, specifying major assumptions;(iii)
    
    within 60 days from the end of quarter, its and the Guarantors consolidated un-audited
quarterly financial statements including profit and loss statements and balance sheet,
prepared in accordance with the Accounting Principles;
 18




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##### 



(iv)
    
    such financial and other information as the Agent may reasonably require; and(v)
    
    a Compliance Certificate in terms and form of Schedule 5 confirming compliance with the
covenants set out in clause 14.1.11, upon the presentation of its and the Guarantors
quarterly financial statements.
 13.1.4
    
    Insurance
 (i)
    
    Insure and procure to keep the Vessel insured satisfactory to the Lenders under the Norwegian
Marine Insurance Plan or equivalent conditions to be approved by the Lenders, such approval
not to be unreasonably withheld, at its expense against;
 (a)
    
    Hull & Machinery (at least 80% of Market value of the Vessel), plus Freight
Interest and Hull Interest and any other usual marine risks,(b)
    
    War risks,(c)
    
    Loss of Hire,(d)
    
    full protection and indemnity cover with an association approved by the
Lenders and to strictly comply with all P&I-rules in the from time to time latest
version of the association,(e)
    
    such other insurances as the Lenders may reasonably require,
 (ii)
    
    procure that the insurances described in (i) (a) and (b) above in respect of the Vessel shall
each be for at least 120% of the Loan or for an amount equal to the Market Value of the Vessel
(whichever is the higher);(iii)
    
    pay for (i) Mortgagees Interest Insurance (MII) taken out by the Agent in respect of the
Vessel amounting to 110% of the Loan and (ii) Mortgagees Additional Perils Insurance (MAPI)
in respect of the Vessel, if so requested by any of the Lenders;(iv)
    
    procure that the Agent is noted as first priority mortgagee in the insurance contracts,
together with the confirmation from the underwriters to the Agent thereof that the Notices of
Assignment of Insurances and the loss payable clause are noted in the insurance contracts and
that standard letters of undertaking, are executed by the insurers/insurance brokers;(v)
    
    not later than five (5) days prior to the expiry date of the relevant Insurances, deliver to
the Agent copies of all cover notes, policies and certificates of entry from the insurance
broker(s) through whom the Insurances have been placed, evidencing that all Insurances
referred to under (i) above, have been renewed and taken out with insurance values as required
under (ii) above, that such Insurances are in full force and effect and that the Agents
interest therein (as first loss payees) have been noted by the insurers;(vi)
    
    not employ the Vessel or cause the Vessel to be employed otherwise than in conformity with
the terms of the instruments of insurance aforesaid (including any warranties expressed or
implied therein) without first obtaining the consent to such employment of the insurers and
complying with such requirements as to extra premium or otherwise as the insurers may
prescribe;(vii)
    
    procure that the insurers of the Vessel do not cancel any of the Insurances for reason of
non payment of premiums for other vessels covered under a fleet policy together with the
Vessel and procure that the insurers shall undertake to issue a separate policy in respect of
the Vessel if and when so requested by the Agent;
 19




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##### 



(viii)
    
    not make any change to the insurances as described under (i) above, without the prior
written consent of the Lenders; and(ix)
    
    shall provide the Agent with an insurance opinion at any time if so requested by the Agent.
 13.1.5
    
    Class, flag and management
 (i)
    
    Procure that the Vessel remains classed with the Classification Society free of all overdue
recommendations or requirements which are affecting the Vessels class and promptly perform
all requirements or recommendations of the Classification Society which would result in the
withdrawal of class if not performed;(ii)
    
    Keep the Vessel registered in the Ship Registry;(iii)
    
    Keep the Vessel managed by the Manager.13.1.6
    
    Damage to the Vessel
  (i)
    
    any accident to the Vessel involving repairs where the cost is likely to exceed 5% of the
insurance value of the Vessel;(ii)
    
    any occurrence or event in consequence whereof the Vessel has become or is likely to become a
Total Loss; and(iii)
    
    an arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel.
 13.1.7
    
    Laws and regulations
  13.1.8
    
    Accounts
  13.1.9
    
    Information  miscellaneous
  13.1.10
    
    Tax filing and payment of Taxes
  13.1.11
    
    Business of the Borrower
  20




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##### 



13.1.12
    
    Fair Market Value, inspection and inspection reports
 (i)
    
    Undertakes to let the Agent on behalf of the Lenders arrange for the Market Value of the
Vessel to be determined semi-annually at the Borrowers cost, and otherwise at the cost of,
and when requested by, the Lenders;(ii)
    
    Procure that the Agents surveyor at the Borrowers cost, is permitted to inspect the
condition of the Vessel twice a year provided always that such arrangement shall not interfere
with the operation of the Vessel and subject to satisfactory indemnities approved by the P&I
insurers; and(iii)
    
    If such reports are made or issued, promptly supply the Agent with any inspection reports
made or issued in respect of the Vessel.
 13.1.13
    
    Repairs, alterations etc.
  13.1.14
    
    Further assurance
 (i)
    
    Promptly do (or cause to be done) all such acts or execute (or cause to be executed) all such
documents (including assignments, transfers, mortgages, charges, notices and instructions) as
the Agent may reasonably specify (and in such form as the Agent may reasonably require in
favour of the Agent or its nominee(s)):
 a.
    
    to perfect the Security Interest created or intended to be created under or
evidenced by the Security Documents (which may include the executing of a mortgage,
charge, assignment or other Security Interest over all or any of the assets which
are, or are intended to be, the subject of the Security Interest created by the
Security Documents), or for the exercise of any rights, powers and remedies of the
Agent or the Lenders provided by or pursuant to the Finance Documents or by law;
and/orb.
    
    to facilitate the realisation of the assets which are, or are intended to
be, the subject of the Security Interest created under the Security Documents.
 (ii)
    
    Take all such action as is available to it (including making all filings and registrations)
as may be necessary for the purpose of the creation, perfection, protection or maintenance of
any Security Interest conferred or intended to be conferred on the Agent and/or the Lenders by
or pursuant to the Finance Documents.
 13.1.15
    
    Syndications
  13.1.16
    
    Know your customer checks
  21




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13.2
    
    Negative undertakings
  13.2.1
    
    Merger
  13.2.2
    
    Acquisitions and/or capital expenditure
  13.2.3
    
    Negative pledge
  13.2.4
    
    Disposals
 (i)
    
    Not enter into a single transaction or a series of transactions (whether related or not) and
whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of a material
asset.(ii)
    
    Not sell, transfer or otherwise dispose of the Vessel unless the Loan is repaid as set out in
clause 9.2 (ii).
 13.2.5
    
    Amendments to the Transaction Documents
  13.2.6
    
    Employment
  13.2.7
    
    Financial Indebtedness
  13.2.8
    
    Terms related to other Financial Indebtedness
  13.2.9
    
    Changes
  (i)
    
    the end of its fiscal year;(ii)
    
    its nature of business;(iii)
    
    its legal name;
 22




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##### 



(iv)
    
    its type of organization; or(v)
    
    its jurisdiction.
 14.
    
    EVENTS OF DEFAULT
 14.1
    
    Event of Default
  14.1.1
    
    No payment
  14.1.2
    
    Misrepresentation
  14.1.3
    
    Breach of obligation
  14.1.4
    
    Cross default
 (i)
    
    Any Financial Indebtedness of the Borrower or a Group Company is not paid when due nor within
any originally applicable grace period;(ii)
    
    Any Financial Indebtedness of the Borrower or a Group Company is declared to be or otherwise
becomes due and payable prior to its specified maturity as a result of an event of default
(however described);(iii)
    
    Any commitment for any Financial Indebtedness of the Borrower or a Group Company is
cancelled or suspended by a creditor of such company as a result of an event of default
(however described);(iv)
    
    Any creditor of the Borrower or a Group Company becomes entitled to declare any Financial
Indebtedness of such company due and payable prior to its specified maturity as a result of an
event of default (however described).
 14.1.5
    
    Insolvency
 (i)
    
    The Borrower or a Group Company is unable or admits inability to pay its debts as they fall
due, suspends making payments on any of its debts or, by reason of actual or anticipated
financial difficulties, commences negotiations with one or more of its creditors with a view
to rescheduling any of its indebtedness.(ii)
    
    A moratorium is declared in respect of any indebtedness of the Borrower or a Group Company.(iii)
    
    The Borrower or a Group Company proposes or enters into a composition or other arrangement
for the benefit of its creditors generally or is found bankrupt or insolvent, or any order is
made
 23




---



##### 



by any competent court or resolution passed by the Borrower or a Group Company for its
winding up or dissolution.
 14.1.6
    
    Unlawful
 (i)
    
    It is or becomes unlawful for the Borrower or a Group Company to perform any of its
respective obligations contained under the Finance Documents, or any Security Interest created
or expressed to be created or evidenced by the Security Documents ceases to be effective;(ii)
    
    Any obligation of the Borrower or a Group Company under any Finance Document are not or cease
to be legal, valid, binding or enforceable and the cessation individually or cumulatively
materially and adversely affects the interests of the Lenders under the Finance Documents;(iii)
    
    Any Finance Document ceases to be in full force and effect or any Security Document ceases
to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other
than the Agent or a Lender) to be ineffective.
 14.1.7
    
    Material adverse change
  14.1.8
    
    Permits
  14.1.9
    
    Liens
  14.1.10
    
    Transaction Documents
  14.1.11
    
    Financial covenants
  (i)
    
    A Book Equity Ratio that is higher than 35%;(ii)
    
    A Leverage Ratio that is lower than 4:1 until 31 December 2008 and lower than 3:1 thereafter;
and(iii)
    
    A Working Capital Ratio that is higher than 1.1.
 14.2
    
    Acceleration
  (i)
    
    by notice to the Borrower declare the Loan or any amount outstanding forthwith due and
payable and/or Commitment cancelled, whereupon the obligation of the Lenders to make the Loan
available shall cease and, if any part of the Loan has been disbursed, the Borrower shall
 24




---



##### 



immediately repay the Loan together with interest accrued, default interest and all other
money payable to the Lenders,(ii)
    
    with or without notice to the Borrower the Agent shall become forthwith entitled to enforce
the securities created by the Security Documents.
 15.
    
    INDEMNITIES
 15.1
    
    Indemnities
  (i)
    
    any default in payment by the Borrower of any sum under or pursuant to any of the Finance
Documents when due;
 (ii)
    
    the occurrence of an Event of Default;(iii)
    
    any repayment or prepayment of the Loan or part thereof being made otherwise than on the
date of expiry of an Interest Period or Repayment Date (as the case may be) relative to the
amount of the Loan repaid or prepaid or any other breaking of an Interest Period;(iv)
    
    the Loan (or any part thereof) not being advanced for any reason (excluding any reason
attributable to the Agent or to any of the Lenders) after a Drawdown Notice has been given.
  15.2
    
    Indemnity to the Agent
  (i)
    
    investigating any event which it reasonably believes is an Event of Default;(ii)
    
    acting or relying on any notice, request or instruction which it reasonably believes to be
genuine, correct and appropriately authorised;
 (iii)
    
    the taking, holding, protection or enforcement of the Security Documents;(iv)
    
    the exercise of any of the rights, powers, discretions and remedies vested in the Agent by
the Finance Documents; and any default by the Borrower in the performance of any of the
obligations expressed to be assumed by it in the Finance Documents.
 15.3
    
    Currency indemnity
 (i)
    
    If any sum due from the Borrower under the Finance Documents (a Sum) or any order, judgment
or award given or made in relation to a Sum has to be converted from the currency (the First
Currency) in which the Sum is payable into another currency (the Second Currency) for the
purpose of;
 (a)
    
    making or filing a claim or proof against the Borrower;
 25




---



##### 



(b)
    
    obtaining or enforcing an order or judgement or award in relation to any
litigation or arbitration proceeds,
 the Borrower shall as an independent obligation within five (5) Banking Days of demand,
indemnify the Lenders and the Agent to whom that Sum is due against any cost, loss or
liability arising out of or as a result of the conversion including any discrepancy
between (A) the rate of exchange used to convert that Sum from the First Currency into the
Second Currency and (B) the rate or rates of exchange available to the Lenders at the time
of their receipt of that Sum.(ii)
    
    The Borrower waives any right it may have in any jurisdiction to pay any amount under the
Finance Documents in a currency or currencies unit other than that in which it is expressed to
be payable.
 16.
    
    AGENCY
 16.1
    
    Appointment and duties of the Agent
  16.2
    
    Relationship
  16.3
    
    Information
  16.4
    
    Default
  16.5
    
    Rely on communication
  16.6
    
    Responsibility of the Agent
  26




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##### 



16.7
    
    Responsibility of each Lender
  16.8
    
    Set off
 Accepting Lender Offering Lender
 16.9
    
    Distribution of payments
  16.10
    
    Reimbursement of cost
  16.11
    
    Resignation
  17.
    
    FEES AND EXPENSES
 27




---



##### 



17.1
    
    Arrangement fee
  17.2
    
    Cost and expenses
  (i)
    
    the negotiation, preparation, execution and, where relevant, registration of the Finance
Documents,
 (ii)
    
    the satisfaction of the conditions precedent set out in clause 4,(iii)
    
    any amendment or extension of or the granting of any waiver or consent under any of the
Finance Documents, in each such case together with all stamp, documentary, registration or
other like duties or taxes (including any duties or taxes payable by the Lenders) imposed
thereon or in connection therewith, and(iv)
    
    the maintenance, protection and enforcement of any right under the Finance Documents.
 17.3
    
    Non recoverable cost
  18.
    
    MISCELLANEOUS
 18.1
    
    Waiver
  18.2
    
    Failure to comply
  18.3
    
    Outstanding Indebtedness
  18.4
    
    Security Documents
  28




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##### 



18.5
    
    Partial illegality
  18.6
    
    Inconsistency
  19.
    
    TRANSFER
 19.1
    
    Lenders transfer
 Assignor
 (i)
    
    any subsidiary or affiliate, and(ii)
    
    a bank and/or financial institution subject to written approval by the Borrower, which shall
not be unreasonably withheld by the Borrower;
 Assignee
 (a)
    
    The obligations are transferred in accordance with clause 19.2 (Procedure for transfer).(b)
    
    A transfer of obligations will be effective only if the Assignee confirms to the Agent and
the Borrower that it undertakes to be bound by the terms of this Agreement as a Lender in form
and substance satisfactory to the Agent. On the transfer becoming effective in this manner the
Assignor shall be relieved of its obligations under this Agreement to the extent that they are
transferred to the Assignee.(c)
    
    The Assignor is not responsible to the Assignee for:
 (i)
    
    the execution, genuineness, validity, enforceability or sufficiency of this
Agreement or any other document;(ii)
    
    the collectability of amounts payable under this Agreement; or(iii)
    
    the accuracy of any statements (whether written or oral) made in or in
connection with this Agreement.
 (d)
    
    The Assignee shall confirm to the Assignor and the other Lenders that it:
 (i)
    
    has made its own independent investigation and assessment of the financial
condition and affairs of the Borrower and its related entities in connection with its
participation in this Agreement and has not relied exclusively on any information
provided to it by the Assignor in connection with this Agreement; and(ii)
    
    will continue to make its own independent appraisal of the creditworthiness
of the Borrower and its related entities while any amount is or may be outstanding
under this Agreement or any Commitment is in force.
 29




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##### 



(e)
    
    Any reference in this Agreement to a Lender includes the Assignee but excludes a Lender if no
amount is or may be owed to or by it under this Agreement and its Commitment has been
cancelled or reduced to nil.
 19.2
    
    Procedure for transfer
 (i)
    
    A transfer is effected if:
 (a)
    
    the Assignor and the Assignee deliver to the Agent and the Borrower (if
applicable) a duly completed certificate, substantially in the form of Schedule 6 (a
Transfer Certificate); and(b)
    
    the Agent executes it.
 (ii)
    
    Each party (other than the Assignor and the Assignee) irrevocably authorizes the Agent to
execute any duly completed Transfer Certificates on its behalf.(iii)
    
    On the date of execution of the Transfer Certificate by the Agent or, if later, on the date
specified in the Transfer Certificate:
 (a)
    
    the Assignor and the other parties (the existing parties) will be
released from their obligations to each other (the discharged obligations);(b)
    
    the Assignee and the existing Parties will assume obligations towards
each other which differ from the discharged obligations insofar as they are owed to
or assumed by the Assignee instead of the Assignor;(c)
    
    the rights of the Assignor and the existing Parties and vice versa
(the discharged rights) will be cancelled; and(d)
    
    the Assignee and the existing Parties will acquire rights against each
other which differ from the discharged rights only, insofar as they are exercisable
by or against the Assignee instead of the Assignor.
 19.3
    
    Borrowers transfer
  20.
    
    AMENDMENTS AND WAIVERS
 20.1
    
    Procedure
  20.2
    
    Waivers
  21.
    
    NOTICES
 21.1
    
    Notices
  30




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##### 



(i)
    
    if to be sent to the Borrower, be sent to it at:DeepOcean Shipping II AS
Stoltenberggata 1
NO-5527 Haugesund
Norway
Fax: +47 52 70 04 01(ii)
    
    if to be sent to the Lenders and/or the Agent, be sent to the Agent at:Sparebank 1 SR-Bank
Sørhauggaten 150
P. O. Box 453
NO-5501 Haugesund
Norway
Fax: + 47 51 53 54 67
  22.
    
    LAW AND JURISDICTION
 22.1
    
    Law
  22.2
    
    Jurisdiction
  *****
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##### 



SCHEDULE 3
 LIST OF ORIGINAL LENDERS AND COMMITMENTS
 Name and address
    
    Proportionate share
    
    CommitmentSparebank 1 SR-Bank
Sørhauggaten 150
P. O. Box 453
NO-5501 Haugesund
Norway
    
    
    100
    %
    
    NOK 350,000,000TOTAL
    
    
    100
    %
    
    NOK 350,000,000
 32




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##### 



EXECUTION PAGE
 IN WITNESS WHEREOF
 SIGNED
    
    SIGNEDSPAREBANK 1 SR-BANK
    
    DEEPOCEAN SHIPPING II ASas Agent and Lender
    
    as Borrower
  SIGNED
    
    SIGNEDDEEP OCEAN ASA
    
    DO BERGEN ASas Guarantor
    
    as Pledgor
 33