Exhibit
10.4


 


[_______],
2016


 


Stellar
Acquisition III Inc. 


90
Kifissias Avenue


Maroussi
15125


Athens,
Greece


 


	Re:	Initial
    Public Offering


 


Gentlemen:


 


This
letter (this “Letter Agreement”) is being delivered to you in accordance with the Underwriting Agreement
(the “Underwriting Agreement”) proposed to be entered into by and between Stellar Acquisition III Inc.,
a Marshall Islands corporation (the “Company”), and Maxim Group LLC, as representative of the several
underwriters named therein (the “Underwriters”), relating to an underwritten initial public offering
(the “Public Offering”), of 8,000,000 of the Company’s units (the “Units”),
each comprised of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”),
and one warrant (each, a “Warrant”). Each Warrant entitles the holder thereof to purchase one share
of the Common Stock at a price of $11.50 per share, subject to adjustment. The Units shall be sold in the Public Offering pursuant
to a registration statement on Form S-1 and prospectus (the “Prospectus”) filed by the Company with
the Securities and Exchange Commission (the “Commission”) and the Company shall apply to have the Units
listed on the Nasdaq Capital Market. Certain capitalized terms used herein are defined in paragraph 11 hereof.


 


In
order to induce the Company and the Underwriters to enter into the Underwriting Agreement and to proceed with the Public Offering
and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Astra Maritime Corp.,
Dominium Investments Inc., Magellan Investments Corp. and Firmus Investments Inc. (each, a “Sponsor”
and collectively, the “Sponsors”) and the undersigned individuals, each of whom is a director, officer
or initial shareholder to the Company (each, an “Insider” and collectively, the “Insiders”),
hereby agrees with the Company as follows:


 


1.
Each Sponsor and each Insider agrees that if the Company seeks shareholder approval of a proposed Business Combination, then in
connection with such proposed Business Combination, it, he or she shall (i) vote any shares of Common Stock owned by it, him or
her in favor of such proposed Business Combination and (ii) not redeem any shares of Common Stock owned by it, him or her in connection
with such shareholder approval.


 


2.
Each Sponsor and each Insider agrees that in the event that the Company fails to consummate a Business Combination (as defined
in the Underwriting Agreement) within 12 months from the date of the closing of the Public Offering (or up to 24 months from the
closing of the Public Offering if the Company extends the period of time to consummate a Business Combination in accordance with
the Company’s amended and restated articles of incorporation (the “Charter”)), or such later period
approved by the Company’s shareholders in accordance with the Charter, the Sponsors and Insiders shall take all reasonable
steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than 10 business days thereafter, subject to lawfully available funds therefor, redeem 100% of the Common
Stock sold as part of the Units in the Public Offering (the “Offering Shares”), at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall
be net of taxes payable and working capital released to the Company and less up to $50,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish Public Shareholders’
rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining
shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations
under Marshall Islands law to provide for claims of creditors and other requirements of applicable law. Each Sponsor and each
Insider agrees not to propose any amendment to the Charter that would affect the substance or timing of the Company’s obligation
to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within 12 months from the closing
of the Public Offering (or up to 24 months from the closing of the Public Offering if the Company extends the period of time to
consummate a Business Combination in accordance with the Charter), unless the Company provides its public shareholders with the
opportunity to redeem their shares of Common Stock upon approval of any such amendment at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account including interest (which interest shall be net of taxes payable
and working capital released to the Company), divided by the number of then outstanding public shares.


 






     

     


    

 


Each
Sponsor and each Insider acknowledges that it, he or she has no right, title, interest or claim of any kind in or to any monies
held in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the
Founder Shares. Each Sponsor and each Insider further waives, with respect to any shares of the Common Stock held by it, him or
her, if any, any redemption rights it, he or she may have in connection with the consummation of a Business Combination, including,
without limitation, any such rights available in the context of a shareholder vote to approve such Business Combination or in
the context of a tender offer made by the Company to purchase shares of the Common Stock (although the Sponsors and Insiders shall
be entitled to redemption and liquidation rights with respect to any shares of the Common Stock (other than the Founder Shares)
they hold if the Company fails to consummate a Business Combination within 12 months from the date of the closing of the Public
Offering (or up to 24 months from the closing of the Public Offering if the Company extends the period of time to consummate a
Business Combination in accordance with the Charter).


 


3.
Subject to the provisions set forth in paragraphs 7(a) and (b) below, during the period commencing on the effective date of the
Underwriting Agreement and ending 180 days after such date, each Sponsor and each Insider shall not (i) sell, offer to sell,
contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly
or indirectly, file (or participate in the filing of) a registration statement with the Commission or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, with respect to any
Units, shares of Common Stock, Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of Common
Stock owned by it, if any, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of any Units, shares of Common Stock, Warrants or any securities convertible into,
or exercisable, or exchangeable for, shares of Common Stock owned by it, if any, whether any such transaction is to be settled
by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction
specified in clause (i) or (ii). The foregoing sentence shall not apply to the registration of the offer and sale of Units
contemplated by the Underwriting Agreement and the sale of the Units to the Underwriters. Each Sponsor and each Insider acknowledges
and agrees that, prior to the effective date of any release or waiver, of the restrictions set forth in this paragraph 3 or paragraph
7 below, the Company shall announce the impending release or waiver by press release through a major news service at least two
business days before the effective date of the release or waiver. Any release or waiver granted shall only be effective two business
days after the publication date of such press release. The provisions of this paragraph will not apply if (i) the release
or waiver is effected solely to permit a transfer of securities that is not for consideration and (ii) the transferee has
agreed in writing to be bound by the same terms described in this Letter Agreement to the extent and for the duration that such
terms remain in effect at the time of the transfer.


 


4.
In the event of the liquidation of the Trust Account, Prokopios (Akis) Tsirigakis and George Syllantavos (the “Indemnitors”)
agree to jointly indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing or defending
against any litigation, whether pending or threatened, or any claim whatsoever) to which the Company may become subject as a result
of any claim by (i) any third party for services rendered or products sold to the Company or (ii) a prospective target
business with which the Company has entered into an acquisition agreement (a “Target”); provided, however,
that such indemnification of the Company by the Indemnitors shall apply only to the extent necessary to ensure that such claims
by a third party for services rendered or products sold to the Company or a Target do not reduce the amount of funds in the Trust
Account to below (i) $10.10 per share (or up to $10.30 per share if the Company extends the period of time to consummate
a Business Combination in accordance with the Charter) of the Offering Shares or (ii) such lesser amount per share of the Offering
Shares held in the Trust Account due to reductions in the value of the trust assets as of the date of the liquidation of the Trust
Account, in each case, net of the amount of interest earned on the property in the Trust Account which may be withdrawn to pay
taxes and for working capital purposes, except as to any claims by a third party who executed a waiver of any and all rights to
seek access to the Trust Account and except as to any claims under the Company’s indemnity of the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended. In the event that any such executed waiver is
deemed to be unenforceable against such third party, the Indemnitors shall not be responsible to the extent of any liability for
such third party claim. The Indemnitors shall have the right to defend against any such claim with counsel of their choice reasonably
satisfactory to the Company if, within 15 days following written receipt of notice of the claim to the Indemnitors, the Indemnitors
notify the Company in writing that they shall undertake such defense.


 






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5.
To the extent that the Underwriters do not exercise their over-allotment option to purchase an additional 1,200,000 Units within
45 days from the date of the Prospectus (and as further described in the Prospectus), the Sponsors agree that they shall forfeit,
at no cost, a number of Founder Shares in the aggregate equal to 300,000 multiplied by a fraction, (i) the numerator of which
is 1,200,000 minus the number of Units purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the
denominator of which is 1,200,000. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised
in full by the Underwriters so that the shareholders prior to the Public Offering will own an aggregate of 20.0% of the Company’s
issued and outstanding shares of Common Stock after the Public Offering. The Sponsors and Insiders further agree that to the extent
that the size of the Public Offering is increased or decreased, the Company will purchase or sell shares of Common Stock or effect
a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the Public Offering
in such amount as to maintain the ownership of the shareholders prior to the Public Offering at 20.0% of its issued and outstanding
shares of Common Stock upon the consummation of the Public Offering. In connection with such increase or decrease in the size
of the Public Offering, then (A) the references to 1,200,000 in the numerator and denominator of the formula in the first
sentence of this paragraph shall be changed to a number equal to 15% of the number of shares included in the Units issued in the
Public Offering and (B) the reference to 300,000 in the formula set forth in the first sentence of this paragraph shall be
adjusted to such number of shares of the Common Stock that the Sponsors would have to return to the Company in order to hold (together
with all of the pre-Public Offering shareholders) an aggregate of 20.0% of the Company’s issued and outstanding shares after
the Public Offering.


 


6.
(a) Each Sponsor and each Insider agrees not to participate in the formation of, or become an officer or director of, any
other blank check company until the Company has entered into a definitive agreement with respect to a Business Combination or
the Company has failed to complete a Business Combination within 12 months after the closing of the Public Offering (or up to
24 months from the closing of the Public Offering if the Company extends the period of time to consummate a Business Combination
in accordance with the Charter).


 


(b)
Each Sponsor and each Insider agrees and acknowledges that: (i) each of the Underwriters and the Company would be irreparably
injured in the event of a breach by such Sponsor or Insider of his, her or its obligations (as applicable) under paragraphs 1,
2, 3, 4, 5, 6(a), 7(a), 7(b), and 9 of this Letter Agreement, (ii) monetary damages may not be an adequate remedy for such
breach, and (iii) the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such
party may have in law or in equity, in the event of such breach. 


 


7.
(a) Each Sponsor and each Insider agrees that it, he or she shall not Transfer (as defined below) any Founder Shares until
the earlier of (i) one year after the completion of a Business Combination or earlier if, subsequent to a Business Combination,
(x) the last sale price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least
150 days after a Business Combination or (y) the date following the completion of a Business Combination on which the Company
completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s shareholders
having the right to exchange their shares of Common Stock for cash, securities or other property (the “Founder Shares
Lock-up Period”).


 


(b)
Each Sponsor and each Insider agrees that it, he or she shall not effectuate any Transfer of Private Placement Warrants or Common
Stock issued or issuable upon the exercise of the Private Placement Warrants, until 30 days after the completion of a Business
Combination (the “Private Placement Warrants Lock-up Period”, together with the Founder Shares Lock-up
Period, the “Lock-up Periods”).


 






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(c)
Notwithstanding the provisions set forth in paragraphs 7(a) and (b), Transfers of the Founder Shares, Private Placement Warrants
and shares of Common Stock issued or issuable upon the exercise of the Private Placement Warrants are permitted to (a) the Company’s
officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of any
Sponsor or any affiliates of any Sponsor or any of its members; (b) in the case of an individual, by a gift to a member of
one of the members of the individual’s immediate family or to a trust, the beneficiary of which is a member of one of the
individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual,
by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to
a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of a Business
Combination at prices no greater than the price at which the securities were originally purchased; or (f) in the event of
the Company’s liquidation prior to the completion of a Business Combination; provided, however,
that in the case of clauses (a) through (e), these permitted transferees must enter into a written agreement agreeing to
be bound by these transfer restrictions.


 


8.
Each Sponsor and each Insider represents and warrants that it, he or she has never been suspended or expelled from membership
in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended
or revoked. Each Insider’s biographical information furnished to the Company is true and accurate in all respects and does
not omit any material information with respect to the undersigned’s background. Each Insider’s questionnaire furnished
to the Company is true and accurate in all respects. Each Insider represents and warrants that: the undersigned is not subject
to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain
from any act or practice relating to the offering of securities in any jurisdiction; the undersigned has never been convicted
of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds
of another person, or (iii) pertaining to any dealings in any securities and the undersigned is not currently a defendant
in any such criminal proceeding. 


 


9.
Except as disclosed in the Prospectus, neither any Sponsor or any Insider nor any affiliate of any Sponsor or any Insider, nor
any director or officer of the Company, shall receive from the Company any finder’s fee, reimbursement, consulting fee,
monies in respect of any repayment of a loan or other compensation prior to, or in connection with any services rendered in order
to effectuate the consummation of a Business Combination (regardless of the type of transaction that it is), other than the following,
none of which will be made from the proceeds of the Public Offering held in the Trust Account prior to the completion of a Business
Combination: (a) repayment of loans of up to an aggregate of $250,000 made to the Company by the Sponsors; (b) payment to an affiliate
of the Company’s executive officers for office space, utilities and secretarial support for a total of $10,000 per month;
(c) reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating a Business
Combination, and (d) repayment of loans, if any, and on such terms as to be determined by the Company from time to time, made
by the Sponsors or certain of the Company’s officers and directors to finance transaction costs in connection with an intended
Business Combination, provided, that, if the Company does not consummate a Business Combination, a portion of the working capital
held outside the Trust Account may be used by the Company to repay such loaned amounts so long as no proceeds from the Trust Account
are used for such repayment. Up to $2,000,000 of such loans (including any loans made in connection with the extension of the
time available for the Company to consummate a Business Combination) may be convertible into warrants of the post Business Combination
entity at a price of $0.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement
Warrants.


 


10.
Each Sponsor and each Insider has full right and power, without violating any agreement to which it is bound (including, without
limitation, any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter
Agreement and, as applicable, to serve as a director on the board of directors of the Company and hereby consents to being named
in the prospectus as a director or director nominee of the Company.


 


11.
As used herein, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Founder
Shares” shall mean the 2,300,000 shares of the Common Stock of the Company initially acquired by the Sponsors and
Insiders for an aggregate purchase price of $25,000, or approximately $0.0001 per share, prior to the consummation of the Public
Offering; (iii) “Private Placement Warrants “ shall mean the Warrants to purchase up to 7,300,000
shares of the Common Stock of the Company that are to be acquired by the Sponsors for an aggregate purchase price of $3.65 million
in the aggregate, or $0.50 per Warrant, in a private placement that shall occur simultaneously with the consummation of the Public
Offering; (iv) “Public Shareholders” shall mean the holders of securities issued in the Public
Offering; (v) “Trust Account” shall mean the trust fund into which a portion of the net proceeds
of the Public Offering shall be deposited; and (vi) “Transfer” shall mean the (a) sale of,
offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or
agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with
respect to or decrease of a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry
into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership
of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public
announcement of any intention to effect any transaction specified in clause (a) or (b).


 






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12.
This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter
hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral,
to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement
may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision,
except by a written instrument executed by all parties hereto.


 


13.
No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the
prior written consent of the other party. Any purported assignment in violation of this paragraph shall be void and ineffectual
and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding
on the Sponsors and Insiders and their respective successors and permitted assigns. Any transfer made in contravention of this
Letter Agreement shall be null and void.


 


14.
This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without
giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.
The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to,
this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably
submits to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waives any objection to
such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.


 


15.
Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be
in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested),
by hand delivery or facsimile transmission.


 


16.
This Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Periods or (ii) the liquidation
of the Company; provided, however, that this Letter Agreement shall earlier terminate in the event that
the Public Offering is not consummated and closed by [______], 2016, provided further that paragraph 4 of this
Letter Agreement shall survive such liquidation.


 


[Signature
page follows]


 




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	Sincerely,

         

        ASTRA
        MARITIME CORP.
	 
	 	 	 
	By:	 	 
	 	Name:
        Prokopios (Akis) Tsirigakis

        Title:
	 


 


	DOMINIUM
    INVESTMENTS INC. 	 
	 	 
	 	 
	Name:
        Prokopios (Akis) Tsirigakis

        Title:
	 
	 	 
	

        MAGELLAN
        INVESTMENTS CORP.
	 
	 	 
	 	 
	Name:
        George Syllantavos

        Title:
	 


 


	FIRMUS
    INVESTMENTS INC. 	 
	 	 
	 	 
	Name:
        George Syllantavos

        Title:
	 


 


	By:	 	 
	 	Prokopios
    (Akis) Tsirigakis	 


 


	By:	 	 
	 	George
    Syllantavos	 


 


	By:	 	 
	 	Alexandros
    Argyros	 


 


	By:	 	 
	 	Tiziano
    Paravagna	 


 


	By:	 	 
	 	Eleonora
    (Liona) Bacha	 


 


	By:	 	 
	 	Nikolas
    Tsirigakis	 


 


	By:	 	 
	 	Nicolas
    Bornozis	 


 


	By:	 	 
	 	Stylianos
    Anastopoulos	 


 


	CENTARUS
    METAL CORP. 	 
	 	 
	 	 
	Name:

        Title:
	 


 


	Acknowledged
        and Agreed:

         

        STELLAR
        ACQUISITION III INC.
	 
	 	 	 
	By:	 	 
	 	Name:

        Title:
	 


 


 


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