FACILITY AGREEMENT
for a
Reducing Revolving Credit Facility
of up to US$87,000,000
to
FREESEAS INC.
 provided by
CREDIT SUISSE




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Contents
 Clause
    
    

    
    Page1
    
    Purpose and definitions
    
    
    12
    
    The Commitment and the Advances
    
    
    123
    
    Interest
    
    
    154
    
    Repayment, reduction and cancellation
    
    
    165
    
    Fees, commission and expenses
    
    
    206
    
    Payments and taxes; accounts and calculations
    
    
    217
    
    Representations and warranties
    
    
    228
    
    Undertakings
    
    
    279
    
    Conditions
    
    
    3210
    
    Events of Default
    
    
    3411
    
    Indemnities
    
    
    3812
    
    Unlawfulness and increased costs
    
    
    3913
    
    Security and set-off
    
    
    4014
    
    Assignment, transfer and lending office
    
    
    4115
    
    Notices and other matters
    
    
    4216
    
    Governing law and jurisdiction
    
    
    44Schedule 1 Form of Drawdown Notice
    
    
    45Schedule 2 Documents and evidence required as conditions precedent to the Commitment being made available
    
    
    46Schedule 3 Form of Master Swap Agreement
    
    
    58Schedule 4 Form of Master Agreement Security Deed
    
    
    59Schedule 5 Form of Owners Guarantee
    
    
    60Schedule 6 Form of Mortgage
    
    
    61Schedule 7 Form of General Assignment
    
    
    62Schedule 8 Form of Managers Undertaking
    
    
    63Schedule 9 Form of Charter Assignment
    
    
    64




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THIS AGREEMENT BETWEEN
 FREESEAS INC.
 CREDIT SUISSE
 IT IS AGREED
 1
    
    Purpose and definitions1.1
    
    Purpose
  (a)
    
    assisting the Borrower in advancing intra-Group loans to the Initial Owners for
the purpose of refinancing in full the Initial Owners existing Indebtedness secured on
the Initial Ships; and(b)
    
    assisting the Borrower in advancing intra-Group loans to Additional Owners for
the acquisition by them of Additional Ships.
 1.2
    
    DefinitionsIn this Agreement, unless the context otherwise requires:Additional Owner means, in respect of an Additional Ship, any member of the Group (other
than the Borrower, the Manager and the Initial Owners) which is or (as the context may
require) will become the registered owner of such Additional Ship, following the Banks
approval of a Request pursuant to clause 2.3.10 and it includes its successors in title and
Additional Owners means any or al of them;Additional Ship means each ship of the Approved Type registered or (as the context may
require) to be registered in the name of an Additional Owner under the laws and flag of the
relevant Flag State through the relevant Registry, following the Banks approval of a
relevant Request pursuant to clause 2.3.10 and, in relation to an Additional Owner, it means
the Owner owning such Additional Ship and Additional Owners means any or all of them;Additional Tranche means each Tranche (other than the Initial Tranche) of the maximum
amount determined and specified by the Bank pursuant to clause 2.3.11 made or (as the context
may require) to be made available to the Borrower for the purpose of assisting the Borrower
in advancing an intra-Group loan to an Additional Owner for the acquisition by it of an
Additional Ship, and Additional Tranches means any or all of them;Advance means, in relation to a Tranche and the part of the Commitment relating thereto,
each borrowing by the Borrower of a portion of such part of the Commitment or (as the context
may require) the principal amount of such borrowing for the time being outstanding and
Advances means any or all of them;Applicable Accounting Principles means generally accepted international accounting
principles and practices;Approved Type means a handy-size, handy-max or panamax bulk carrier which is:
 (a)
    
    not older than ten (10) years;
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(b)
    
    not smaller than 20,000 dwt and not larger than 85,000 dwt; and(c)
    
    otherwise in all respects (including, without limitation, as to its flag,
physical condition, classification or employment) acceptable to the Bank in its sole
discretion;
 Assignee
 Availability Period
 Available Amount
 Bank
 Banking Day
 Borrowed Money
 Borrower
 Borrowers Security Documents
 Charter Assignment Charter
Assignments
 Charterer
 Classification
 Classification Society
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Code
 Commitment
 (a)
    
    in respect of the Initial Tranche, means $48,700,000;(b)
    
    in respect of each Additional Tranche, means the amount specified by the Bank
under clause 2.3.11 to be the maximum amount to be made available to the Borrower under
such Additional Tranche,
 in each case as reduced or cancelled by any relevant term of this Agreement;Compulsory Acquisition means, in relation to a Ship, requisition for title or other
compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or
confiscation for any reason of such Ship by any Government Entity or other competent
authority, whether de jure or de facto, but shall exclude requisition for use or hire not
involving requisition of title;Confirmation shall have, in relation to any continuing Designated Transaction, the meaning
given to it in the Master Swap Agreement;Contract means, in respect of an Additional Ship, the memorandum of agreement and/or
shipbuilding contract for the sale of such Additional Ship to, and the purchase of such
Additional Ship by, the relevant Additional Owner, made or (as the context may require) to be
made between the relevant Additional Owner as purchaser and any other person (excluding a
member of the Group) as seller and/or builder of such Additional Ship and Contracts means
any or all of them;Default means any Event of Default or any event or circumstance which with the giving of
notice or lapse of time or the satisfaction of any other condition (or any combination
thereof) would constitute an Event of Default;Delivery Date means, in relation to an Additional Ship, the date on which the relevant
Additional Ship is delivered to, and accepted by, the relevant Additional Owner under the
relevant Contract;Designated Transaction means a Transaction which is entered into by the Borrower with the
Bank as contemplated by clause 2.7;DOC means a document of compliance issued to an Operator in accordance with rule 13 of the
Code;Dollars and $ mean the lawful currency of the United States of America and, in respect of
all payments to be made under any of the Security Documents, mean funds which are for same
day settlement in the New York Clearing House Interbank Payments System (or such other U.S.
dollar funds as may at the relevant time be customary for the settlement of international
banking transactions denominated in U.S. dollars);
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Drawdown Date means, in relation to each Advance, any date, being a Banking Day falling
within the Availability Period, on which an Advance is, or is to be, made available;Drawdown Notice means, in relation to each Advance, a notice substantially in the form of
schedule 1 in respect of such Advance;Early Termination Date shall have, in relation to any continuing Designated Transaction,
the meaning given to it in the Master Swap Agreement;Earnings means, in relation to a Ship, all moneys whatsoever from time to time due or
payable to the Owner owning such Ship during the Security Period arising out of the use or
operation of such Ship including (but without limiting the generality of the foregoing) all
freight, hire and passage moneys, income arising under pooling arrangements, compensation
payable to the Owner of such Ship in the event of the requisition of such Ship for hire,
remuneration for salvage and towage services, demurrage and detention moneys and damages for
breach (of payments for variation or termination) of any charterparty or other contract for
the employment of such Ship;Encumbrance means any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, trust arrangement or security interest or other encumbrance of any
kind securing any obligation of any person or any type of preferential arrangement (including
without limitation title transfer and/or retention arrangements) having a similar effect;Environmental Affiliate means any agent or employee of any Security Party or any other
Relevant Party or any person having a contractual relationship with a Security Party or any
other Relevant Party in connection with any Relevant Ship or its operation or the carriage of
cargo and/or passengers thereon and/or the provision of goods and/or services on or from such
Relevant Ship;Environmental Approval means any consent, authorisation, licence or approval of any
governmental or public body or authorities or courts applicable to any Relevant Ship or its
operation or the carriage of cargo and/or passengers thereon and/or the provision of goods
and/or services on or from such Relevant Ship required under any Environmental Law;Environmental Claim means any and all enforcement, clean-up, removal or other governmental
or regulatory actions or orders instituted or completed pursuant to any Environmental Law or
any Environmental Approval together with claims made by any third party relating to damage,
contribution, loss or injury, resulting from any actual or threatened emission, spill,
release or discharge of a Pollutant from any Relevant Ship;Environmental Laws means all national, international and state laws, rules, regulations,
treaties and conventions applicable to any Relevant Ship pertaining to the pollution or
protection of human health or the environment including, without limitation, the carriage of
Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants;Event of Default means any of the events or circumstances described in clause 10.1;Final Maturity Date means 31 October 2015;First Reduction Date means 31 January 2008;Flag State means, in relation to each Ship, the Marshall Islands or such other state or
territory designated in writing by the Bank, at the request of an Owner, as being the Flag
State of such Owners Ship for the purposes of the relevant Ship Security Documents;Free Goddess means the motor vessel Free Goddess, a 1995-built, 22,051 dwt bulk carrier,
registered in the ownership of the Free Goddess Owner under the laws and flag of the relevant
Flag State under Official Number 3030;
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Free Goddess Owner means Adventure Five S.A. of Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title;Free Hero means the motor vessel Free Hero, a 1995-built, 24,318 dwt bulk carrier
registered in the ownership of the Free Hero Owner under the laws and flag of the relevant
Flag State under Official Number 2540;Free Hero Owner means Adventure Six S.A. of Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH96960 and includes its successors in title;Free Jupiter means the motor vessel Free Jupiter, a 2002-built, 47,777 dwt bulk carrier,
registered in the ownership of the Free Jupiter Owner under the laws and flag of the relevant
Flag State under Official Number 2506;Free Jupiter Owner means Adventure Eight S.A. of Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title;General Assignment means, in relation to each Ship, a general assignment executed or (as
the context may require) to be executed by the relevant Owner in favour of the Bank in the
form set out in schedule 7 and General Assignments means any or all of them;Government Entity means and includes (whether having a distinct legal personality or not)
any national or local government authority, board, commission, department, division, organ,
instrumentality, court or agency and any association, organisation or institution of which
any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or
in whose activities any of the foregoing is a participant;Group means, together, the Borrower and its Subsidiaries from time to time (which, for the
avoidance of doubt, shall include the Owners and the Manager) and member of the Group shall
be construed accordingly;Indebtedness means any obligation for the payment or repayment of money, whether as
principal or as surety and whether present or future, actual or contingent;Initial Charter means:
 (a)
    
    in relation to Free Goddess, charterparty contract made between the Free Goddess
Owner and Navision Shipping Company A.S. as charterer (the Free Goddess Charterer) to
be documented in a BHTME form time charterparty to be entered into between the Free
Goddess Owner and the Free Goddess Charterer which contract is on the date of this
Agreement incorporated in a final fixture recap agreed between the Parties dated 23
August 2007;(b)
    
    in relation to Free Hero, the charterparty dated 4 December 2006 and made between
(1) Ocean Phoenix Shipping Ltd. (the Original Owner) and (2) Armada Pacific Carriers
(Singapore) Pte. Ltd. as charterer (the Free Hero Charterer) as amended and novated by
a tripartite agreement dated 4 May 2007 and made between the Free Hero Owner, the
Original Owner and the Free Hero Charterer; or(c)
    
    in relation to Free Jupiter, the charterparty contract made between (1) Korea
Line Corporation (the Free Jupiter Charterer) and (2) the Free Jupiter Owner to be
documented BHPTIME form time charterparty to be entered into between the Free Jupiter
Owner and the Free Jupiter Chartererer which contract is on the date of this Agreement
incorporated in a confirmation email dated 26 June 2006 from the Free Jupiter Charterers
Brokers (Falcon Enterprises Inc.) addressed to the Free Jupiter Owner and responding to
the Free Jupiter Owners message recapitulating the relevant fixture recap,
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and Initial Charters means any or all of them;Initial Owner means:
 (a)
    
    in relation to Free Goddess, the Free Goddess Owner;(b)
    
    in relation to Free Hero, the Free Hero Owner; or(c)
    
    in relation to Free Jupiter, the Free Jupiter Owner,
 and Initial Owners means any or all of them;Initial Ship means:
 (a)
    
    in relation to the Free Goddess Owner, Free Goddess;(b)
    
    in relation to the Free Hero Owner, Free Hero; or(c)
    
    in relation to the Free Jupiter Owner, Free Jupiter,
 and Initial Ships means any or all of them;Initial Tranche means the Tranche of up to $48,700,000 made or (as the context may require)
to be made available to the Borrower for the purpose of assisting the Borrower in advancing
intra-Group loans to the Initial Owners for the refinancing in full of the existing
Indebtedness of the Initial Owners secured on the Initial Ships;Insurances means, in relation to a Ship, all policies and contracts of insurance (which
expression includes all entries of such Ship in a protection and indemnity or war risks
association) which are from time to time during the Security Period in place or taken out or
entered into by or for the benefit of the Owner of such Ship (whether in the sole name of
such Owner, or in the joint names of such Owner and the Bank or otherwise) in respect of such
Ship and her Earnings or otherwise howsoever in connection with such Ship and all benefits
thereof (including claims of whatsoever nature and return of premiums);Interest Payment Date means the last day of an Interest Period;Interest Period means, in relation to an Advance, each period for the calculation of
interest in respect of such Advance ascertained in accordance with clauses 3.2 and 3.3;ISPS Code means the International Ship and Port Facility Security Code constituted pursuant
to resolution A.924(22) of the International Maritime Organization now set out in Chapter
XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as
adopted by a Diplomatic conference of the International Maritime Organisation on Maritime
Security in December 2002 and includes any amendments or extensions thereto and any
regulation issued pursuant thereto;ISSC means, in relation to a Ship, an International Ship Security Certificate issued in
respect of such Ship pursuant to the ISPS Code;LIBOR means, in relation to any amount and for any period, the offered rate (if any) for
deposits of Dollars for such amount and for such period which is:
 (a)
    
    the rate for such period, appearing on Reuters page LIBOR 01 (British Bankers
Association Interest Settlement Rates) (or such other page as may replace such page
LIBOR 01 on such system or on any other system of the information vendor for the time
being designated by the British Bankers Association to calculate the BBA Interest
Settlement Rate (as defined in the British Bankers Associations Recommended Terms and
Conditions (BBAIRS terms), at or about 11:00 a.m. (London time) on the Quotation Date;
or
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(b)
    
    if on such date no such rate is displayed, the Banks offered rate for deposits
of Dollars in an amount approximately equal to the amount in relation to which LIBOR is
to be determined for a period equivalent to such period to prime banks in the London
Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for such
period;
 Loan means the aggregate principal amount owing to the Bank under this Agreement at any
relevant time;Management Agreement means, in relation to each Ship, the management agreement made or (as
the context may require) to be made between the relevant Owner and the Manager of that Ship
in a form previously agreed in writing by the Bank, providing for (inter alia) the Manager to
carry out the technical an/or commercial management of such Ship and Management Agreements
means any or all of them;Manager means, in relation to a Ship, Free Bulkers S.A. of Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands MH96960, or such other person or persons as
may be appointed from time to time as technical and commercial manager of such Ship with the
prior written consent of the Bank and includes its successors in title;Managers Undertaking means, in relation to each Ship, the undertaking and assignment in
respect of that Ship executed or (as the context may require) to be executed by the Manager
in favour of the Bank, in the form set out in schedule 8 and Managers Undertakings means
any or all of them;Margin means:
 (a)
    
    subject to paragraph (b) below, one point two five per cent (1.25%) per annum; or(b)
    
    for any period determined by the Bank during which the Security Value is higher
than one hundred and sixty seven per cent (167%) of the aggregate of (i) the Loan and
(ii) the Swap Exposure minus (iii) any balance then standing to the credit of Security
Accounts, one per cent (1%) per annum;
 Master Agreement Security Deed means a security deed executed or (as the context may
require) to be executed by the Borrower in favour of the Bank in the form set out in schedule
4;Master Swap Agreement means the agreement made or (as the context may require) to be made
between the Bank and the Borrower comprising a 2002 ISDA Master Agreement (including the
Schedule) in the form set out in schedule 3 and includes any Designated Transactions from
time to time entered into and any Confirmations from time to time exchanged thereunder and
governed thereby;month means a period beginning in one calendar month and ending in the next calendar month
on the day numerically corresponding to the day of the calendar month on which it started,
provided that (a) if the period started on the last Banking Day in a calendar month or if
there is no such numerically corresponding day, it shall end on the last Banking Day in such
next calendar month and (b) if such numerically corresponding day is not a Banking Day, the
period shall end on the next following Banking Day in the same calendar month but if there is
no such Banking Day it shall end on the preceding Banking Day and months and monthly
shall be construed accordingly;Mortgage means, in relation to each Ship, the first preferred Marshall Islands mortgage
over that Ship executed or (as the context may require) to be executed by the relevant Owner
in favour of the Bank in the form set out in schedule 6, and Mortgages means any or all of
them;Mortgaged Ship means, at any relevant time, any Ship which is at such time subject to a
Mortgage and/or the Earnings, Insurances and Requisition Compensation of which are subject to
an Encumbrance pursuant to the relevant Ship Security Documents and a Ship
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shall for the purposes of this Agreement be deemed to be a Mortgaged Ship as from the date
that the Mortgage of that Ship shall have been executed and registered in accordance with
this Agreement until whichever shall be the earlier of (i) the payment in full of the amount
required by the Bank to be paid pursuant to clause 4.4 following the sale or Total Loss of
such Ship and (ii) the date on which all moneys owing under the Security Documents have been
repaid in full;Operating Account means, in relation to each Owner and its Ship, a Dollar account of that
Owner opened or (as the context may require) to be opened with the Bank and includes any
sub-accounts thereof and any other account designated in writing by the Bank to be an
Operating Account for that Owner and its Ship and Operating Accounts means any or all of
them;Operating Account Pledge means, in relation to each Operating Account, a first priority
account pledge over (inter alia) that Operating Account, executed or (as the context may
require) to be executed by the relevant Owner and the Bank, in such form as the Bank may
require in its sole discretion and Operating Account Pledges means any or all of them;Operator means any person who is from time to time during the Security Period concerned in
the operation of a Ship and falls within the definition of Company set out in rule 1.1.2 of
the Code;Owner means, in relation to a Ship, the Owner of that Ship and it includes each Initial
Owner and each Additional Owner and Owners means any or all of them;Owners Guarantee means, in relation to each Owner, the guarantee executed or (as the
context may require) to be executed by that Owner in favour of the Bank in the form set out
in schedule 5 and Owners Guarantees means all of them;Permitted Encumbrance means any Encumbrance in favour of the Bank created pursuant to the
Security Documents and Permitted Liens;Permitted Liens means, in relation to a Ship, any lien on such Ship for masters, officers
or crews wages outstanding in the ordinary course of trading, any lien for salvage, and any
ship repairers or outfitters possessory lien for a sum not (except with the prior written
consent of the Bank) exceeding the Casualty Amount (as defined in the Ship Security Documents
for such Ship) for such Ship;Pollutant means and includes pollutants, contaminants, toxic substances, oil as defined in
the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the
United States Comprehensive Environmental Response, Compensation and Liability Act 1980;Quotation Date means, in relation to any period for which LIBOR is to be determined under
this Agreement, the day falling two (2) Banking Day before the first day of such period,
unless market practice differs in the London Interbank Market, which case the Quotation Date
will be determined by the Bank in accordance with market practice in the London Interbank
Market;Reduction Dates means, subject to clause 6.3:
 (a)
    
    in relation to the Initial Tranche (and the part of the Commitment relating
thereto), the First Reduction Date and each of the dates falling at three (3) monthly
intervals thereafter up to and including the Final Maturity Date;(b)
    
    in relation to each Additional Tranche (and the part of the Commitment relating
thereto), each of the dates falling at three (3) monthly intervals after the Drawdown
Date of the first Advance to be drawn down under such Tranche, up to and including the
Final Maturity Date;
 
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Registry means, in relation to a Ship, such registrar, commissioner or representative of
the relevant Flag State who is duly authorised and empowered to register such Ship, the
relevant Owners title to such Ship and the relevant Mortgage under the laws and flag of the
relevant Flag State;Related Company of a person means any Subsidiary of such person, any company or other
entity of which such person is a Subsidiary and any Subsidiary of any such company or entity;Relevant Jurisdiction means any jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place
of business or is otherwise effectively connected;Relevant Party means the Borrower, each of the Owners, any other Security Party and each
member of the Group from time to time;Relevant Ship means the Ships and any other vessel from time to time (whether before or
after the date of this Agreement) owned, managed or crewed by, or chartered to, any Relevant
Party;Request has the meaning given to it in clause 2.3.9;Requisition Compensation means, in relation to a Ship, all sums of money or other
compensation from time to time payable during the Security Period by reason of the Compulsory
Acquisition of such Ship;Restis Family means each of Mr Victor Restis and any of Mrs Bella Resti and/or Ms Claudia
Resti and/or Ms Katia Resti and includes their direct linear descendants;Security Accounts means, at any relevant time, the Operating Accounts and any bank accounts
of the Borrower opened with the Bank, which are subject to an Encumbrance in favour of the
Bank and designated by the Bank as Security Accounts for the purposes of this Agreement;Security Charter means, in relation to a Ship, any time charter or other contract of
employment for such Ship for a term which exceeds or, by virtue of any optional extensions
therein contained, may exceed twelve (12) months duration which is entered into at any
relevant time by the relevant Owner with a Charterer and which is in a form and substance
acceptable to the Bank in all respects (including, for the avoidance of doubt, the Initial
Charters);Security Documents means this Agreement, the Master Swap Agreement, the Owners Guarantees,
the Mortgages, the General Assignments, the Operating Accounts Pledges, the Managers
Undertakings, the Master Agreement Security Deed, any Charter Assignment and any other
documents as may have been or shall from time to time after the date of this Agreement be
executed to guarantee and/or secure all or any part of any moneys from time to time owing by
the Borrower to the Bank pursuant to this Agreement, interest thereon and other moneys from
time to time owing by the Borrower or any other Security Party pursuant to this Agreement
and/or any other Security Document (whether or not any such document also secures moneys from
time to time owing pursuant to any other document or agreement);Security Party means the Borrower, each Owner, the Manager or any other person who may at
any time be a party to any of the Security Documents (other than the Bank);Security Period means the period commencing on the date of this Agreement and terminating
upon discharge of the security created by the Security Documents by payment of all moneys
payable thereunder;
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Security Requirement means the amount in Dollars (as certified by the Bank whose
certificate shall, in the absence of manifest error, be conclusive and binding on the
Borrower) which is, at any relevant time, One hundred and thirty five per cent (135%) of the
aggregate of:
 (a)
    
    the Loan at such time; plus(b)
    
    the Swap Exposure at such time; minus(c)
    
    the aggregate amount, if any, standing to the credit of the Security Accounts at
such time;
 Security Value means the amount in Dollars (as certified by the Bank whose certificate
shall, in the absence of manifest error, be conclusive and binding on the Borrower) which, at
any relevant time, is the aggregate of (a) the market value of the Mortgaged Ships as most
recently determined in accordance with clause 8.2.2 and (b) market value of any additional
security for the time being actually provided to the Bank pursuant to clause 8.2;Seller means, in relation to an Additional Ship, the seller and/or builder of such
Additional Ship under the relevant Contract and Sellers means any or all of them;Ship means, in relation to an Owner, the Ship owned by that Owner and it includes each
Initial Ship and each Additional Ship, and Ships means any or all of them;Ship Security Documents means, in relation to a Ship, the Mortgage, the General Assignment,
any Charter Assignment and the Managers Undertaking in respect of such Ship;SMC means, in relation to a Ship, a safety management certificate issued in respect of such
Ship in accordance with rule 13 of the Code;Subsidiary of a person means any company or entity directly or indirectly controlled by
such person, and for this purpose control means either the ownership of more than fifty per
cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or
entity or the power to direct its policies and management, whether by contract or otherwise;Swap Exposure means, as at any relevant time, the amount certified by the Bank to be the
aggregate net amount in Dollars which would be payable by the Borrower to the Bank under (and
calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master
Swap Agreement if an Early Termination Date had occurred at the relevant time in relation to
all continuing Designated Transactions thereunder;Taxes includes all present and future taxes, levies, imposts, duties, fees or charges of
whatever nature together with interest thereon and penalties in respect thereof and
Taxation shall be construed accordingly;Total Loss in relation to a Ship means:
 (a)
    
    the actual, constructive, compromised or arranged total loss of such Ship; or(b)
    
    the Compulsory Acquisition of such Ship; or(c)
    
    the hijacking, theft, condemnation, capture, seizure, arrest, detention or
confiscation of such Ship (other than where the same amounts to the Compulsory
Acquisition of such Ship) by any Government Entity, or by persons acting or purporting
to act on behalf of any Government Entity, unless such Ship be released and restored to
the relevant Owner from such hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation within thirty (30) days after the occurrence thereof;
 
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Tranche means each of the tranches into which the Commitment and/or the Loan is sub-divided
(being the Initial Tranche and each Additional Tranche) or (as the context may require) the
principal amount thereof outstanding at any relevant time, and:
 (a)
    
    in relation to the Initial Ships, it means the Initial Tranche; or(b)
    
    in relation to an Additional Ship, it means the Additional Tranche made available
for the financing of the acquisition of such Additional Ship by the relevant Additional
Owner,
 and Tranches means any or all of them;Transaction has the meaning given to it in the Master Swap Agreement;Transferee has the meaning given to it in clause 14.4;Underlying Documents means, together, any Security Charters, the Contracts and the
Management Agreements and Underlying Document means any of them; andVarouxakis Family means each of Mr Ion Varouxakis and/or his siblings and/or his parents
and/or his wife and/or his direct linear descendants.1.3
    
    HeadingsClause headings and the table of contents are inserted for convenience of reference only and
shall be ignored in the interpretation of this Agreement.1.4
    
    Construction of certain termsIn this Agreement, unless the context otherwise requires:
 1.4.1
    
    references to clauses and schedules are to be construed as references to clauses of, and
schedules to, this Agreement and references to this Agreement include its schedules;1.4.2
    
    references to (or to any specified provision of) this Agreement or any other document shall
be construed as references to this Agreement, that provision or that document as in force for
the time being and as amended in accordance with the terms thereof, or, as the case may be,
with the agreement of the relevant parties;1.4.3
    
    references to a regulation include any present or future regulation, rule, directive,
requirement, request or guideline (whether or not having the force of law) of any agency,
authority, central bank or government department or any self-regulatory or other national or
supra-national authority;1.4.4
    
    words importing the plural shall include the singular and vice versa;1.4.5
    
    references to a time of day are to London time;1.4.6
    
    references to a person shall be construed as references to an individual, firm, company,
corporation, unincorporated body of persons or any Government Entity;1.4.7
    
    references to a guarantee include references to an indemnity or other assurance against
financial loss including, without limitation, an obligation to purchase assets or services as
a consequence of a default by any other person to pay any Indebtedness and guaranteed shall
be construed accordingly; and
 11




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1.4.8
    
    references to any enactment shall be deemed to include references to such enactment as
re-enacted, amended or extended.
 2
    
    The Commitment and the Advances2.1
    
    Agreement to lendUpon and subject to the terms of this Agreement, the Bank, relying upon each of the
representations and warranties in clause 7, agrees to make available to the Borrower, during
the Availability Period, a reducing revolving credit facility of up to Eighty seven million
Dollars ($87,000,000) in several Tranches, comprising the Initial Tranche and one or more
Additional Tranches.2.2
    
    DrawdownSubject to the terms and conditions of this Agreement, each Advance shall be made available
to the Borrower following receipt by the Bank from the Borrower of a Drawdown Notice for such
Advance not later than 10:00 a.m. on the third Banking Day before the date on which the
Borrower proposes such Advance is made. A Drawdown Notice shall be effective on actual
receipt by the Bank and once given shall, subject as provided in clause 3.6.1, be
irrevocable.2.3
    
    Timing and limitations of Tranches and Advances
 2.3.1
    
    The aggregate amount of the Loan shall not exceed $87,000,000.2.3.2
    
    The Borrower shall be entitled to draw down the Commitment in several Tranches, comprising
the Initial Tranche and one or more Additional Tranches.2.3.3
    
    The aggregate amount available under the Initial Tranche shall not exceed the lower of (a)
$48,700,000 and (b) 50% of the acquisition cost of the Initial Ships by the Initial Owners (as
evidenced by the relevant executed memoranda of agreement for such Ships) and shall be drawn
down in up to two (2) Advances only, for the purpose of assisting the Borrower to advance
intra-Group loans to the Initial Owners for the refinancing in full of their existing
Indebtedness secured on the Initial Ships.2.3.4
    
    The aggregate amount available under all of the Additional Tranches shall not exceed
$38,300,000 and no further Additional Tranches shall be made available if the aggregate amount
already made available under previously utilised Additional Tranches is $38,300,000.2.3.5
    
    An Additional Tranche shall be made available to the Borrower in one (1) Advance only, for
the purpose of assisting the Borrower to advance an intra-Group loan to an Additional Owner
for the acquisition by it of an Additional Ship under a Contract. The maximum amount
available under an Additional Tranche shall not exceed the lower of (a) 75% of the purchase
price of the Additional Ship to be financed by the proceeds of such Additional Tranche (as
evidenced by the relevant Contract), (b) 75% of the market value of such Additional Ship as
evidenced by the valuation of such Additional Ship made under schedule 2, Part 4 and (c) the
balance of the Commitment not already made available (whether drawn or not) under any other
Tranche.2.3.6
    
    No Additional Tranche shall be made available unless the Initial Tranche has been made
available and (whether partly or fully) drawn down.2.3.7
    
    There shall be no more than two (2) Additional Tranches available under this Agreement.2.3.8
    
    Each Tranche shall be drawn down originally in a single Advance except in the case of the
Initial Tranche which may be drawn down in two (2) Advances.
 12




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2.3.9
    
    If the Borrower wishes the Bank to make available an Additional Tranche under this
Agreement, then the Borrower shall submit a request to the Bank in writing (a Request)
advising the Bank:
 (a)
    
    of a proposed Additional Ship, its name, dead-weight tonnage, year of
built, classification, proposed employment, existing and proposed flag, place of
delivery, the proposed Additional Owner that intends to purchase it, the proposed
acquisition cost and the proposed date of delivery under the proposed Contract for
such Additional Ship and any other technical features and characteristics of that
Additional Ship or any other information or data relevant to it, as may be
requested by the Bank in its sole discretion; and(b)
    
    the proposed amount of the Additional Tranche to be made available for
such proposed Additional Ship, which shall be of an amount not exceeding 75% of the
acquisition cost thereof under the proposed Contract for such Additional Ship,
 as soon as practically possible before the date when it is intended that the relevant
Additional Owner enters into the relevant proposed Contract for such proposed Additional
Ship. The Borrower shall not submit a Request for a proposed Additional Ship unless it
genuinely believes that, at the time of the submission of the relevant Request and at the
time of its intended acquisition, such Additional Ship is and will be a ship of the
Approved Type.2.3.10
    
    The Bank will, as soon as reasonably possible but in any event not later than five (5)
Banking Days after the Borrowers Request in respect of a proposed Additional Ship, notify the
Borrower in writing as to whether the Request has been accepted or declined by the Bank. The
Bank shall not accept a Request for an Additional Ship which is not, and will not be, a ship
of the Approved Type, both at the time of submission of the Request and at the time of its
proposed acquisition by the proposed Additional Owner under the relevant Contract. If,
without taking into account its physical condition, the proposed Additional Ship would
otherwise be of the Approved Type, then the Bank shall not unreasonably withhold its consent
solely on the grounds of the physical condition of such Additional Ship, unless the Bank has
first requested and received from the Borrower a survey report of such Additional Ship made by
a surveyor appointed by the Bank in its sole discretion (at the cost and expense of the
Borrower) and found the physical inspection of such Additional Ship, as stated in such report,
to be unsatisfactory to the Bank. If the Bank advises the Borrower that it wishes to receive
such a survey report for a proposed Additional Ship, then the deadline referred to above in
this clause 2.3.10 shall be extended to ten (10) Banking Days after the day when the Borrower
submitted to the Bank the relevant survey report.2.3.11
    
    When the Bank advises the Borrower that it accepts a Request in respect of an Additional
Ship, it shall also notify the Borrower in writing of the maximum amount (in accordance with
the other provisions of this clause 2.3) of the Commitment it shall make available to it under
the Additional Tranche for such Additional Ship and, for the purposes of this Agreement, such
amount advised by the Bank, shall be the part of the Commitment relating to, and available to
the Borrower under, such Additional Tranche. The Bank shall include in the same notice to the
Borrower, the amount (calculated and determined by the Bank in its sole discretion in
accordance with clause 4.3.3) of each reduction of the Commitment for such Additional Tranche
(but which calculation shall be based on an 18-year repayment profile inclusive of any final
balloon reduction with the final reduction falling in any event on the Final Maturity Date)
which shall be made in accordance with clause 4.3.1 and clause 4.3.3.2.3.12
    
    Any notice given by the Bank under clause 2.3.11 advising the Borrower of (a) the amount of
the Commitment in respect of an Additional Tranche and/or (b) the number and amount of the
reductions of the Commitment in respect of an Additional Tranche to be made on each relevant
Reduction Date, shall constitute supplemental terms of this Agreement and an integral part
hereof and shall be conclusive and binding on the Borrower.
 13




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2.3.13
    
    The Borrower shall be entitled, by written notice to the Bank given prior to the giving of
the first Drawdown Notice in respect of an Advance under an Additional Tranche, to cancel that
Additional Tranche, whereupon the relevant Additional Tranche shall be cancelled but the
unutilized part of the Commitment in respect of such Additional
Tranche shall remain available to the Borrower for borrowing under future Additional
Tranches that may subsequently be made available to the Borrower in accordance with the
other provisions of this Agreement.2.3.14
    
    Each Advance of a Tranche shall be a minimum of Five million Dollars ($5,000,000) or the
balance of the Available Amount for such Tranche, provided that no Advance of a Tranche may be
drawn down on any day:
 (a)
    
    of an amount exceeding the Available Amount for such Tranche on such
day; or(b)
    
    of an amount which, when added to the aggregate amount of the Loan
outstanding on such day, would exceed sixty per cent (60%) of the Security Value;
or(c)
    
    if a Default has occurred and is continuing on such day; or(d)
    
    if the number of Advances of such Tranche outstanding (taking into
account the proposed Advance to be drawdown) would exceed three (3).
 2.3.15
    
    No Advance may be drawn down after 31 December 2007 if no Advance has been drawn down to
that date.2.3.16
    
    No Advance may be drawn down after the last day of the Availability Period.
 2.4
    
    AvailabilityUpon receipt of a Drawdown Notice for an Advance complying with the terms of this Agreement,
the Bank shall make such Advance available to the Borrower on the Drawdown Date for such
Advance in accordance with clause 6.2. The Borrower acknowledges that payment in accordance
with clause 6.2 of any Advance (or part thereof) to any lender of the existing Indebtedness
of the Initial Owners secured on the Initial Ships or, as the case may be, to any Seller or
the Borrower, shall satisfy the obligations of the Bank to lend such Advance (or the relevant
part thereof) to the Borrower.2.5
    
    Termination of CommitmentAny part of the Commitment which remains undrawn and uncancelled by the last day of the
Availability Period shall thereupon be automatically cancelled. The Commitment shall be
reduced to zero (0) if no Advance has been drawn down by 31 December 2007.2.6
    
    Application of proceedsWithout prejudice to the Borrowers obligations under clause 8.1.3, the Bank shall not have
any responsibility for the application of the proceeds of the Loan or any part thereof by the
Borrower.2.7
    
    Derivative transactions
 2.7.1
    
    If, at any time during the Security Period, the Borrower wishes to enter into any derivative
transaction for any purpose whatsoever (including, without limitation, interest rate swap
transactions so as to hedge all or any part of its exposure under this Agreement to interest
rate fluctuations), it shall advise the Bank in writing.
 14




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2.7.2
    
    Any such derivative transaction shall be concluded with the Bank under the Master Swap
Agreement provided however that no such derivative transaction shall be concluded unless the
Bank first agrees to it in writing. If and when any such derivative transaction has been
concluded, it shall constitute a Designated Transaction, and the Borrower shall sign a
Confirmation with the Bank.
 3
    
    Interest3.1
    
    Normal interest rateThe Borrower shall pay interest on each Advance in respect of each Interest Period relating
thereto on each Interest Payment Date (or, in the case of Interest Periods of more than three
(3) months, by instalments, the first such instalment payable three (3) months from the
commencement of the Interest Period and the subsequent instalments payable at intervals of
three (3) months or, if shorter, the period from the date of the preceding instalment until
the Interest Payment Date relative to such period) at the rate per annum determined by the
Bank to be the aggregate of (a) the Margin and (b) LIBOR for such Interest Period.3.2
    
    Selection of Interest PeriodsThe Borrower may by notice received by the Bank not later than 10:00 a.m. on the second
Banking Day before the beginning of each Interest Period specify whether such Interest Period
shall have a duration of three (3) months, six (6) months, nine (9) months or twelve (12)
months or such other period which the Bank determines (in its absolute discretion) is
available in the London Interbank Market as the Borrower may select and the Bank may agree.3.3
    
    Determination of Interest PeriodsEvery Interest Period shall be of the duration specified by the Borrower pursuant to clause
3.2 but so that:
 3.3.1
    
    the initial Interest Period in respect of each Advance shall commence on the date such
Advance is made and each subsequent Interest Period for such Advance shall commence on the
last day of the previous Interest Period for such Advance;3.3.2
    
    if any Interest Period in respect of an Advance of a Tranche would otherwise overrun a
Reduction Date for such Tranche, then, in the case of the last Reduction Date for such
Tranche, such Interest Period shall end on such Reduction Date, and in the case of any other
Reduction Date or Reduction Dates for such Tranche on which the Borrower will be required to
make a prepayment pursuant to clause 4.3, the relevant Tranche (or any Advance thereof) shall
be divided into parts so that there is one part in the amount of the prepayment amount due on
each such Reduction Date falling during that Interest Period and having an Interest Period
ending on the relevant Reduction Date and another part in the amount of the balance of the
relevant Tranche (or Advance thereof) having an Interest Period ascertained in accordance with
clause 3.2 and the other provisions of this clause 3.3; and3.3.3
    
    if the Borrower fails to specify the duration of an Interest Period in accordance with the
provisions of clause 3.2 and this clause 3.3 such Interest Period shall have a duration of
three (3) months or such other period as shall comply with this clause 3.3.
 3.4
    
    Default interestIf the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant
to this clause 3.4) on its due date for payment under any of the Security Documents (other
than the Master Swap Agreement), the Borrower shall pay interest on such sum on demand from
the due date up to the date of actual payment (as well after as
 15




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before judgment) at a rate
determined by the Bank pursuant to this clause 3.4. The period beginning on such due date
and ending on such date of payment shall be divided into successive periods of not more than
six (6) months as selected by the Bank, each of which (other than the first, which shall
commence on such due date) shall commence on the last day of the preceding such period. The
rate of interest applicable to each such period shall be the aggregate (as determined by the
Bank) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such period.
Default interest shall be due and payable on the last day of each such
period as determined by the Bank pursuant to this clause 3.4 or, if earlier, on the date on
which the sum in respect of which such default interest is accruing shall actually be paid.
If, for the reasons specified in clause 3.6.1, the Bank is unable to determine a rate in
accordance with the foregoing provisions of this clause 3.4, interest on any sum not paid on
its due date for payment shall be calculated at a rate determined by the Bank to be two per
cent (2%) per annum above the aggregate of the Margin and the cost of funds to the Bank.
 3.5
    
    Notification of interest rateThe Bank shall notify the Borrower promptly of each rate of interest (or, as the case may be
default interest) determined by it under this clause 3.3.6
    
    Market disruption; non-availability
 3.6.1
    
    If and whenever, at any time prior to the commencement of any Interest Period:
 (a)
    
    the Bank shall have determined (which determination shall, in the absence
of manifest error, be conclusive) that adequate and fair means do not exist for
ascertaining LIBOR during such Interest Period or that LIBOR does not accurately
reflect the cost to the Bank of obtaining such deposits; or(b)
    
    that deposits in Dollars are not available to the Bank in the London
Interbank Market in the ordinary course of business in sufficient amounts to fund the
Loan for such Interest Period;
 the Bank shall forthwith give notice (a Determination Notice) thereof to the Borrower.
A Determination Notice shall contain particulars of the relevant circumstances giving rise
to its issue. After the giving of any Determination Notice the undrawn and uncancelled
amount of the Commitment shall not be borrowed until notice to the contrary is given to
the Borrower by the Bank.3.6.2
    
    During the period of ten (10) days after any Determination Notice has been given by the Bank
under clause 3.6.1, the Bank shall certify an alternative basis (the Alternative Basis) for
funding the Commitment or maintaining the Loan. The Alternative Basis may, at the Banks sole
unfettered discretion include (without limitation) alternative interest periods, alternative
currencies or alternative rates of interest but shall include a margin above the cost of funds
to the Bank equivalent to the Margin. The Alternative Basis so certified shall be binding
upon the Borrower and shall take effect in accordance with its terms from the date specified
in the Determination Notice until such time as the Bank notifies the Borrower that none of the
circumstances specified in clause 3.6.1 continues to exist whereupon the normal interest rate
fixing provisions of this Agreement shall apply.
 4
    
    Repayment, reduction and cancellation4.1
    
    RepaymentWithout prejudice to the provisions of clause 4.3, the Borrower shall repay all the Advances
under all Tranches in full on the Final Maturity Date.4.2
    
    Voluntary prepaymentThe Borrower may, upon giving to the Bank prior notice in writing of its intention to make
such prepayment, prepay the Loan in whole or part (such part being in an amount of One
million Dollars ($1,000,000) or any larger sum which is an integral multiple of One million
Dollars ($1,000,000)) at any time without premium or penalty but subject always to its
obligations under clauses 4.5 and 11.1.
 16




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4.3
    
    Reductions of the Commitment and prepayment of the Advances and Tranches
 4.3.1
    
    The Commitment in respect of each Tranche shall be reduced on each of the Reduction Dates
for the relevant Tranche.4.3.2
    
    Subject to the provisions of this Agreement, the amount of each such reduction for the
Initial Tranche shall be (a) $1,250,000 on each of the first to the thirty first (inclusive)
Reduction Dates for the Initial Tranche and (b) $9,950,000 on the final Reduction Date for the
Initial Tranche. For the avoidance of doubt, on the final Reduction Date for the Initial
Tranche, the Commitment in respect of the Initial Tranche shall be reduced to zero.4.3.3
    
    Subject to the other provisions of this Agreement, the amount of each such reduction for an
Additional Tranche to be made on each Reduction Date for that Additional Tranche, shall be the
amount determined by the Bank and notified by the Bank to the Borrower in writing, as
contained in the Banks notice for such Additional Tranche referred to in clause 2.3.11.4.3.4
    
    The Borrower shall prepay on each Reduction Date for a Tranche such part of such Tranche as
shall ensure that:
 (a)
    
    the outstanding amount of the Advances under such Tranche (taking into
account such prepayment),will not exceed(b)
    
    the amount of the Commitment in respect of such Tranche (taking into
account the reduction thereof on such Reduction Date in accordance with clause 4.3.2
or (as the case may be) 4.3.3).
 4.4
    
    Prepayment and cancellation on Total Loss or sale; other mandatory prepayments
 4.4.1
    
    Before first drawdownOn an Initial Ship becoming a Total Loss (or suffering damage or being involved in an
incident which in the opinion of the Bank may result in such Initial Ship being
subsequently determined to be a Total Loss) or sold before any Advance of the Initial
Tranche is drawn down, the obligation of the Bank to make available the Commitment (or
part thereof) shall immediately cease and the Commitment shall be reduced to zero (0).4.4.2
    
    Mortgaged Ships
 (a)
    
    Subject to clause 4.4.2(b), if a Mortgaged Ship becomes a Total Loss or is
sold (with the prior written consent of the Bank pursuant to the relevant Ship
Security Documents), the Relevant Fraction of the Commitment shall be cancelled
and/or the Borrower shall prepay the Relevant Fraction of the Advances.(b)
    
    Notwithstanding sub-paragraph (a) of this clause 4.4.2, if a Mortgaged Ship
becomes a Total Loss or is sold (with the prior written consent of the Bank pursuant
to the relevant Security Documents) and at that time an Event of Default shall have
occurred and be continuing, then:
 17




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(i)
    
    the Borrower shall prepay, on the Disposal Reduction Date for
such Mortgaged Ship, such proportion of the Loan; and/or(ii)
    
    such part of the Commitment shall be forthwith cancelled,
 in each case, as the Bank may require in its absolute discretion (and the
provisions of this clause 4.4.2(b) shall prevail over the provisions of clause
4.4.2(a) as to the amounts to be cancelled and/or prepaid).(c)
    
    For the avoidance of doubt, it is hereby agreed that, for the purposes of
clauses 4.4.2(a) and 4.4.2(b), the Borrower shall be required to make a prepayment of
the Advances (or part thereof) in accordance with either of such clauses, only if,
and to the extent that, following the Total Loss or sale of the relevant Mortgaged
Ship, the mere cancellation of part of the Commitment required by either of such
clauses, shall not be sufficient to ensure that the aggregate amount of the Advances
then outstanding does not exceed the Commitment (taking into account the relevant
reduction thereof).
 4.4.3
    
    Defined termsFor the purposes of this clause 4.4:
 (a)
    
    Disposal Reduction Date means:
 (i)
    
    in relation to a Mortgaged Ship which has become a Total
Loss, its Total Loss Reduction Date; or(ii)
    
    in relation to a Mortgaged Ship which is sold in accordance
with the provisions of the relevant Ship Security Documents, the date of (and
immediately prior to) completion of such sale by the transfer of title to such
Mortgaged Ship to the purchaser in exchange for payment of the relevant
purchase price;
 (b)
    
    Relevant Fraction means, in relation to a Mortgaged Ship which has become
a Total Loss or is sold, the fraction having (i) as numerator the market value of the
relevant Mortgaged Ship lost or sold as most recently determined in accordance with
clause 8.2.2 and (ii) as a denominator the market value of all the Mortgaged Ships
(including the relevant Mortgaged Ship lost or sold) as most recently determined in
accordance with clause 8.2.2; and(c)
    
    Total Loss Reduction Date means, in relation to a Mortgaged Ship which
has become a Total Loss, the date which is the earlier of:
 (i)
    
    the date falling one hundred and twenty (120) days after that
on which such Mortgaged Ship becomes a Total Loss; and(ii)
    
    the date upon which insurance proceeds are, or Requisition
Compensation is, received in respect of such Total Loss by the Borrower (or
the Bank pursuant to the relevant Ship Security Documents).
 4.4.4
    
    InterpretationFor the purpose of this Agreement, a Total Loss shall be deemed to have occurred in
relation to a Ship:
 (a)
    
    in the case of an actual total loss of such Ship, on the actual date and at
the time such Ship was lost or, if such date is not known, on the date on which such
Ship was last reported;
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(b)
    
    in the case of a constructive total loss of such Ship, upon the date and at
the time notice of abandonment of such Ship is given to the insurers of such Ship for
the time being;(c)
    
    in the case of a compromised or arranged total loss of such Ship, on the
date upon which a binding agreement as to such compromised or arranged total loss has
been entered into by the insurers of such Ship;(d)
    
    in the case of Compulsory Acquisition of such Ship, on the date upon which
the relevant requisition of title or other compulsory acquisition occurs; and(e)
    
    in the case of hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of such Ship (other than where the same amounts to
Compulsory Acquisition of such Ship) by any Government Entity, or by persons
purporting to act on behalf of any Government Entity, which deprives the Borrower of
the use of such Ship for more than thirty (30) days, upon the expiry of the period of
thirty (30) days after the date upon which the relevant hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation occurred.
 4.5
    
    Amounts payable on prepaymentAny prepayment of all or part of the Loan under this Agreement shall be made together with:
 4.5.1
    
    accrued interest on the amount to be prepaid to the date of such prepayment;4.5.2
    
    any additional amount payable under clauses 6.6 or 12.2; and4.5.3
    
    all other sums payable by the Borrower to the Bank under this Agreement or any of the other
Security Documents including, without limitation, any accrued commitment commission payable
under clause 5.1.2 and any amounts payable under clause 11.
 4.6
    
    Notice of prepayment; reduction of repayment instalments; re-borrowing
 4.6.1
    
    No prepayment may be effected under clause 4.2 unless the Borrower shall have given the Bank
at least fifteen (15) days notice of its intention to make such payment. Every notice of
prepayment shall be effective only on actual receipt by the Bank, shall be irrevocable, shall
specify the Tranche (or Tranches), the Advance (or Advances) and the amount thereof to be
prepaid, the manner of application of such prepayment pursuant to clause 4.6.2, and shall
oblige the Borrower to make such prepayment on the date specified.4.6.2
    
    Any amount to be prepaid pursuant to clause 4.2 shall be applied in prepayment of such
Tranche (or Tranches), Advance (or Advances), and in such manner between them, as specified by
the Borrower.4.6.3
    
    Any prepayment of the Advances made pursuant to clause 4.4.2 as a result of the Total Loss
or sale of a Ship, shall be applied, first, in prepayment of the Tranche (and the Advances
thereof) relevant to the Ship lost or sold and, secondly, prepayment of all other Tranches
(and Advances thereof) proportionately as between them.4.6.4
    
    The Borrower may not prepay the Loan or any part thereof save as expressly provided in this
Agreement.4.6.5
    
    Unless and to the extent that the Commitment has been cancelled or reduced on or prior to
the date of any such prepayment and subject to the other terms of this Agreement, amounts
prepaid under this Agreement may be re-borrowed.4.6.6
    
    For the avoidance of doubt, any amounts of the Commitment reduced or cancelled pursuant to
clause 4.4 may not be re-instated.
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4.6.7
    
    Any reduction of the Commitment made pursuant to clause 4.4.2 as a result of the Total Loss
or sale of a Ship, shall be applied, first, in reduction of the part of the Commitment
relating to the Tranche relevant to the Ship lost or sold and, secondly, in proportionate
reduction of the Commitment in respect of all other Tranches and any part of the
Commitment not yet allocated to a Tranche.4.6.8
    
    Any reduction of the Commitment in respect of a Tranche shall reduce proportionately the
amounts thereof still required to be reduced on each Reduction Date for such Tranche pursuant
to clause 4.3.
 4.7
    
    Cancellation of CommitmentThe Borrower may, at any time during the Availability Period, by notice to the Bank cancel,
with effect from a date not less than three (3) Banking Days after the receipt by the Bank of
such notice, the whole or any part (being One million Dollars ($1,000,000)) or any larger sum
which is an integral multiple of One million Dollars ($1,000,000)) of the Commitment, which
is then available for drawing. Any such notice of cancellation, once given, shall be
irrevocable and upon such cancellation taking effect the Commitment shall be reduced
accordingly. On the date when any such cancellation takes effect, the Borrower shall pay to
the Bank any accrued commitment commission on the part of the Commitment being cancelled and
any other amounts then payable under clause 11.4.8
    
    Unwinding of Designated TransactionsOn or prior to any repayment of all or part of the Loan (including, without limitation,
pursuant to clauses 4.2, 4.3, 4.4 or 8.2.1(a) or any other provision of this Agreement), the
Borrower shall, upon the request of the Bank wholly or partially reverse, offset, unwind,
cancel, close out, net out or otherwise terminate one or more of the continuing Designated
Transactions so that the notional principal amount of the continuing Designated Transactions
thereafter remaining does not, and will not in the future, exceed the amount of the Loan as
may be reducing from time to time thereafter.5
    
    Fees, commission and expenses5.1
    
    Fees and commissionsThe Borrower shall pay to the Bank:
 5.1.1
    
    on or prior to the date of this Agreement, an arrangement fee in the amount of $435,000;5.1.2
    
    (i) on the date of this Agreement, a management fee of $3,000, and (ii) on each of the dates
falling at six (6) monthly intervals thereafter until the last day of the Security Period, a
management fee of $1,000 per Mortgaged Ship as at the due date of each such payment; and5.1.3
    
    on each of the dates falling at three (3) monthly intervals after the date of this
Agreement] until the last day of the Availability Period and on the last day of the
Availability Period, commitment commission computed from 3 September 2007 (in the case of the
first payment of commission) and from the due date of the preceding payment of commission (in
the case of each subsequent payment), at the rate of zero point three zero per cent (0.30%)
per annum on the daily undrawn and uncancelled amount of the Commitment.
 The fees and commission referred to in clause 5.1 shall be payable by the Borrower to the
Bank whether or not any part of the Commitment is ever advanced and shall be, in each case,
non-refundable.
 20




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5.2
    
    ExpensesThe Borrower shall pay to the Bank on a full indemnity basis on demand:
 5.2.1
    
    all expenses (including legal, printing and out-of-pocket expenses) incurred by the Bank in
connection with the negotiation, preparation, execution and, where relevant, registration of
the Security Documents and of any amendment or extension of or the granting of any waiver or
consent under, any of the Security Documents; and5.2.2
    
    all expenses (including legal, printing and out-of-pocket expenses) incurred by the Bank in
contemplation of, or otherwise in connection with, the enforcement of, or preservation of any
rights under, any of the Security Documents, or otherwise in respect of the moneys owing under
any of the Security Documents,
 together with interest at the rate referred to in clause 3.4 from the date on which such
expenses were incurred to the date of payment (as well after as before judgment).5.3
    
    Value added taxAll fees and expenses payable pursuant to this clause 5 shall be paid together with value
added tax or any similar tax (if any) properly chargeable thereon. Any value added tax
chargeable in respect of any services supplied by the Bank under this Agreement shall, on
delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid
hereunder.5.4
    
    Stamp and other dutiesThe Borrower shall pay all stamp, documentary, registration or other like duties or taxes
(including any duties or taxes payable by the Bank) imposed on or in connection with any of
the Underlying Documents, the Security Documents, the Loan or any part thereof and shall
indemnify the Bank against any liability arising by reason of any delay or omission by the
Borrower to pay such duties or taxes.6
    
    Payments and taxes; accounts and calculations6.1
    
    No set-off or counterclaimThe Borrower acknowledges that in performing its obligations under this Agreement, the Bank
will be incurring liabilities to third parties in relation to the funding of amounts to the
Borrower, such liabilities matching the liabilities of the Borrower to the Bank and that it
is reasonable for the Bank to be entitled to receive payments from the Borrower gross on the
due date in order that the Bank is put in a position to perform its matching obligations to
the relevant third parties. All payments to be made by the Borrower under any of the
Security Documents shall be made in full, without any set-off or counterclaim whatsoever and,
subject as provided in clause 6.6, free and clear of any deductions or withholdings, in
Dollars on the due date to such account at such Bank and in such place as the Bank may from
time to time specify for this purpose.6.2
    
    Payment by the BankAll sums to be advanced by the Bank to the Borrower under this Agreement shall be remitted in
Dollars on the Drawdown Date for the relevant Advance and shall be paid by the Bank to the
account specified in the Drawdown Notice for such Advance.6.3
    
    Non-Banking DaysWhen any payment under any of the Security Documents would otherwise be due on a day which is
not a Banking Day, the due date for payment shall be extended to the next following Banking
Day unless the Banking Day falls in the next calendar month in which case payment shall be
made on the immediately preceding Banking Day.
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6.4
    
    CalculationsAll interest and other payments of an annual nature under any of the Security Documents shall
accrue from day to day and be calculated on the basis of actual days elapsed and a three
hundred and sixty (360) day year.6.5
    
    Certificates conclusiveAny certificate or determination of the Bank as to any rate of interest or any other amount
pursuant to and for the purposes of any of the Security Documents shall, in the absence of
manifest error, be conclusive and binding on the Borrower.6.6
    
    Grossing-up for Taxes
 6.6.1
    
    If at any time the Borrower is required to make any deduction or withholding in respect of
Taxes from any payment due under any of the Security Documents for the account of the Bank,
the sum due from the Borrower in respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction or withholding, the Bank receives
on the due date for such payment (and retains, free from any liability in respect of such
deduction or withholding), a net sum equal to the sum which it would have received had no such
deduction or withholding been required to be made and the Borrower shall indemnify the Bank
against any losses or costs incurred by it by reason of any failure of the Borrower to make
any such deduction or withholding or by reason of any increased payment not being made on the
due date for such payment. The Borrower shall promptly deliver to the Bank any receipts,
certificates or other proof evidencing the amounts (if any) paid or payable in respect of any
deduction or withholding as aforesaid.6.6.2
    
    For the avoidance of doubt, clause 6.6.1 does not apply in respect of sums due from the
Borrower to the Bank under or in connection with the Master Swap Agreement as to which sums
the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Swap Agreement
shall apply.
 6.7
    
    Loan accountThe Bank shall maintain, in accordance with its usual practice, an account evidencing the
amounts from time to time lent by, owing and paid to it under the Security Documents. Such
account shall, in the absence of manifest error, be conclusive as to the amount from time to
time owing by the Borrower under the Security Documents.7
    
    Representations and warranties7.1
    
    Continuing representations and warrantiesThe Borrower represents and warrants to the Bank that:
 7.1.1
    
    Due incorporationeach of the Borrower, the Owners and each of the other Security Parties is duly
incorporated and validly existing in good standing under the laws of their respective
countries of incorporation as a Marshall Islands corporation or as a limited liability
company (in the case of each of the other Security Parties), and have power to carry on
their respective businesses as they are now being conducted and to own their respective
property and other assets;
 22




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7.1.2
    
    Corporate powerthe Borrower has power to execute, deliver and perform its obligations under the relevant
Underlying Documents and the Security Documents to which it is or is to be a party and to
borrow the Commitment and each of the other Security Parties has power
to execute and deliver and perform its obligations under the Security Documents and the
Underlying Documents to which it is or is to be a party; all necessary corporate,
shareholder and other action has been taken to authorise the execution, delivery and
performance of the same and no limitation on the powers of the Borrower to borrow will be
exceeded as a result of borrowing the Advances or any of them;7.1.3
    
    Binding obligationsthe Underlying Documents and the Security Documents constitute or will, when executed,
constitute valid and legally binding obligations of the relevant Security Parties
enforceable in accordance with their respective terms;7.1.4
    
    No conflict with other obligationsthe execution and delivery of, the performance of its obligations under, and compliance
with the provisions of, the Underlying Documents and the Security Documents by the
relevant Security Parties will not (i) contravene any existing applicable law, statute,
rule or regulation or any judgment, decree or permit to which the Borrower or any other
Security Party is subject, (ii) conflict with, or result in any breach of any of the terms
of, or constitute a default under, any agreement or other instrument to which the Borrower
or any other Security Party is a party or is subject or by which it or any of its property
is bound, (iii) contravene or conflict with any provision of the constitutional documents
of the Borrower or any other Security Party or (iv) result in the creation or imposition
of or oblige the Borrower or any of its Related Companies or any other Security Party or
any of its Related Companies to create any Encumbrance (other than a Permitted
Encumbrance) on any of the undertakings, assets, rights or revenues of the Borrower or any
of its Related Companies or any other Security Party;7.1.5
    
    No litigationno litigation, arbitration or administrative proceeding is taking place, pending or, to
the knowledge of the officers of the Borrower, threatened against the Borrower or any of
its Related Companies or any other Security Party or any of its Related Companies which
could have a material adverse effect on the business, assets or financial condition of the
Borrower or any other Security Party or any other member of the Group or the Group as a
whole;7.1.6
    
    No filings requiredsave for the registration of each Mortgage under the laws of the relevant Flag State
through the relevant Registry, it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of any of the Underlying Documents or the
Security Documents that they or any other instrument be notarised, filed, recorded,
registered or enrolled in any court, public office or elsewhere in any Relevant
Jurisdiction or that any stamp, registration or similar tax or charge be paid in any
Relevant Jurisdiction on or in relation to any of the Underlying Documents or the Security
Documents and each of the Underlying Documents and the Security Documents is in proper
form for its enforcement in the courts of each Relevant Jurisdiction;7.1.7
    
    Choice of lawthe choice of (a) English law to govern the Underlying Documents and the Security
Documents (other than the Mortgages and the Operating Account Pledges), (b) the laws of
the relevant Flag State to govern each Mortgage and (c) the laws of Switzerland to govern
the Operating Account Pledges, and the submissions by the Security Parties to the
non-exclusive jurisdiction of the English courts or, in the case of the Operating Account
Pledges, the courts or Zürich, are valid and binding;
 23




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7.1.8
    
    No immunityneither the Borrower nor any other Security Party nor any of their respective assets is
entitled to immunity on the grounds of sovereignty or otherwise from any legal action or
proceeding (which shall include, without limitation, suit, attachment prior to judgement,
execution or other enforcement);7.1.9
    
    Consents obtainedevery consent, authorisation, licence or approval of, or registration with or declaration
to, governmental or public bodies or authorities or courts required by any Security Party
to authorise, or required by any Security Party in connection with, the execution,
delivery, validity, enforceability or admissibility in evidence of each of the Underlying
Documents and each of the Security Documents to which it is a party or the performance by
each Security Party of its obligations under the Underlying Documents and the Security
Documents to which it is a party, has been obtained or made and is in full force and
effect and there has been no default in the observance of any of the conditions or
restrictions (if any) imposed in, or in connection with, any of the same;7.1.10
    
    Shareholdings
 (a)
    
    each of the Owners is a wholly-owned direct Subsidiary of the
Borrower and each of Mr Ion Varouxakis and the Restis Family are the ultimate
beneficial owners of no less than ten per cent (10%) each of the total issued
voting share capital of the Borrower;(b)
    
    no person or persons acting in concert (other than Mr Ion
Varouxakis and the Restis Family), is the ultimate beneficial owner of more than
thirty per cent (30%) of the total issued voting share capital of the Borrower
(and for the purposes of this paragraph (b) persons acting in concert shall
have the meaning given to a syndicate or a group of persons in Section
13(d)(3) of the Securities Exchange Act 1934 (as amended) of the United States of
America); and(c)
    
    all of the shares in the Manager are ultimately beneficially owned
by Mr Varouxakis and/or the Varouxakis Family;
 7.1.11
    
    Financial statements correct and completethe audited consolidated financial statements of the Group in respect of the financial
year ended on 31 December 2006 as delivered to the Bank have been prepared in accordance
with the Applicable Accounting Principles and present fairly and accurately the
consolidated financial position of the Group as at such date and the consolidated results
of the operations of the Group for the financial year ended on such date and, as at such
date, neither the Group nor any member thereof had any significant liabilities (contingent
or otherwise) or any unrealised or anticipated losses which are not disclosed by, or
reserved against or provided for in, such financial statement.
 7.2
    
    Initial representations and warrantiesThe Borrower further represents and warrants to the Bank that:
 7.2.1
    
    Pari passuthe obligations of the Borrower under this Agreement are direct, general and unconditional
obligations of the Borrower and rank at least pari passu with all other present and future
unsecured and unsubordinated Indebtedness of the Borrower with the exception of any
obligations which are mandatorily preferred by law and not by contract;
 24




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7.2.2
    
    No default under other Indebtednessneither the Borrower nor any other Security Party nor any other member of the Group is
(nor would with the giving of notice or lapse of time or the satisfaction of any other
condition or combination thereof be) in breach of or in default under any agreement
relating to Indebtedness to which it is a party or by which it may be bound;7.2.3
    
    Informationthe information, exhibits and reports furnished by any Security Party to the Bank in
connection with the negotiation and preparation of the Security Documents are true and
accurate in all material respects and not misleading, do not omit material facts and all
reasonable enquiries have been made to verify the facts and statements contained therein;
there are no other facts the omission of which would make any fact or statement therein
misleading;7.2.4
    
    No withholding Taxesno Taxes are imposed by withholding or otherwise on any payment to be made by any Security
Party under the Underlying Documents or the Security Documents or are imposed on or by
virtue of the execution or delivery by the Security Parties of the Underlying Documents or
the Security Documents or any other document or instrument to be executed or delivered
under any of the Security Documents;7.2.5
    
    No Defaultno Default has occurred and is continuing;7.2.6
    
    The Shipseach Ship will, on the date when the Mortgage over such Ship is registered, be:
 (a)
    
    in the absolute ownership of the relevant Owner who will, on and after such
date, be the sole, legal and beneficial owner of such Ship;(b)
    
    permanently registered through the relevant Registry as a ship under the
laws and flag of the relevant Flag State;(c)
    
    operationally seaworthy and in every way fit for service; and(d)
    
    classed with the relevant Classification free of all requirements and
recommendations of the relevant Classification Society;
 7.2.7
    
    Ships employmentsave for the relevant Initial Charter, no Ship is nor will, on or before the date when the
Mortgage over such Ship is registered, be subject to any charter or contract or to any
agreement to enter into any charter or contract which, if entered into after the date of
the relevant Ship Security Documents, would have required the consent of the Bank and, on
or before the date when the Mortgage over such Ship is registered, there will not be any
agreement or arrangement whereby the Earnings of such Ship may be shared with any other
person;
 25




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7.2.8
    
    Freedom from Encumbrancesnone of the Ships, nor its Earnings, Insurances, Requisition Compensation nor the
Operating Accounts relevant to such Ship nor any other properties or rights which are, or
are to be, the subject of any of the Security Documents nor any part thereof will be, on
the date when the Mortgage over such Ship is registered, subject to any Encumbrance (other
than Permitted Liens);7.2.9
    
    Compliance with Environmental Laws and Approvalsexcept as may already have been disclosed by the Borrower in writing to, and acknowledged
in writing by, the Bank:
 (a)
    
    the Borrower and the other Relevant Parties and, to the best of the
Borrowers knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have complied with the provisions of all Environmental Laws;(b)
    
    the Borrower and the other Relevant Parties and, to the best of the
Borrowers knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have obtained all Environmental Approvals and are in
compliance with all such Environmental Approvals; and(c)
    
    neither the Borrower nor any other Relevant Party nor, to the best of the
Borrowers knowledge and belief (having made due enquiry), any of their respective
Environmental Affiliates have received notice of any Environmental Claim that the
Borrower or any other Relevant Party or any such Environmental Affiliate is not in
compliance with any Environmental Law or any Environmental Approval;
 7.2.10
    
    No Environmental Claimsexcept as may already have been disclosed by the Borrower in writing to, and acknowledged
in writing by, the Bank, there is no Environmental Claim pending or, to the best of the
Borrowers knowledge and belief, threatened against the Borrower or any of the Ships or
any other Relevant Party or any other Relevant Ship or, to the best of the Borrowers
knowledge and belief (having made due enquiry), any of their respective Environmental
Affiliates;7.2.11
    
    No potential Environmental Claimsexcept as may already have been disclosed by the Borrower in writing to, and acknowledged
in writing by, the Bank, there has been no emission, spill, release or discharge of a
Pollutant from any of the Ships or any other Relevant Ship owned by, managed or crewed by
or chartered to any Relevant Party nor, (having made due enquiry) to the best of the
Borrowers knowledge and belief, from any Relevant Ship owned by, managed or crewed by or
chartered to any other Relevant Party, which could give rise to an Environmental Claim;7.2.12
    
    ISPS Codeon the date when the Mortgage over a Ship is registered, the Owner of such Ship shall have
a valid and current ISSC in respect of such Ship and such Ship shall be in compliance with
the ISPS Code;7.2.13
    
    No material adverse changethere has been no material adverse change in the financial position of the Security
Parties or any of them or the consolidated financial position of the Group, from that
described by the Borrower to the Bank in the negotiation of this Agreement;
 26




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7.2.14
    
    Borrowers own accountin relation to the borrowing by the Borrower of each Advance, the performance and
discharge of its obligations and liabilities under the Security Documents and the
transactions and other arrangements effected or contemplated by this Agreement, the
Borrower is acting for its own account and that the foregoing will not involve or lead to
a contravention of any law, official requirement or other regulatory measure or procedure
which has been implemented by any relevant regulatory authority or otherwise to combat
money laundering (as defined in Article 1 of the Directive (91/308/EEC) of the Council
of the European Communities (as amended)); and7.2.15
    
    Copies true and completethe copies of the Underlying Documents delivered or to be delivered to the Bank pursuant
to clause 9.1 are or will, when delivered, be true and complete copies of such documents;
such documents constitute valid and binding obligations of the parties thereto enforceable
in accordance with their terms and there have been no amendments or variations thereof or
defaults thereunder.
 7.3
    
    Repetition of representations and warrantiesOn and as of each Drawdown Date and (except in relation to the representations and warranties
in clause 7.2) on each Interest Payment Date, the Borrower shall:
 (a)
    
    be deemed to repeat the representations and warranties in clauses 7.1 and 7.2 as
if made with reference to the facts and circumstances existing on such day; and(b)
    
    be deemed to further represent and warrant to the Bank that the then latest
audited financial statements delivered to the Bank under clause 8.1.5 (if any) have been
prepared in accordance with the Applicable Accounting Principles and practices which
have been consistently applied and present fairly and accurately the consolidated
financial position of the Group as at the end of the financial period to which the same
relate and the consolidated results of the operations of the Group for the financial
period to which the same relate and, as at the end of such financial period, neither the
Borrower nor any other member of the Group had any significant liabilities (contingent
or otherwise) or any unrealised or anticipated losses which are not disclosed by, or
reserved against or provided for in, such financial statements.
 8
    
    Undertakings8.1
    
    GeneralThe Borrower undertakes with the Bank that, from the date of this Agreement and so long as
any moneys are owing under any of the Security Documents and while all or any part of the
Commitment remains outstanding, it will:
 8.1.1
    
    Notice of Defaultpromptly inform the Bank of any occurrence of which it becomes aware which might
materially and adversely affect the ability of any Security Party to perform its
obligations under any of the Security Documents or the Underlying Documents and, without
limiting the generality of the foregoing, will inform the Bank of any Default forthwith
upon becoming aware thereof and will from time to time, if so requested by the Bank,
confirm to the Bank in writing that, save as otherwise stated in such confirmation, no
Default has occurred and is continuing;
 27




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8.1.2
    
    Consents and licenceswithout prejudice to clauses 7.1 and 9, obtain or cause to be obtained, maintain in full
force and effect and comply in all material respects with the conditions and restrictions
(if any) imposed in, or in connection with, every consent, authorisation, licence or
approval of governmental or public bodies or authorities or courts and do, or cause to be
done, all other acts and things which may from time to time be necessary or desirable
under applicable law for the continued due performance of all the obligations of the
Security Parties under each of the Security Documents;8.1.3
    
    Use of proceedsuse the Advances or any of them exclusively for the purposes specified in clause 1.1;8.1.4
    
    Pari passuensure that its obligations under this Agreement shall, without prejudice to the
provisions of clause 8.3, at all times rank at least pari passu with all its other present
and future unsecured and unsubordinated Indebtedness with the exception of any obligations
which are mandatorily preferred by law and not by contract;8.1.5
    
    Financial statementsprepare or cause to be prepared:
 (a)
    
    consolidated financial statements of the Group in accordance with the
Applicable Accounting Principles consistently applied in respect of each financial
year and cause the same to be reported on by its auditors; and(b)
    
    unaudited consolidated financial statements of the Group in respect of each
financial half-year, on the same basis as the audited statements,
 and deliver to the Bank as many copies of the same as the Bank may reasonably require as
soon as practicable but not later than one hundred and eighty (180) days (in the case of
annual statements) or ninety (90) days (in the case of semi-annual statements) after the
end of the financial period to which they relate;8.1.6
    
    Delivery of reportsdeliver to the Bank as many copies as the Bank may reasonably require of every report,
circular, notice, notification, filing or like document issued by the Borrower to its
shareholders or creditors in general or filed, issued or submitted to NASDAQ or any
related authority, at the same time as the same is issued, filed or submitted;8.1.7
    
    Provision of further informationprovide the Bank with such financial and other information concerning the Borrower, the
other Security Parties, any other member of the Group, any Charterers, the Group and their
respective commitments, operations and affairs, as the Bank may from time to time
reasonably require;8.1.8
    
    Obligations under Security Documentsand will procure that each of the other Security Parties will, duly and punctually perform
each of the obligations expressed to be assumed by it under the Security Documents and the
Underlying Documents to which it is a party;
 28




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8.1.9
    
    Compliance with Codeand will procure that any Operator will, comply with and ensure that each Ship and any
Operator at all times complies with the requirements of the Code, including (but not
limited to) the maintenance and renewal of valid certificates pursuant thereto throughout
the Security Period;8.1.10
    
    Withdrawal of DOC and SMCand will procure that any Operator will, immediately inform the Bank if there is any
threatened or actual withdrawal of its Operators DOC or the SMC in respect of any Ship;8.1.11
    
    Issuance of DOC and SMCand will procure that any Operator will, promptly inform the Bank upon the issuance to any
Operator of a DOC and to each Ship of an SMC or the receipt by the relevant Owner or any
Operator of notification that its application for the same has been refused;8.1.12
    
    ISPS Code complianceand will procure that the Manager or any Operator will,
 (a)
    
    from the date when the Mortgage over a Ship is registered and at all times
thereafter, maintain a valid and current ISSC respect of such Ship;(b)
    
    immediately notify the Bank in writing of any actual or threatened
withdrawal, suspension, cancellation or modification of the ISSC in respect of any
Ship; and(c)
    
    procure that, from the date when the Mortgage over a Ship is registered and
at all times thereafter, such Ship complies with the ISPS Code;
 8.1.13
    
    KYC requirementsdeliver to the Bank such documents and evidence as the Bank shall from time to time
require based on applicable laws and regulations or the Banks own internal guidelines, in
each case relating to the verifications of identity and knowledge of the Banks customers;8.1.14
    
    Employmentwithout prejudice to the rights of the Bank under the provisions of the other Security
Documents, advise the Bank promptly of any Security Charter being entered into in respect
of a Ship and:
 (a)
    
    deliver a certified copy of each such Security Charter forthwith after its
execution; and(b)
    
    procure that the relevant Owner shall, forthwith after its execution:
 (i)
    
    execute a Charter Assignment of such Security Charter; and(ii)
    
    procure the service of any notice of assignment on the
relevant Charterer or other counterparty and the acknowledgement of such
notice by the relevant Charterer or other counterparty;
 (c)
    
    deliver to the Bank on demand made by it, such documents and evidence of
the type referred to in schedule 2 to any such Charter Assignment, Security Charter
or Charterer or any other related matter referred to in this clause 8.1.14, as the
Bank may in its sole discretion require; and
 29




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(d)
    
    pay on the Banks demand all legal and other costs incurred by the Bank in
connection with or in relation to any such assignment or any other related matter
referred to in this clause 8.1.14; and
 8.1.15
    
    Minimum cash balancesprocure that, at all times during the Security Period, there are maintained in the
Operating Accounts or any other Security Account minimum cash balances of no less than
$375,000 per Mortgaged Ship.
 8.2
    
    Security value maintenance
 8.2.1
    
    Security ShortfallIf at any time the Security Value shall be less than the Security Requirement, the Bank
shall give notice to the Borrower requiring that such deficiency be remedied and then the
Borrower shall either:
 (a)
    
    prepay, within a period of fifteen (15) days of the date of receipt by the
Borrower of the Banks said notice, such sum in Dollars as will result in the
Security Requirement after such prepayment (taking into account any other prepayment
of the Loan (or part thereof) made between the date of the notice and the date of
such prepayment) being equal to the Security Value; or(b)
    
    within fifteen (15) days of the date of receipt by the Borrower of the
Banks said notice, constitute to the satisfaction of the Bank such further security
for the Loan and any amounts owing under the Master Swap Agreement as shall be
acceptable to the Bank, having a value for security purposes (as determined by the
Bank in its absolute discretion) at the date upon which such further security shall
be constituted which, when added to the Security Value, shall not be less than the
Security Requirement as at such date.
 The provisions of clauses 4.5 and any relevant provisions of 4.6 shall apply to
prepayments made under this clause 8.2.1(a).8.2.2
    
    Valuation of Ships
 (a)
    
    Each of the Mortgaged Ships shall, for the purposes of this Agreement, be
valued in Dollars as and when the Bank shall require (and at least twice in each
calendar year), by an independent and internationally recognised firm of shipbrokers
appointed by the Bank in its sole discretion. Each such valuation shall be addressed
to the Bank and made without, unless required by the Bank, physical inspection and 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 a willing seller without taking into account the
benefit of any charterparty or other engagement concerning the Mortgaged Ship. Such
valuation shall constitute the value of such Mortgaged Ship for the purposes of this
clause 8.2.(b)
    
    The Borrower shall be entitled to request the Bank to obtain a second
valuation of a Mortgaged Ship by another independent and internationally recognised
firm of shipbrokers appointed by the Bank in its sole discretion, such valuation to
be made on the same basis described in paragraph (a) above. In the event of the Bank
so obtaining a second such valuation for a Mortgaged Ship, the arithmetic mean of the
two (2) valuations shall constitute the value of such Mortgaged Ship for the purposes
of this clause 8.2.
 30




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(c)
    
    The value of each Mortgaged Ship determined in accordance with the
provisions of this clause 8.2 shall be binding upon the parties hereto until such
time as any such further valuation shall be obtained.
 8.2.3
    
    InformationThe Borrower undertakes with the Bank to supply to the Bank and to any such firm of
shipbrokers such information concerning each Mortgaged Ship and its condition as such firm
of shipbrokers may require for the purpose of making any such valuation.8.2.4
    
    CostsAll costs in connection with the Bank obtaining any valuation of each of the Mortgaged
Ships referred to in clause 8.2.2 and all costs in connection with any valuation of the
Ships obtained pursuant to schedule 2, and any valuation either of any additional security
for the purposes of ascertaining the Security Value at any time or necessitated by the
Borrower electing to constitute additional security pursuant to clause 8.2.1(b), shall be
borne by the Borrower Provided thatif no Default shall have occurred which is continuing,
the Borrower shall only bear the cost of up to two (2) (or, in the case of application of
clause 8.2.2(b), four (4)) such valuations for each Mortgaged Ship pursuant to clause
8.2.2 in each calendar year.8.2.5
    
    Valuation of additional securityFor the purpose of this clause 8.2, the market value of any additional security provided
or to be provided to the Bank shall be determined by the Bank in its absolute discretion
without any necessity for the Bank assigning any reason thereto.8.2.6
    
    Documents and evidenceIn connection with any additional security provided in accordance with this clause 8.2,
the Bank shall be entitled to receive such evidence and documents of the kind referred to
in schedule 2 as may in the Banks opinion be appropriate and such favourable legal
opinions as the Bank shall in its absolute discretion require.
 8.3
    
    Negative undertakingsThe Borrower undertakes with the Bank that, from the date of this Agreement and so long as
any moneys are owing under the Security Documents and while all or any part of the Commitment
remains outstanding, the Borrower will not:
 8.3.1
    
    Negative pledgepermit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be
created or extended over all or any part of its present or future undertaking, assets
(including without limitation the shares of the Owners), rights or revenues to secure or
prefer any present or future Indebtedness or other liability or obligation of any of the
Security Parties or any other person;8.3.2
    
    No mergermerge or consolidate with any other company or person or enter into any de-merger,
amalgamation, corporate reconstruction or corporate redomiciliation of any kind
whatsoever;8.3.3
    
    Disposalssell, transfer, abandon, lend or otherwise dispose of or cease to exercise direct control
over any part of its present or future undertaking, assets (including without limitation
the shares of the Owners), rights or revenues (otherwise than, by transfers, sales or
disposals for full consideration in the ordinary course of trading) whether by one or a
series of transactions related or not;
 31




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8.3.4
    
    Other businessundertake any business other than the ownership of shares of companies owning and
operating ocean-going vessels and chartering the same to third parties;8.3.5
    
    No borrowingincur any Borrowed Money except for Borrowed Money pursuant to the Security Documents;8.3.6
    
    Repayment of borrowingsrepay or prepay the principal of, or pay interest on or any other sum in connection with,
any of its Borrowed Money except for (a) Borrowed Money pursuant to the Security Documents
and (b) Borrowed Money existing on the date of this Agreement advised by the Borrower to
the Bank in writing prior to the date of this Agreement;8.3.7
    
    Loansmake any loans or grant any credit to any person or agree to do so save for normal trade
credit in the ordinary course of business, or loans or advances made to any other member
of the Group on an arms length basis and in the ordinary course of business;8.3.8
    
    Share capital and distribution
 (a)
    
    subject to paragraph (b) below, purchase or otherwise
acquire for value any shares of its capital or declare or pay any dividends or distribute any of its
present or future assets, undertaking, rights or revenues to any of its shareholders;(b)
    
    the Borrower may declare or pay dividends to its shareholders if no Default
shall have occurred at the time of declaration or payment of such dividends nor would
occur as a result of the declaration or payment of such dividends;
 8.3.9
    
    Shareholdingschange, cause, permit any change in, the legal ownership of any Owner, such that any of
them ceases to be a wholly-owned direct Subsidiary of the Borrower;8.3.10
    
    Change of managementchange, cause or permit any change in, its senior management; or8.3.11
    
    Constitutional documentsagree to any amendments or variation of its constitutional documents.
 9
    
    Conditions
 9.1.1
    
    CommitmentThe obligation of the Bank to make the Commitment available shall be subject to the
condition that the Bank or its duly authorised representative shall have received, not
later than two (2) Banking Days before the date of this Agreement, the documents and
evidence specified in Part 1 of schedule 2 in form and substance satisfactory to the Bank.
 32




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9.1.2
    
    Initial Tranche  first AdvanceThe obligation of the Bank to make available the first Advance to be drawn down under the
Initial Tranche, shall be subject to the condition that the Bank or its duly authorised
representative shall have received, on or prior to the drawdown of such Advance, the
documents and evidence specified in Part 2 of schedule 2, in form and substance
satisfactory to the Bank.9.1.3
    
    Initial Tranche  second AdvanceThe obligation of the Bank to make available the second Advance to be drawn down under the
Initial Tranche, shall be subject to the condition that the Bank or its duly authorised
representative shall have received, on or prior to the drawdown of such
Advance, the documents and evidence specified in Part 3 of schedule 2, in form and
substance satisfactory to the Bank.9.1.4
    
    Additional TranchesThe obligation of the Bank to make available the first Advance to be drawn down under each
Additional Tranche, shall be subject to the condition that the Bank or its duly authorised
representative shall have received, on or prior to the drawdown of such Advance, the
documents and evidence specified in Part 4 of schedule 2 in respect of the Additional Ship
to which such Tranche relates (referred to in such Part 4 as the Relevant Ship) in form
and substance satisfactory to the Bank.
 9.2
    
    General conditions precedentThe obligation of the Bank to make any Advance available shall be subject to the further
conditions that, at the time of the giving of the Drawdown Notice for such Advance, and at
the time of the making of such Advance:
 9.2.1
    
    the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3(b) and (ii)
clause 4 of each Owners Guarantee, are true and correct on and as of each such time as if
each was made with respect to the facts and circumstances existing at such time;9.2.2
    
    no Default shall have occurred and be continuing or would result from the making of such
Advance; and9.2.3
    
    in the case of Advances under any Additional Tranche, that the conditions set out in clauses
9.1.1, 9.1.2 and 9.1.3 have been satisfied.
 9.3
    
    Waiver of conditions precedentThe conditions specified in this clause 9 are inserted solely for the benefit of the Bank and
may be waived by the Bank in whole or in part and with or without conditions.9.4
    
    Further conditions precedentNot later than five (5) Banking Days prior to each Drawdown Date of an Advance and not later
than five (5) Banking Days prior to each Interest Payment Date, the Bank may request and the
Borrower shall, not later than two (2) Banking Days prior to such date, deliver to the Bank
on such request further favourable certificates and/or favourable opinions as to any or all
of the matters which are the subject of clauses 7, 8, 9 and 10.
 33




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10
    
    Events of Default10.1
    
    EventsThere shall be an Event of Default if:
 10.1.1
    
    Non-payment: any Security Party fails to pay any sum payable by it under any of the Security
Documents or the Underlying Documents at the time, in the currency and in the manner
stipulated in the Security Documents or the Underlying Documents (and so that, for this
purpose, sums payable on demand shall be treated as having been paid at the stipulated time if
paid within three (3) Banking Days of demand); or10.1.2
    
    Master Swap Agreement: (a) an Event of Default or Potential Event of Default (in each case
as defined in the Master Swap Agreement) has occurred and is continuing with the Borrower as
the Defaulting Party (as defined in the Master Swap Agreement) under the Master Swap Agreement
or (b) an Early Termination Date has occurred or been or become capable of being effectively
designated under the Master Swap Agreement by the Bank or (c) the Master Swap Agreement is
terminated, cancelled, suspended,
rescinded or revoked or otherwise ceases to remain in full force and effect for any
reason; or10.1.3
    
    Breach of Insurances and certain other obligations: the relevant Owner or, as the case may
be, the Manager fails to obtain and/or maintain the Insurances (in accordance with the
requirements of the relevant Ship Security Documents) for any of the Mortgaged Ships or if any
insurer in respect of any such Insurances cancels such Insurances or disclaims liability by
reason, in either case, of mis-statement in any proposal for such Insurances or for any other
failure or default on the part of any of the Owners or any other person, or the Borrower
commits any breach of or omits to observe any of the obligations or undertakings expressed to
be assumed by it under clauses 8.2 or 8.3 of this Agreement or any of the Owners commits any
breach of or omits to observe any of the obligations or undertakings expressed to be assumed
by it under clause 5 of the relevant Owners Guarantee; or10.1.4
    
    Breach of other obligations: any Security Party commits any breach of or omits to observe
any of its obligations or undertakings expressed to be assumed by it under any of the Security
Documents to which it is a party or any of the Underlying Documents (other than those referred
to in clauses 10.1.1, 10.1.2 and 10.1.3 above) and, in respect of any such breach or omission
which in the opinion of the Bank is capable of remedy, such action as the Bank may require
shall not have been taken within fourteen (14) days of the Bank notifying the relevant
Security Party of such default and of such required action; or10.1.5
    
    Misrepresentation: any representation or warranty made or deemed to be made or repeated by
or in respect of any Security Party to which it is a party in or pursuant to any of the
Security Documents or in any notice, certificate or statement referred to in or delivered
under any of the Security Documents to which it is a party or any of the Underlying Documents,
is or proves to have been incorrect or misleading in any material respect; or10.1.6
    
    Cross-default: any Indebtedness of any Relevant Party is not paid when due or any
Indebtedness of any Relevant Party becomes (whether by declaration or automatically in
accordance with the relevant agreement or instrument constituting the same) due and payable
prior to the date when it would otherwise have become due (unless as a result of the exercise
by the relevant Relevant Party of a voluntary right of prepayment), or the creditor of any
Relevant Party becomes entitled to declare any such Indebtedness due and payable or any
facility or commitment available to any Relevant Party relating to Indebtedness is withdrawn,
suspended or cancelled by reason of any default (howsoever described) of the person concerned
unless the Relevant Party shall have satisfied the Bank that such withdrawal, suspension or
cancellation will not affect or prejudice in any way such Relevant Partys ability to pay its
debts as they fall due and fund its commitments, or any guarantee given by any Relevant Party
in respect of Indebtedness is not honoured when due and called upon; or10.1.7
    
    Legal process: any judgment or order made against any Relevant Party is not stayed or
complied with within fourteen (14) days (except where that Relevant Party is not obliged by
law to comply with such order or judgment and is contesting it in good faith) or a creditor
attaches or takes possession of, or a distress, execution, sequestration or other process is
levied or enforced upon or sued out against, any of the undertakings, assets, rights or
revenues of any Relevant Party and is not discharged within fourteen (14) days; or
 34




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10.1.8
    
    Insolvency: any Relevant Party is unable or admits inability to pay its debts as they fall
due; suspends making payments on any of its debts or announces an intention to do so; becomes
insolvent; has assets the value of which is less than the value of its liabilities (taking
into account contingent and prospective liabilities); or suffers the declaration of a
moratorium in respect of any of its Indebtedness; or10.1.9
    
    Reduction or loss of capital: a meeting is convened by any Relevant Party for the purpose of
passing any resolution to reduce or redeem any of its share capital or, in the case of any of
the Owners or the Manager, to purchase any of its share capital; or10.1.10
    
    Winding up: any corporate action, legal proceedings or other procedure or step is taken for
the purpose of winding-up any Relevant Party or an order is made or resolution passed for the
winding up of any Relevant Party or a notice is issued convening a meeting for the purpose of
passing any such resolution; or10.1.11
    
    Administration: any petition is presented, notice given or other step is taken for the
purpose of the appointment of an administrator of any Relevant Party or the Bank believes that
any such petition or other step is imminent or an administration order is made in relation to
any Relevant Party; or10.1.12
    
    Appointment of receivers and managers: any administrative or other receiver is appointed of
any Relevant Party or any part of its assets and/or undertaking or any other steps are taken
to enforce any Encumbrance over all or any part of the assets of any Relevant Party; or10.1.13
    
    Compositions: any corporate action, legal proceedings or other procedures or steps are
taken, or negotiations commenced, by any Relevant Party or by any of its creditors with a view
to the general readjustment or rescheduling of all or part of its indebtedness or to proposing
any kind of composition, compromise or arrangement involving such person and any of its
creditors; or10.1.14
    
    Analogous proceedings: there occurs, in relation to any Relevant Party, in any country or
territory in which any of them carries on business or to the jurisdiction of whose courts any
part of their assets is subject, any event which, in the reasonable opinion of the Bank,
appears in that country or territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.7 to 10.1.13 (inclusive) or any Relevant
Party otherwise becomes subject, in any such country or territory, to the operation of any law
relating to insolvency, bankruptcy or liquidation; or10.1.15
    
    Cessation of business: any Relevant Party suspends or ceases or threatens to suspend or
cease to carry on its business; or10.1.16
    
    Seizure: all or a material part of the undertaking, assets, rights or revenues of, or
            shares or other ownership interests in, any other Relevant Party are seized, nationalised,
expropriated or compulsorily acquired by or under the authority of any government; or10.1.17
    
    Invalidity: any of the Security Documents shall at any time and for any reason become
invalid or unenforceable or otherwise cease to remain in full force and effect, or if the
validity or enforceability of any of the Security Documents shall at any time and for any
reason be contested by any Security Party which is a party thereto, or if any such Security
Party shall deny that it has any, or any further, liability thereunder; or10.1.18
    
    Unlawfulness: it becomes impossible or unlawful at any time for any Security Party to
fulfil any of the covenants and obligations expressed to be assumed by it in any of the
Security Documents or for the Bank to exercise the rights or any of them vested in it under
any of the Security Documents or otherwise; or
 35




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10.1.19
    
    Repudiation: any Security Party repudiates any of the Security Documents or does or causes
or permits to be done any act or thing evidencing an intention to repudiate any of the
Security Documents; or10.1.20
    
    Encumbrances enforceable: any Encumbrance (other than Permitted Liens) in respect of any of
the property (or part thereof) which is the subject of any of the Security Documents becomes
enforceable; or10.1.21
    
    Material adverse change: there occurs, in the reasonable opinion of the Bank, a material
adverse change in the financial condition of any Security Party or any other member of the
Group, or the Group as a whole, by reference to the financial statements of the Group referred
to in clause 7.1.11 or from that described by any Security Party to the Bank in the
negotiation of this Agreement, which, would in the opinion of the Bank materially impair the
ability of the Security Parties (or any of them) to perform their respective obligations under
this Agreement and to the Security Documents to which they are a party; or10.1.22
    
    Arrest: any Mortgaged Ship is arrested, confiscated, seized, taken in execution, impounded,
forfeited, detained in exercise or purported exercise of any possessory lien or other claim or
otherwise taken from the possession of the relevant Owner and the relevant Owner shall fail to
procure the release of such Mortgaged Ship within a period of five (5) Banking Days
thereafter; or10.1.23
    
    Registration: the registration of any Ship under the laws and flag of the relevant Flag
State is cancelled or terminated without the prior written consent of the Bank or if such
registration of such Ship is not renewed at least forty-five (45) days prior to the expiry of
such registration; or10.1.24
    
    Unrest: the Flag State of any Ship becomes involved in hostilities or civil war or there is
a seizure of power in such Flag State by unconstitutional means if, in any such case, such
event could in the opinion of the Bank reasonably be expected to have a material adverse
effect on the security constituted by any of the Security Documents; or10.1.25
    
    Environment: the Borrower, any of the Owners and/or any other Relevant Party and/or any of
their respective Environmental Affiliates fails to comply with any Environmental Law or any
Environmental Approval or any of the Ships or any other Relevant Ship is involved in any
incident which gives rise or may give rise to an Environmental Claim if, in any such case,
such non-compliance or incident or the consequences thereof could, in the opinion of the Bank,
reasonably be expected to have a material adverse effect on the business, assets, operations,
property or financial condition of the Borrower or any of its Related Companies or any other
Relevant Party or the Group as a whole or on the security constituted by any of the Security
Documents; or10.1.26
    
    P&I: the Borrower or any of the Owners or any other person fails or omits to comply with
any requirements of the protection and indemnity association or other insurer with which any
Ship is entered for insurance or insured against protection and indemnity risks (including all
P&I risks) to the effect that any cover (including, without limitation, any cover in respect
of liability for Environmental Claims arising in jurisdictions where any Ship operates or
trades) is or may be liable to cancellation, qualification or exclusion at any time; or10.1.27
    
    Shareholdings:
 (a)
    
    any Owner ceases to be a wholly-owned direct Subsidiary of the Borrower; or
 36




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(b)
    
    there is any change in the ultimate beneficial ownership of
any of the shares in the Borrower such that (i) Mr Ion Varouxakis ceases to be the ultimate
beneficial owner of at least 10% of the total issued voting share capital of the
Borrower at any relevant time or (ii) the Restis Family cease to be the ultimate
beneficial owner of at least 10% of the total issued voting share capital of the
Borrower at any relevant time or (iii) any person or persons acting in concert (other
than Mr Ion Varouxakis and the Restis Family) becomes the ultimate beneficial owner
of more than 30% of the total issued voting share capital of the Borrower at any
relevant time (and for the purposes of this paragraph (b) persons acting in concert
shall have the meaning given to a syndicate or group of persons in Section
13(d)(3) of the Securities Exchange Act 1934 (as amended) of the United States of
America); or(c)
    
    any of the shares of the Manager ceases to be ultimately beneficially owned
by Mr Ion Varouxakis and/or the Varouxakis Family; or
 10.1.28
    
    Accounts: moneys are withdrawn from any Operating Account other than in accordance with
clause 5 of the relevant Owners Guarantee; or10.1.29
    
    Manager: any Ship ceases to be managed by the Manager without the prior written consent of
the Bank; or10.1.30
    
    De-listing etc.: the shares of the Borrower are de-listed, or cease to trade or are
suspended from trading (whether permanently or temporarily for longer than ten (10)
consecutive days) on, NASDAQ; or10.1.31
    
    Initial Charters:any Initial Charter is cancelled, repudiated or terminated for any reason
(other than by mere effluxion of time or the Total Loss of the relevant Initial Ship); or10.1.32
    
    Free Jupiter: the second Advance of the Initial Tranche is not made and the conditions
precedent specified in Part 3 of schedule 2 have not been delivered by the Borrower to the
Bank by 30 May 2008; or10.1.33
    
    Licenses, etc: any license, authorisation, consent or approval at any time necessary to
enable any Security Party to comply with its obligations under the Security Documents or the
Underlying Documents is revoked or withheld or modified or is otherwise not granted or fails
to remain in full force and effect or if any exchange control or other law or regulation shall
exist which would make any transaction under the Security Documents or the Underlying
Documents or the continuation thereof, unlawful or would prevent the performance by any
Security Party of any term of any of the Security Documents or the Underlying Documents; or10.1.34
    
    Material events: any other event occurs or circumstance arises which, in the reasonable
opinion of the Bank, is likely materially and adversely to affect either (i) the ability of
any Security Party to perform all or any of its obligations under or otherwise to comply with
the terms of any of the Security Documents to which it is a party or (ii) the security created
by any of the Security Documents.
 10.2
    
    AccelerationThe Bank shall, without prejudice to any other rights of the Bank, at any time after the
happening of an Event of Default by notice to the Borrower declare that:
 10.2.1
    
    the obligation of the Bank to make the Commitment available shall be terminated, whereupon
the Commitment at the time shall be reduced to zero forthwith; and/or10.2.2
    
    the Loan and all interest and commitment commission accrued and all other sums payable under
the Security Documents have become due and payable, whereupon the same shall, immediately or
in accordance with the terms of such notice, become due and payable.
 37




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10.3
    
    Demand basisIf, pursuant to clause 10.2.2, the Bank declares the Loan to be due and payable on demand,
the Bank may by written notice to the Borrower (a) call for repayment of the Loan on such
date as may be specified whereupon the Loan shall become due and payable on the date so
specified together with all interest and commitment commission accrued and all other sums
payable under this Agreement or (b) withdraw such declaration with effect from the date
specified in such notice.11
    
    Indemnities11.1
    
    Miscellaneous indemnitiesThe Borrower shall on demand indemnify the Bank, without prejudice to any of the Banks other
rights under any of the Security Documents, against any loss (including loss of Margin) or
expense which the Bank shall certify as sustained or incurred by it as a consequence of:
 11.1.1
    
    any default in payment of any sum under any of the Security Documents when due;11.1.2
    
    the occurrence of any other Event of Default;11.1.3
    
    any prepayment of the Loan (or any part thereof) being made under clauses 4.2, 4.3, 4.4,
8.2.1(a) or 12.1 or any other prepayment or repayment of an Advance (or part thereof) being
made otherwise than on an Interest Payment Date relating to the part of the Advance being
prepaid or repaid; or11.1.4
    
    any Advance not being made for any reason (excluding any default by the Bank) after the
Drawdown Notice for such Advance has been given,including, in any such case, but not limited to any loss or expense sustained or incurred by
the Bank in maintaining or funding the Commitment or any part thereof or in liquidating or
re-employing deposits from third parties acquired to effect or maintain the Commitment or any
part thereof or any other amount owing to the Bank.
 11.2
    
    Currency indemnityIf any sum due from the Borrower under any of the Security Documents or any order or judgment
given or made in relation thereto has to be converted from the currency (the first
currency) in which the same is payable under the relevant Security Document or under such
order or judgment into another currency (the second currency) for the purpose of (a) making
or filing a claim or proof against the Borrower, (b) obtaining an order or judgment in any
court or other tribunal or (c) enforcing any order or judgment given or made in relation to
any of the Security Documents, the Borrower shall indemnify and hold harmless the Bank from
and against any loss suffered as a result of any difference between (i) the rate of exchange
used for such purpose to convert the sum in question from the first currency into the second
currency and (ii) the rate or rates of exchange at which the Bank may in the ordinary course
of business purchase the first currency with the second currency upon receipt of a sum paid
to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.Any amount due from the Borrower under this clause 11.2 shall be due as a separate debt and
shall not be affected by judgment being obtained for any other sums due under or in respect
of any of the Security Documents and the term rate of exchange includes any premium and
costs of exchange payable in connection with the purchase of the first currency with the
second currency.
 38




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11.3
    
    Environmental indemnityThe Borrower shall indemnify the Bank on demand and hold it harmless from and against all
costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings
(whether civil or criminal), penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be suffered, incurred or paid by, or made or
asserted against the Bank at any time, whether before or after the repayment in full of
principal and interest under this Agreement, relating to, or arising directly or indirectly
in any manner or for any cause or reason whatsoever out of an Environmental Claim made or
asserted against the Bank if such Environmental Claim would not have been, or been capable of
being, made or asserted against the Bank if it had not entered into any of the Security
Documents and/or exercised any of its rights, powers and discretions thereby
conferred and/or performed any of its obligations thereunder and/or been involved in any of
the transactions contemplated by the Security Documents.11.4
    
    Central Bank or European Central Bank reserve requirements indemnityThe Borrower shall on demand promptly indemnify the Bank against any cost incurred or loss
suffered by the Bank as a result of its complying with the minimum reserve requirements of
the European Central Bank and/or with respect to maintaining required reserves with the
relevant national central bank to the extent that such compliance relates to the Commitment
or the Loan or part thereof or deposits obtained by it to fund or maintain the whole or part
of the Loan and such cost or loss is not recoverable by the Bank
under clause 12.2.12
    
    Unlawfulness and increased costs12.1
    
    UnlawfulnessIf it is or becomes contrary to any law or regulation for the Bank to make an Advance or
maintain its Commitment or fund the Loan, the Bank shall promptly give notice to the Borrower
whereupon (a) the Commitment shall be reduced to zero and (b) the Borrower shall be obliged
to prepay the Loan either (i) forthwith or (ii) on a future specified date not being earlier
than the latest date permitted by the relevant law or regulation together with interest
accrued to the date of prepayment and all other sums payable by the Borrower under this
Agreement and/or the Master Swap Agreement or either of them.12.2
    
    Increased costsIf the result of any change in, or in the interpretation or application of, or the
introduction of, any law or any regulation, request or requirement (whether or not having the
force of law, but, if not having the force of law, with which the Bank or, as the case may
be, its holding company habitually complies), including (without limitation) those relating
to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special
deposits, is to:
 12.2.1
    
    subject the Bank to Taxes or change the basis of Taxation of the Bank with respect to any
payment under any of the Security Documents (other than Taxes or Taxation on the overall net
income, profits or gains of the Bank imposed in the jurisdiction in which its principal or
lending office under this Agreement is located); and/or12.2.2
    
    increase the cost to, or impose an additional cost on, the Bank or its holding company in
making or keeping the Loan available or maintaining or funding all or part of the Loan; and/or12.2.3
    
    reduce the amount payable or the effective return to the Bank under any of the Security
Documents; and/or
 39




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12.2.4
    
    reduce the Banks or its holding companys rate of return on its overall capital by reason
of a change in the manner in which it is required to allocate capital resources to the Banks
obligations under any of the Security Documents; and/or12.2.5
    
    require the Bank or its holding company to make a payment or forego a return on or
calculated by reference to any amount received or receivable by the Bank under any of the
Security Documents; and/or12.2.6
    
    require the Bank or its holding company to incur or sustain a loss (including a loss of
future potential profits) by reason of being obliged to deduct all or part of the Loan from
its capital for regulatory purposes,then and in each such case (subject to clause 12.3):
 (a)
    
    the Bank shall notify the Borrower in writing of such event promptly upon
its becoming aware of the same; and(b)
    
    the Borrower shall on demand made at any time whether or not the Advances
outstanding have been repaid, pay to the Bank the amount which the Bank specifies (in
a certificate setting forth the basis of the computation of such amount but not
including any matters which the Bank or its holding company regards as confidential)
is required to compensate the Bank and/or (as the case may be) its holding company
for such liability to Taxes, cost, reduction, payment, foregone return or loss.
 For the purposes of this clause 12.2 holding company means the company or entity (if any)
within the consolidated supervision of which the Bank is included.12.3
    
    ExceptionNothing in clause 12.2 shall entitle the Bank to receive any amount in respect of
compensation for any such liability to Taxes, increased or additional cost, reduction,
payment, foregone return or loss to the extent that the same is the subject of an additional
payment under clause 6.6.13
    
    Security and set-off13.1
    
    Application of moneysAll moneys received by the Bank under or pursuant to any of the Security Documents and
expressed to be applicable in accordance with the provisions of this clause 13.1 shall be
applied in the following manner:
 13.1.1
    
    first, in or toward payment of all unpaid costs, expenses, fees and commitment commissions
which may be owing to the Bank under any of the Security Documents;13.1.2
    
    secondly, in or towards payment of any arrears of interest owing in respect of the Loan or
any part thereof;13.1.3
    
    thirdly, in or towards repayment of the Loan (whether the same is due and payable or not);13.1.4
    
    fourthly, in or towards payment to the Bank of any sum owing to it under the Master Swap
Agreement;13.1.5
    
    fifthly, in or towards payment to the Bank for any loss suffered by reason of any such
payment in respect of principal not being effected on an Interest Payment Date relating to the
part of the Loan repaid or prepaid and which amounts are so payable under this Agreement;
 40




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##### 



13.1.6
    
    sixthly, in or towards payment to the Bank of any other sums owing to it under any of the
Security Documents; and13.1.7
    
    seventhly, the surplus (if any) shall be paid to the Borrower or to whomsoever else may be
entitled to receive such surplus.
 13.2
    
    Set-off
 13.2.1
    
    The Borrower authorises the Bank (without prejudice to any of the Banks rights at law, in
equity or otherwise), at any time and without notice to the Borrower, to apply any credit
balance to which the Borrower is then entitled standing upon any account of such Borrower with
any branch of the Bank in or towards satisfaction of any sum due and
payable from the Borrower to the Bank under any of the Security Documents. For this
purpose, the Bank is authorised to purchase with the moneys standing to the credit of such
account such other currencies as may be necessary to effect such application.13.2.2
    
    The Bank shall not be obliged to exercise any right given to it by this clause 13.2. The
Bank shall notify the Borrower forthwith upon the exercise or purported exercise of any right
of set-off giving full details in relation thereto.13.2.3
    
    Nothing in this clause 13.2 shall be effective to create an Encumbrance or any other
security interest.
 13.3
    
    Further assuranceThe Borrower undertakes that the Security Documents shall, both at the date of execution and
delivery thereof and so long as any moneys are owing under any of the Security Documents, be
valid and binding obligations of the respective parties thereto and rights of the Bank
enforceable in accordance with their respective terms and that it will, at its expense,
execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing
by each of the other Security Parties of, any and every such further assurance, document, act
or thing as in the reasonable opinion of the Bank may be necessary or desirable for
perfecting the security contemplated or constituted by the Security Documents.13.4
    
    ConflictsIn the event of any conflict between this Agreement and any of the other Borrowers Security
Documents, the provisions of this Agreement shall prevail.14
    
    Assignment, transfer and lending office14.1
    
    Benefit and burdenThis Agreement shall be binding upon, and enure for the benefit of, the Bank and the Borrower
and their respective successors in title.14.2
    
    No assignment by BorrowerThe Borrower may not assign or transfer any of its rights or obligations under this
Agreement.14.3
    
    Assignment by BankThe Bank may assign all or any part of its rights under this Agreement or under any of the
other Security Documents to any other bank or financial institution (an Assignee) with the
prior written consent of the Borrower (such consent not to be unreasonably withheld and the
request for which to be promptly responded to) unless the Assignee shall be a Related Company
of the Bank (in which case no such consent shall be required, the Borrower consenting to such
assignment by its execution of this Agreement).
 41




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##### 



14.4
    
    TransferThe Bank may transfer all or any part of its rights, benefits and/or obligations under this
Agreement and/or any of the other Security Documents to any one or more banks or other
financial institutions (a Transferee) with the prior written consent of the Borrower (such
consent not to be unreasonably withheld and the request for which to be promptly responded
to) unless the Transferee shall be a Related Company of the Bank (in which case no such
consent shall be required, the Borrower consenting to such transfer by its execution of this
Agreement) and if the Transferee, by delivery of such undertaking as the Bank may approve,
becomes bound by the terms of this Agreement and agrees to perform all or, as the case may
be, part of the Banks obligations under this Agreement.
 14.5
    
    Documenting assignments and transfersIf the Bank assigns all or any part of its rights or transfers all or any part of its rights,
benefits and/or obligations as provided in clause 14.3 or 14.4 the Borrower undertakes,
immediately on being requested to do so by the Bank and at the cost of the Bank, to enter
into, and procure that the other Security Parties shall enter into, such documents as may be
necessary or desirable to transfer to the Assignee or Transferee all or the relevant part of
the Banks interest in the Security Documents and all relevant references in this Agreement
to the Bank shall thereafter be construed as a reference to the Bank and/or its Assignee or
Transferee (as the case may be) to the extent of their respective interests.14.6
    
    Lending officeThe Bank shall lend through its office at the address specified in the definition of Bank
in clause 1.2 or through any other office of the Bank selected from time to time by it
through which the Bank wishes to lend for the purposes of this Agreement. If the office
through which the Bank is lending is changed pursuant to this clause 14.6, the Bank shall
notify the Borrower promptly of such change.14.7
    
    Disclosure of informationThe Bank may disclose to a prospective assignee, transferee or to any other person who may
propose entering into contractual relations with the Bank in relation to this Agreement such
information about the Borrower and the other Security Parties or any of them as the Bank
shall consider appropriate.15
    
    Notices and other matters15.1
    
    NoticesEvery notice, request, demand or other communication under this Agreement or (unless
otherwise provided therein) under any of the other Security Documents shall:
 15.1.1
    
    be in writing delivered personally or by first-class prepaid letter (airmail if available)
or facsimile transmission or other means of telecommunication in permanent written form;15.1.2
    
    be deemed to have been received, subject as otherwise provided in the relevant Security
Document, in the case of a letter, when delivered personally or five (5) days after it has
been put in to the post and, in the case of a facsimile transmission or other means of
telecommunication in permanent written form, at the time of despatch (provided that if the
date of despatch is not a business day in the country of the addressee or if the time of
despatch is after the close of business in the country of the addressee it shall be deemed to
have been received at the opening of business on the next such business day); and
 42




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##### 



15.1.3
    
    be sent:
 (a)
    
    if to the Borrower at:
 
 
 (b)
    
    if to the Bank at:
 
 
 or to such other address and/or numbers as is notified by one party to the other party
under this Agreement.
 15.2
    
    No implied waivers, remedies cumulativeNo failure or delay on the part of the Bank to exercise any power, right or remedy under any
of the Security Documents shall operate as a waiver thereof, nor shall any single or partial
exercise by the Bank of any power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy. The remedies provided in the
Security Documents are cumulative and are not exclusive of any remedies provided by law.15.3
    
    English languageAll certificates, instruments and other documents to be delivered under or supplied in
connection with any of the Security Documents shall be in the English language or shall be
accompanied by a certified English translation upon which the Bank shall be entitled to rely.15.4
    
    Waiver of Borrowers rightsThe Borrower agrees with the Bank that, from the date of this Agreement and so long as any
moneys are owing under any of the Security Documents and while all or any part of the
Commitment remains outstanding, it will not, without the prior written consent of the Bank:
 15.4.1
    
    exercise any right of subrogation, reimbursement and indemnity against any Owner or any
other person liable under the Security Documents, whether in respect of any Indebtedness or
intra-Group loans or otherwise;15.4.2
    
    demand or accept repayment in whole or in part of any Indebtedness (including intra-Group
loans) now or hereafter due to such Borrower from any Owner or from any other person liable
under the Security Documents or demand or accept any guarantee, indemnity or other assurance
against financial loss or any document or instrument created or evidencing an Encumbrance in
respect of the same or dispose of the same;15.4.3
    
    take any steps to enforce any right against any Owner or any other person liable under the
Security Documents in respect of any such moneys; or15.4.4
    
    claim any set-off or counterclaim against any Owner or any other person liable under the
Security Documents or claiming or proving in competition with the Bank in the liquidation of
any Owner or any other person liable under the Security Documents or have the benefit of, or
share in, any payment from or composition with, any Owner or any other person liable under the
Security Documents or any other Security Document now or hereafter held by the Bank for any
moneys owing under this Agreement or for the obligations or liabilities of any other person
liable but so that, if so directed by the Bank, it will prove for the whole or any part of its
claim in the liquidation of any Owner or other person liable under the Security Documents on
terms that the benefit of such proof and all money received by it in respect thereof shall be
held on trust for the Bank and applied in or towards discharge of any moneys owing under this
Agreement in such manner as the Bank shall deem appropriate.
 43




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##### 



16
    
    Governing law and jurisdiction16.1
    
    LawThis Agreement is governed by, and shall be construed in accordance with, English law.16.2
    
    Submission to jurisdictionThe Borrower agrees, for the benefit of the Bank, that any legal action or proceedings
arising out of or in connection with this Agreement against the Borrower or any of its assets
may be brought in the English courts. The Borrower irrevocably and unconditionally submits
to the jurisdiction of such courts and irrevocably designates, appoints and empowers Messrs.
Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18
1AB, England to receive for it and on its behalf, service of process issued out of the
English courts in any such legal action or proceedings. The submission to such jurisdiction
shall not (and shall not be construed so as to) limit the right of the Bank to take
proceedings against the Borrower in the courts of any other competent jurisdiction nor shall
the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings
in any other jurisdiction, whether concurrently or not.The parties further agree that only the courts of England and not those of any other State
shall have jurisdiction to determine any claim which the Borrower may have against the Bank
arising out of or in connection with this Agreement.16.3
    
    Contracts (Rights of Third Parties) Act 1999No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act
1999 by a person who is not a party to this Agreement.
 IN WITNESS
 44




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##### 



Schedule 1
 Form of Drawdown Notice
  To:
    
    Credit Suisse
St. Alban-Graben 1-3
P.O. Box CH 4002
Basel
Switzerland
  US$87,000,000 Reducing Revolving Credit Facility
Facility Agreement dated [  ] 2007
 Facility Agreement [name and number of account] [details of bank in New York City
  (a)
    
    no event or circumstance has occurred and is continuing which constitutes a Default;(b)
    
    the representations and warranties contained (i) in clauses 7.1, 7.2 and 7.3(b) of the
Facility Agreement and (ii) in clauses 4.1 and 4.2 of each executed Owners Guarantee, are
true and correct at the date hereof as if made with respect to the facts and circumstances
existing at such date;(c)
    
    the borrowing to be effected by the drawdown of such Advance will be within our corporate
powers, has been validly authorised by appropriate corporate action and will not cause any
limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be
exceeded; and(d)
    
    there has been no material adverse change in the financial position of ourselves or any
Security Party or the Group, from that described by us or any other Security Party to the Bank
in the negotiation of the Facility Agreement.
  For and on behalf ofFREESEAS INC. 45




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##### 



Schedule 2
 Documents and evidence required as conditions precedent to the
 Commitment being made available
  1
    
    Constitutional documentscopies, certified by an officer of each Security Party as true, complete and up to date
copies of all documents which contain or establish or relate to the constitution of that
Security Party;2
    
    Corporate authorisationscopies of resolutions of the directors of each Security Party and officers certificates
attaching extracts of the resolutions of the shareholders of each Security Party, approving
such of the Underlying Documents and the Security Documents to which such Security Party is,
or is to be, party and authorising the signature, delivery and performance of such Security
Partys obligations thereunder, certified (in a certificate dated no earlier than five (5)
Banking Days prior to the date of this Agreement) by an officer of such Security Party as:
 (a)
    
    being true and correct;(b)
    
    being duly passed at meetings of the directors of such Security Party and of the
shareholders of such Security Party, each duly convened and held;(c)
    
    not having been amended, modified or revoked; and(d)
    
    being in full force and effect,
 together with originals or certified copies of any powers of attorney issued by any such
Security Party pursuant to such resolutions;3
    
    Specimen signaturescopies of the signatures of the persons who have been authorised on behalf of each Security
Party to sign such of the Underlying Documents and the Security Documents to which such
Security Party is, or is to be, party and to give notices and communications, including
notices of drawing, under or in connection with the Security Documents, certified (in a
certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement)
by an officer of such Security Party as being the true signatures of such persons;4
    
    Certificates of incumbencya list of directors and officers of each Security Party specifying the names and positions of
such persons, certified (in a certificate dated no earlier than five (5) Banking Days prior
to the date of this Agreement) by an officer of such Security Party to be true, complete and
up to date;
 46




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##### 



5
    
    Borrowers consents and approvalsa certificate (dated no earlier than five (5) Banking Days prior to the date of this
Agreement) from an officer of the Borrower that no consents, authorisations, licences or
approvals are necessary for the Borrower to authorise or are required by the Borrower in
connection with the borrowing by the Borrower of the Advances pursuant to this Agreement or
the execution, delivery and performance of the Borrowers Security Documents;6
    
    Other consents and approvalsa certificate (dated no earlier than five (5) Banking Days prior to the date of this
Agreement) from an officer of each Security Party (other than the Borrower) that no consents,
authorisations, licences or approvals are necessary for such Security Party to guarantee
and/or grant security for the borrowing by the Borrower of the Commitment pursuant to this
Agreement and execute, deliver and perform the Security Documents insofar as such Security
Party is a party thereto;7
    
    Marshall Islands opinionan opinion of Simpson & Reeder, special legal advisers on matters of Marshall Islands law to
the Bank;8
    
    Operating Accountsevidence that the Operating Accounts of the Initial Owners have been opened together with
duly completed mandate forms in respect thereof and that there is a credit balance in each
such Operating Account;9
    
    Security Documentsthe Master Swap Agreement and the Master Agreement Security Deed, each duly executed by the
relevant Security Parties;10
    
    Feesevidence that any fees are under clause 5.1.1 have been paid in full;11
    
    Borrowers process agenta letter from the Borrowers process agent for receipt of service of proceedings referred to
in clause 16.2 accepting its appointment under the said clause and under each of the other
Security Documents referred to in this Part 1 and in which it is or is to be appointed as the
Borrowers agent; and12
    
    Security Parties process agenta letter from each Security Partys agent for receipt of service of proceedings referred to
in each of the Security Documents referred to in this Part 1 and in which it is or is to be
appointed as such Security Partys agent.
 47




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##### 



Part 2
Initial Tranche  first Advance
 1
    
    Drawdown NoticeThe Drawdown Notice in respect of the first Advance to be drawn down under the Initial
Tranche duly executed;2
    
    Conditions precedentevidence that the conditions precedent set out in Part 1 of schedule 2 remain fully satisfied;3
    
    Ship conditionsevidence that each Initial Ship (other than Free Jupiter):3.1
    
    Registration and Encumbrancesis permanently registered in the name of the relevant Owner under the laws and flag of the
relevant Flag State through the relevant Registry and that each such Initial Ship and its
Earnings, Insurances and Requisition Compensation are free of Encumbrances;3.2
    
    Classificationmaintains the relevant Classification free of all requirements and recommendations of the
relevant Classification Society;3.3
    
    Insuranceis insured in accordance with the provisions of the relevant Ship Security Documents and all
requirements of such Ship Security Documents in respect of such insurance have been complied
with (including without limitation, confirmation from the protection and indemnity
association or other insurer with which each such Initial Ship is, or is to be, entered for
insurance or insured against protection and indemnity risks (including oil pollution risks)
that any necessary declarations required by the association or insurer for the removal of any
oil pollution exclusion have been made and that any such exclusion does not apply to each
such Initial Ship); and3.4
    
    Initial Charterhas been delivered for service to the relevant charterer under the relevant Initial Charter;4
    
    Security Documentsthe Owners Guarantee of each Initial Owner (other than the Free Jupiter Owner), the
Operating Account Pledge in respect of the Operating Account of each such Initial Owner and
the Ship Security Documents in respect of each Initial Ship (other than Free Jupiter), each
duly executed;5
    
    Mortgage registrationevidence that the Mortgage over each Initial Ship (other than Free Jupiter) has been
permanently registered against each such Initial Ship under the laws and flag of the relevant
Flag State through the relevant Registry;
 48




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##### 



6
    
    Registration formssuch statutory forms duly signed by the Borrower and the other Security Parties as may be
required by the Bank to perfect the security contemplated by the Security Documents referred
to in this Part 2;7
    
    Notices of assignmentcopies of duly executed notices of assignment required by the terms of the relevant Ship
Security Documents referred to in this Part 2 and in the forms prescribed by such Ship
Security Documents;8
    
    Valuationa valuation of each Initial Ship (other than Free Jupiter) made by one or (as the case may
be) two shipbrokers in accordance with, and on the basis described in, clause 8.2.2, at the
expense of the Borrower, such valuation to be made not earlier than thirty (30) days prior to
the drawdown of the first Advance to be drawn down under the Initial Tranche;9
    
    Insurance opinionan opinion (at the cost of the Borrower) from insurance consultants to the Bank on the
Insurances effected or to be effected in respect of each Initial Ship (other than Free
Jupiter) upon and following the first Drawdown Date;10
    
    SMC/DOCa copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the
date of this Agreement) as a true and complete copy by an officer of the Borrower of the DOC
issued to the Operator of each Initial Ship (other than Free Jupiter) and the SMC for each
such Initial Ship;11
    
    ISPS
 (a)
    
    evidence satisfactory to the Bank that each Initial Ship (other than Free
Jupiter) is subject to a ship security plan which complies with the ISPS Code; and(b)
    
    a copy, certified (in a certificate dated no earlier than five (5) Banking Days
prior to the first Drawdown Date) as a true and complete copy by an officer of the
Borrower of the ISSC and the continuous synopsis record (as described in the ISPS Code)
for each Initial Ship (other than Free Jupiter);
 12
    
    Feesevidence that any fees and any commitment commission due under clause 5.1 have been paid in
full;13
    
    Marshall Islands opinionan opinion of Cozen O Connor, special legal advisers on matters of Marshall Islands law to
the Bank;14
    
    Underlying Documentsa certified true copy of the Management Agreement and the Initial Charter in respect of each
Initial Ship (other than Free Jupiter);
 49




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##### 



15
    
    Security Parties process agenta letter from the relevant Security Parties agent for receipt of service of proceedings
accepting its appointment under each of the Security Documents referred to in this Part 2 and
in which it is or is to be appointed as the relevant Security Partys agent;16
    
    Existing Indebtednessevidence that the Indebtedness of the Initial Owners existing on the date of this Agreement
and secured on the Initial Ships has been, or will be with the proceeds of the first Advance
to be drawn down under the Initial Tranche, reduced to $28,000,000, the Initial Owners (other
than the Free Jupiter Owner) have been released from their obligations in respect thereof and
any security granted in respect thereof has been discharged (except in connection with Free
Jupiter); and17
    
    Further matters/opinionsany such other matter or further opinion as may be required by the Bank.
 50




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##### 



Part 3
Initial Tranche  second Advance
 1
    
    Drawdown NoticeThe Drawdown Notice in respect of the second Advance to be drawn down under the Initial
Tranche duly executed;2
    
    Conditions precedentevidence that the conditions precedent set out in Part 1 and Part 2 of schedule 2 remain
fully satisfied;3
    
    Ship conditionsevidence that Free Jupiter:3.1
    
    Registration and Encumbrancesis permanently registered in the name of the relevant Owner under the laws and flag of the
relevant Flag State through the relevant Registry and that Free Jupiterand its Earnings,
Insurances and Requisition Compensation are free of Encumbrances;3.2
    
    Classificationmaintains the relevant Classification free of all requirements and recommendations of the
relevant Classification Society;3.3
    
    Insuranceis insured in accordance with the provisions of the relevant Ship Security Documents and all
requirements of such Ship Security Documents in respect of such insurance have been complied
with (including without limitation, confirmation from the protection and indemnity
association or other insurer with which Free Jupiteris, or is to be, entered for insurance
or insured against protection and indemnity risks (including oil pollution risks) that any
necessary declarations required by the association or insurer for the removal of any oil
pollution exclusion have been made and that any such exclusion does not apply to Free
Jupiter; and3.4
    
    Initial Charterhas been delivered for service to the relevant charterer under the relevant Initial Charter;4
    
    Security Documentsthe Owners Guarantee of the Free Jupiter Owner, the Operating Account Pledge in respect of
the Operating Account of the Free Jupiter Owner and the Ship Security Documents in respect of
Free Jupiter, each duly executed;5
    
    Mortgage registrationevidence that the Mortgage over Free Jupiterhas been permanently registered against such
Ship under the laws and flag of the relevant Flag State through the relevant Registry;
 51




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##### 



6
    
    Registration formssuch statutory forms duly signed by the Borrower and the other Security Parties as may be
required by the Bank to perfect the security contemplated by the Security Documents referred
to in this Part 3;7
    
    Notices of assignmentcopies of duly executed notices of assignment required by the terms of the relevant Ship
Security Documents referred to in this Part 3 and in the forms prescribed by such Ship
Security Documents;8
    
    Valuationa valuation of Free Jupitermade by one or (as the case may be) two shipbrokers in accordance
with, and on the basis described in, clause 8.2.2, at the expense of the Borrower, such
valuation to be made not earlier than thirty (30) days prior to the drawdown of the second
Advance to be drawn down under the Initial Tranche;9
    
    Insurance opinionan opinion (at the cost of the Borrower) from insurance consultants to the Bank on the
Insurances effected or to be effected in respect of Free Jupiterupon and following the
Drawdown Date of the second Advance to be drawn down under the Initial Tranche;10
    
    SMC/DOCa copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the
date of this Agreement) as a true and complete copy by an officer of the Borrower of the DOC
issued to the Operator of Free Jupiterand the SMC for such Ship;11
    
    ISPS
 (a)
    
    evidence satisfactory to the Bank that Free Jupiteris subject to a ship security
plan which complies with the ISPS Code; and(b)
    
    a copy, certified (in a certificate dated no earlier than five (5) Banking Days
prior to the Drawdown Date of the second Advance to be drawn down under the Initial
Tranche) as a true and complete copy by an officer of the Borrower of the ISSC and the
continuous synopsis record (as described in the ISPS Code) for Free Jupiter;
 12
    
    Feesevidence that any fees and any commitment commission due under clause 5.1 have been paid in
full;13
    
    Marshall Islands opinionan opinion of Cozen O Connor, special legal advisers on matters of Marshall Islands law to
the Bank;14
    
    Underlying Documentsa certified true copy of the Management Agreement and the Initial Charter in respect of Free
Jupiter;
 52




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##### 



15
    
    Security Parties process agenta letter from the relevant Security Parties agent for receipt of service of proceedings
accepting its appointment under each of the Security Documents referred to in this Part 3 and
in which it is or is to be appointed as the relevant Security Partys agent;16
    
    Existing Indebtednessevidence that the Indebtedness of the Initial Owners existing on the date of this Agreement
and secured on the Initial Ships has been, or will be with the proceeds of the second Advance
to be drawn down under the Initial Tranche repaid in full and any security granted in respect
thereof has been discharged;17
    
    Dry-dockevidence that Free Jupiterhas completed its repairs in connection with its recent grounding
and has left the dry-dock and resumed trading and any amounts due for such repairs have been
settled in full by the relevant Owner and there is no dispute with the insurers, charterers
or cargo interests of Free Jupiterin connection with any claims made as a result of such
grounding and the insurers have paid any such claims (including to the Free Jupiter Owner) ;
and18
    
    Further matters/opinionsany such other matter or further opinion as may be required by the Bank.
 53




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##### 



Part 4
Additional Tranches
 1
    
    Drawdown NoticeThe duly executed Drawdown Notice in respect of the first Advance (the Relevant Advance) to
be drawn down under each Additional Tranche;2
    
    Constitutional Documentscopies, certified by an officer of the relevant Additional Owner (the Relevant Owner) to
purchase the relevant Additional Ship to which such Tranche relates (for the purposes of this
Part 4, the Relevant Ship) relating to the Relevant Advance as true, complete and up to
date copies of all documents which contain or establish or relate to the constitution of the
Relevant Owner;3
    
    Corporate authorisationscopies of resolutions of the directors of the Relevant Owner and the Manager and officers
certificates attaching extracts of the resolutions of the shareholders of each such Security
Party, approving such of the Underlying Documents and the Security Documents to which such
Security Party is, or is to be, party and authorising the signature, delivery and performance
of such Security Partys obligations thereunder, certified (in a certificate dated no earlier
than five (5) Banking Days) by an officer of such Security Party as:
 (a)
    
    being true and correct;(b)
    
    being duly passed at meetings of the directors of such Security Party and of the
shareholders of such Security Party, each duly convened and held;(c)
    
    not having been amended, modified or revoked; and(d)
    
    being in full force and effect,
 together with originals or certified copies of any powers of attorney issued by any such
Security Party pursuant to such resolutions;4
    
    Specimen signaturescopies of the signatures of the persons who have been authorised on behalf of the Relevant
Owner and the Manager to sign such of the Underlying Documents and the Security Documents
referred to in this Part 4 and to which such Security Party is, or is to be, party and to
give notices and communications, including notices of drawing, under or in connection with
the Security Documents, certified (in a certificate dated no earlier than five (5) Banking
Days prior to the date of the relevant Drawdown Notice) by an officer of such Security Party
as being the true signatures of such persons;5
    
    Certificates of incumbencya list of directors and officers of the Relevant Owner and the Manager specifying the names
and positions of such persons, certified (in a certificate dated no earlier than five (5)
Banking Days prior to the date of the relevant Drawdown Notice) by an officer of such
Security Party to be true, complete and up to date;
 54




---



##### 



6
    
    Consents and approvalsa certificate (dated no earlier than five (5) Banking Days prior to the date of the relevant
Drawdown Notice) from an officer of the Relevant Owner and the Manager that no
consents, authorisations, licences or approvals are necessary for such Security Party to
guarantee and/or grant security for the borrowing by the Borrower of the Advances pursuant to
this Agreement and execute, deliver and perform the Security Documents insofar as such
Security Party is a party thereto;7
    
    Ship conditionsevidence that the Additional Ship:7.1
    
    Registration and Encumbrancesis permanently registered in the name of the relevant Owner under the laws and flag of the
relevant Flag State through the relevant Registry and that such Relevant Ship and its
Earnings, Insurances and Requisition Compensation are free of Encumbrances;7.2
    
    Classificationmaintains the relevant Classification free of all requirements and recommendations of the
relevant Classification Society;7.3
    
    Insuranceis insured in accordance with the provisions of the relevant Ship Security Documents and all
requirements of such Ship Security Documents in respect of such insurance have been complied
with (including without limitation, confirmation from the protection and indemnity
association or other insurer with which such Relevant Ship is, or is to be, entered for
insurance or insured against protection and indemnity risks (including oil pollution risks)
that any necessary declarations required by the association or insurer for the removal of any
oil pollution exclusion have been made and that any such exclusion does not apply to such
Relevant Ship); and7.4
    
    Approved Typeevidence that the Relevant Ship is and remains a ship of the Approved Type as of the Drawdown
Date of the Relevant Advance;8
    
    Security Documentsthe Owners Guarantee of the Owner of the Relevant Ship, the Operating Account Pledge in
respect of the Operating Account of the Relevant Ship and the Ship Security Documents in
respect of the Relevant Ship, each duly executed;9
    
    Mortgage registrationevidence that the Mortgage over the Relevant Ship has been permanently registered against the
Relevant Ship under the laws and flag of the relevant Flag State through the relevant
Registry;10
    
    Registration formssuch statutory forms duly signed by the relevant Owner and the other Security Parties as may
be required by the Bank to perfect the security contemplated by the relevant Security
Documents referred to in this Part 4;
 55




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##### 



11
    
    Notices of assignmentcopies of duly executed notices of assignment requested by the terms of the relevant Ship
Security Documents referred to in this Part 4 and in the forms prescribed by such Ship
Security Documents referred to in this Part 4;12
    
    Delivery documentscopies, certified by the relevant Owner to be true and complete, of the bill of sale, the
protocol of delivery and acceptance, the relevant commercial invoice and any other relevant
delivery documents exchanged in respect of the Relevant Ship under the relevant Contract;13
    
    Transfer of titleevidence that the transfer of title to the Relevant Ship from the relevant Seller to the
relevant Owner has been duly recorded in the relevant Registry free from Encumbrances;14
    
    Valuationsa valuation of the Relevant Ship made by one or (as the case may be) two shipbrokers in
accordance with, and on the basis described in, clause 8.2.2, at the expense of the Borrower,
such valuation to be made not earlier than thirty (30) days prior to the drawdown of the
Relevant Advance;15
    
    Insurance opinionan opinion (at the cost of the Borrower) from insurance consultants to the Bank on the
insurances effected or to be effected in respect of the Relevant Ship upon and following the
drawdown of the Relevant Advance;16
    
    SMC/DOCa copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the
Drawdown Date of the Relevant Advance) as a true and complete copy by an officer of the
relevant Owner of the DOC issued to the Operator of the Relevant Ship and either (a) the SMC
for the Relevant Ship or (b) an application for the issuance of the SMC for the Relevant
Ship;17
    
    ISPS
 (a)
    
    evidence satisfactory to the Bank that the Relevant Ship is subject to a ship
security plan which complies with the ISPS Code; and
 (b)
    
    a copy, certified (in a certificate dated no earlier than five (5) Banking Days
prior to the Drawdown Date of the Relevant Advance) as a true and complete copy by an
officer of the relevant Owner of either (a) the ISSC or (b) an application for the
issuance of the ISSC and the continuous synopsis record (as described in the ISPS Code)
for the Relevant Ship;
 18
    
    Feesevidence that any fees and any commitment commission due under clause 5.1 have been paid in
full;
 56




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##### 



19
    
    Legal opinionsan opinion of special legal advisers to the Bank on the laws of the Flag State of the
Relevant Ship and on the laws of the country of incorporation of the relevant Owner of the
Relevant Ship;20
    
    Underlying Documentsa certified true copy of the Contract, the Management Agreement and any Security Charter in
respect of the Relevant Ship, duly executed;21
    
    Operating Accountevidence that the Operating Account of the Owner of the Relevant Ship has been duly opened
together with duly completed mandate forms in respect thereof, and that there is a credit
balance in such account;22
    
    Minimum fleet coverevidence satisfactory to the Bank that at least 50% of all Mortgaged Ships (including the
Relevant Ship) by reference to their aggregate deadweight tons, are subject to time-charters
with such charterers, and on such daily charter rates, as are acceptable to the Bank in its
sole discretion;23
    
    Equityany funds required to pay the remaining part of the purchase price of the Relevant Ship under
the relevant Contract which is not being financed by the Relevant Advance, have been
deposited with the Bank at least three (3) days before the relevant Drawdown Date;24
    
    Security Parties process agenta letter from the relevant Security Parties agent for receipt of service of proceedings
accepting its appointment under each the said Security Documents referred to in this Part 4
in which it is or is to be appointed as the said Security Parties process agent; and25
    
    Further matter/opinionsany such other matters or further opinions as the Bank may require.
 57




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##### 



Schedule 3
 Form of Master Swap Agreement
 58




---



##### 



Schedule 4
 Form of Master Agreement Security Deed
 59




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##### 



Schedule 5
 Form of Owners Guarantee
 60




---



##### 



Schedule 6
 Form of Mortgage
 61




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##### 



Schedule 7
 Form of General Assignment
 62




---



##### 



Schedule 8
 Form of Managers Undertaking
 63




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##### 



Schedule 9
 Form of Charter Assignment
 64




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##### 



SIGNEDby
    
    
    )for and on behalf of
    
    
    )
    
    
    
    ____________________FREESEAS INC.
    
    
    )
    
    
    Authorised SignatorySIGNEDby
    
    
    )for and on behalf of
    
    
    )
    
    
    
    ____________________CREDIT SUISSE
    
    
    )
    
    
    Attorney-in-factas Bank
    
    
    )
 65