FIRST PREFERRED MORTGAGE
       DATED the 1st
day of September 2008




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TABLE OF CONTENTS
 Clause
    
    Heading
    
    Page1.
    
    Interpretation
    
    22.
    
    Representations and warranties
    
    63.
    
    Payment covenants
    
    74.
    
    Charging Clause
    
    75.
    
    Continuing security and other provisions
    
    86.
    
    Covenants
    
    97.
    
    Powers of Mortgagee to protect security and remedy defaults
    
    188.
    
    Events of Default
    
    189.
    
    Enforceability and Mortgagees powers
    
    2110.
    
    Application of Moneys
    
    2211.
    
    Omissions or Delay
    
    2212.
    
    Delegation of Powers
    
    2313.
    
    Indemnity
    
    2314.
    
    Power of Attorney
    
    2315.
    
    Further Assurance
    
    2316.
    
    Discharge amount; maturity date
    
    2317.
    
    Partial Invalidity
    
    2418.
    
    Notices
    
    2419.
    
    Law and jurisdiction
    
    24




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st
 Mortgagor
  Mortgagee
  (1)
    
    the Mortgagor is the sole, absolute, legal and beneficial owner of the vessel described and
defined in clause 1.1:(2)
    
    by, and subject to and upon the terms and conditions of a credit agreement signed by the
Mortgagee on the 12th day of August 2008 and by the Borrowers (as hereinafter
defined) on the 14th day of August 2008 (as the same may be amended, supplemented or varied
from time to time together with the therein referred to HBU General Banking Conditions of 1995
and HBU General Credit Provisions of July 2006 the Financial Agreement), a copy of
which is annexed hereto as Exhibit A, the Mortgagee agreed to make available to the
Borrowers (as hereinafter defined) as joint and several obligors:
 (i)
    
    an overdraft facility in the amount of USD 2,500,000 (two million
five hundred thousand United States Dollars) (Overdraft I);(ii)
    
    an overdraft facility in the amount of USD 1,375,000 (one million
three hundred seventy-five thousand United States Dollars (Overdraft
 II);(iii)
    
    an overdraft facility in the amount of USD 3,000,000 (three million
United States Dollars) (Overdraft III);(iv)
    
    an overdraft facility in the amount of USD 34,600,000 (thirty-four
million six hundred thousand United States Dollars) (Overdraft IV);
and(v)
    
    an eight year roll-over loan facility in the principal amount of
USD 27,000,000 (twenty-seven million United States Dollars),
currently outstanding to the amount of USD 25,250,000 (twenty-five
million two hundred fifty thousand United States Dollars) (the Roll-Over Loan)
 (Overdraft I, Overdraft II, Overdraft III, Overdraft IV and the Roll-Over Loan together
hereinafter referred to as the Facility):
 (3)
    
    it is a condition of the Financial Agreement that the Mortgagor shall execute in favour of
the Mortgagee a FIRST Preferred Mortgage over the Vessel (as hereinafter defined) for securing
the Outstanding Indebtedness (as hereinafter defined) in the form herein set out;(4)
    
    the Mortgagor in order to secure the repayment of the Facility and the payment of interest
thereon and all other sums of moneys from time to time owing to the Mortgagee under the
Financial Agreement and the performance and observance of and compliance with all the
covenants, terms and conditions contained in the Financial Agreement and this Mortgage, has
duly authorized the execution and delivery of this FIRST Preferred Mortgage under and pursuant
to Chapter 3 of Title 21 of the Liberian Code of Law of 1956 (as amended)




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which is executed by the Mortgagor in consideration of the Mortgagee making available the
Facility.
  1
    
    Interpretation1.1
    
    In this Mortgage unless the context otherwise requires:Borrowers means the Mortgagor, Adventure Two S.A., Adventure Three S.A. and
Adventure Seven S.A., all of Majuro, Marshall Islands;Business Day means a day on which the banks are open for business in Amsterdam,
London and New York (whichever is applicable) for all kinds of business as contemplated
herein and/or the Financial Agreement;DOC means a document of compliance issued to an Operator in accordance with the
ISM Code;Dollars and USD means the lawful currency of the United States of
America;Earnings means all moneys whatsoever from time to time due or payable actually or
contingently to the Mortgagor arising out of the use or operation of the Vessel, including
without limitation all moneys payable to the Mortgagor under the Time Charter and all other
freight, hire and passage moneys, moneys arising under any contract or other agreement or
arrangement with any


operator, income arising under pooling arrangements, compensation payable to the Mortgagor
as a result of, or otherwise in connection with, the requisition of the Vessel for hire,
remuneration for salvage and towage serviees, demurrage and detention moneys, and all
damages for breach, and all payments for, or otherwise in connection with any variation or
termination of any charterparty, contract or other agreement or arrangement in respect of,
or otherwise in connection with the employment of the Vessel;
 Environmental Approvals means any and all consents, approvals, licences, permits,
exemptions or authorisations required under applicable Environmental Laws;Environmental Claim means:
 (a)
    
    any and all enforcement, clean-up, removal or other governmental,
judicial or regulatory action or order or claim instituted or made
pursuant to any Environmental Law or resulting from a Spill; or(b)
    
    any claim made by any other party howsoever relating to a Spill;
 Environmental Incident means any Spill:
 (a)
    
    from the Vessel;(b)
    
    from a vessel other than the Vessel in circumstances where:




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(i)
    
    the Vessel or the Mortgagor, the Operator or the Manager
may
be liable for Environmental Claims arising from the Spill
(other than the Environmental Claims arising and fully
satisfied before the date of this Mortgage); and/or(ii)
    
    the Vessel may be arrested or attached in connection with
any
Environmental Claim arising from such Spill;
 Environmental Law means any and all national and international and state laws,
rules, regulations, treaties, conventions and agreements whatsoever relating to the
pollution or protection of human health or environment (including, without limitation the
United States Oil Pollution Act of 1990 and any comparable laws of the individual States of
the United States of America);Environmentally Sensitive Material means pollutions, contaminants, toxic
substances, oil and its products and all hazardous substances and any other  substance whose release into the environment is regulated, prohibited or penalised by or
pursuant to any Environmental Law;Event of Default means any one of the events of default specified and referred
to in the Financial Agreement and/or clause 8:Facility has the meaning given in recital (2) hereto;Financial Agreement has the meaning given in recital (2) hereto;Insurances means all policies and contracts of insurance, including without
limitation all entries of the Vessel in a protection and indemnity or war risks association
which are from time to time in place or taken out or entered into by or for the benefit of
the Mortgagor in respect of, or otherwise in connection with, the Vessel and/or her
Earnings or any part thereof and all the benefits thereof, including without limitation all
claims of whatsoever nature and all return of premiums;ISM Code means the International Safety Management Code for the Safe Operation of
Ships and for Pollution Prevention (as amended, including any regulation issued
thereunder), as adopted by the Assembly of the International Maritime Organisation on 4
November 1993 by resolution A.741 (18) and incorporated on 19 May 1994 as chapter IX of the
Safety of Life at Sea Convention 1974;ISPS Code means the International Ship and Port Facility Security Code (as
amended, including any regulation issued thereunder), as adopted by the Assembly of the
International Maritime Organisation;ISSC means an international ship security certificate issued in respect of the
Vessel in accordance with the ISPS Code;Major Casualty Amount means USD 500,000 (five hundred thousand United States
Dollar) or the equivalent thereof in any other currency;Management Agreement means the agreement dated the 7th day of August 2008 and
made between the Mortgagor and the Manager regarding the management of the Vessel;




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Manager means FREE BULKERS S.A. or such other manager of the Vessel as approved
by the Mortgagee in writing;Material Adverse Change means (a) any material adverse change in the business,
assets, condition (financial or otherwise), operations, performance or prospects of the
Mortgagor or any of the other Security Parties, (b) any material adverse effect on the
ability of the Mortgagor or any of the other Security Parties to perform any of its
obligations under any of the Security Documents to which it is a party or (c) any material
adverse effect on the validity, binding nature, or enforceability of any of the Security
Documents;Operator means any entity who is at any time during the Security Period concerned
in the operation of the Vessel and falls within the definition of Company set out in the
ISM Code;Outstanding Indebtedness means (a) the aggregate of all sums of money actual or
contingent, present or future due by the Borrowers as joint and several obligors to the
Mortgagee under or in connection with the Security Documents or any of them and (b) all
costs and expenses incurred in connection with the Security Documents, including any taxes
payable by the Mortgagee (other than on net profit), as well as any reasonable costs and
expenses incurred by the Mortgagee in connection with the Mortgagors failure to comply
with or fulfil any obligation under the Security Documents at the time and in the manner
required, including collection charges, disbursements, fees of legal consultants and other
experts and costs of proceedings, irrespective against whom brought;Overdraft I has the meaning given m recital (2) hereto;Overdraft II has the meaning given in recital (2) hereto;Overdraft III has the meaning given in recital (2) hereto;Overdraft IV has the meaning given in recital (2) hereto;Pollutant means and includes oil and its products, any other polluting, toxic or
hazardous substance and any other substance whose release into the environment is regulated
or penalised by Environmental Laws;Requisition Compensation means all moneys or other compensation payable by reason
of requisition for title or other compulsory acquisition of the Vessel otherwise than by
requisition for hire;Roll-Over Loan has the meaning given in recital (2) hereto;Security Documents means the Financial Agreement, this Mortgage and any other
such document as may be executed from time to time to secure and/or regulate the
Outstanding Indebtedness;Security Interest means a mortgage, charge (whether fixed or floating), pledge,
lien, hypothecation, assignment or other security interest or arrangement of any kind
whatsoever;Security Parties means the Borrowers and any other party to the Security
Documents other than the Mortgagee at any relevant time;




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Security Period means the period commencing on the date of this Mortgage and
terminating on the date upon which all moneys payable or to become payable from time to
time pursuant to the terms of the Financial Agreement, this Mortgage and/or any of the
other Security Documents shall have been paid and discharged in full;SMC means a safety management certificate issued in respect of the Vessel in
accordance with the ISM Code;Spill means any actual or threatened emission, spill, release or discharge of a
Pollutant into the environment;Time Charter means the time charterparty dated 7 March 2008 and novation
agreement dated 12 August 2008 in respect of the Vessel made between the Mortgagor and the
Time Charterer;Time Charterer means AWB (Geneva) S.A., of Geneva, Switzerland;  Total
Loss means:
 (a)
    
    actual or constructive or compromised or arranged total loss of the Vessel;(b)
    
    requisition for title or other compulsory acquisition of the Vessel otherwise
than by requisition for hire;(c)
    
    capture seizure arrest detention or confiscation of the Vessel by any
government or entity or individual acting or purporting to act on behalf of any
government unless the Vessel be released and restored to the Mortgagor from such
capture seizure arrest detention or confiscation within thirty (30) days after the
occurrence thereof;
 Vessel means the Liberian flag vessel FREE MAVERICK with Official Number
13999, gross tonnage approximately 14,397, net tonnage approximately 8.314, built in 1998
at Hiroshima, Japan, by Kanda Shipbuilding Co. Ltd and includes her engines, machinery,
boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores,
belongings and appurtenances whether on board or ashore and whether now owned or
hereafter required.
 1.2
    
    In clause 6.1:
 excess risks means the proportion (if any) of claims for general average and
salvage charges and under the Institute Collision Clause not recoverable in consequence
of the value at which a vessel is assessed for the purpose of such claims exceeding her
insured value;protection and indemnity risks means the usual risks (including pollution and a
Freight Demurrage and Defence cover) covered by a protection and indemnity association
including the proportion (if any) not recoverable in case of collision under the
Institute Collision Clause;




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war risks includes the risks of mines and all risks excluded from the standard
form of English marine policy by the Institute War Exclusion Clause.1.3
    
    This Mortgage shall be read together with the Financial Agreement, but in the case of
conflict between the two instruments the provisions of the Financial Agreement shall prevail
in as far as it does not contravene the laws of the Republic of Liberia.1.4
    
    In this Mortgage:
 (a)
    
    clause headings are inserted for convenience of reference only and shall
be ignored in the interpretation of this Mortgage;(b)
    
    unless the context otherwise requires, words denoting the singular number
shall include the plural and vice versa;(c)
    
    references to clauses and schedules shall be construed as references to
clauses of and schedules to this Mortgage;(d)
    
    an entity shall be construed to include any firm, company, association,
partnership (whether or not having separate legal personality), institution, government (local, national or supranational), state,
agency or sub division thereof or international organisation;(e)
    
    reference to any document including this Mortgage shall be construed as
reference to such document as amended supplemented or varied from time to time;(f)
    
    words and expressions defined in the Financial Agreement shall, unless it
is stated otherwise herein, have the same meaning when used in this Mortgage; and(g)
    
    the Mortgagee, the Mortgagor, the Borrowers, the Security Parties and any
other entity or individual shall include their respective successors in title,
estates and, in the event of an assignment permitted under this Mortgage, assignees.
 2.
    
    Representations and warranties2.1
    
    The Mortgagor hereby represents and warrants to the Mortgagee that:
 (a)
    
    Entitlement to grant Mortgageit is fully entitled to grant this Mortgage and further to agree and perform the
terms and conditions hereof and that such granting and performance will not cause
the Mortgagor to be in breach of any agreement to which it is a party;(b)
    
    Ownership of Vesselit is the sole, absolute, legal and beneficial owner of the Vessel;(c)
    
    Charter and sharing Earnings




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the Vessel, save for the Time Charter, is not subject to any charter which, if
entered into after the date of this Mortgage, would have required the consent of
the Mortgagee under clause 6.1(k) and there is no existing agreement or
arrangement whereby the Earnings may be shared with any other entity or
individual;(d)
    
    Security Interestthe Vessel is not subject to any Security Interest (save as constituted

by the Security Documents or otherwise permitted by the terms thereof); and
 (e)
    
    DOC, SMC and ISSCthe Operator has obtained and maintains a DOC (a true copy of which has been
delivered to the Mortgagee) and has obtained and maintains a SMC and an ISSC
(true copies of which have been delivered to the Mortgagee) in respect of the
Vessel, all are in full force and effect and nothing has happened which might
cause any of them to be withdrawn, suspended, cancelled or modified.
 2.2
    
    The Mortgagor hereby further represents and warrants to the Mortgagee that:
 (a)
    
    all applicable Environmental Laws and Environmental Approvals relating to
the Vessel, its operation and management and the business of the Mortgagor (as now
conducted and as reasonably anticipated to be conducted in the future) have been
complied with;(b)
    
    no Environmental Claim has been made or threatened or is pending against
the Mortgagor, the Manager or otherwise in connection with the Vessel and not fully
satisfied; and(c)
    
    no Environmental Incident has occurred.
 3.
    
    Payment covenantsThe Mortgagor hereby covenants duly to observe and perform all its obligations under the
Financial Agreement in accordance with the terms and conditions thereof and in particular:
 (a)
    
    to repay the Facility by the instalments and on the dates referred to and
otherwise in the manner and upon the terms set out in the Financial Agreement;(b)
    
    to pay interest on the Facility and on other moneys payable under the
Financial Agreement at the rate or rates from time to time applicable thereto in the
manner and upon the terms set out in the Financial Agreement;(c)
    
    to pay all other moneys payable by the Mortgagor under or in connection with
the Security Documents or any of them at the times
and in the manner therein specified.
 4.
    
    Charging Clause




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4.1
    
    In pursuance of the Financial Agreement and in consideration of the premises and by way of
security for payment of the Outstanding Indebtedness and the performance of the obligations
under the Financial Agreement, this Mortgage and the other Security Documents of the Borrowers
as joint and several obligors, the Mortgagor with full title guarantee hereby
mortgages and charges and agrees to mortgage and charge to and in favour of the Mortgagee
all its right, title and interest (present and future) to and in the Vessel TO HAVE AND HOLD
the same unto and in favour of the Mortgagee forever upon the terms set forth in this Mortgage
to secure the Outstanding Indebtedness and further to secure the performance and observance of
and the compliance with the covenants, terms and conditions in the Financial Agreement, this
Mortgage and the other Security Documents contained.4.2
    
    Notwithstanding anything to the contrary in this Mortgage it is not intended that any
provision of this Mortgage shall waive the preferred status of this Mortgage and that if any
provision or part thereof in this Mortgage shall be construed as waiving the preferred status
of this Mortgage, then such provisions shall to such extent be void and of no effect.4.3
    
    The Mortgagor shall remain liable to perform all the obligations assumed by it in relation to
the Vessel and the Mortgagee shall not be under any obligation of any kind whatsoever in
respect thereof or be under any liability whatsoever in event of any failure by the Mortgagor
to perform its obligations in respect thereof.5.
    
    Continuing security and other provisionsIt is declared and agreed that:
 (a)
    
    the security created by this Mortgage and the other Security Documents
shall be held by the Mortgagee as a continuing security for the payment of the
Outstanding Indebtedness and the performance and observance of and compliance with
all obligations of the Mortgagor under the Security Documents or any of them, express
or implied;(b)
    
    the security so created shall not be satisfied by any intermediate payment
or satisfaction of any part of the Outstanding Indebtedness and shall be in addition
to and shall not in any way prejudice or affect
and may be enforced by the Mortgagee without prior recourse to the security
created by any other of the Security Documents or by any other security now or
hereafter held by the Mortgagee and shall not in any way be prejudiced or
affected thereby or by the invalidity or unenforceability thereof or by the
Mortgagee releasing, modifying or refraining from perfecting or enforcing any of
the same or granting time or indulgence or compounding with any liable entity or
individual;(c)
    
    all the rights, remedies and powers vested in the Mortgagee under this
Mortgage shall be in addition to and not a limitation of any and every other right,
power or remedy vested in the Mortgagee under any other of the Security Documents or
at law (whether Liberia or otherwise) and that all the powers so vested in the
Mortgagee may be exercised from time to time and as often as the Mortgagee may deem
expedient; and




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(d)
    
    the Mortgagee shall not be obliged to make any enquiry as to the nature or
sufficiency of any payment received by it under this Mortgage or to make any claim or
to take any action or to enforce any rights and benefits hereby assigned to the
Mortgagee or to which the Mortgagee may at any time be entitled under this Mortgage.
 6.
    
    Covenants6.1
    
    The Mortgagor further covenants with the Mortgagee throughout the Security Period:
 (a)
    
    Insurance
 (i)
    
    Type of insurancesto insure and keep the Vessel insured at the expense of the Mortgagor
against:
 (A)
    
    fire and usual marine risks (including excess risks);(B)
    
    war risks;(C)
    
    protection and indemnity risks
(including pollution risks and a freight demurrage and defence
cover);(D)
    
    where the Vessel shall, at any time enter waters under
the jurisdiction of the United States of America and/or
the Exclusive Economic Zone (as defined in the
United States Oil Pollution Act of 1990) oil pollution
liability risks in excess of the cover for oil pollution
liability risks included within the cover for protection
and indemnity risks;
 and, at the option of the Mortgagee, either (i) to effect and keep effected, in the name and
for the benefit of the Mortgagee, but at the expense of the Mortgagor or (ii) to reimburse
the Mortgagee on demand for any and all costs incurred by it in effecting and maintaining
such insurance in relation to the Vessel:
 (E)
    
    a mortgagees interest insurance; and(F)
    
    where the Vessel shall, at any time enter waters under
the jurisdiction of the United States of America and/or
the Exclusive Economic Zone (as defined in the
United States Oil Pollution Act of 1990) an insurance
against the possible consequences of pollution due to,
without limitation, oil or any other substance
involving the Vessel including, without limitation, the
risk of expropriation or sequestration of the Vessel or
the imposition of any Security Interest having priority
over the Mortgage (Mortgagees Interest Insurance -
Additional Perils (Pollution));




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(ii)
    
    Currency and amountsto effect and keep effected the Insurances (if not effected by the Mortgagee) in such amounts
and in such currency and upon such terms and through such brokers (hereinafter called the
approved brokers) and with such insurance companies, underwriters, war risks and
protection and indemnity associations (hereinafter called the approved
associations) as shall from time to time be approved in writing by the Mortgagee
PROVIDED HOWEVER that the insurances against war risks and protection and indemnity risks may
be effected by the entry of the Vessel with such war risks and protection and indemnity risks
associations as shall from time
to time be approved in writing by the Mortgagee and if so required by the Mortgagee (but
without, as between the Mortgagor and the Mortgagee, liability on the part of the Mortgagee
for premiums or calls) with the Mortgagee named as co-assured;(iii)
    
    Fleet coverif any of the Insurances forms part of a fleet cover, to procure that the approved brokers
and (as the case may be) the approved associations shall undertake to the Mortgagee that
they shall neither set off against any claims in respect of the Vessel any premiums due in
respect of other vessels under such fleet cover or any premiums due for other insurances,
nor cancel such insurance in respect of the Vessel for reason of non-payment of premiums
for other vessels under such fleet cover or of premiums for such other insurances and shall
undertake to issue a separate policy in respect of the Vessel if and when so requested by
the Mortgagee;(iv)
    
    Renewalsat least fourteen (14) days before the relevant policies, contracts or entries expire, to
notify the Mortgagee in writing of the names of the brokers and/or the war risks and
protection and indemnity risks associations proposed to be employed by the Mortgagor for the
purposes of the renewal of such insurances (subject to the Mortgagees approval of such
brokers and/or associations) and of the amounts in which such insurances are proposed to be
renewed and the risks to be covered and, (subject to compliance with any requirements of the
Mortgagee pursuant to this clause 6.1(a), to renew (or procure the renewal of)
such Insurances at least ten (10) days before the relevant policies, contracts or entries
expire and to procure that such brokers and (as the case may be) such associations will at
least seven (7) days before such expiry confirm such renewals in writing to the Mortgagee;(v)
    
    Paymentspunctually to pay all premiums, calls, contributions or other sums payable in respect of the
Insurances and to produce all relevant receipts or other evidence if and when so required by
the Mortgagee;(vi)
    
    Guarantees, indemnities




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to arrange for the execution of such guarantees or indemnities as may from time to time be
required by or in connection with any protection and indemnity or war risks association or
required by or in connection with a usual marine risks policy (including excess risks and
war risks);(vii)
    
    Loss payable clause, notice of assignmentto procure that the interest of the Mortgagee shall be duly endorsed upon all slips, cover
notes, policies, certificates of entry or other instruments of insurance issued or to be
issued in connection with the Insurances by means of a loss payable and notice of
cancellation clause and a notice of assignment (signed by the Mortgagor) in such forms as
from time to time required by the Mortgagee;(viii)
    
    Instruments of insuranceto procure that all instruments of the Insurances shall be deposited with the approved
brokers and that such brokers shall (if so required by the Mortgagee) furnish the Mortgagee
with pro forma copies thereof and a letter or letters of undertaking in such form as may
from time to time be required by the Mortgagee;(ix)
    
    Letter(s) of undertakingto procure that the protection and indemnity and/or war risks associations wherein the
Vessel is entered shall (if so required by the Mortgagee) furnish the Mortgagee with a
letter or letters of undertaking in such form as may from time to time be required by the
Mortgagee;(x)
    
    Use of the Vesselnot to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity
with the terms of the instruments
of the Insurances (including any warranties express 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;(xi)
    
    Reimbursementto reimburse to the Mortgagee on demand any costs or expenses incurred by the Mortgagee in
obtaining (if and when so required by the Mortgagee) reports from an independent marine
insurance broker appointed by the Mortgagee as to the adequacy of the insurances effected or
proposed to be effected pursuant to this clause 6 and procure that there is
delivered to such broker any and all such information in relation to such insurances as such
broker may require;(xii)
    
    No consent, acts or omissions




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not to make, do, consent or agree to any act or omission which would or might render any
instrument of insurance invalid, void, voidable or unenforceable or render any sum paid
thereunder repayable in whole or in part;(xiii)
    
    Co-operation with collecting insurance moneysto do all things necessary and provide all documents, evidence and information to enable the
Mortgagee to collect or recover any moneys which shall at any time become due in respect of
the Insurances;(xiv)
    
    Application insurance moneysto apply such sums receivable in respect of the Insurances other than in respect of a Total
Loss and any major casualty (that is to say any casualty the claim in respect of which
exceeds the Major Casualty Amount inclusive of any deductible) which shall be payable to the
Mortgagee as are paid to the Mortgagor for the purpose of making good the loss and fully
repairing all damage in respect whereof the insurance moneys shall have been received;
 (xv)
    
    Voyage declarationto make all such quarterly or other voyage declaration as may
from time to time be required by the protection and indemnity
risks association to maintain cover for trading (including,
without limitation, trading to the United States of America and
Exclusive Economic Zone (as defined in the United States Oil
Pollution Act 1990))
 PROVIDED ALWAYS THAT the Mortgagee shall be entitled to review the
requirements of this clause 6.1(a) from time to time in order to
take account of significant changes in circumstances after the date of this
Mortgage (such changes in circumstances include, without limitation, changes
in the availability or the cost of insurance coverage). The Mortgagee may
notify the Mortgagor in writing from time to time of any proposed
modification to the requirements of this clause 6.1(a) which it
deems appropriate in the circumstances, and such modification shall take
effect on and from the date it is notified in writing to the Mortgagor as an
amendment to this clause 6.1 (a) and shall bind the Mortgagor
accordingly;
 (b)
    
    Name and Registration
 not to change the name of the Vessel and to keep the Vessel registered with
full registration as a Liberian ship in the Republic of Liberia at the Port
of Monrovia in the name of the Mortgagor and not do or suffer to be done
anything, or omit to do anything, the doing or omission of which could or
might result in the Vessel being required to be registered otherwise than as
a Liberian ship in the Republic




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of Liberia at the Port of Monrovia and not to do or suffer to be done
anything, or omit to do anything, the doing or omission of which could or
might result in such registration being forfeited, terminated or imperilled
and not to register the Vessel or permit its registration under any other
name, flag or at any other port or with any other numbers without the prior
written consent of the Mortgagee and to procure the renewal of such
registration of the Vessel as a Liberian ship with full registration at least
one month before the same shall expire;
 (c)
    
    Operator
 (i)
    
    to comply and to procure that the Operator
will comply with and ensure that the Vessel and the Operator at all
times
comply with the requirements of the ISM Code and the ISPS Code;(ii)
    
    immediately to inform and to procure that
the Operator will inform the Mortgagee if there is any threatened or
actual withdrawal, suspension, cancellation or modification of its or
the Operators DOC, the Vessels SMC or the Vessels ISSC; and(iii)
    
    promptly to inform and to procure that the
Operator will promptly inform the Mortgagee upon the issue to the
Mortgagor or the Operator of a DOC and to the Vessel of a SMC and an
ISSC;
 (d)
    
    Employment
 not knowingly to employ the Vessel or suffer its employment in any trade or
business whieh is forbidden by international law or is otherwise illegal or
in earrying illegal or prohibited goods or in any manner whatsoever which may
render the Vessel or its cargo liable to condemnation in a Prize Court or to
penalty, destruction, seizure or confiscation and in the event of any major
political confrontation or hostilities (whether or not war shall have been
formally declared) or during any civil war or insurrection, not to carry or
permit to be carried on or in the Vessel any cargo that is or may be declared
contraband of war or that may render the Vessel or its cargo liable to
penalty, destruction, seizure, or confiscation unless special war risks
policies previously approved by the Mortgagee shall have been effected prior
to undertaking any such risk and to deliver the signed cover notes in respect
thereof forthwith to the Mortgagee;
 (e)
    
    Encumbrances, sale or other disposal




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##### 



(i)
    
    not without the previous consent in writing of
the Mortgagee to create or suffer the creation of any Security Interest on or
in
respect of the Vessel to or in favour of any entity or individual
other than the Mortgagee;(ii)
    
    not without the previous consent in writing of
the Mortgagee   (and then only subject to such terms as the Mortgagee may
impose) to sell agree to sell transfer or abandon or otherwise
dispose of the Vessel or any share or interest therein;
 (f)
    
    Prevention of and release from arrest
 to pay and discharge all debts and liabilities which may give rise to
maritime statutory or possessory liens on the Vessel or to claims
enforceable by actions in rem against the Vessel or similar process so as to
keep her free from arrest or detention and in the event of arrest or
detention of the Vessel being threatened or effected forthwith to notify the
Mortgagee thereof and to take all steps and to make all payments necessary
to obtain the release of the Vessel from such arrest or detention within
thirty days from receiving notice thereof;
 (g)
    
    Repair and Class
 (i)
    
    to maintain the Vessel in her present class and
to comply with
the provisions of all regulations and requirements (statutory or
otherwise) from time to time applicable to the Vessel and to
comply with all class recommendations of its classification
society in accordance with their terms; and(ii)
    
    to keep the Vessel in good and efficient state
of repair and
procure that all repairs to or replacement of any damaged,
worn or lost parts or equipment are effected in such manner
(both as regards workmanship and quality of materials) as not
to diminish the value of the Vessel;
 (h)
    
    Surveys




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##### 



to submit the Vessel to such periodical or other surveys as may be required
for classification purposes and if so required to supply to the Mortgagee
copies of all survey reports issued in respect thereof;
 (i)
    
    Inspections
 to permit the Mortgagee to inspect the condition of the Vessel at all
reasonable times and to give the Mortgagee sufficient notice whenever
practicable of dry-dockings, surveys and major repairs so as to enable the
Mortgagees surveyors or other entity or individual appointed by it to attend
thereat and if so required to supply to the Mortgagee copies of survey
reports on the Vessel;
 (j)
    
    Modification, Removal of Parts, Equipment owned by third partiesnot without the prior written consent of the Mortgagee to:
 (i)
    
    make any modification to the Vessel in consequence of
which
her structure, type or performance characteristics could or
might materially be altered or her value materially reduced; or(ii)
    
    remove any material part of the Vessel or any equipment
the
value of which is such that its removal from the Vessel would
materially reduce the value of the Vessel without replacing the
same with equivalent parts or equipment owned by the
Mortgagor free from encumbrances; or(iii)
    
    install on the Vessel any equipment owned by a third
party
which cannot be removed without causing damage to the
structure or fabric of the Vessel and not to permit any of the
foregoing by any third party;
 (k)
    
    Chartering
 (i)
    
    not without the prior written consent of the Mortgagee, which shall not
unreasonably be withheld, to:
 (a)
    
    let the Vessel on demise charter for any period; or(b)
    
    save for the Time Charter let the Vessel on time or
consecutive voyage charter or otherwise dispose of the Vessel, except for a
time or consecutive voyage charter agreement for a period which does not
exceed or which by virtue of any optional extensions therein contained is
not likely to exceed six (6) months duration; or(c)
    
    charter the Vessel on terms whereby more than three (3)
months hire is payable in advance;




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##### 



(ii)
    
    to maintain the Time Charter materially unamended and renew or
extend the Time Charter on terms and conditions identical to the Time
Charter, but in any case for charter rates acceptable to the Mortgagee;
 (1)
    
    Informationto supply to the Mortgagee on request full information regarding the Vessel, her
employment, position and engagements, particulars of all towages and salvages and
copies of all charters and other contracts concerning the Vessel;(m)
    
    Notification of certain eventsto notify the Mortgagee forthwith by letter or in case of urgency by-telefax of
any accident to the Vessel involving repairs the cost whereof is likely to exceed
the Major Casualty Amount, of any occurrence whereby the Vessel has or is likely
to become a Total Loss, of any actual or threatened arrest, detention, seizure,
confiscation or requisition of the Vessel, of any requirement of insurers,
classification society or any competent authority which is not immediately
carried out and of any petition or notice or meeting to consider any resolution
to dissolve wind-up or liquidate the Mortgagor;(n)
    
    Reimbursementto pay to the Mortgagee on demand all moneys whatsoever which the Mortgagee shall
or may expend be put to or become liable for in or about the protection
maintenance or enforcement of the security created by this Mortgage and the other
Security Documents or in or about the exercise by the Mortgagee of any of the
powers vested in it hereunder or thereunder and to pay interest thereon at the
default rate as per the Financial Agreement;(o)
    
    Coststo pay on demand to the Mortgagee (or as it may direct) the amount of all
investigation and legal expenses of any kind whatsoever stamp duties (if any)
registration fees and any other charges incurred by the Mortgagee in connection
with the preparation completion registration and discharge of the Security
Documents or otherwise in connection with the Outstanding Indebtedness and the
security therefor and to pay interest thereon at the default rate as per the
Financial Agreement;(p)
    
    Managernot without the previous consent in writing of the Mortgagee (and then only on
and subject to such terms as the Mortgagee may impose) to appoint a manager of
the Vessel other than the Manager or amend or terminate the Management Agreement;(q)
    
    Repairers liensnot without the previous consent in writing of the Mortgagee to put the Vessel
into the possession of any entity or individual for the purpose of work being
done upon her in an amount exceeding or likely to exceed the Major Casualty
Amount, unless such entity or individual shall first have given to the Mortgagee
and in terms satisfactory to it a written undertaking not to exercise any lien on
the Vessel or her Earnings for the cost of such work or otherwise;(r)
    
    Payment of outgoings and evidence of payment




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##### 



promptly to pay all tolls dues and other outgoings whatsoever in respect of the
Vessel and her Earnings and Insurances and to keep proper books of account in
respect of the Vessel and her Earnings and as and when the Mortgagee may so
require to make such books available for inspection on behalf of the Mortgagee
and furnish satisfactory evidence that the wages allotments the premiums for
social insurances and pension contributions of the master and crew are being
regularly paid and that all deductions from crews wages in respect of Liberian
tax liability are being properly accounted for and that the master has no claim
for disbursements other than those incurred by him in the ordinary course of
trading on the voyage then in progress;(s)
    
    Notice on board Vesselto carry a certified copy of this Mortgage with the Vessels papers on board and
exhibit it on demand to any person having business with the Vessel or to any
representative of the Mortgagee and to place and keep prominently displayed in the
chartroom and in the masters cabin of the Vessel a notice, printed in plain type
of such size that the paragraph of reading matter shall cover a space not less
than six inches wide by nine inches high, framed, reading as follows:NOTICE OF MORTGAGEThis Vessel is covered by a FIRST PREFERRED SHIP MORTGAGE in favour of
HOLLANDSCHE BANK-UNIE N.V. under the authority of Title 21 of the Liberian Code
of Law of 1956 (as amended). Under the terms of said Mortgage, neither the Owner,
any charterer nor the Master of the Vessel nor any other person has any right,
power or authority to create, incur or permit to be imposed upon this vessel any
lien whatsoever other than for crews wages or salvage.; and(t)
    
    Libelif a libel be filed against the Vessel or the Vessel be otherwise attached,
levied upon or taken into custody by virtue of any legal proceedings in any
Court, to promptly notify the Mortgagee thereof by telex or fax confirmed by a
letter at its office as herein referred to and within thirty (30) days cause the
Vessel to be released and all liens thereon to be discharged except for this
Mortgage and promptly notify the Mortgagee within 48 (forty-eight) hours after is
has become known to the Mortgagor of any average or salvage incurred by the
Vessel.
 6.2
    
    Environmental MattersThe Mortgagor hereby further covenants with the Mortgagee that throughout the Security
Period and unless the Mortgagee shall have otherwise agreed in writing it will:
 (a)
    
    comply, or procure compliance with, all Environmental Laws and Environmental
Approvals relating to the Vessel, its operation or management and the business of the
Mortgagor from time to time;(b)
    
    notify the Mortgagee forthwith upon:
 (i)
    
    any Environmental Claim being made against the Mortgagor,
the Manager or otherwise in connection with the Vessel; and(ii)
    
    any Environmental Incident occurring; and




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##### 



(c)
    
    keep the Mortgagee advised, in writing on such regular basis and in
such detail as the Mortgagee shall require, of the Mortgagors response
to any such Environmental Claim or Environmental Incident.
 7.
    
    Powers of Mortgagee to protect security and remedy defaults7.1
    
    The Mortgagee shall without prejudice to its other rights and powers under this Mortgage and
the other Security Documents be entitled (but not bound) at any time and as often as may be
necessary to take any such action as it may in its discretion think fit for the purpose of
protecting or maintaining the security created by this Mortgage (including, without
limitation, such action as is referred to in clause 7.2) and each and every expense,
liability, or loss (including, without limitation, legal fees) so incurred by the Mortgagee in
or about the protection or maintenance of the said security together with default interest as
per the Financial Agreement payable thereon shall be repayable to it by the Mortgagor on
demand.7.2
    
    Without prejudice to the generality of clause 7.1:
 (a)
    
    if the Mortgagor does not comply with the provisions of clause 6.1 (a)the Mortgagee shall be entitled (but not bound) to effect or to replace and renew
and thereafter to maintain the Insurances in such manner as in its discretion it may
think fit and to require that all policies, contracts and other records relating to
the Insurances (including details of any correspondence concerning outstanding
claims) be forthwith delivered to such brokers as the Mortgagee may nominate and to
collect, recover, compromise and give a good discharge for all claims then
outstanding or thereafter arising under the Insurances or any of them and to take
over or institute (if necessary using the name of the Mortgagor) all such proceedings
in connection therewith as the Mortgagee in its absolute discretion may think fit and
to permit the brokers through whom the collection or recovery is effected to charge
the usual brokerage therefor; and(b)
    
    if the Mortgagor does not comply with the provisions of
clauses 6.1(g),
6.1(h) and 6.1(i) or any of them the Mortgagee shall be entitled (but not bound)
to arrange for the carrying out of such repairs to and/or surveys of the Vessel as it
deems expedient or necessary; and(c)
    
    if the Mortgagor does not comply with the provisions of clauses 6.1(f)
and 6.l(r) or any of them the Mortgagee shall be entitled (but not bound) to pay
and discharge all such debts, damages and liabilities and all such tolls, dues,
taxes, assessments, charges, fines, penalties and other outgoings as are therein
mentioned and/or to take any such measures as it deems expedient or necessary for the
purpose of seeuring the release of the Vessel.
 8.
    
    Events of DefaultUpon the happening of any of the following events the Outstanding Indebtedness shall
immediately become due and payable to the Mortgagee without notice and without the
necessity of any Court declaration to the effect that an Event of Default has taken place:
 (a)
    
    Non-paymentany of the Security Parties shall fail to pay on the due date (or before the
expiry of any grace period applicable thereto) any sum due under any Security
Document; or(b)
    
    Misrepresentation




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##### 



any representation or warranty made by any of the Security Parties in any
Security Document or any notice, certificate or statement made or delivered
hereunder or thereunder is or proves to have been incorrect in any material
respect when made, or if replaced at any time during the continuance of this
Mortgage with reference to the facts subsisting at such time, would no longer be
correct and accurate in all material respects; or(c)
    
    Other obligationsany of the Security Parties defaults in the due performance and observance of any
of the terms, undertakings or conditions of  or the due compliance with its
obligations under  any Security Document and, if and only if such default other
than set out under clause 8(a) is capable of remedy, such default is not
remedied within 30 (thirty) days; or(d)
    
    Cross-defaultany loan, debt, guarantee or other obligation constituting indebtedness of any of
the Security Parties becomes due prior to its specified maturity by reason of
default (unless such default is caused solely by the Vessel becoming a Total Loss)
or is not paid when due or any of the Security Parties is otherwise in material
breach of or default under any agreement, deed or mortgage under or pursuant to
which such
indebtedness was incurred unless in any such case the non-payment, breach or
default is remedied within 30 (thirty) days; or(e)
    
    Distressa distress or other execution is levied or sued out upon or against any part of
the property of any of the Seeurity Parties and is not discharged within 30
(thirty) days of having been so levied or sued out; or(f)
    
    Insolvencyany of the Security Parties suspends or threatens to suspend its operations or
transfers or disposes of all or a substantial part of its undertakings or assets
or transfers its business to another country or ceases to pursue its corporate
objeets or changes its corporate statute in any material way; or(g)
    
    any of the Security Parties (i) is unable or admits in writing their
inability to pay its lawful debts as they mature, or (ii) makes a general
assignment or pledge for the benefit of or a composition with its
creditors; or(h)
    
    an application is made to, or any proceedings are commenced in or any
order or judgement is given by any court for the liquidation,
winding-up, reorganisation or reconstruetion (where, in the opinion of
the Mortgagee, such reorganisation or reconstruction might prejudice
the Mortgagees position hereunder or under any of the Security
Documents) of any of the Security Parties or for the appointment of a
receiver, trustee, liquidator, administrator or administrative receiver or
similar officer of any of the Security Parties or any part of its assets; or(i)
    
    any of the Security Parties is adjudicated bankrupt or insolvent or files
a voluntary petition in bankruptcy or insolvency; or




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##### 



(j)
    
    Authorisationany authorisation, approval, consent, licence, exemption, registration,
notification or other requirement of any governmental or public body necessary for
the validity, enforceability or legality of any Security Document or the
performance thereof is not being obtained or, if obtained, ceases for any reason
to be in full force and effect; or(k)
    
    Total Loss, change ownership or registration of the Vesselthe Vessel becomes Total Loss, there is any change in the ownership of the Vessel
or the Vessel ceases to be registered under the Liberian flag; or(1)
    
    Change shareholder or control; material change of directorship or
managementwithout the prior written consent of the Mortgagee there is after the date hereof
any change in the shareholding or control in or any material change in the
directorship or management of any of the Security Parties; or(m)
    
    Breach or termination charterpartvthe Mortgagor defaults in the performance of any charterparty of the Vessel in any
material way or any charterparty of the Vessel terminates for any reason other
than the due performance in accordance with its terms or as a result of a Total
Loss unless (i) the Mortgagor has entered into a new charter party on terms and
conditions acceptable to the Mortgagee within 14 (fourteen) days after the charter
party has been terminated or (ii) the Mortgagee has prior to the termination
approved in writing the termination of the charter party by the Mortgagor; or(n)
    
    Unenforceabilityany of the Mortgagees rights or powers of enforcement against or in respect of
the Vessel under any Security Document becomes unenforceable; or(o)
    
    Unlawfulnessthe due performance in accordance with its terms of any Security Document becomes
illegal or impossible under the law of the country of incorporation of any party
thereto; or(p)
    
    Change of law and governmental measurethe law or its interpretation changes or a governmental measure is taken which
affects or may affect any of the Security Documents, and/or the underlying value thereof, and the parties to such documents and the
Mortgagee shall not have reached within a reasonable period a written agreement
adjusting the relevant provisions and/or securities, on such a basis that the
position of the Mortgagee is not detrimentally affected; or
 (q)
    
    Material Adverse Changea Material Adverse Change occurs, or any events or circumstances arise which, in
the reasonable opinion of the Mortgagee, give grounds for belief that a Material
Adverse Change will occur; unless such events or circumstances are




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##### 



capable of remedy and are remedied within 30 (thirty) days of the day the
Mortgagee was given notice to any of the Security Parties; or(r)
    
    Other events of defaultif the Outstanding Indebtedness becomes immediately due and payable to the
Mortgagee in accordance with the provisions of the Financial Agreement or any of
the other Security Documents.
 9
    
    Enforceability and Mortgagees powersUpon the happening of any Event of Default the Mortgagee shall become forthwith entitled
to enforce the security created by this Mortgage without prior notiee and in any manner
available to it and in such sequence as the Mortgagee may in its absolute discretion
prefer and when it may see fit to put into force and to exercise all or any of the rights
powers and remedies conferred upon mortgagees by law and/or possessed by it as mortgagee
and chargee of the Vessel by virtue of this Mortgage and in particular (without limiting
the generality of the foregoing):
 (a)
    
    to take possession of the Vessel;(b)
    
    to require that all policies, contracts, certificates of entry and other
records relating to the Insurances (including details of and correspondence
concerning outstanding claims) be forthwith delivered to such brokers as the
Mortgagee may nominate;(c)
    
    to collect, recover, compromise and give a good discharge for all claims
then outstanding or thereafter arising under the Insurances or any of them or in
respect of the Earnings or any Requisition
Compensation and to take over or institute (if necessary using the name of the
Mortgagor) all such proceedings in connection therewith as the Mortgagee in its
absolute discretion thinks fit and to permit the brokers through whom collection
or recovery is effected to charge the usual brokerage therefor;(d)
    
    to discharge compound release or compromise claims against the
Mortgagor in respect of the Vessel which have given or may give rise
to any charge or lien on the Vessel or which are or may be enforceable
by proceedings against the Vessel;(e)
    
    to terminate any charterparty in respect of the Vessel without being
responsible for any loss thereby occurred;(f)
    
    to sell the Vessel or any share therein with or without prior notice to
the Mortgagor and with or without the benefit of any charterparty or
other contract for her employment by public auction or private
contract at such place and upon such terms as the Mortgagee in its
absolute discretion may determine with power to postpone any such
sale and without being answerable for any loss occasioned by such
sale or resulting from postponement thereof;(g)
    
    to manage, insure, maintain and repair the Vessel and to employ or lay
up the Vessel in such manner and for such period as the Mortgagee in
its absolute discretion deems expedient and for the purposes aforesaid
the Mortgagee shall be entitled to do all acts and things incidental or
conducive thereto and in particular to enter into such arrangement
respecting the Vessel her insurance management maintenance repair




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##### 



classification and employment in all respects as if the Mortgagee was
the owner of the Vessel and without being responsible for any loss
thereby incurred;(h)
    
    to recover from the Mortgagor on demand any such losses as may be
incurred by the Mortgagee in or about the exercise of the power vested
in the Mortgagee under sub-clause (g) of this clause with interest
thereon at the default rate as per the Financial Agreement from the
date when such losses were incurred by the Mortgagee until the date of
payment whether before or after any relevant judgment;(i)
    
    to recover from the Mortgagor on demand all expenses payments and
disbursements incurred by the Mortgagee in or about or incidental to
the exercise by it of any of the powers aforesaid together with interest
thereon at the default rate as per the Financial Agreement from the date when
such expenses payments or disbursements were incurred by the Mortgagee until the
date of payment whether before or after any relevant judgment
 PROVIDED ALWAYS that (i) the Mortgagee shall not be liable as mortgagee in possession in
respect of the Vessel to account or be liable for any loss upon realisation or for any
neglect or default of any nature whatsoever in connection therewith for which a mortgagee
in possession may be liable as such and (ii) upon any sale of the Vessel or any share
therein by the Mortgagee pursuant to sub-clause (f) of this clause the purchaser
shall not be bound to see or enquire whether the Mortgagees power of sale has arisen in
the manner herein provided and the sale shall be deemed to be within the power of the
Mortgagee and the receipt of the Mortgagee for the purchase money shall effectively
discharge the purchaser who shall not be concerned with the manner of application of the
proceeds of sale or be in any way answerable therefor.10
    
    Application of MoneysUpon the happening of any Event of Default the Mortgagee shall become forthwith entitled
as and when it may see fit to apply any amounts received by it from the Mortgagor and the
Mortgagee shall similarly be entitled to apply any amounts received by it in respect of:
 (a)
    
    sale of the Vessel or any share therein;(b)
    
    recovery under the Insurances;(c)
    
    any Earnings or moneys received pursuant to the provisions of
clause 9.(g);(d)
    
    any Requisition Compensation,
 in the manner as specified in the Financial Agreement.
 11
    
    Omissions or DelayNo delay, indulgence or omission of the Mortgagee to exercise any right power or remedy
vested in it under the Security Documents or any of them shall in any way prejudice or
impair such right power or remedy or be construed as a waiver of or as acquiescence in any
default by the Mortgagor and in event of the Mortgagee at any time agreeing to waive any
such right
power or remedy such waiver shall be revocable by the Mortgagee at any time and the right
power or remedy shall thereafter be again exercisable as though there had been no such
waiver.




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##### 



12
    
    Delegation of PowersThe Mortgagee shall be entitled at any time and as often as may be expedient to delegate
all or any of the powers and discretions vested in it by the Security Documents or any of
them (including the powers vested in it by virtue of clause 7.2(a) and clause
14) in such manner upon such terms and to such entities or individuals as the
Mortgagee in its absolute discretion may think fit.13
    
    Indemnity13.1
    
    The Mortgagor hereby agrees and covenants to indemnify the Mortgagee against all losses
actions claims expenses demands obligations and liabilities whatsoever and whensoever arising
which the Mortgagee may incur in respect of, in relation to or in connection with the Vessel
or otherwise, howsoever, in relation to or in connection with any of the matters dealt with in
the Security Doeuments or any of them.13.2
    
    The Mortgagor hereby agrees and undertakes to indemnify the Mortgagee on demand against all
losses, actions, claims, expenses, demands, obligations and liabilities sustained or incurred
as result of or in connection with any Environmental Claim being made against the Mortgagee or
otherwise howsoever arising out of any Environmental Incident.14
    
    Power of Attorney14.1
    
    The Mortgagor, by way of security and in order more fully to secure the performance of the
Mortgagors obligations under this Mortgage, hereby irrevocably appoints the Mortgagee as its
attorney during the Security Period for the purposes of:
 (a)
    
    doing in its name all acts and executing, signing and (if required)
registering in its name all documents which the Mortgagor itself could do,
execute, sign or register in relation to the Vessel (including without limitation,
transferring title to the Vessel to a third party and deleting the Vessel from the
Liberian Ships Registry); provided, however, that such power shall not be
exercisable by or on behalf of the Mortgagee until this Mortgage shall have become
immediately enforceable pursuant to clause 9; and(b)
    
    executing, signing, perfecting, doing and (if required) registering every
such further assurance document, act or thing as is referred to in clause 15.
 14.2
    
    The exercise of such power as is referred to in clause 14.1 (a) by or on behalf of
the Mortgagee shall not put any entity or individual dealing with the Mortgagee upon any
enquiry as to whether this Mortgage has become enforceable nor shall such entity or individual
be in any way affected by notice that this Mortgage has not become enforceable and, in
relation to both clauses 14.1(a) and 14.1(b), the exercise by the Mortgagee of such
power shall be conclusive evidence of its right to exercise the same.15
    
    Further AssuranceThe Mortgagor hereby further covenants at its own expense from time to time to execute,
sign, perfect, do and (if required) register any such further assurance, document, act or
thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of
more effectually mortgaging and charging the Vessel or perfecting the security constituted
or intended to be constituted by the Security Documents.16
    
    Discharge amount; maturity date




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##### 



For the purpose of recording this Mortgage as required by Chapter 3 of Title 21 of the
Liberian Code of Law of 1956 (as amended), the total amount of this Mortgage is USD
66,725,000 (sixty-six million seven hundred and twenty-five thousand United States Dollars)
together with interest thereon, fees, commissions and performance of mortgage covenants,
and the date of maturity is the 31st day of August day of 2018, and the discharge amount is
the same as the total amount.17
    
    Partial InvalidityIf at any time any one or more of the provisions in this Mortgage is or becomes invalid,
illegal or unenforceable in any respect under any law or regulation, the validity, legality
and enforceability of the remaining provisions of this Mortgage shall not be in any way
affected or impaired thereby.18
    
    Notices18.1
    
    Any notice or other communication under or in connection with this Mortgage
shall be in writing and delivered by hand or sent by facsimile, by courier, or by
registered mail to:the Mortgagor:
 
    
    ADVENTURE ELEVEN S.A.
    
    c/o FREE BULKERS S.A.
    
    Akti Miaouli 93
    
    Piraeus 185 382
    
    Greece
    
    telephone: +30 210 4528770
    
    fax: +30 210 4291100
 the Mortgagee:
 
    
    HOLLANDSCHE BANK-UNIE N.V.

    
    Coolsingel 104

 3011 AG Rotterdam
    
    the Netherlands 
or
    
    P.O. Box 249
    
    3000 AE Rotterdam
    
    the Netherlands 


telephone: +31 10 2820282
    
    fax: +31 10 2820399.
 18.2
    
    Any such notice or other communication shall be deemed to have been duly
given or made as follows:
 (a)
    
    if sent by personal delivery, upon delivery at the address of the relevant
party;(b)
    
    if sent by courier service or registered mail three (3) Business Days after
the date of dispatch; and(c)
    
    if sent by facsimile, when dispatched.
 Any communication by facsimile sent by the Mortgagor to the Mortgagee shall be confirmed by
letter if so required by the Mortgagee.
 19
    
    Law and jurisdiction19.1
    
    This Mortgage shall be governed by and construed in accordance with the laws of the Republic
of Liberia.




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##### 



19.2
    
    Subject to clause 19.3, the courts of Rotterdam, the Netherlands shall have exclusive
jurisdiction in relation to all matters which may arise out of or connection with this
Mortgage with the exclusion of any other court of law.19.3
    
    For the exclusive benefit of the Mortgagee the Mortgagor agrees that the Mortgagee reserves
the right to commence proceedings in relation to any matter which arises out of or in
connection with this Mortgage in the courts of any place in the Netherlands other than
Rotterdam or any country other than the Netherlands and which have jurisdiction to that
matter.19.4
    
    In this clause 19 proceedings means proceedings of any kind, including an
application for a provisional or protective measure.19.5
    
    The Mortgagor hereby agrees that any writ, judgment or other notice of process shall be
sufficiently and effectively served on it, if served on it at the address specified in
clause 18.1.
  SIGNED
by: /s/ Kurt B. Plankl
as: attorney-in-fact for
ADVENTURE ELEVEN S.A.
in the presence of:
    )))))
    /s/ Kurt B. Plankl




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ACKNOWLEDGEMENT
 STATE OF NEW YORK
    
    
    ))
    
    
    ss.:COUNTY OF NEW YORK
    
    
    )
 On this 1st day of September, in the year 2008, before me, the undersigned, a Notary Public in
and for said State, personally appeared Kurt B. Plankl, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
 /s/ Kassandra SavickiKASSANDRA SAVICKINotary Public, State of New YorkNo. 02SL6110523 Qualified in New York CountyCommission Expires
May 24, 2012




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Exhibit
A




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HOLLANDSCHE  BANK-UNIE N.V.
   1.
    
    Adventure Two S.A.. established in Majuro, Marshall
Islands,
Adventure Three S.A., established in Majuro, Marshall Islands,
Adventure Seven S.A.. established in Majuro, Marshall Islands,
Adventure Eleven S.A.. established in Monrovia, Liberia,                  
hereinafter (together and individually) referred to as the Borrower,
    (new)2.
    
    HOLLANDSCHE BANK-UNIE N.V., having its registered office in Rotterdam,
the Netherlands, hereinafter referred to as HBU.
   Facility amount
    
    USD
    
    66,725,000
    
    (was USD
32,125,000)Breakdown of facility amountOverdraft facility I
    
    USD
    
    2,500,000Overdraft
facility II
    
    USD
    
    1,375,000Overdraft facility III
    
    USD
    
    3,000,000Overdraft facility IV
    
    USD
    
    34,600,000
    
    
    (new)8-year rollover loan
    
    USD
    
    25,250,000
    
    (outstanding amount)
 (principal
amount USD 27,000,000)
 Overdraft facility I, II and IV
  Reduction
scheme overdraft facility I
 
 Reduction scheme overdraft facility II
  Reduction scheme overdraft facility III
 (amendment)




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HOLLANDSCHE  BANK-UNIE N.V.
 Reduction scheme overdraft futility IV
 (new)
    The 8-year rollover loan
  (amendment)
 Overdraft facility I, II, III and IV (amendment)
 
    
    Current variable USD debit interest rate, based on the market rate, will be 3.76%.
    
    Short term loans: libor + 1.30%.
    
    Short term loans: libor + 1.25%, when Borrower will conclude an IRS or CAP.
 Overdraft facility IV
 (new)
 
Upfront fee: 0.6% of the principal amount
 
  Commitment fee 0.65% per annum
   
    
    First preferred mortgage, on the vessel m.v. Voge Kacja to be renamed
m.v. Free Maverick, registered under the flag of Liberia.
IMO number 9157416. Fuller
details will be included in the mortgage deed. On this mortgage the laws of Liberia will be
applicable.(new)
    
    First preferred mortgage of USD 3,700,000 on the vessel m.v.
Free Destiny, registered under the flag of the Marshall
Islands. IMO number 8128157, call letters V7GD9. Fuller details
are included in the mortgage deed. On this mortgage the laws of
the Marshall Islands are applicable.
    
    Second preferred mortgage on the vessel m.v. Free Destiny, registered under the flag
of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details are included
in the mortgage deed. On this mortgage the Jaws of the Marshall Islands are
applicable.
    
    Third preferred mortgage on the vessel m.v. Free
Destiny, registered under the flag
of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details will he
included in the mortgage deed. On this mortgage the laws of the Marshall Islands are
applicable,
(new)




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HOLLANDSCHE  BANK-UNIE
N.V.
 on
 on
  (new)
 of
  (new)
   (amendment)




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HOLLANDSCHE  BANK-UNIE N.V.
 
    
    a right of pledge on the rights of recourse and the subrogated rights arising pursuant
to the joint and several liability referred to in 1.4.3 of the HBU General Credit
Provisions. In order to effectuate the above, the Borrower hereby pledges to HBU, to the extent not already
pledged to HBU in accordance with 1.4.3. of the HBU General Credit Provisions, his
aforementioned rights of recourse as security as stated above. If the Borrower is subrogated to
the rights of HBU, HBU reserves a pledge on the subrogated rights as security as stated above.
HBU hereby accepts the above rights of pledge. This Credit Agreement constitutes a notice of
these pledges to the other parties referred to as the Borrower and to HBU.
  
    
    With a view to the continuity of the Borrowers business, HBU deems it necessary that, as from the
end 2008:
 
    
    the Interest Coverage Ratio of Freeseas Inc. must amount to at least 2.5;
    
    the Debt Service Cover Ratio of Freeseas Die. is not less than l.l.
    
    the Gearing of Freeseas Inc. must amount to maximum 2.5;
    
    out of the Excess Cash of the Borrowers 50% has to be used to save as extra repayment
on overdraft facility IV. (new)
  
    
    All definitions concerning this Credit Agreement are stated in the Appendix B.
    
    In case of a sale of the m.v. Free Envoy or the
m.v. Free Destiny any outstanding balance under Borrowers
 
    
    the corresponding overdraft facility I or II will be fully repaid,
    
    the balance will be repaid on the overdraft facility IV. and
    
    any remaining balance will be repaid on the rollover loan.(amendment)
 
    
    The vessels will be safely operated and maintained and will
in any case always be in class (acceptable IACS members) during the loan period.
    
    Borrower will give HBU a time charter agreement with respect to the new vessel
for inspection. The contents, a contract of at least 1 year at a rate of at least USD 30,000 a
day. must be acceptable to HBU.(new)
    
    Borrower will give HBU the time charter agreements for inspection. The contents
thereof must be acceptable to HBU.
    
    Borrower will give HBU the time charter agreement with respect to the m.v.
Free Envoy for inspection. The contents, a contract of at
least 1  year at a
rate of at least USD 25.000 a
day, must he acceptable to HBU.(new)
    
    The loan to value ratio must not exceed 70% at any moment. The loan to value
ratio means the total outstanding facilities of the Borrower with HBU divided
by actual valuation results of the vessels mortgaged in favour of HBU.
 (amendment)




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HOLLANDSCHE  BANK-UNIE N.V.
 
    
    The Borrower will submit once a year to HBU a valuation report of the mortgaged
vessels. The contents must be acceptable to HBU.
    
    All relations between the Borrower and HBU shall be subject to the General Banking
Conditions of HBU. in addition, the credit relationship concerned shall also be subject to
the HBU General Credit Provisions of July 2006, attached to this Credit Agreement. By
signing this Credit Agreement the Borrower declares that he has received a copy of the
General Banking Conditions and the HBU General Credit Provisions and
is fully aware of the
contents thereof.
   HOLLANDSCHE
BANK-UNIE N.V./s/ [ILLEGIBLE]

Marshall Islands, Majuro
    
    14/8/2008/s/  Ion Varouxakis

Adventure Two S.A.
    
    /s/ Ion Varouxakis

Adventure Three S.A./s/ Ion Varouxakis

Adventure Seven S.A.Liberia, Monrevia
    
    14/8/2008
 /s/  Ion Varouxakis






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HOLLANDSCHE  BANK-UNIE N.V.
                 HBU




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HOLLANDSCHE  BANK-UNIE N.V.
     
    
    any indebtedness for or in respect of indebtedness for borrowed money;
    
    any documentary credit facility;
    
    any treasury transaction or any other transaction entered into in connection with
protection against or benefit from fluctuation in any rate or price and the amount of
the financial indebtedness in relation to any such transaction shall be calculated by
reference to the marked-to-market valuation of such transaction at
the relevant time;
and
    
    any guarantee, indemnity, bond, standby letter of credit or any other instrument
issued in connection
  3
   
    
    any decrease in the amount of Working Capital:
    
    any cash receipt in respect of any exceptional or extraordinary item (including,
without limitation, the proceeds of the sale of any assets other than
material part of
the business disposal proceeds or the proceeds from the disposal of a material asset);
    
    any increase in provisions, other non-cash debits and other non-cash charges
taken into account in establishing Consolidated EBITDA;
  
    
    any amount of Capital Expenditure actually made by FreeSeas Inc.;
    
    any increase in the amount of Working Capital;
    
    any cash payment in respect of any exceptional or extraordinary item;
    
    any amount actually paid or due and payable in respect of taxes on the profits of
FreeSeas Inc.;
    
    any decrease in provisions and other non-cash credits taken into account in
establishing Consolidated EBITDA;




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HOLLANDSCHE  BANK-UNIE N.V.
    
    
    gross interest and arrangement fee on any form of such Financial Indebtedness which
lias accrued as an obligation of FreeSeas Inc. during that Relevant Period, including the
interest element of finance leases; and
    
    the consideration given by FreeSeas Inc. during that Relevant Period by way of
discount in connection with such Financial Indebtedness by way of acceptance credit, bill
discounting or other like arrangement.
    
    
    Net Interest Expense for such Relevant Period; and
    
    all scheduled repayments of capital or principal under the terms of any Financial
Indebtedness of FreeSeas Inc. (excluding any Financial Indebtedness owed by FreeSeas Inc.
to any other member of FreeSeas Inc.) in each case which fall due during that Relevant
Period.




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HOLLANDSCHE  BANK-UNIE N.V.










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OFFICE OF THE DEPUTY COMMISSIONER OF
MARITIME AFFAIRS OF THE REPUBLIC OF
LIBERIA
 I,
HEREBY CERTIFY THAT the within  is a true copy of the instrument received for
record-and recorded in this office in BOOK PM 60 at PAGE 469 on; 1
Day, September Month, 2008 Year At 7:47, A.M. E.D.S.T.
  Name of
Vessel: Free Maverick
 Official
Number: 13999(SEAL)
    
    GIVEN under my hand and seal
this 1 day of September, 2008 /s/
[ILLEGIBLE]
Deputy Commissioner 
of Maritime Affairs of the Republic of
Liberia
 RLM-249 Rev. 1798