20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

     ¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

     x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

OR

     ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

OR

     ¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report: Not applicable

Commission file number 001-33922

DRYSHIPS INC.

(Exact name of Registrant as specified in its charter)

(Translation of Registrant’s name into English)

Republic of the Marshall Islands

(Jurisdiction of incorporation or organization)

80 Kifissias Avenue

GR 15125 Amaroussion

Greece

(Address of principal executive offices)

Mr. George Economou

Tel: + 011 30 210-80 90-570, Fax: + 011 30 210 80 90 585

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of class	Name of exchange on which registered
Common stock, $0.01 par value	Nasdaq Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: As of December 31, 2008, there were 70,600,000 shares of the registrant’s common stock, $0.01 par value, outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  x    Yes    ¨  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    ¨  Yes    x  No

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x     Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definitions of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  x	International Financial Reporting Standards as issued by the International Accounting Standards Board  ¨
Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

¨  Item 17    ¨  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨  Yes    x  No

FORWARD-LOOKING STATEMENTS

DryShips Inc., or the “Company”, desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection therewith. This document and any other written or oral statements made by the Company or on its behalf may include forward-looking statements, which reflect its current views with respect to future events and financial performance. This document includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as “forward-looking statements.” We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. When used in this document, the words “anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “may,” “should,” and “expect” reflect forward-looking statements.

Please note in this annual report, “we,” “us,” “our,” and “the Company,” all refer to DryShips Inc. and its subsidiaries.

All statements in this document that are not statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, such matters as:

• future operating or financial results;

• statements about planned, pending or recent acquisitions, business strategy and expected capital spending or operating expenses, including drydocking and insurance costs;

• our ability to enter into new contracts for our drilling rigs and drillships and future utilization rates and contract rates for drilling rigs and drillships;

• future capital expenditures and investments in the construction, acquisition and refurbishment of drilling rigs and drillships (including the amount and nature thereof and the timing of completion thereof);

• statements about drybulk shipping market trends, including charter rates and factors affecting supply and demand;

• our ability to obtain additional financing;

• expectations regarding the availability of vessel acquisitions; and

• anticipated developments with respect to pending litigation.

The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although DryShips Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, DryShips Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements contained in this annual report.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and drybulk vessel, drilling rig and drillship values, failure of a seller to deliver one or more drilling rigs, drillships or drybulk vessels, failure of a buyer to accept delivery of a drilling rig, drillship, or vessel, inability to procure acquisition financing, default by one or more charterers of

ii

our ships, changes in demand for drybulk commodities or oil, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled drydocking, changes in DryShips Inc.’s voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities and political events or acts by terrorists.

iii

TABLE OF CONTENTS

PART I
Item 1	Identity of Directors, Senior Management and Advisers	1
Item 2	Offer Statistics and Expected Timetable	1
Item 3	Key Information	1
Item 4	Information on the Company	37
Item 4A	Unresolved Staff Comments	64
Item 5	Operating and Financial Review and Prospects	64
Item 6	Directors and Senior Management	102
Item 7	Major Shareholders and Related Party Transactions	107
Item 8	Financial Information	112
Item 9	The Offer and Listing	114
Item 10	Additional Information	114
Item 11	Quantitative and Qualitative Disclosures about Market Risk	125
Item 12	Description of Securities Other than Equity Securities	126
PART II
Item 13	Defaults, Dividend Arrearages and Delinquencies	127
Item 14	Material Modifications to the Rights of Security Holders and Use of Proceeds	127
Item 15	Controls and Procedures	127
Item 16A	Audit Committee Financial Expert	129
Item 16B	Code of Ethics	129
Item 16C	Principal Accountant Fees and Services	129
Item 16D	Exemptions from the Listing Standards for Audit Committees	130
Item 16E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	130
Item 16F	Changes in Registrant’s Certifying Accountant	130
Item 16G	Corporate Governance	130
PART III
Item 17	Financial Statements	131
Item 18	Financial Statements	131
Item 19	Exhibits	131

iv

PART I.

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

A. Selected Financial Data

The following table sets forth the selected consolidated financial data and other operating data for DryShips Inc. as of and for the year ended October 31, 2004, as of and for the two-month period ended December 31, 2004, and for the years ended December 31, 2005, 2006, 2007 and 2008 as adjusted for the Company’s change in accounting policy in the first quarter of 2008 for drydocking costs from the deferral method to the direct expense method. The following information should be read in conjunction with Item 5 – “Operating and Financial Review and Prospects” and the consolidated financial statements and related notes included herein. The following selected consolidated financial data of DryShips Inc. is derived from our audited consolidated financial statements and the notes thereto which have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”).

3. A (i) INCOME STATEMENT

(In thousands of Dollars,	Year Ended October 31,			Two-Months Ended December 31			Year Ended December 31,
except per share and share data)	2004 (as adjusted)			2004 (as adjusted)			2005 (as adjusted)			2006 (as adjusted)			2007 (as adjusted)			2008
INCOME STATEMENT
Voyage revenues		63,458			15,599			228,913			248,431			582,561			861,296
Revenue from drilling contracts		—			—			—			—			—			219,406
Loss on forward freight agreements		—			—			—			22,473			—			—
Voyage expenses		5,481			1,136			9,592			15,965			31,647			53,172
Vessel operating expenses		13,046			1,756			39,875			54,164			63,225			79,662
Drilling rig operating expenses		—			—			—			—			—			86,229
Depreciation and amortization		4,735			808			40,231			58,011			76,511			157,979
Gain on sale of vessels		—			—			—			(8,845	)		(137,694	)		(223,022	)
Gain on contract cancellation		—			—			—			—			—			(9,098	)
Contract termination fees and forfeiture of vessel deposits		—			—			—			—			—			160,000
Goodwill impairment charge																	700,457
Management fees		1,261			240			4,962			6,609			9,579			21,129
General and administrative expenses (1)		221			114			4,186			5,931			7,493			68,229
Operating Income (loss)		38,714			11,545			130,067			94,123			531,800			(14,035	)
Interest and finance costs		(1,515	)		(508	)		(20,668	)		(42,392	)		(51,231	)		(113,194	)
Interest income		12			8			749			1,691			5,073			13,085
Gain / (loss) on interest rate swaps		—			—			270			676			(3,981	)		(207,936	)
Other, net		341			(6	)		(175	)		214			(3,037	)		(12,640	)
Income/ (loss) before income taxes, equity in loss of investee and minority interest		37,552			11,039			110,243			54,312			478,624			(334,720	)
Income taxes		—			—			—			—			—			(2,844	)
Equity in loss of investees		—			—			—			—			(299	)		(6,893	)
Minority interest		—			—			—			—			—			(16,825	)
Net Income/(loss)		37,552			11,039			110,243			54,312			478,325			(361,282	)
Basic and diluted earnings/(loss) per share	$	2.44		$	0.72		$	3.81		$	1.68		$	13.40		$	(8.11	)
Weighted average basic and diluted shares outstanding		15,400,000			15,400,000			28,957,397			32,348,194			35,700,182			44,598,585
Dividends declared per share	$	4.48		$	0.00		$	0.40		$	0.80		$	0.80		$	0.80

1

3.A. (ii) BALANCE SHEET AND OTHER FINANCIAL DATA

(In thousands of Dollars,	Year Ended October 31,		Two-Months Ended December 31,		Year Ended December 31,
except per share and share data)	2004		2004		2005		2006		2007		2008
	(as adjusted)		(as adjusted)		(as adjusted)		(as adjusted)		(as adjusted)
Current assets	69,344				18,777		25,875		153,035		720,427
Total assets	179,926				906,778		1,161,973		2,344,432		4,842,680
Current liabilities, including current portion of long-term debt	98,124				135,745		129,344		239,304		2,525,048
Total long-term debt, including current portion	114,908				525,353		658,742		1,243,778		3,158,870
Number of shares outstanding	15,400,000				30,350,000		35,490,097		36,681,097		70,600,000
Stockholders’ (deficit) / equity	(7,707	)			352,720		444,692		1,021,729		1,291,572
OTHER FINANCIAL DATA
Net cash provided by operating activities	7,309		55,207		163,806		99,082		407,899		540,129
Net cash used in investing activities	(20,119	)			(847,649	)	(287,512	)	(955,749	)	(2,110,852	)
Net cash provided by (used in) financing activities	15,985		(53,007	)	680,656		185,783		656,381		1,762,769
EBITDA (2)	43,790		12,347		170,393		153,024		600,994		(100,350	)
DRYBULK FLEET DATA:
Average number of vessels (3)	5.9		6		21.6		29.76		33.67		38.56
Total voyage days for drybulk carrier fleet (4)	2,066		366		7,710		10,606		12,130		13,896
Total calendar days for drybulk carrier fleet (5)	2,166		366		7,866		10,859		12,288		14,114
Drybulk carrier fleet utilization(6)	95.40	%	100.00	%	98.00	%	97.70	%	98.71	%	98.46	%
(In Dollars)
AVERAGE DAILY RESULTS
Time charter equivalent (7)	28,062		39,516		28,446		21,918		45,417		58,155
Vessel operating expenses (8)	6,023		4,798		5,069		4,988		5,145		5,644
Management fees	582		655		631		609		780		1,497
General and administrative expenses (9)	102		311		532		546		610		1,610
Total vessel operating expenses(10)	6,707		5,764		6,232		6,143		6,535		8,751
DRILLING RIG FLEET DATA:
Average number of drilling rigs(3)	—		—		—		—		—		2.0
Total voyage days for drilling rig fleet (4)	—		—		—		—		—		410
Total calendar days for drilling rig fleet(5)	—		—		—		—		—		462
Drilling rig fleet utilization(6)	—		—		—		—		—		88.74	%
(In Dollars)
AVERAGE DAILY RESULTS
Rig operating expenses	—		—		—		—		—		186,643
General and administrative expenses	—		—		—		—		—		30,290
Total rig operating expenses	—		—		—		—		—		216,933

(1) We did not pay any compensation to members of our senior management or our directors in the year ended October 31, 2004, and for the two month period ended December 31, 2004. Compensation to members of our senior management and directors amounted to $1.4 million, $1.4 million, $1.5 million and $9.0 million for each of the years ended December 31, 2005, 2006, 2007 and 2008, respectively.

(2) EBITDA represents net income before interest, income taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included in this annual report because it is a basis upon which we assess our liquidity position, because it is used by our lenders as a measure of our compliance with certain loan covenants and because we believe that it presents useful information to investors regarding our ability to service and/or incur indebtedness. The following table reconciles net cash provided by operating activities, as reflected in the consolidated statements of cash flows, to EBITDA:

2

(In thousands of Dollars)	Year Ended October 31,		Two-Months Ended December 31,		Year Ended December 31,
	2004		2004		2005		2006		2007		2008
	(as adjusted)		(as adjusted)		(as adjusted)		(as adjusted)		(as adjusted)
Net Cash provided by operating activities	7,309		55,207		163,806		99,082		407,899		540,129
Net increase / (decrease) in current assets	36,925		(42,322	)	4,560		5,067		23,291		33,914
Net (increase) / decrease in current liabilities, excluding current portion of long-term debt	(1,815	)	(927	)	(21,914	)	2,015		(18,873	)	(9,904	)
Gain on sale of vessels	—		—		—		8,845		137,694		223,022
Contract termination fees and forfeiture of vessel deposits	—		—		—		—		—		(55,000	)
Gain on contract cancellation											9,098
Goodwill impairment charge											(700,457	)
Amortization of stock based compensation	—		—		—		—		—		(31,502	)
Accrued commitments on undrawn lines of credit	—		—		—		—		—		(2,855	)
Amortization of fair value of acquired time charters	—		—		5,224		2,967		7,185		34,638
(Recognition) / amortization of free lubricants benefit	—		—		(928	)	119		257		276
Interest on credit facility from related parties	—		—		—		(77	)	—		—
Equity of loss of investees	—		—		—		—		(299	)	(6,893	)
Change in fair values of derivatives	—		—		270		(1,910	)	(128	)	(204,964	)
Income taxes	—		—		—		—		—		2,844
Minority interest	—		—		—		—		—		(16,825	)
Interest and finance costs, net	1,503		500		19,919		40,701		46,158		100,109
Amortization and write-off of deferred financing costs included in interest and finance costs	(132	)	(111	)	(544	)	(3,785	)	(2,190	)	(15,980	)
EBITDA	43,790		12,347		170,393		153,024		600,994		(100,350	)

(3) Average number of vessels is the number of vessels that constituted the respective fleet for the relevant period, as measured by the sum of the number of days each vessel in that fleet was a part of the fleet during the period divided by the number of calendar days in that period.

(4) Total voyage days for the respective fleet are the total days the vessels in that fleet were in the Company’s possession for the relevant period net of off-hire days associated with major repairs, drydockings or special or intermediate surveys.

(5) Calendar days are the total days the vessels in that fleet were in the Company’s possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.

(6) Fleet utilization is the percentage of time that the vessels in that fleet were available for revenue-generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.

(7) Time charter equivalent, or “TCE”, is a measure of the average daily revenue performance of a vessel on a per voyage basis. The Company’s method of calculating TCE is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE revenues, a non-GAAP measure, provides additional

3

meaningful information in conjunction with revenues from our vessels, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. TCE is also a standard shipping industry performance measure used primarily to compare period -to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. The following table reflects the calculation of our TCE rates for the periods presented.

Drybulk Carrier Segment (In thousands of Dollars, except for TCE rates, which are expressed in Dollars and voyage days)	Year Ended October 31,		Two-Months Ended December 31,		Year Ended December 31,
	2004		2004		2005		2006		2007		2008
Voyage revenues	63,458		15,599		228,913		248,431		582,561		861,296
Voyage expenses	(5,481	)	(1,136	)	(9,592	)	(15,965	)	(31,647	)	(53,172	)
Time charter equivalent revenues	57,977		14,463		219,321		232,466		550,914		808,124
Total voyage days for drybulk fleet	2,066		366		7,710		10,606		12,130		13,896
Time charter equivalent (TCE) rate	28,062		39,516		28,446		21,918		45,417		58,155

Drilling Rig Segment (In thousands of Dollars, except for TCE rates, which are expressed in Dollars and voyage days)	Year Ended December 31, 2008
Revenue from drilling contracts	219,406
Drilling rig operating expenses	86,229
	133,177
Total employment days for drilling rigs	410

4

(8) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by drybulk carrier fleet calendar days for the relevant time period.

(9) Daily general and administrative expense is calculated by dividing general and administrative expense less stock-based compensation by drybulk carrier fleet calendar days for the relevant time period.

(10) Total vessel operating expenses or “TVOE” is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses, management fees and general and administrative expenses less stock-based compensation . Daily TVOE is calculated by dividing TVOE by drybulk carrier fleet calendar days for the relevant time period.

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

D. Risk factors

Some of the following risks relate principally to the industries in which we operate and our business in general. Other risks relate principally to the securities market and ownership of our common stock. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results or our ability to pay dividends, if any, in the future, or the trading price of our common stock.

International Drybulk Shipping Industry Specific Risk Factors

The drybulk carrier charter market has continued to deteriorate since October 2008, which has adversely affected our revenues, earnings and profitability and our ability to comply with our loan covenants.

The Baltic Drybulk Index, or BDI, declined from a high of 11,793 in May 2008 to a low of 663 in December 2008, which represents a decline of 94%. The BDI fell over 70% during the month of October alone. Over the comparable period of May through December 2008, the high and low of the Baltic Panamax Index and the Baltic Capesize Index represent a decline of 96% and 99%, respectively. The decline in charter rates is due to various factors, including the lack of trade financing for purchases of commodities carried by sea, which has resulted in a significant decline in cargo shipments, and the excess supply of iron ore in China, which has resulted in falling iron ore prices and increased stockpiles in Chinese ports. The decline in charter rates in the drybulk market also affects the value of our drybulk vessels, which follows the trends of drybulk charter rates, and earnings on our charters, and similarly, affects our cash flows, liquidity and compliance with the covenants contained in our loan agreements.

We currently employ 13 vessels in the spot market with charters scheduled to expire over the next thirty days, by which time, we will have to negotiate new employment for all of these 13 vessels in the currently depressed charter market. In addition, two of our vessels are employed on time charters and one of our vessels is employed on a bareboat charter at rates that adjust with the BDI. If the very low charter rates in the drybulk market continue for any significant period in 2009, this would have an adverse effect on our revenues, profitability, cash flows and our ability to comply with the financial covenants in our loan agreements. In such a situation, unless our lenders are willing to provide waivers of covenant compliance or modifications to our covenants, our lenders could accelerate our debt and we could face the loss of our vessels. We are currently in discussions with our lenders to obtain waivers and covenant modifications. See “Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Resources – Credit Facilities.”

5

Charter hire rates for drybulk carriers have decreased, which may adversely affect our earnings.

The drybulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability. For example, the degree of charter hire rate volatility among different types of drybulk carriers has varied widely. After reaching historical highs in mid-2008, charter hire rates for Panamax and Capesize drybulk carriers reached near historically low levels in December 2008 began improving in January and February 2009 and then deteriorated in the latter half of March 2009. Because we charter some of our vessels pursuant to spot market voyage charters, or spot charters, we are exposed to changes in spot market charter rates for drybulk carriers and such changes may affect our earnings and the value of our drybulk carriers at any given time. We may not be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations. Because the factors affecting the supply and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.

Factors that influence demand for vessel capacity include:

• supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;

• changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;

• the location of regional and global exploration, production and manufacturing facilities;

• the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;

• the globalization of production and manufacturing;

• global and regional economic and political conditions, including armed conflicts and terrorist activities; embargoes and strikes;

• developments in international trade;

• changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;

• environmental and other regulatory developments;

• currency exchange rates; and

• weather.

The factors that influence the supply of vessel capacity include:

• the number of newbuilding deliveries;

• port and canal congestion;

• the scrapping rate of older vessels;

• vessel casualties; and

• the number of vessels that are out of service.

We anticipate that the future demand for our drybulk carriers will be dependent upon continued economic growth in the world’s economies, including China and India, seasonal and regional changes in demand, changes in the capacity of the global drybulk carrier fleet and the sources and supply of drybulk cargoes to be transported by sea. The capacity of the global drybulk carrier fleet seems likely to increase and economic growth may not continue. Adverse economic, political, social or other developments could have a material adverse effect on our business and operating results.

An over-supply of drybulk carrier capacity may lead to reductions in charter hire rates and profitability.

The market supply of drybulk carriers has been increasing, and the number of drybulk carriers on order are near historic highs. These newbuildings were delivered in significant numbers starting at the beginning of 2006 and continuing through 2008. As of December 2008, newbuilding orders had been placed for an aggregate of more than 28.27% of the existing global drybulk fleet, with deliveries expected during the next 36 months. An over-supply of drybulk carrier capacity may result in a further reduction of charter hire rates. If such a reduction occurs, upon the expiration or termination of our vessels’ current charters we may only be able to re-charter our vessels at reduced or unprofitable rates or we may not be able to charter these vessels at all.

We expect that a number of these newbuilding orders will be cancelled due to the decline in the drybulk charter market. We recently cancelled the acquisition of a total of nine Capesize vessels, five of which were newbuildings, and five Panamax vessels, two of which were newbuildings, from third party and related party sellers.

6

A further economic slowdown in the Asia Pacific region could exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations.

We anticipate a significant number of the port calls made by our vessels will continue to involve the loading or discharging of drybulk commodities in ports in the Asia Pacific region. As a result, further negative changes in economic conditions in any Asia Pacific country, particularly in China, may exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations, as well as our future prospects. In recent years, China has been one of the world’s fastest growing economies in terms of gross domestic product, which has had a significant impact on shipping demand. For the year ended December 31, 2008, the growth of China’s gross domestic product from the prior year ended December 31, 2007 was approximately 9%, compared with a growth rate of 11.2% over the same two year period ended December 31, 2007, and its growth in the fourth quarter of 2008 fell to an annualized rate of 6.8%. It is likely that China and other countries in the Asia Pacific region will continue to experience slowed or even negative economic growth in the near future. Moreover, the current economic slowdown in the economies of the United States, the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. China has recently announced a $586.0 billion stimulus package aimed in part at increasing investment and consumer spending and maintaining export growth in response to the recent slowdown in its economic growth. Our business, financial condition and results of operations, as well as our future prospects, will likely be materially and adversely affected by a further economic downturn in any of these countries.

Changes in the economic and political environment in China and policies adopted by the government to regulate its economy may have a material adverse effect on our business, financial condition and results of operations.

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five-year State Plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Limited price reforms were undertaken, with the result that prices for certain commodities are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. If the Chinese government does not continue to pursue a policy of economic reform, the level of imports to and exports from China could be adversely affected by changes to these economic reforms by the Chinese government, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could adversely affect our business, operating results and financial condition.

7

Disruptions in world financial markets and the resulting governmental action in the United States and in other parts of the world could have a further material adverse impact on our results of operations, financial condition and cash flows, and could cause the market price of our common stock to further decline.

The United States and other parts of the world are exhibiting deteriorating economic trends and have been in a recession. For example, the credit markets in the United States have experienced significant contraction, de-leveraging and reduced liquidity, and the United States federal government and state governments have implemented and are considering a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The SEC, other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws.

Recently, a number of financial institutions have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings or are in regulatory enforcement actions. The uncertainty surrounding the future of the credit markets in the United States and the rest of the world has resulted in reduced access to credit worldwide. As of December 31, 2008, we had total outstanding indebtedness of $3.2 billion under our credit facilities.

We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the current adverse changes in market conditions and regulatory climate in the United States and worldwide may adversely affect our business or impair our ability to borrow amounts under our credit facilities or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, have caused the price of our common stock on the Nasdaq Global Select Market to decline and could cause the price of our common stock to decline further.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea and in the Gulf of Aden off the coast of Somalia. Throughout 2008, the frequency of piracy incidents has increased significantly, particularly in the Gulf of Aden off the coast of Somalia. For example, in November 2008, the MV Sirius Star, a tanker vessel not affiliated with us, was captured by pirates in the Indian Ocean while carrying crude oil estimated to be worth $100 million. In February 2009, the vessel Saldanha, which is owned by our subsidiary, Team-Up Owning Company Limited, was seized by pirates while transporting coal through the Gulf of Aden. If these piracy attacks result in regions in which our vessels are deployed being characterized by insurers as “war risk” zones, as the Gulf of Aden temporarily was in May 2008, or Joint War Committee (JWC) “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. Crew costs, including those due to employing onboard security guards, could increase in such circumstances. In addition, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and it is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition, results of operations and cash flows.

8

World events could affect our results of operations and financial condition.

Terrorist attacks such as those in New York on September 11, 2001 and in London on July 7, 2005 and the continuing response of the United States to these attacks, as well as the threat of future terrorist attacks in the United States or elsewhere, continues to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. The continuing conflict in Iraq may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs.

Terrorist attacks on vessels, such as the October 2002 attack on the VLCC Limburg, a vessel not related to us, may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and may impact the economic recession in the United States and other countries. Any of these occurrences could have a material adverse impact on our revenues and costs.

Our revenues are subject to seasonal fluctuations, which could affect our operating results and our ability to pay dividends, if any, in the future.

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results, which could affect our ability to pay dividends, if any, in the future from quarter to quarter. The drybulk carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues have historically been weaker during the fiscal quarters ended June 30 and September 30, and, conversely, our revenues have historically been stronger in fiscal quarters ended December 31 and March 31. This seasonality may adversely affect our operating results and our ability to pay dividends, if any, in the future.

9

Rising fuel prices may adversely affect our profits.

While we do not bear the cost of fuel (bunkers) under our time and bareboat charters, fuel is a significant, if not the largest, expense in our shipping operations when vessels are under spot charter. Changes in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.

We are subject to international safety regulations and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.

In addition, vessel classification societies also impose significant safety and other requirements on our vessels. In complying with current and future environmental requirements, vessel-owners and operators may also incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in compliance.

The operation of our vessels is also affected by the requirements set forth in the United Nations’ International Maritime Organization’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. Each of the vessels that has been delivered to us is ISM Code-certified and we expect that any vessels that we acquire in the future will be ISM Code-certified when delivered to us. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. If we are subject to increased liability for noncompliance or if our insurance coverage is adversely impacted as a result of noncompliance, it may negatively affect our ability to pay dividends, if any, in the future. If any of our vessels are denied access to, or are detained in, certain ports, this may decrease our revenues.

We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the International Convention on Civil Liability for Oil Pollution Damage of 1969, the International Convention for the Prevention of Pollution from Ships of 1975, the International Maritime Organization, or IMO, International

10

Convention for the Prevention of Marine Pollution of 1973, the IMO International Convention for the Safety of Life at Sea of 1974, the International Convention on Load Lines of 1966, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Clean Air Act, U.S. Clean Water Act and the U.S. Marine Transportation Security Act of 2002. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, the management of ballast waters, maintenance and inspection, elimination of tin-based paint, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties and criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, such insurance may not be sufficient to cover all such risks or any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition and our ability to pay dividends, if any, in the future.

Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.

International shipping is subject to various security and customs inspection and related procedures in countries of origin, destination and trans-shipment points. Inspection procedures may result in the seizure of contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us.

It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, financial condition and results of operations.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert “sister ship” liability against one vessel in our fleet for claims relating to another of our vessels.

11

Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.

A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Although we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels may negatively impact our revenues and reduce the amount of dividends, if any, in the future.

Offshore Drilling Industry—Specific Risk Factors

Our business in the offshore drilling sector depends on the level of activity in the offshore oil and gas industry, which is significantly affected by, among other things, volatile oil and gas prices and may be materially and adversely affected by a decline in the offshore oil and gas industry.

The offshore contract drilling industry is cyclical and volatile. Our business in the offshore drilling sector depends on the level of activity in oil and gas exploration, development and production in offshore areas worldwide. The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development and political and regulatory environments affect customers’ drilling campaigns. Oil and gas prices and market expectations of potential changes in these prices also significantly affect this level of activity and demand for drilling units.

Oil and gas prices are extremely volatile and are affected by numerous factors beyond our control, including the following:

• worldwide demand for oil and gas;

• the cost of exploring for, developing, producing and delivering oil and gas;

• expectations regarding future energy prices;

• advances in exploration and development technology;

• the ability of the Organization of Petroleum Exporting Countries, or OPEC, to set and maintain levels and pricing;

• the level of production in non-OPEC countries;

• government regulations;

• local and international political, economic and weather conditions;

• domestic and foreign tax policies;

• development and exploitation of alternative fuels;

• the policies of various governments regarding exploration and development of their oil and gas reserves; and

• the worldwide military and political environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East or other geographic areas or further acts of terrorism in the United States, or elsewhere.

Declines in oil and gas prices for an extended period of time could negatively affect our business in the offshore drilling sector. Sustained periods of low oil prices typically result in reduced exploration

12

and drilling because oil and gas companies’ capital expenditure budgets are subject to their cash flow and are therefore sensitive to changes in energy prices. These changes in commodity prices can have a dramatic effect on rig demand, and periods of low demand can cause excess rig supply and intensify the competition in the industry which often results in drilling units, particularly lower specification drilling units, being idle for long periods of time. We cannot predict the future level of demand for our services or future conditions of the oil and gas industry. Any decrease in exploration, development or production expenditures by oil and gas companies could reduce our revenues and materially harm our business and results of operations.

In addition to oil and gas prices, the offshore drilling industry is influenced by additional factors, including:

• the availability of competing offshore drilling vessels;

• the level of costs for associated offshore oilfield and construction services;

• oil and gas transportation costs;

• the discovery of new oil and gas reserves; and

• the cost of non-conventional hydrocarbons, such as the exploitation of oil sands.

The offshore drilling industry is highly competitive and there is intense price competition, and as a result, we may be unable to compete successfully with other providers of contract drilling services that have greater resources than we have.

The offshore contract drilling industry is highly competitive with numerous industry participants, none of which has a dominant market share. Drilling contracts are traditionally often awarded on a competitive bid basis. Intense price competition is often the primary factor in determining which qualified contractor is awarded the drilling contract, although rig availability, location, and the quality and technical capability of service and equipment are key factors which are considered. Some of our competitors in the drilling industry are larger than we are and have more diverse fleets, or fleets with generally higher specifications, and greater resources than us. In addition, because of the relatively small size of our offshore drilling segment, we may be unable to take advantage of economies of scale to the same extent as some of our larger competitors. Given the high capital requirements that are inherent in the offshore drilling industry, we may also be unable to invest in new technologies or expand our fleet in the future as may be necessary for us to succeed in this industry, while our larger competitors’ superior financial resources may enable them to respond more rapidly to changing market demands. In addition, mergers among oil and natural gas exploration and production companies have reduced the number of available customers, resulting in increased competition for projects. We may not be able to maintain our competitive position, and we believe that competition for contracts will continue to be intense in the foreseeable future. Our inability to compete successfully may reduce our revenues and profitability.

An over-supply of drilling units may lead to a reduction in day rates and therefore may materially impact our profitability in our offshore drilling segment.

During the recent period of high utilization and high day rates, industry participants have increased the supply of drilling units by ordering the construction of new drilling units. Historically, this has resulted in an over-supply of drilling units and has caused a subsequent decline in utilization and day rates when the drilling units enter the market, sometimes for extended periods of time until the units have been absorbed into the active fleet. According to industry sources, the worldwide fleet of ultra-deepwater drilling units currently consists of 32 units, comprised of 16 semi-submersible rigs and 16 drillships. An additional 42 rigs and 42 drillships are under construction or on order, which would bring the total fleet to 116 drilling units in 2012. During the second and third quarter of 2008, a total of 12 ultra-deepwater drilling units were ordered. Not all of the drilling units currently under construction have been contracted for future work, which may intensify price competition as scheduled delivery dates occur. The entry into service of these

13

new, upgraded or reactivated drilling units will increase supply and could curtail a further strengthening, or trigger a reduction, in day rates as drilling units are absorbed into the active fleet. Any further increase in construction of new drilling units could have a negative impact on utilization and day rates. In addition, the new construction of high-specification rigs, as well as changes in our competitors’ drilling rig fleets, could require us to make material additional capital investments to keep our fleet competitive. Lower utilization and day rates could adversely affect our revenues and profitability. Prolonged periods of low utilization and day rates could also result in the recognition of impairment charges on our drilling units if future cash flow estimates, based upon information available to management at the time, indicate that the carrying value of these drilling units may not be recoverable.

The market value of our current drilling units and drilling units we may acquire in the future may decrease, which could cause us to incur losses if we decide to sell them following a decline in their market values.

If the offshore contract drilling industry suffers adverse developments in the future, the fair market value of our drilling units may decline. The fair market value of the drilling units we currently own or may acquire in the future may increase or decrease depending on a number of factors, including:

• prevailing level of drilling services contract day rates;

• general economic and market conditions affecting the offshore contract drilling industry, including competition from other offshore contract drilling companies;

• types, sizes and ages of drilling units;

• supply and demand for drilling units;

• costs of newbuildings;

• governmental or other regulations; and

• technological advances.

If we sell any drilling unit when drilling unit prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the drilling unit’s carrying amount on our financial statements, resulting in a loss. Additionally, our lenders may accelerate loan repayments should there be a loss in the market value of our drilling units. Such loss or repayment could materially and adversely affect our business prospects, financial condition, liquidity, results of operations, and our ability to pay dividends to our shareholders.

Consolidation of suppliers may limit our ability to obtain supplies and services at an acceptable cost, on our schedule or at all, which may have a material adverse effect on our results of operations and financial condition.

We rely on certain third parties to provide supplies and services necessary for our offshore drilling operations, including but not limited to drilling equipment suppliers, catering and machinery suppliers. Recent mergers have reduced the number of available suppliers, resulting in fewer alternatives for sourcing of key supplies. We may not be able to obtain supplies and services at an acceptable cost, at the times we need them or at all. Such consolidation, combined with a high volume of drilling units under construction, may result in a shortage of supplies and services thereby potentially inhibiting the ability of suppliers to deliver on time. These cost increases or delays could have a material adverse affect on our results of operations and financial condition.

Our international operations in the offshore drilling sector involve additional risks.

We operate in the offshore drilling sector in various regions throughout the world, including Ghana, that may expose us to political and other uncertainties, including risks of:

• terrorist acts, war and civil disturbances;

14

• seizure, nationalization or expropriation of property or equipment;

• political unrest;

• foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;

• the inability to repatriate income or capital;

• complications associated with repairing and replacing equipment in remote locations;

• import-export quotas, wage and price controls, imposition of trade barriers and other forms of government regulation and economic conditions that are beyond our control;

• regulatory or financial requirements to comply with foreign bureaucratic actions; and

• changing taxation policies.

In addition, international contract drilling operations are subject to various laws and regulations in countries in which we operate, including laws and regulations relating to:

• the equipping and operation of drilling units;

• repatriation of foreign earnings;

• oil and gas exploration and development;

• taxation of offshore earnings and earnings of expatriate personnel; and

• use and compensation of local employees and suppliers by foreign contractors.

Our two existing drilling rigs are currently operating in the North Sea and offshore Ghana. In the past we have operated our drilling rig the Eirik Raude in the Gulf of Mexico and offshore Canada, Cuba and Norway while the drilling rig Leiv Eiriksson has operated offshore in West Africa. Some foreign governments favor or effectively require the awarding of drilling contracts to local contractors, require use of a local agent or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These practices may adversely affect our ability to compete in those regions. It is difficult to predict what governmental regulations may be enacted in the future that could adversely affect the international drilling industry. The actions of foreign governments, including initiatives by OPEC, may adversely affect our ability to compete.

We are indemnified to some extent against loss of capital assets, but generally not loss of revenue, from most of these risks through provisions in our drilling contracts.

Governmental laws and regulations, including environmental laws and regulations, may add to our costs or limit our drilling activity.

Our business in the offshore drilling industry is affected by public policy and laws and regulations relating to the energy industry and the environment in the geographic areas where we operate.

The offshore drilling industry is dependent on demand for services from the oil and gas exploration and production industry, and accordingly, we are directly affected by the adoption of laws and regulations that for economic, environmental or other policy reasons curtail exploration and development drilling for oil and gas. We may be required to make significant capital expenditures to comply with governmental laws and regulations. It is also possible that these laws and regulations may in the future add significantly to our operating costs or significantly limit drilling activity. Governments in some countries are increasingly active in regulating and controlling the ownership of concessions, the exploration for oil and gas, and other aspects of the oil and gas industries. In recent years, increased concern has been raised over protection of the environment. Offshore drilling in certain areas has been opposed by environmental groups, and has in certain cases been restricted.

15

To the extent new laws are enacted or other governmental actions are taken that prohibit or restrict offshore drilling or impose additional environmental protection requirements that result in increased costs to the oil and gas industry in general or the offshore drilling industry in particular, our business or prospects could be materially adversely affected. The operation of our drilling units will require certain governmental approvals, the number and prerequisites of which cannot be determined until we identify the jurisdictions in which we will operate upon securing contracts for the drilling units. Depending on the jurisdiction, these governmental approvals may involve public hearings and costly undertakings on our part. We may not obtain such approvals or such approvals may not be obtained in a timely manner. If we fail to timely secure the necessary approvals or permits, our customers may have the right to terminate or seek to renegotiate their drilling contracts to our detriment. The amendment or modification of existing laws and regulations or the adoption of new laws and regulations curtailing or further regulating exploratory or development drilling and production of oil and gas could have a material adverse effect on our business, operating results or financial condition. Future earnings may be negatively affected by compliance with any such new legislation or regulations. In addition, we may become subject to additional laws and regulations as a result of future rig operations or repositioning.

We may be subject to liability under environmental laws and regulations, which could have a material adverse effect on our results of operations and financial condition.

Our operations in the offshore drilling industry may involve the use or handling of materials that may be classified as environmentally hazardous substances. Environmental laws and regulations applicable in the countries in which we conduct operations have generally become more stringent. Such laws and regulations may expose us to liability for the conduct of or for conditions caused by others, or for our acts that were in compliance with all applicable laws at the time such actions were taken.

During our drilling operations in the past, we have caused the release of oil, waste and other pollutants into the sea and into protected areas, such as the Barents Sea. While we conduct maintenance on our drilling rigs in an effort to prevent such releases, future releases could occur, especially as our rigs age. Such releases may be large in quantity, above our permitted limits or in protected or other areas in which public interest groups or governmental authorities have an interest. These releases could result in fines and other costs to us, such as costs to upgrade our drilling rigs, costs to clean up the pollution, and costs to comply with more stringent requirements in our discharge permits. Moreover, these releases may result in our customers or governmental authorities suspending or terminating our operations in the affected area, which could have a material adverse effect on our business, results of operation and financial condition.

We expect that we will be able to obtain some degree of contractual indemnification from our customers in most of our drilling contracts against pollution and environmental damages, but such indemnification may not be enforceable in all instances, the customer may not be financially capable in all cases of complying with its indemnity obligations and we may not be able to obtain such indemnification agreements in the future.

We currently maintain insurance coverage against certain environmental liabilities, including pollution caused by sudden and accidental oil spills. However, such insurance may not continue to be available or carried by us or, if available and carried, may not be adequate to cover any liability in all circumstances, which could have a material adverse effect on our business, operating results and financial conditions.

16

Acts of terrorism and political and social unrest could affect the markets for drilling services, which may have a material adverse effect on our results of operations.

Acts of terrorism and political and social unrest, brought about by world political events or otherwise, have caused instability in the world’s financial and insurance markets in the past and may occur in the future. Such acts could be directed against companies such as ours. In addition, acts of terrorism and social unrest could lead to increased volatility in prices for crude oil and natural gas and could affect the markets for drilling services and result in lower dayrates. Insurance premiums could increase and coverages may be unavailable in the future. U.S. government regulations may effectively preclude us from actively engaging in business activities in certain countries. These regulations could be amended to cover countries where we currently operate or where we may wish to operate in the future. Increased insurance costs or increased cost of compliance with applicable regulations may have a material adverse effect on our results of operations.

Company Specific Risk Factors

We are in breach of certain financial covenants contained in our loan agreements, have received notices from certain of our lenders regarding these covenant breaches, and are currently in discussions with our lenders for waivers and amendments of such financial covenants, and if we are not successful in obtaining such waivers and amendments, our lenders may declare an event of default and accelerate our outstanding indebtedness under the relevant agreement, which would impair our ability to continue to conduct our business.

Our loan agreements require that we maintain certain financial and other covenants. The current low drybulk charter rates and drybulk vessel values have affected our ability to comply with these covenants. A violation of these covenants constitutes an event of default under our credit facilities, which would, unless waived by our lenders, provide our lenders with the right to require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our fleet, reclassify our indebtedness as current liabilities and accelerate our indebtedness and foreclose their liens on our vessels, which would impair our ability to continue to conduct our business. A total of $1.8 billion of indebtedness relating to our drybulk fleet has been reclassified as current liabilities in our audited consolidated balance sheet for the year ended December 31, 2008 included in this annual report.

Several of our lenders, which collectively held $1.8 billion of our indebtedness relating to our drybulk fleet as of December 31, 2008, notified us that we are in breach of certain financial and other covenants contained in our loan agreements.

With respect to our $800 million credit facility with Nordea Bank Finland Plc, or Nordea Bank, as Agent, we have entered into a waiver and amendment agreement regarding the waiver of certain covenants including the minimum required security cover, the required minimum monthly retentions and the undertaking to prepay certain indebtedness in an amount equal to 50% of the net proceeds of new equity issued by us. In addition, among other things, lender consent will be required for the acquisition of drillship hulls 1837 and 1838, for new cash capital expenditures or commitments and for new acquisitions for cash until the loan has been repaid to below $375 million. The waiver agreement effective date will not exceed August 12, 2009, at which time the Company expects to be in compliance with the restructured loan covenants. As of December 31, 2008, we had outstanding borrowings in the amount of $650 million under this facility.

With respect to our loan agreements with Piraeus Bank, dated October 5, 2007 and March 13, 2008, we are in breach of various financial and asset coverage covenants. We have reached a preliminary agreement for covenant waivers and to restructure these facilities. There can be no assurance that we will be able to reach a definitive agreement with Piraeus Bank. As of December 31, 2008, we had outstanding borrowings in the amount of $166 million under this facility.

With respect to our senior and junior loan agreements with HSH, each dated March 31, 2006, we are in breach of various covenants which require us to maintain (i) an aggregate market value of the collateralized vessels of not less than 150% of the amount outstanding under the relevant agreement, and (ii) a minimum market value adjusted net worth of the Company. As of December 31, 2008, we had outstanding borrowings in the amount of $673.4 million under these agreements.

17

With respect to our loan agreement with WestLB AG dated June 20, 2008, we are in breach of various covenants which require us to maintain an aggregate market value of the collateralized vessels of not less than 135% of the aggregate value of (i) the loan and (ii) the swap exposure, which as of any relevant date is the aggregate amount payable by the Company to WestLB AG in the event of an early termination with respect to all continuing swap transactions between the Company and WestLB AG. As of December 31, 2008, we had outstanding borrowings in the amount of $78.4 million under this facility.

In addition, we are in breach of certain other financial covenants contained in our other loan agreements. We may not be successful in obtaining covenant waivers or modifications or our lenders may accelerate our indebtedness and foreclose their liens on our vessels. Please see “Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Resources – Breach of Loan Covenants.”

If our indebtedness is accelerated, it would be very difficult in the current financing environment for us to refinance our debt or obtain additional financing and we could lose our vessels if our lenders foreclose their liens. In addition, if the fair value of our vessels, which is calculated using undiscounted cash flows, deteriorates significantly from their currently depressed levels, we may have to record a further impairment adjustment to our financial statements, which would adversely affect our financial results and further hinder our ability to raise capital. Further, as discussed below, our independent registered public accounting firm has issued their opinion with an explanatory paragraph in connection with our audited financial statements included in this report that expresses substantial doubt about our ability to continue as a going concern.

Moreover, in connection with any waivers and/or amendments to our loan agreements, our lenders may impose additional operating and financial restrictions on us and/or modify the terms of our existing loan agreements. These restrictions may limit our ability to, among other things, pay dividends, make capital expenditures and/or incur additional indebtedness, including through the issuance of guarantees. In addition, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness.

Our inability to comply with certain financial and other covenants under our loan agreements raises substantial doubt about our ability to continue as a going concern.

As discussed above, we are in breach of certain financial and other covenants contained in our loan agreements as a result of the decline in the drybulk charter market and related decline in vessel values in the drybulk sector. We may be unable to meet the financial and other covenants contained in our loan agreements for the foreseeable future and our lenders may choose to accelerate our indebtedness. Therefore, our ability to continue as a going concern is dependent on management’s ability to successfully generate revenue and raise new equity in order to meet our obligations as they become due and the continued support of our lenders. As of March 26, 2009, we have issued a total of 71,265,000 common shares pursuant to our at the market offering under our ATM Equity Offering^SM Sales Agreement, dated January 28, 2009, by and between the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated as our agent for the sale of up to $500 million of our common shares, resulting in net proceeds of $370.5 million. We had 153,855,405 common shares outstanding as of March 26, 2009. Our independent registered public accounting firm has issued their opinion with an explanatory paragraph in connection with our financial statements included in this annual report that expresses substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of our inability to continue as a going concern. However, there is a material uncertainty related to events or conditions which raises significant doubt on our ability to continue as a going concern and, therefore, we may be unable to realize our assets and discharge our liabilities in the normal course of business. Although management believes that the actions presently being taken to generate revenues and raise new equity pursuant to our at the market offering will provide the opportunity for us to continue as a going concern, we may need to raise new equity in the future in order to continue as a going concern.

18

Our credit facilities impose operating and financial restrictions on us, and if we receive waivers and/or amendments to our loan agreements, our lenders may impose additional operating and financial restrictions on us and/or modify the terms of our existing loan agreements.

In addition to certain financial covenants relating to our financial position, operating performance and liquidity, the restrictions contained in our loan agreements limit our ability to, among other things:

• pay dividends to investors or make capital expenditures if we do not repay amounts drawn under the credit facilities, if there is a default under the credit facilities or if the payment of the dividend or capital expenditure would result in a default or breach of a loan covenant;

• incur additional indebtedness, including through the issuance of guarantees;

• change the flag, class or management of our vessels;

• create liens on our assets;

• sell or otherwise change the ownership of our vessels;

• merge or consolidate with, or transfer all or substantially all our assets to, another person;

• drop below certain minimum cash deposits, as defined in our credit facilities; and/or

• receive dividends from certain subsidiaries.

Pursuant to our final waiver agreement with Nordea Bank Finland Plc, we have agreed to additional operating and financial restrictions. See “Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Resources – Breach of Loan Covenants.” In connection with future waivers or amendments, lenders may impose additional restrictions on us

Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders’ interests may be different from ours and we may not be able to obtain our lender’s permission when needed. In addition to the above restrictions, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness. These potential restrictions and requirements may limit our ability to pay dividends, if any, in the future, to you, finance our future operations, make acquisitions or pursue business opportunities.

The failure of our counterparties to meet their obligations under our time charter agreements or drilling contracts could cause us to suffer losses or otherwise adversely affect our business.

Twenty of our vessels are currently employed under time charters, while three of our vessels are currently employed on bareboat charter with two customers, and our two drilling rigs are employed under drilling contracts which expire in September 2009 and October 2011, respectively. In addition, we received a letter of award on March 18, 2009 for the Leiv Eiriksson for a three year period with Petróleo Brasileiro S.A at a day rate of $540,000 plus an 8% incentive bonus based on operational performance. For the year ended December 31, 2008, two of our customers accounted for 31% of our revenues in our drybulk segment, and two customers accounted for 85.8% of our total offshore drilling revenues. The ability and willingness of each of our counterparties to perform its obligations under a time charter agreement or drilling contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the drybulk shipping or offshore drilling industries and the overall financial condition of the counterparties. In addition, in depressed market conditions, there have been reports of charterers, including some of our charterers, renegotiating their charters or defaulting on their obligations under charters and our customers may fail to pay charterhire or attempt to renegotiate

19

charter rates. In addition, our counterparties may have entered into contracts with third parties, many of whom are experiencing reduced cash flow or entering into bankruptcy in this period of depressed market conditions. If these third parties were to default on their obligations to our counterparties, it would reduce the cash flow of our counterparties and could cause them, in turn, to default on their obligations to us. The time charters on which we deploy nineteen of the vessels in our fleet provide for charter rates that are significantly above current market rates. The drilling contracts on which we employ our two drilling rigs are at rates approximating market rates. Should a counterparty fail to honor its obligations under agreements with us, it may be difficult to secure substitute employment for such vessel or drilling rig, and any new charter arrangements we secure in the spot market or on time charters could be at lower rates given currently decreased charter rate levels, particularly in the drybulk carrier market. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to pay dividends, if any, in the future, and comply with covenants in our credit facilities.

We may be unable to fulfill our obligations under our agreements to complete the construction of two newbuilding drybulk vessels that are expected to be delivered to us in 2009.

We currently have contracts to complete the construction of two newbuilding vessels in 2009, for which we will be required to procure additional financing of approximately $47.2 million. Our ability to obtain financing in the current economic environment, particularly for the acquisition of drybulk vessels, which are experiencing low charter rates and depressed vessel values, is limited and unless there is an improvement in our cash flow from operations and we are successful in obtaining debt financing, we may not be able to complete these transactions and we could lose our deposit money, which as of March 5, 2009 amounts to $20 million, and we may incur additional liability and costs. We do not now have any arrangements for chartering these vessels, and, accordingly, upon their delivery, we will have to deploy these vessels in the spot market, for which charter rates have been depressed since October 2008.

If the spin off of our subsidiary, Primelead Shareholders Inc., is delayed or does not occur, we will have significant additional indebtedness and payment obligations relating to the two drillships under construction that it will acquire.

Shortly prior to or concurrently with the spin off of our subsidiary, Primelead Shareholders, which now owns the stock of Ocean Rig ASA, or Ocean Rig, it will acquire our existing subsidiary, DrillShips Investment, which has contracts for construction of the two drillships, Hulls 1865 and 1866, to be delivered

20

in July 2011 and September 2011, respectively. Due to the disruptions in the credit markets worldwide and weakness in the energy sector, we do not expect to complete the spin off until the second half of 2009. If the spin off is delayed or does not occur, we will retain liability for the $173.4 million of indebtedness for Hulls 1865 and 1866 already incurred to finance payments made under the drillship newbuilding contracts, with $21.7 million in interest and installment payments due within the next year and $1.1 billion of newbuilding installment payments due thereafter. We have entered into two separate credit facilities with Deutsche Bank A.G., each in the amount of $562.5 million, to finance these installment payments. This indebtedness would be in addition to the indebtedness we have incurred and will incur to finance our drybulk fleet and its operations, would adversely affect our ability to comply with our loan covenants and service our indebtedness and would adversely impact our profitability and cash flows. If for any reason we fail to take delivery of the two newbuilding drillships, Hulls 1865 and 1866, we could lose our deposit money, which as of March 26, 2009 amounts to $411.9 million.

No financing has been arranged for the acquisition of the two newbuilding drillships under construction, Hulls 1837 and 1838, which our subsidiary, Primelead Shareholders Inc., is to acquire shortly prior to or at the time of its spinoff.

Shortly prior to or concurrently with the spin off of our subsidiary, Primelead Shareholders, which now owns the stock of Ocean Rig ASA, it will also acquire DrillShips Holdings, an entity not currently owned by us, which has contracts for construction of Hulls 1837 and 1838, to be delivered in December 2010 and March 2011, respectively, in exchange for 25% of the then-outstanding shares of Primelead Shareholders. Drillships Holdings is controlled by clients of Cardiff Marine Inc., or Cardiff, an affiliated company, including Mr. George Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer. We have entered into a contract to purchase DrillShips Holdings, and DrillShips Holdings has signed contracts to purchase two additional newbuilding ultra-deep water drillships, identified as Hulls 1837 and 1838, for which there are $1.1 billion in remaining installment payments. Financing has not been arranged for these installment payments. Due to the disruptions in the credit markets worldwide and weakness in the energy sector, we do not expect to complete the spin off until the second half of 2009. The indebtedness that would be assumed in connection with the acquisition of DrillShips Holdings would be in addition to the indebtedness we have incurred and will incur to finance our drybulk fleet and its operations, as well as drillship Hulls 1865 and 1866, would adversely affect our ability to comply with our loan covenants and service our indebtedness and would adversely impact our profitability and cash flows. If the spin off does not occur, we currently anticipate that we will not complete our acquisitions of Hulls 1837 and 1838. In addition, the consent of Nordea Bank and DVB Bank AG will be required to close the acquisition of Hulls 1837 and 1838.

Our board of directors has determined to suspend the payment of cash dividends as a result of market conditions in the international shipping industry, and until such market conditions improve, it is unlikely that we will reinstate the payment of dividends.

In light of a lower freight rate environment and a highly challenged financing environment, our board of directors, beginning with the fourth quarter of 2008, has suspended our common share dividend. Our dividend policy will be assessed by the board of directors from time to time. The suspension allows us to preserve capital and use the preserved capital to capitalize on market opportunities as they may arise. Until market conditions improve, it is unlikely that we will reinstate the payment of dividends. In addition, other external factors, such as our lenders imposing restrictions on our ability to pay dividends under the terms of our loan agreements, may limit our ability to pay dividends. Further, we may not be permitted to pay dividends if we are in breach of the covenants contained in our loan agreements.

The continued steep decline in the price of crude oil may affect the revenues that we are able to earn from our drilling rigs and the rates we are able to negotiate for our newbuilding drillships.

The price of crude oil is volatile and has continued to fall sharply over the past few months despite significant reductions in crude production announced by OPEC. Changes in crude oil prices often affect

21

oil exploration and drilling activities that, in turn, drive changes in the contract rates for oil drilling equipment, such as deep sea oil rigs and drillships, or, possibly, the suspension of exploration and drilling programs. Such changes and any such suspension could affect the rates which we receive for these rigs when their contracts expire, with the result that we will recognize less revenue from their operations. The employment contract for the Leiv Eiriksson, which currently earns $511,000 per day, expires in September 2009. We received a letter of award on March 18, 2009 for the Leiv Eiriksson for a three year period with Petróleo Brasileiro S.A. at a day rate of $540,000 plus an 8% incentive bonus based on operational performance. The contract for the Eirik Raude, which earns $637,000 on average over the contract period per day, expires in October 2011. The counterparty to the contract, Tullow Oil, has an option through March 31, 2009 to extend the contract for one or two additional years. Similarly, were the spin off of our subsidiary, Primelead Shareholders Inc., not to occur, and if the price of crude oil were to remain at or fall further from its already depressed levels, we may not be able to negotiate charter agreements for the newbuilding drillships that are scheduled to be delivered to us in 2010 through 2011 at attractive rates or at all. If the spin off does not occur, we currently anticipate that we will not close the acquisition of the additional two newbuilding drillships identified as Hulls 1837 and 1838.

Our earnings may be adversely affected if we are not able to take advantage of favorable charter rates.

We charter our drybulk carriers to customers primarily pursuant to long-term or short–term (spot) time charters, which generally last from several days to several weeks, and long-term time charters, which can last up to several years. We may in the future extend the charter periods for additional vessels in our fleet. Our vessels that are committed to longer-term charters may not be available for employment on short-term charters during periods of increasing short-term charter hire rates when these charters may be more profitable than long-term charters.

Investment in derivative instruments such as freight forward agreements could result in losses.

From time to time, we may take positions in derivative instruments including freight forward agreements, or FFAs. FFAs and other derivative instruments may be used to hedge a vessel owner’s exposure to the charter market by providing for the sale of a contracted charter rate along a specified route and period of time. Upon settlement, if the contracted charter rate is less than the average of the rates, as reported by an identified index, for the specified route and period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. If we take positions in FFAs or other derivative instruments and do not correctly anticipate charter rate movements over the specified route and time period, we could suffer losses in the settling or termination of the FFA. This could adversely affect our results of operations and cash flows.

The derivative contracts we have entered into to hedge our exposure to fluctuations in interest rates could result in higher than market interest rates and charges against our income.

We have entered into 33 interest rate swaps for purposes of managing our exposure to fluctuations in interest rates applicable to indebtedness under our credit facilities, which were advanced at a floating rate based on LIBOR. Our hedging strategies, however, may not be effective and we may incur substantial losses if interest rates move materially differently from our expectations. Some of our existing interest rate swaps do not, and future derivative contracts may not, qualify for treatment as hedges for accounting purposes. We recognize fluctuations in the fair value of these contracts in our income statement. In addition, our financial condition could be materially adversely affected to the extent we do not hedge our exposure to interest rate fluctuations under our financing arrangements, under which loans have been advanced at a floating rate based on LIBOR and for which we have not entered into an interest rate swap or other hedging arrangement. Any hedging activities we engage in may not effectively manage our interest rate exposure or have the desired impact on our financial conditions or results of operations. At December 31, 2008, the fair value of our interest rate swaps was an unrealized loss of $207.9 million. See Note 12 to our financial statements for the year ended December 31, 2008.

22

We depend entirely on Cardiff to manage and charter our drybulk fleet.

With respect to our operations in the drybulk shipping sector, we currently have three employees, our Chief Executive Officer who also acts as the Interim Chief Financial Officer, our Chief Operating Officer and our Internal Auditor. We have no plans to hire additional employees for our operations in the drybulk shipping sector. We subcontract the commercial and technical management of our drybulk fleet, including crewing, maintenance and repair to Cardiff. 70% of the issued and outstanding capital stock of Cardiff is owned by a foundation which is controlled by Mr. Economou, our Chairman and Chief Executive Officer, and a director of our Company. The remaining 30% of the issued and outstanding capital stock of Cardiff is owned by a company controlled by the sister of Mr. Economou, who is also a director of our Company. The loss of Cardiff’s services or its failure to perform its obligations to us could materially and adversely affect the results of our operations. Although we may have rights against Cardiff if it defaults on its obligations to us, you will have no recourse against Cardiff. Further, we are required to seek approval from our lenders to change our manager.

Cardiff is a privately held company and there is little or no publicly available information about it.

The ability of Cardiff to continue providing services for our benefit will depend in part on its own financial strength. Circumstances beyond our control could impair Cardiff’s financial strength, and because it is privately held it is unlikely that information about its financial strength would become public unless Cardiff began to default on its obligations. As a result, an investor in our shares might have little advance warning of problems affecting Cardiff, even though these problems could have a material adverse effect on us.

Our Chairman, Chief Executive Officer and Interim Chief Financial Officer has affiliations with Cardiff which could create conflicts of interest.

Our majority shareholder is controlled by Mr. George Economou who controls four companies that, in aggregate, own 9.3% of us as of March 13, 2009 and a foundation that owns 70% of Cardiff. Mr. Economou is also our Chairman, Chief Executive Officer, Interim Chief Financial Officer and a director of our Company. These responsibilities and relationships could create conflicts of interest between us, on the one hand, and Cardiff, on the other hand. These conflicts may arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus drybulk carriers managed by other companies affiliated with Cardiff and Mr. Economou. In particular, Cardiff may give preferential treatment to vessels that are beneficially owned by related parties because Mr. Economou and members of his family may receive greater economic benefits.

Companies affiliated with Cardiff own and may acquire vessels that compete with our fleet which may create conflicts of interest between Cardiff as our fleet manager and us.

Erato Owning Company Limited is a company affiliated with Cardiff that owns a Capesize drybulk carrier. Mentor Owning Company Limited and Iris Owning Company Limited are companies affiliated with Cardiff that each owns a Handymax drybulk carrier. The three vessels owned by those companies, or the “Bareboat Charter Vessels”, are currently employed under bareboat charters that end in September 2014. Subject to the obligations of Mr. Economou set forth in a letter agreement between him and the Company to use commercially reasonable efforts to cause the sale of the Bareboat Charter Vessels, and to give us a right of first refusal to acquire them, when the Bareboat Charter Vessels are redelivered to the owners, they may be managed by Cardiff in competition with our fleet. In addition, Cardiff’s affiliates may acquire additional drybulk carriers in the future, subject to a right of first refusal that Mr. Economou has granted to us in that letter agreement. Furthermore, Calypso Marine Corp., Oil Transport Investments Limited and Innovative Investments Limited, companies affiliated with Cardiff, each own a Capesize

23

drybulk carrier. These vessels also could be in competition with our fleet and Cardiff and other companies affiliated with Cardiff might be faced with conflicts of interest with respect to their own interests and their obligations to us. Cardiff may give preferential treatment to other companies affiliated with it, which may adversely affect our results of operations.

We may have difficulty managing our planned growth properly.

We intend to continue to grow our fleet. Our future growth will primarily depend on our ability to:

• locate and acquire suitable vessels;

• identify and consummate acquisitions or joint ventures;

• enhance our customer base;

• manage our expansion; and

• obtain required financing on acceptable terms.

Growing any business by acquisition presents numerous risks, such as undisclosed liabilities and obligations, the possibility that indemnification agreements will be unenforceable or insufficient to cover potential losses and difficulties associated with imposing common standards, controls, procedures and policies, obtaining additional qualified personnel, managing relationships with customers and integrating newly acquired assets and operations into existing infrastructure. We may be unable to successfully execute our growth plans or we may incur significant expenses and losses in connection with our future growth which would have an adverse impact on our financial condition and results of operations.

Purchasing and operating secondhand vessels may result in increased operating costs and reduced fleet utilization.

While we have the right to inspect previously owned vessels prior to our purchase of them and we intend to inspect all secondhand vessels that we acquire in the future, such an inspection does not provide us with the same knowledge about their condition that we would have if these vessels had been built for and operated exclusively by us. A secondhand vessel may have conditions or defects that we were not aware of when we bought the vessel and which may require us to incur costly repairs to the vessel. These repairs may require us to put a vessel into drydock which would reduce our fleet utilization. Furthermore, we usually do not receive the benefit of warranties on secondhand vessels.

In the highly competitive international shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources and as a result, we may be unable to employ our vessels profitability.

We employ our vessels in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than we do. Competition for the transportation of drybulk cargo by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, competitors with greater resources could enter the drybulk shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer. If we are unable to successfully compete with other drybulk shipping companies, this would have an adverse impact on our results of operations.

24

We are dependent upon key management personnel, particularly our Chairman, Chief Executive Officer and Interim Chief Financial Officer, Mr. George Economou.

Our continued operations depend to a significant extent upon the abilities and efforts of our Chairman, Chief Executive Officer and Interim Chief Financial Officer, Mr. George Economou. The loss of Mr. Economou’s service to our Company could adversely affect our discussions with our lenders and management of our fleet during this difficult economic period and, therefore, could adversely affect our business prospects, financial condition and results of operations. We do not currently, nor do we intend to, maintain “key man” life insurance on any of our personnel, including Mr. Economou.

Risks associated with operating ocean-going vessels could affect our business and reputation, which could adversely affect our revenues and stock price.

The operation of ocean-going vessels carries inherent risks. These risks include the possibility of:

• marine disaster;

• environmental accidents;

• cargo and property losses or damage;

• business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and

• piracy.

The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator. Any of these circumstances or events could increase our costs or lower our revenues.

The shipping industry has inherent operational risks that may not be adequately covered by our insurance.

We procure insurance for our fleet against risks commonly insured against by vessel owners and operators. Our current insurance includes hull and machinery insurance, war risks insurance and protection and indemnity insurance (which includes environmental damage and pollution insurance). We may not be adequately insured against all risks or our insurers may not pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs.

The operation of drybulk carriers has certain unique operational risks.

The operation of certain ship types, such as drybulk carriers, has certain unique risks. With a drybulk carrier, the cargo itself and its interaction with the ship can be a risk factor. By their nature, drybulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, drybulk carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold), and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach to the sea. Hull breaches in drybulk carriers may lead to the flooding of the vessels holds. If a drybulk carrier suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessels bulkheads leading to the loss of a vessel. If we are

25

unable to adequately maintain our vessels we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition, results of operations and our ability to pay dividends, if any, in the future. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

If our vessels fail to maintain their class certification and/or fail any annual survey, intermediate survey, dry-docking or special survey, that vessel would be unable to carry cargo, thereby reducing our revenues and profitability and violating certain covenants under our credit facilities.

The hull and machinery of every commercial drybulk vessel and rig must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention, or SOLAS. All of our drybulk vessels are certified as being “in class” by all the major Classification Societies (e.g., American Bureau of Shipping, Lloyd’s Register of Shipping). Both our drilling rigs are certified as being “in class” by De Norske Veritas (DNV). The Leiv Eiriksson completed the 5-year class in 2006 and the Eirik Raude in 2007.

A vessel must undergo annual surveys, intermediate surveys, dry-dockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be dry-docked every two to three years for inspection of the underwater parts of such vessel.

If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, dry-docking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our credit facilities. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations. That status could cause us to be in violation of certain covenants in our credit facility.

The aging of our fleet may result in increased operating costs or loss of hire in the future, which could adversely affect our earnings.

In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. As of December 31, 2008, the 39 vessels in our fleet had an average age of 8 years. As our fleet ages we will incur increased costs. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations and safety or other equipment standards related to the age of vessels may also require expenditures for alterations or the addition of new equipment to our vessels and may restrict the type of activities in which our vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

In addition, charterers actively discriminate against hiring older vessels. For example, Rightship, the ship vetting service founded by Rio Tinto and BHP-Billiton which has become the major vetting service in the drybulk shipping industry, ranks the suitability of vessels based on a scale of one to five stars. Most major carriers will not charter a vessel that Rightship has vetted with fewer than three stars. Rightship automatically downgrades any vessel over 18 years of age to two stars, which significantly decreases its chances of entering into a charter. Therefore, as our vessels approach and exceed 18 years of age, we may not be able to operate these vessels profitably during the remainder of their useful lives.

26

Our vessels may suffer damage and we may face unexpected drydocking costs, which could adversely affect our cash flow and financial condition.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. The loss of earnings while our vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings and reduce the amount of dividends, if any, in the future. We may not have insurance that is sufficient to cover all or any of these costs or losses and may have to pay drydocking costs not covered by our insurance.

If our drilling rigs suffer damage, they may need to be repaired at a yard facility. The costs of discontinued operations due to repairs are unpredictable and can be substantial. The loss of earnings while our rigs are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings and reduce the amount of dividends, if any, in the future. We may not have insurance that is sufficient to cover all or any of these costs or losses and may have to pay repair costs not covered by our insurance.

Currently, our revenues from the offshore drilling segment depend on two drilling rigs, which are designed to operate in harsh environments. The damage or loss of either of these drilling rigs could have a material adverse effect on our results of operations and financial condition.

Our revenues from the offshore drilling segment are dependent on two drilling rigs, the Eirik Raude, which is currently operating offshore Ghana and the Leiv Eiriksson, which is currently operating in the North Sea. Both drilling rigs may be exposed to risks inherent in deepwater drilling and operating in harsh environments that may cause damage or loss. The drilling of oil and gas wells, particularly exploratory wells where little is known of the subsurface formations involves risks, such as extreme pressure and temperature, blowouts, reservoir damage, loss of production, loss of well control, lost or stuck drill strings, equipment defects, punch-throughs, craterings, fires, explosions, pollution and natural disasters such as hurricanes and tropical storms. In addition, offshore drilling operations are subject to perils peculiar to marine operations, either while on-site or during mobilization, including capsizing, sinking, grounding, collision, marine life infestations, and loss or damage from severe weather. The replacement or repair of a rig could take a significant amount of time, and we may not have any right to compensation for lost revenues during that time, despite our comprehensive loss of hire insurance policy. As long as we have only two drilling rigs in operation, loss of or serious damage to one of the drilling rigs could materially reduce our revenues in our offshore drilling segment for the time that a rig is out of operation. In view of the sophisticated design of the drilling rigs, we may be unable to obtain a replacement rig that could perform under the conditions that our drilling rigs are expected to operate, which could have a material adverse effect on our results of operations and financial condition.

We are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm our reported revenue and results of operations.

We generate all of our revenues in U.S. dollars but currently incur approximately 50% of our operating expenses and the majority of our general and administrative expenses in currencies other than the U.S. dollar, primarily the Euro. Our principal currency for our operations and financing for the offshore drilling sector is the U.S. Dollar. The dayrates for the drilling rigs, the Company’s principal source of revenues, are quoted and received in U.S. Dollars. The principal currency for operating expenses in the offshore drilling sector is also the U.S. Dollar; however, a significant portion of employee salaries and administration expenses, as well as parts of the consumables and repair and maintenance expenses for the drilling rigs, are paid in Norwegian Kroner (NOK), Great British Pound (GBP), Canadian dollar (CAD) and Euro (EUR). Because a significant portion of our expenses are incurred in currencies other than the U.S. dollar, our expenses may from time to time increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. dollar and the Euro, which could affect the amount of net income that we report in future periods. As of December 31, 2008, the Company had outstanding four forward contracts to sell $6.0 million for NOK 31.4 million and seven forward contracts to sell $10.5

27

million for NOK 72.9 million. The fair value of such contracts at December 31, 2008 was a liability of $1.6 million. Our use of financial derivatives involves certain risks, including the risk that losses on a hedged position could exceed the nominal amount invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwilling to satisfy its contractual obligations, which could have an adverse effect on our results.

If the recent volatility in LIBOR continues, it could affect our profitability, earnings and cash flow.

LIBOR has recently been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are the result of the recent disruptions in the international credit markets. Because the interest rates borne by our outstanding indebtedness fluctuate with changes in LIBOR, if this volatility were to continue, it would affect the amount of interest payable on our debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow.

Furthermore, interest in most loan agreements in our industry has been based on published LIBOR rates. Recently, however, lenders have insisted on provisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate. If we are required to agree to such a provision in future loan agreements, our lending costs could increase significantly, which would have an adverse effect on our profitability, earnings and cash flow.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations or pay our dividends, if any, in the future.

We are a holding company and our subsidiaries, which are all wholly-owned by us either directly or indirectly, conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to make dividend payments, if any, in the future depends on our subsidiaries and their ability to distribute funds to us. Under our credit facilities, we are restricted in our payments of dividends. If we are unable to obtain funds from our subsidiaries, our board of directors may not exercise its discretion to pay dividends in the future. We do not intend to obtain funds from other sources to pay dividends, if any, in the future. In addition, the declaration and payment of dividends, if any, in the future will depend on the provisions of Marshall Islands law affecting the payment of dividends. Marshall Islands law generally prohibits the payment of dividends if the company is insolvent or would be rendered insolvent upon payment of such dividend and dividends may be declared and paid out of our operating surplus; but in this case, there is no such surplus. Dividends may be declared or paid out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Our ability to pay dividends, if any, in the future will also be subject to our satisfaction of certain financial covenants contained in our credit facilities. We may be unable to pay dividends in the anticipated amounts or at all. Under our credit facility with HSH Nordbank, we have agreed not to pay dividends in any year that exceed 50% of our net income for that year, as evidenced by the relevant annual audited financial statements.

As we expand our business, we may need to improve our operating and financial systems and will need to recruit suitable employees and crew for our vessels.

Our current operating and financial systems may not be adequate as we expand the size of our fleet and our attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will need to recruit suitable additional seafarers and shoreside administrative and management personnel. We may be unable to hire suitable employees as we expand our fleet. If we or our crewing agent encounters business or financial difficulties, we may not be able to adequately staff our vessels. If we are unable to grow our financial and operating systems or to recruit suitable employees as we expand our fleet, our financial performance and our ability to pay dividends, if any, in the future may be adversely affected.

28

United States tax authorities could treat us as a “passive foreign investment company,” which could have adverse United States federal income tax consequences to United States holders.

A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

Based on our method of operation, we do not believe that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities does not constitute “passive income,” and the assets that we own and operate in connection with the production of that income do not constitute passive assets.

There is, however, no direct legal authority under the PFIC rules addressing our method of operation. Accordingly, no assurance can be given that the United States Internal Revenue Service, or IRS, or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face adverse United States tax consequences. Under the PFIC rules, unless those shareholders make an election available under the Code (which election could itself have adverse consequences for such shareholders, as discussed below under “Taxation”), such shareholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over the shareholder’s holding period of our common shares. See “Taxation” for a more comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are treated as a PFIC.

We may have to pay tax on United States source shipping income, which would reduce our earnings.

Under the United States Internal Revenue Code of 1986, or the Code, 50% of the gross shipping income of a vessel-owning or -chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% United States federal income tax without allowance for any deductions, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder.

We expect that we and each of our subsidiaries qualify for this statutory tax exemption and we have taken and intend to continue to take this position for United States federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption and thereby become subject to United States federal income tax on our United States source shipping income. Due to the factual nature of the issues involved, it is possible that our tax-exempt status or that of any of our subsidiaries may change.

29

If we or our subsidiaries are not entitled to this exemption under Section 883 for any taxable year, we or our subsidiaries could be subject for those years to an effective 2% (i.e., 50% of 4%) United States federal income tax on our gross shipping income attributable to transportation that begins or ends, but that does not both begin and end, in the United States. The imposition of this taxation could have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

Construction of drillships are subject to risks, including delays and cost overruns, which could have an adverse impact on our available cash resources and results of operations.

We, through our subsidiaries, have entered into contracts with Samsung Heavy Industries Co. Ltd., or Samsung Heavy Industries, for the construction of two ultra-deepwater newbuilding drillships, which we expect to take delivery of in the third quarter of 2011. We have also entered into a share purchase agreement to acquire the owning companies of two additional newbuilding drillships from a related party, which purchase we do not expect to complete if the spin off does not occur. We may also undertake new construction projects and conversion projects in the future. In addition, we make significant upgrade, refurbishment, conversion and repair expenditures for our fleet from time to time, particularly as our drilling units become older. Some of these expenditures are unplanned. These projects and other efforts of this type are subject to risks of cost overruns or delays inherent in any large construction project as a result of numerous factors, including the following:

• shipyard unavailability;

• shortages of equipment, materials or skilled labor;

• unscheduled delays in the delivery of ordered materials and equipment;

• local customs strikes or related work slowdowns that could delay importation of equipment or materials;

• engineering problems, including those relating to the commissioning of newly designed equipment;

• latent damages or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions;

• work stoppages;

• client acceptance delays;

• weather interference or storm damage;

• disputes with shipyards and suppliers;

• shipyard failures and difficulties;

• failure or delay of third-party equipment vendors or service providers;

• unanticipated cost increases; and

• difficulty in obtaining necessary permits or approvals or in meeting permit or approval conditions.

These factors may contribute to cost variations and delays in the delivery of our ultra-deepwater newbuilding drillships. Delays in the delivery of these newbuilding drillships or the inability to complete construction in accordance with their design specifications may, in some circumstances, result in delay in contract commencement, resulting in a loss of revenue to us, and may also cause customers to renegotiate, terminate or shorten the term of a drilling contract for the drillship pursuant to applicable late delivery clauses. In the event of termination of one of these contracts, we may not be able to secure a replacement

30

contract on as favorable terms. Additionally, capital expenditures for drillship upgrades, refurbishment and construction projects could materially exceed our planned capital expenditures. Moreover, our drillships that may undergo upgrade, refurbishment and repair may not earn a dayrate during the periods they are out of service. In addition, in the event of a shipyard failure or other difficulty, we may be unable to enforce certain provisions under our newbuilding contracts such as our refund guarantee, to recover amounts paid as installments under such contracts. The occurrence of any of these events may have a material adverse effect on our results of operations, financial condition or cash flows.

New technologies may cause our current drilling methods to become obsolete, resulting in an adverse effect on our business.

The offshore contract drilling industry is subject to the introduction of new drilling techniques and services using new technologies, some of which may be subject to patent protection. As competitors and others use or develop new technologies, we may be placed at a competitive disadvantage and competitive pressures may force us to implement new technologies at substantial cost. Although we purchased the right to use the Bingo 9000 design, or the Bingo Design, for our drilling rigs, neither we nor the company from which we purchased those rights has obtained or applied for any patents or other intellectual property protection relating to the Bingo Design. As a result, other parties may challenge our right to use the Bingo Design or seek damages for the alleged infringement of intellectual property rights that they may claim to own. We may also lose the competitive advantage that we sought to achieve through the use of the Bingo Design if our competitors duplicate key aspects of the Bingo Design without our permission, and we may be unable to prevent our competitors from doing so.

Our insurance may not be adequate to cover our losses that may result from our operations due to the inherent operational risks of the offshore drilling contract industry.

We maintain insurance in accordance with industry standards. Our insurance is intended to cover normal risks in our current operations, including insurance against property damage, loss of hire, war risk and third-party liability, including pollution liability.

Although we have obtained insurance for the full assessed market value of our drilling units, insurance coverage may not, under certain circumstances, be available, and if available, may not provide sufficient funds to protect us from all losses and liabilities that could result from our operations. We have also obtained loss of hire insurance which becomes effective after 30 days of downtime and coverage extends for approximately one year. The principal risks which may not be insurable are various environmental liabilities and liabilities resulting from reservoir damage caused by our negligence. Moreover, our insurance provides for premium adjustments based on claims and is subject to deductibles and aggregate recovery limits. In the case of pollution liabilities, our deductible is $25,000 per event and $10,000 in the case of other claims, our deductible is $1.5 million per hull and machinery event and our aggregate recovery limits are $624 million under our protection and indemnity insurance which is provided by mutual protection and indemnity associations. Our insurance coverage may not protect fully against losses resulting from a required cessation of rig operations for environmental or other reasons. The occurrence of a casualty, loss or liability against which we may not be fully insured could significantly reduce our revenues, make it financially impossible for us to obtain a replacement rig or to repair a damaged rig, cause us to pay fines or damages which are generally not insurable and that may have priority over the payment obligations under our indebtedness or otherwise impair our ability to meet our obligations under our indebtedness and to operate profitably. Insurance may not be available to us at all or on terms acceptable to us, we may not maintain insurance or, if we are so insured, our policy may not be adequate to cover our loss or liability in all cases.

31

Our customers may be involved the handling of environmentally hazardous substances and if discharged into the ocean may subject us to pollution liability which could have a negative impact on our cash flows, results of operations and ability to pay dividends, if any, in the future.

Our operations may involve the use or handling of materials that may be classified as environmentally hazardous substances. Environmental laws and regulations applicable in the countries in which we conduct operations have generally become more stringent. Such laws and regulations may expose us to liability for the conduct of or for conditions caused by others, or for our acts that were in compliance with all applicable laws at the time such actions were taken.

During our drilling operations in the past, we, through our subsidiary Ocean Rig, have caused the release of oil, waste and other pollutants into the sea and into protected areas, such as the Barents Sea where on April 12, 2005, we discharged less than one cubic meter of hydraulic oil. While we conduct maintenance on our drilling rigs in an effort to prevent such releases, future releases could occur, especially as our rigs age. Such releases may be large in quantity, above our permitted limits or in protected or other areas in which public interest groups or governmental authorities have an interest. These releases could result in fines and other costs to us, such as costs to upgrade our drilling rigs, costs to clean up the pollution, and costs to comply with more stringent requirements in our discharge permits. Moreover, these releases may result in our customers or governmental authorities suspending or terminating our operations in the affected area, which could have a material adverse effect on our business, results of operation and financial condition.

We expect that we will be able to obtain some degree of contractual indemnification from our customers in most of our drilling contracts against pollution and environmental damages, but such indemnification may not be enforceable in all instances, that the customer will be financially capable in all cases of complying with its indemnity obligations or that the Company will be able to obtain such indemnification agreements in the future.

Failure to attract or retain key personnel, labor disruptions or an increase in labor costs could hurt our operations in the offshore drilling sector.

We require highly skilled personnel to operate and provide technical services and support for our business in the offshore drilling sector worldwide. We had at December 31, 2008 approximately 401 skilled employees in our offshore drilling sector, the majority of whom are employed on the Leiv Eiriksson and the Eirik Raude. Competition for the labor required for drilling operations has intensified as the number of rigs activated, added to worldwide fleets or under construction has increased, leading to shortages of qualified personnel in the industry and creating upward pressure on wages and higher turnover. If turnover increases, we could see a reduction in the experience level of our personnel, which could lead to higher downtime, more operating incidents and personal injury and other claims, which in turn could decrease revenues and increase costs. In addition, labor disruptions could hinder our operations from being carried our normally and if not resolved in a timely cost-effective manner, could have a material impact our business. In response to these labor market conditions, we are increasing efforts in our recruitment, training, development and retention programs as required to meet our anticipated personnel needs for offshore drilling. If these labor trends continue, we may experience further increases in costs or limits on operations in the offshore drilling sector. Some of our employees are covered by collective bargaining agreements. If we choose to cease operations in one of those countries or if market conditions reduce the demand for our drilling services in such a country, we would incur costs, which may be material, associated with workforce reductions. In addition, upon their expiration, these agreements may be renegotiated, and as a result, we could experience higher personnel expenses, other increased costs and increased operating restrictions, which may be material to our business in the offshore drilling sector.

32

Our operating and maintenance costs with respect to our offshore drilling rigs will not necessarily fluctuate in proportion to changes in operating revenues, which may have a material adverse effect on our results of operations, financial condition and cash flows.

Our operating and maintenance costs with respect to our offshore drilling rigs will not necessarily fluctuate in proportion to changes in operating revenues. Operating revenues may fluctuate as a function of changes in dayrate. However, costs for operating a rig are generally fixed or only semi-variable regardless of the dayrate being earned. In addition, should our drilling units incur idle time between contracts, we typically will not de-man those drilling units because we will use the crew to prepare the rig for its next contract. During times of reduced activity, reductions in costs may not be immediate as portions of the crew may be required to prepare rigs for stacking, after which time the crew members are assigned to active rigs or dismissed. In addition, as our drilling units are mobilized from one geographic location to another, the labor and other operating and maintenance costs can vary significantly. In general, labor costs increase primarily due to higher salary levels and inflation. Equipment maintenance expenses fluctuate depending upon the type of activity the unit is performing and the age and condition of the equipment. Contract preparation expenses vary based on the scope and length of contract preparation required and the duration of the firm contractual period over which such expenditures are incurred. If we experience increased operating costs without a corresponding increase in earnings, this may have a material adverse effect on our results of operations, financial condition and cash flows.

We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.

We may be, from time to time, involved in various litigation matters. These matters may include, among other things, contract disputes, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. A contingent liability of $3.1 million has been recognized in our balance sheet for the year ended December 31, 2008 included in this annual report based on a claim from an investment bank in connection with our acquisition of Ocean Rig. The maximum exposure to this claim is $24 million. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent which may have a material adverse effect on our financial condition.

A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate our drilling rigs could result in a high tax rate on our worldwide earnings, which could result in a significant negative impact on our earnings and cash flows from operations.

We conduct our worldwide drilling operations through various subsidiaries. Tax laws and regulations are highly complex and subject to interpretation. Consequently, we are subject to changing tax laws, treaties and regulations in and between countries in which we operate. Our income tax expense is based upon our interpretation of tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws, treaties or regulations, or in the interpretation thereof, or in the valuation of our deferred tax assets, could result in a materially higher tax expense or a higher effective tax rate on our worldwide earnings in our offshore drilling segment, and such change could be significant to our financial results. If any tax authority successfully challenges our operational structure, inter-company pricing policies or the taxable presence of our key subsidiaries in certain countries; or if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure; or if we lose a material tax dispute in any country, particularly in the U.S., Canada, the U.K., or Norway, our effective tax rate on our worldwide earnings from our offshore drilling operations could increase substantially and our earnings and cash flows from these operations could be materially adversely affected.

33

Our subsidiaries that provide services relating to drilling may be subject to taxation in the jurisdictions in which such activities are conducted. Such taxation would result in decreased earnings available to our shareholders. Ocean Rig is currently in the process of transferring the domicile of its Norwegian entities that own, directly or indirectly, the Leiv Eiriksson and the Eirik Raude to the Republic of the Marshall Islands. The Leiv Eiriksson and the Eirik Raude were transferred to Marshall Island entities in December 2008 and we anticipate that the remainder of the rig-owning holding company structure will be reorganized under Marshall Island entities in the second quarter of 2009.

Investors are encouraged to consult their own tax advisors concerning the overall tax consequences of the ownership of our common stock arising in an investor’s particular situation under United States federal, state, local or foreign law.

The spin off of our subsidiary, Primelead Shareholders Inc., may have adverse tax consequences to shareholders.

The proposed spin off of our subsidiary, Primelead Shareholders Inc., may be a taxable transaction to our shareholders depending upon their country of residence. As a result, a shareholder may recognize gain and be subject to tax as a result of receiving shares of Primelead Shareholders Inc. in the spin off, notwithstanding that cash had not been received. In addition, after the spin off, Primelead Shareholders Inc. may be treated as a passive foreign investment company, which would have adverse United States federal income tax consequences to a United States holder of shares of Primelead Shareholders Inc. Under the passive foreign investment company rules, unless those shareholders make an election available under the Code (which election could itself have adverse consequences for such shareholders), such shareholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of shares of Primelead Shareholders Inc., as if the excess distribution or gain had been recognized ratably over the shareholder’s holding period in such shares.

Risks Relating to Our Common Stock

There is no guarantee of a continuing public market for you to resell our common stock.

Our common shares commenced trading on the Nasdaq National Market, now the Nasdaq Global Select Market, in February 2005. An active and liquid public market for our common shares may not continue. The price of our common stock may be volatile and may fluctuate due to factors such as:

• actual or anticipated fluctuations in our quarterly and annual results and those of other public companies operating in the drybulk carrier and/or offshore contract drilling rig industries;

• mergers and strategic alliances in the drybulk shipping industry and/or offshore contract drilling rig industry and/or offshore contract drilling industry;

• market conditions in the drybulk shipping industry and/or offshore contract drilling rig industry and the general state of the securities markets;

• changes in government regulation;

• shortfalls in our operating results from levels forecast by securities analysts; and

• announcements concerning us or our competitors.

You may not be able to sell your shares of our common stock in the future at the price that you paid for them or at all.

34

The market price of our common shares has fluctuated widely and the market price of our common shares may fluctuate in the future.

The market price of our common shares has fluctuated widely since our initial public offering in February 2005 and may continue to do so as a result of many factors, including our actual results of operations and perceived prospects, the prospects of our competition and of the shipping industry in general and in particular the drybulk and offshore drilling sectors, differences between our actual financial and operating results and those expected by investors and analysts, changes in analysts’ recommendations or projections, changes in general valuations for companies in the shipping industry, particularly the drybulk and offshore drilling sectors, changes in general economic or market conditions and broad market fluctuations.

The market price of our common shares has recently dropped below $5.00 per share, and the last reported sale price on the Nasdaq Global Select Market on March 26, 2009 was $5.11 per share. If the market price of our common shares remains below $5.00 per share, under stock exchange rules, our shareholders will not be able to use such shares as collateral for borrowing in margin accounts. This inability to continue to use our common shares as collateral may lead to sales of such shares creating downward pressure on and increased volatility in the market price of our common shares.

In addition, under the rules of the Nasdaq Stock Market, listed companies have historically been required to maintain a share price of at least $1.00 per share and if the share price declines below $1.00 for a period of 30 consecutive business days, then the listed company would have a cure period of at least 180 days to regain compliance with the $1.00 per share minimum. In light of recently deteriorating market conditions, under a rule change recently approved by the U.S. Securities and Exchange Commission, or the SEC, the Nasdaq Stock Market has temporarily suspended the minimum share price requirement through April 19, 2009. Following the expiration of the suspension, in the event that our share price declines below $1.00, we may be required to take action, such as a reverse stock split, in order to comply with Nasdaq rules that may be in effect at the time. We continue to raise equity capital at the market and in privately negotiated transactions. The effect of this may be to depress our share price and dilute our shareholders’ investment.

We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law and as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States.

Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or “BCA.” The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Shareholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.

A small number of our stockholders effectively control the outcome of matters on which our stockholders are entitled to vote.

Entities affiliated with Mr. Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer currently own, directly or indirectly, approximately 8.6% of our outstanding common stock as of March 24, 2009. While those stockholders have no agreement, arrangement or understanding relating to the voting of their shares of our common stock, they will effectively control the outcome of matters on which our stockholders are entitled to vote, including the election of directors and other significant corporate actions. The interests of these stockholders may be different from your interests.

35

Future sales of our common shares could cause the market price of our common stock to decline.

We recently filed a prospectus supplement pursuant to Rule 424(b) of the Securities Act relating to the offer and sale of up to $500 million of our common shares in an at-the-market offering through Merrill Lynch, Pierce, Fenner & Smith Incorporated as sales agent. As of March 26, 2009, we have issued and sold 71,265,000 common shares pursuant to our at-the-market offering, resulting in net proceeds of $370.5 million. Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, may depress the market price for our common stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.

We may issue additional shares of our common stock in the future and our stockholders may elect to sell large numbers of shares held by them from time to time. Our amended and restated articles of incorporation authorize us to issue 1,000,000,000 common shares with par value $0.01 per share of which 153,855,405 shares are outstanding as of March 26, 2009.

We may issue registered preferred stock in the future. Our amended and restated articles of incorporation authorize us to issue 500,000,000 registered preferred shares with par value $0.01 per share of which none have been issued.

Anti-takeover provisions in our organizational documents could make it difficult for our stockholders to replace or remove our current board of directors or have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock.

Several provisions of our amended and restated articles of incorporation and bylaws could make it difficult for our stockholders to change the composition of our board of directors in any one year, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable.

These provisions include:

• authorizing our board of directors to issue “blank check” preferred stock without stockholder approval;

• providing for a classified board of directors with staggered, three year terms;

• prohibiting cumulative voting in the election of directors;

• authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote for the directors;

• prohibiting stockholder action by written consent;

• limiting the persons who may call special meetings of stockholders; and

• establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

In addition, we have adopted a stockholders rights agreement pursuant to which our board of directors may cause the substantial dilution of the holdings of any person that attempts to acquire us without the approval of our board of directors.

These anti-takeover provisions, including provisions of our stockholder rights agreement, could substantially impede the ability of public stockholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.

36

Item 4. Information on the Company

A. History and development of the Company

DryShips Inc. is a Marshall Islands corporation that was formed in September 2004. Prior to our initial public offering we issued 15,400,000 shares of our common stock to our shareholders in October 2004. In February 2005, we completed our initial public offering and issued an additional 14,950,000 common shares with a par value of $0.01 at a price of $18.00 per share. The net proceeds of the initial public offering amounted to $251.3 million.

On May 10, 2006, we filed our universal shelf registration statement and related prospectus for the issuance of up to 5,000,000 common shares. From May 2006 through August 2006, 4,650,000 shares of common stock with a par value $0.01 were issued. The net proceeds after underwriting commissions of 2.5% and other issuance fees were $56.5 million.

Our shareholders voted to adopt a resolution at our annual general shareholders’ meeting on July 11, 2006, which increased the aggregate number of shares of common stock that we are authorized to issue from 45,000,000 registered shares with par value of $0.01 to 75,000,000 registered shares with par value $0.01.

On October 24, 2006, our board of directors agreed to the request of our major shareholders (Elios Investments Inc., Advice Investments S.A. and Magic Management Inc.) following the declaration of our $0.20 quarterly dividend per share in September 2006, to receive their dividend payment in the form of our common shares in lieu of cash. One of these shareholders, Elios Investments Inc., is controlled by our Chairman and Chief Executive Officer, Mr. George Economou. In addition, the board of directors also agreed on that date to the request of a company related to Mr. Economou to accept repayment of the outstanding balance of a seller’s credit in respect of a vessel purchased by us (as discussed in Note 6 of our consolidated financial statements) in our common shares. As a result of the agreement, an aggregate of $3,080,000 in dividends and the seller’s credit together with interest amounting to $3,327,000 were settled with 235,585 and 254,512 of our common shares, respectively. The price used as consideration for issuance of the above common shares was equal to the average closing price of our common stock on the Nasdaq Global Select Market over the 8 trading days ended October 24, 2006, which was $13.07 per share.

In December 2006, we filed a registration statement on Form F-3 on behalf of our major shareholders registering for resale an aggregate of 15,890,097 of our common shares. Based on amendments to Schedule 13G filed on February 13, 2009 and February 14, 2008, respectively, each of Advice Investments S.A. and Magic Management Inc. no longer beneficially owns 5% or more of our outstanding common shares.

In October 2007, we filed a registration statement on Form F-3ASR (Registration No. 333-1446540) and a prospectus supplement pursuant to Rule 424(b) relating to the offer and sale of up to 6,000,000 shares of common stock, par value $0.01 per share, pursuant to a controlled equity offering sales agreement that we entered into with Cantor Fitzgerald & Co. From October 2007 through December 2007, we issued an aggregate of 1,191,000 common shares with par value $0.01 per share. The net proceeds, after underwriting commissions ranging between 2% to 2.5% and other issuance fees, amounted to $127.1 million. From January 2008 through March 2008, we issued an aggregate of 4,759,000 common shares with par value $0.01 per share. The net proceeds, after underwriting commissions ranging between 2% to 2.5% and other issuance fees, amounted to $352.8 million.

In January 2008, following a special shareholders meeting, we increased the aggregate number of authorized shares of common stock of the Company from 75,000,000 registered shares with par value of

37

$0.01 to 1,000,000,000 registered shares with a par value of $0.01 and increased the aggregate number of authorized shares of preferred stock from 30,000,000 registered shares, par value $0.01 per share, to 500,000,000 registered preferred shares with a par value of $0.01 per share.

In March 2008, we filed a prospectus supplement relating to the offer and sale of up to 6,000,000 common shares, par value $0.01 per share pursuant to our controlled equity offering. In May 2008, we issued 1,109,903 common shares pursuant to this prospectus supplement. The net proceeds, after underwriting commissions and other issuance fees, amounted to $101.6 million.

On October 21, 2008, we filed a prospectus supplement pursuant to our controlled equity offering for the sale of up to 4,940,097 common shares, pursuant to which we sold 2,069,700 shares. The net proceeds of this offering amounted to $41.9 million.

On November 6, 2008, we filed a prospectus supplement pursuant to our controlled equity offering for the sale of up to 25,000,000 common shares, pursuant to which we sold 24,980,300 shares. The net proceeds of this offering amounted to $167.1 million.

On January 28, 2009, we entered into an ATM Equity Sales Agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated relating to the offering of our common shares and filed a related prospectus supplement for the offer and sale of up to $500 million of our common shares, pursuant to which we have sold 71,265,000 shares as of March 26, 2009. The net proceeds of this offering were $370.5 million as of March 26, 2009.

On March 19, 2009, we issued a total of 11,990,405 common shares to the nominees of Central Mare Inc. in connection with the disposal of three newbuilding Capesize vessels. See “Item 4. Information on the Company – Business Overview – Recent Developments in Our Drybulk Carrier Operations – Disposal of Three Capesize Newbuildings.”

As of March 26, 2009, we had 153,855,405 common shares issued and outstanding.

Prior to our initial public offering in February 2005, our initial fleet was comprised of one Capesize drybulk carrier and five Panamax drybulk carriers. As of the year ended December 31, 2005, our fleet consisted of 27 drybulk carriers. During the year ended December 31, 2006, we purchased a total of eight drybulk carriers for an aggregate purchase price of $274.2 million, entered into two newbuilding purchase contracts and sold one vessel for an aggregate sale price of $11.7 million. During the year ended December 31, 2007, we purchased a total of 15 drybulk carriers for an aggregate purchase price of $851 million, entered into six newbuilding purchase contracts and sold eleven vessels for an aggregate sale price of $362.9 million. During the year ended December 31, 2008, we purchased a total of seven drybulk carriers for an aggregate purchase price of $779.4 million, and sold seven vessels for an aggregate sale price of $401.5 million. In addition, as discussed further below, we, through our acquisition of Ocean Rig ASA, acquired two ultra-deep water semi-submersible drilling rigs. We also exercised a purchase option to acquire two newbuilding ultra-deep water advanced capability drillships and entered into a share purchase agreement with a related party to purchase all of the outstanding capital stock of a corporation that has contracts to acquire two additional newbuilding ultra-deep water advanced capability drillship.

As of the year ended December 31, 2008, our fleet consisted of 40 drybulk carriers comprised of seven Capesize, 29 Panamax, two Supramax, and two newbuilding drybulk vessels, as well as two ultra-deep-water semi-submersible drilling rigs and two ultra-deep-water newbuilding drillships.

Our executive offices are located at Omega Building, 80 Kifissias Avenue, Amaroussion GR 151 25 Greece. Our telephone number is 011-30-210-809-0570.

38

B. Business Overview

We are a Marshall Islands corporation with our principal executive offices in Athens, Greece. We were incorporated in September 2004. As of March 26, 2009, we own, through our subsidiaries, a fleet of 40 drybulk carriers comprised of seven Capesize, 29 Panamax, two Supramax, and two newbuilding drybulk vessels, which have a combined deadweight tonnage of approximately 3.3 million dwt. Our drybulk fleet principally carries a variety of drybulk commodities including major bulks such as coal, iron ore, and grains, and minor bulks such as bauxite, phosphate, fertilizers and steel products. The average age of the vessels in our drybulk fleet is 8.0 years. We are also an owner and operator of two ultra-deep water semi-submersible drilling rigs and two ultra deep-water newbuilding drillships, which are further discussed below.

We employ our drybulk vessels under period time charters, on bareboat charters, in the spot charter market and in drybulk carrier pools. Twenty of our vessels are currently employed on time charter, with an average remaining duration of five years, and three of our vessels are currently employed on bareboat charters. Eleven of our vessels are currently trading in the spot market. Two of our vessels are currently unfixed, as a result of cancelled contracts for sale, and we intend to charter these vessels in the spot market. One of our Panamax drybulk carriers is currently operated in a Panamax drybulk carrier pool. Pools have the size and scope to combine spot market voyages, time charters and contracts of affreightment with freight forward agreements for hedging purposes and to perform more efficient vessel scheduling thereby increasing fleet utilization.

All of our drybulk carriers are managed by Cardiff Marine Inc., or Cardiff, under separate ship management agreements. Mr. George Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer, has been active in shipping since 1976 and formed Cardiff in 1991. We are affiliated with Cardiff. Cardiff, a Liberian corporation with offices in Greece, is responsible for all technical and commercial management functions of our drybulk fleet. We believe that Cardiff has established a reputation in the international shipping industry for operating and maintaining a fleet with high standards of performance, reliability and safety. Seventy percent of the issued and outstanding capital stock of Cardiff is owned by a foundation which is controlled by Mr. Economou. The remaining 30% of the issued and outstanding capital stock of Cardiff is owned by a company controlled by Mr. Economou’s sister, who is also a member of our board of directors.

Cardiff provides comprehensive ship management services including technical supervision, such as repairs, maintenance and inspections, safety and quality, crewing and training, as well as supply provisioning. Cardiff’s commercial management services include operations, chartering, sale and purchase, post-fixture administration, accounting, freight invoicing and insurance. Cardiff completed early implementation of the International Maritime Organization’s, or IMO, International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code, in 1996. Cardiff has obtained documents of compliance for its office and safety management certificates for its vessels as required by the ISM Code and has been ISO 14001 certified since 2003, in recognition of its commitment to overall quality.

In addition, through our acquisition of Ocean Rig ASA, or Ocean Rig, a Norwegian offshore drilling services company whose shares were listed on the Oslo Stock Exchange, we own and operate two ultra-deep water, harsh environment, semi-submersible drilling rigs, the Leiv Eiriksson and the Eirik Raude. In April 2008, we, through our subsidiary, DrillShips Investment Inc., or DrillShips Investment, exercised an option to acquire two newbuilding advanced capability drillships for use in ultra-deep water locations, identified as Hull 1865 and Hull 1866, for an expected cost of approximately $800 million per drillship. We expect to take delivery of Hulls 1865 and 1866 in July 2011 and September 2011, respectively. Our subsidiary Primelead Shareholders Inc., or Primelead Shareholders, entered into a share purchase agreement with related parties to acquire Drillships Holdings, Inc., or Drillships Holdings, which has contracts for construction of two newbuilding ultra-deep water drillships, identified as Hulls 1837 and 1838, to be delivered in December 2010 and March 2011, respectively, in exchange for 25% of the then-outstanding shares of Primelead Shareholders. Drillships Holdings is controlled by clients of Cardiff including Mr. Economou.

39

We have announced our intention to spin off to our shareholders our interests in our subsidiary, Primelead Shareholders, which owns the stock of Ocean Rig. Prior to or concurrently with the spin off of Primelead Shareholders, it will acquire (i) our existing subsidiary, DrillShips Investment, which has contracts for construction of the two drillships, Hulls 1865 and 1866, and (ii) Drillships Holdings, an entity not currently owned by us, which has contracts for construction of Hulls 1837 and 1838. Due to the disruptions in the credit markets worldwide and weakness in the energy sector, we do not expect to complete the spin off until the second half of 2009. If the spin off does not occur, we currently anticipate that we will not close on our acquisitions of Hulls 1837 and 1838. Our investment in Ocean Rig amounts to $1.4 billion, which our subsidiary, Primelead Limited, financed in part with approximately $800 million of borrowings, which DryShips Inc. has guaranteed. We are currently discussing with our lenders being released from our guarantee in the event the spin off proceeds. However, unless our lenders agree and assuming the spin off proceeds as announced, we will retain liability for the indebtedness that was incurred to acquire Ocean Rig but will no longer have an equity interest in Primelead Shareholders and, accordingly, will not share in the revenues or profits of its offshore drilling operations. As of March 5, 2009, $465 million of the $800 million of acquisition indebtedness is outstanding.

The Leiv Eiriksson, one of our two drilling rigs, is currently operating under a two-year contract expiring in September 2009 with Shell U.K. Limited, A/S Norske Shell and Shell E&P Ireland Limited for drilling operations in Irish, UK and Norwegian waters, which we refer to as the Shell contract. The rig operated in Irish waters in the second quarter of 2008 and relocated to Norwegian waters in the third quarter of 2008. On July 11, 2008, we obtained the requisite approvals from the Norwegian authorities and commenced operations in Norwegian waters. From January 1 through March 31, 2008, a dayrate of $476,000 applied while the rig was operating in Ireland and in the UK, and a dayrate of $511,000 applied while the rig was operating in Norwegian waters. Since April 1, 2008, a dayrate of $511,000 applies regardless of where the rig is operating. We received a letter of award on March 18, 2009 for the Leiv Eiriksson for a three year period with Petróleo Brasileiro S.A. at a day rate of $540,000 plus an 8% incentive bonus based upon operational performance. The letter of award is subject to the completion of definitive documentation. The contract is expected to commence in direct continuation from the current contract with Shell.

In October 2008, our other drilling rig, the Eirik Raude, commenced a contract entered in for a three-year term with Tullow Oil PLC for development drilling in offshore Ghana at an average dayrate over the contract period of $637,000, based upon 100% utilization, expiring in October 2011, which we refer to as the Tullow Oil contract. Tullow Oil has an option through March 31, 2009 to extend the contract for one or two additional years.

Various subsidiaries of Ocean Rig directly manage the Eirik Raude and the Leiv Eiriksson. The supervision of the construction of the two newbuilding drillships identified as Hulls 1865 and 1866 is performed by our subsidiary, Ocean Rig AS, pursuant to three separate management agreements. On August 1, 2008, the owning companies of the two newbuilding drillships identified as Hulls 1837 and 1838, which on October 3, 2008 we entered into a share purchase agreement to acquire, each entered into a separate management agreement with Ocean Rig AS for the supervision of the construction of these drillships on the same terms as the agreements by and between the owning companies of drillship hulls 1865 and 1866 and Ocean Rig AS. We expect to enter into separate management agreements with Cardiff prior to the spin off, pursuant to which Cardiff will provide additional supervisory services in connection with the newbuilding drillships, Hull 1837, Hull 1838, Hull 1865 and Hull 1866.

40

Our Fleet

As of March 26, 2009, our fleet is comprised of the following vessels:

Fleet Employment Data								Redelivery
	Year Built	DWT	Type	Current Employment	Gross rate per day			Earlier	Latest
Period Employment
Capesize:
Alameda	2001	170,269	Capesize	T/C	$	21,000		Feb-11	May-11
Brisbane	1995	151,066	Capesize	T/C	$	25,000	*	Dec-11	Apr-12
Capri	2001	172,579	Capesize	T/C	$	61,000		Apr-18	Jun-18
Flecha	2004	170,012	Capesize	T/C	$	55,000		Jul-18	Nov-18
Manasota	2004	171,061	Capesize	T/C	$	67,000		Feb-13	Apr-13
Mystic	2008	170,500	Capesize	T/C	$	52,310		Aug-18	Dec-18
Samsara	1996	150,393	Capesize	T/C	$	57,000		Dec-11	Apr-12
Panamax:
Avoca	2004	76,500	Panamax	T/C	$	45,500		Aug-13	Dec-13
Bargara	2002	74,832	Panamax	T/C	$	43,750		May-12	Jul-12
Capitola	2001	74,832	Panamax	T/C	$	39,500		Jun-13	Aug-13
Catalina	2005	74,432	Panamax	T/C	$	40,000		Jun-13	Aug-13
Ecola	2001	73,931	Panamax	T/C	$	43,500		Jun-12	Aug-12
Ligari	2004	75,583	Panamax	T/C	$	55,500		Jun-12	Aug-12
Majorca	2005	74,364	Panamax	T/C	$	43,750		Jun-12	Aug-12
Mendocino	2002	76,623	Panamax	T/C	$	56,500		Jun-12	Sep-12
Padre	2004	73,601	Panamax	T/C	$	46,500		Sep-12	Dec-12
Positano	2000	73,288	Panamax	T/C	$	42,500		Sept-13	Dec-13
Redondo	2000	74,716	Panamax	T/C	$	34,500		Apr-13	Jun-13
Saldanha	2004	75,500	Panamax	T/C	$	52,500		Jun-12	Sep-12
Samatan	2001	74,823	Panamax	T/C	$	39,500		May-13	Jul-13
Xanadu	1999	72,270	Panamax	T/C	$	39,750		Jul-13	Sep-13
Supramax:
Paros I (ex Clipper Gemini)	2003	51,201	Supramax	BB	$	27,135		Oct-11	May-12
Pachino (ex VOC Galaxy)	2002	51,201	Supramax	BB	$	20,250		Sept-10	Feb-11
Spot Vessels
Panamax:
Conquistador	2001	75,607	Panamax	Spot***		**
Coronado	2000	75,706	Panamax	Spot		**
Iguana	1996	70,349	Panamax	Spot		**
La Jolla	1997	72,126	Panamax	Spot		**		*****
Delray (ex Lacerta)	1994	71,862	Panamax	Spot		**
Heinrich Oldendorff	2001	73,931	Panamax	Spot
Maganari	2001	75,941	Panamax	Spot		**
Marbella	2000	72,561	Panamax	Spot		**
Ocean Crystal	1999	73,688	Panamax	Spot		**
Oregon	2002	74,204	Panamax	Spot		**
Primera	1998	72,495	Panamax	Spot		**
Sonoma	2001	74,786	Panamax	Baumarine		**
Sorrento	2004	76,633	Panamax	Spot		**
Toro	1995	73,034	Panamax	Spot		**		*****
Newbuildings:
N/B-Hull No: 1518A	Q3 2009	75,000	Panamax	N/A		N/A
N/B-Hull No: 1519A	Q4 2010	75,000	Panamax	N/A		N/A
N/B-Hull No: 2089	2009	180,000	Capesize	N/A		N/A
N/B-Hull No: SS 58	2010	82,000	Kamsarmax	N/A		N/A
N/B-Hull No: SS 59	2010	82,000	Kamsarmax	N/A		N/A

41

Rigs
Leiv Eiriksson	2001	Fifth-generation semi-submersible drilling unit		Contract with Shell U.K Limited, A/S Norske Shell and Shell E&P Ireland for a two-year term at day rates which ranged between $476,000 and $511,000, depending on operating areas. Since April 1, 2008, a day rate of $511,000 applies, regardless of operating area. This contract expires in September 2009. We received a letter of award on March 18, 2009 for the Leiv Eiriksson for a three year period with Petróleo Brasileiro S.A. at a day rate of $540,000 plus an 8% incentive bonus based on operational performance. The letter of award is subject to the completion of definitive documentation.
Fleet Employment Data						Redelivery
	Year Built	DWT	Type	Current Employment	Gross rate per day	Earlier	Latest
Eirik Raude	2002	Fifth-generation semi-submersible drilling unit		Contract with Tullow Oil PLC for a three-year term at an average day rate of $637,000 which expires in October 2011.
Newbuilding Drillships:
N/B-Hull No: 1865	2011	UDW Drillship
N/B-Hull No: 1866	2011	UDW Drillship
Contracted future acquisitions: N/B-Hull No: 1837	2010	UDW Drillship******		We have not yet closed on the acquisition of the owning company of this newbuilding drillship, and we do not intend to close on the acquisition if the spin off does not occur.
N/B-Hull No: 1838	2011	UDW Drillship******		We have not yet closed on the acquisition of the owning company of this newbuilding drillship, and we do not intend to close on the acquisition if the spin off does not occur

*	We recently agreed to amend the terms of the charter for this vessel from a rate of $57,000 per day for a period of 34 months to a rate of $25,000 per day for 36 months commencing February 2009, with the Company’s option to extend for three successive one year terms at a rate of $25,000 per day and the charterer’s option to extend for three successive one year terms at a rate of $30,000 per day.
**	For spot vessels, we have calculated an average TCE rate of $10,500 per day for March 2009. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period.
***	The gross rate per day is 100% of the average of the TC routes of the Baltic Panamax Index (PM4TC).
****	The gross rate per day is 100% of the average of the TC routes of the Baltic Capesize Index.
*****	We previously entered into an agreement to sell the MV La Jolla and agreed to settle the dispute with the buyers in connection with the buyers’ failure to take delivery under the relevant memorandum of agreement in exchange for aggregate compensation in the amount of $9 million. We previously entered into an agreement with Samsun Logix Corporation, or Samsun, the buyers of the MV Toro, to sell the vessel at a reduced price. The buyers were obligated to remit an additional deposit of $1.5 million. We received notice from Samsun that it filed for receivership. Following Samsun’s failure to pay the additional deposit, we commenced arbitration proceedings against Samsun. See “Recent Developments in Our Drybulk Carrier Operations” below.
******	If the spin off of Primelead Shareholders does not occur, we currently do not anticipate that we will close our acquisition of these newbuilding drillships. In addition, the consent of Nordea Bank will be required for the acquisition of drillship hulls 1837 and 1838.
1.	For vessels trading in the Baumarine pool, the TCE rate is the pool’s estimate for earnings in the month of December.
2.	For vessels trading in the spot market or the Baumarine pool, the quoted rates are not indications of future earnings and the Company gives no assurance or guarantee of future rates.
3.	The MV Heinrich Oldendorff, MV Paros I (ex MV Clipper Gemini) and MV Pachino (ex MV VOC Galaxy) are employed under bareboat charter.

42

We actively manage the deployment of our drybulk fleet between long-term and short-term (spot market) time charters, which generally last from several days to several weeks, and long-term time charters and bareboat charters, which can last up to several years. A time charter is generally a contract to charter a vessel for a fixed period of time at a set daily rate. Under time charters, the charterer pays voyage expenses such as port, canal and fuel costs. A voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for a specified total price. Under spot market voyage charters, we pay voyage expenses such as port, canal and fuel costs. Under both types of charters, we pay for vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, as well as for commissions. We are also responsible for the drydocking costs relating to each vessel. Under a bareboat charter, the vessel is chartered for a stipulated period of time which gives the charterer possession and control of the vessel, including the right to appoint the master and the crew. Under bareboat charters, all voyage costs are paid by the Company’s customers.

We deploy our drilling rigs on long-term charters, or drilling contracts that provide for a day rate to be paid to us by the charterer. Under the drilling contracts, the customer typically pays us a fixed daily rate, depending on the activity and up-time of the rig. The customer bears all fuel costs and logistics costs related to transport to/from the rig. We remain responsible for paying the operating expenses for the rigs, including the cost of crewing, catering, insuring, repairing and maintaining the rig, the costs of spares and consumable stores and other miscellaneous expenses. The lease element of revenue is recognized to the income statement on a straight line basis. The drilling services element of mobilization revenues, contributions from customers and the direct incremental expenses of mobilization are deferred and recognized over the estimated duration of the drilling contracts. To the extent that deferred expenses exceed revenue to be recognized, it is expensed as incurred. Demobilization fees and expenses are recognized over the demobilization period.

Our drybulk vessels and drilling rigs operate worldwide within the trading limits imposed by our insurance terms and do not operate in areas where United States, European Union or United Nations sanctions have been imposed.

Our Drybulk Operations

Competition

Demand for drybulk carriers fluctuates in line with the main patterns of trade of the major drybulk cargoes and varies according to changes in the supply and demand for these items. We compete with other owners of drybulk carriers in the Capesize, Panamax and Supramax size sectors. Ownership of drybulk carriers is highly fragmented and is divided among approximately 1,500 independent drybulk carrier owners. We compete for charters on the basis of price, vessel location, size, age and condition of the vessel, as well as on our reputation as an owner and operator.

Customers

During the year ended December 31, 2008, two of our customers accounted for more than ten percent of our voyage revenue: Cargill International Ltd (20%) and SK Shipping (11%). During the year ended December 31, 2007, one of our customers accounted for more than ten percent of our voyage revenue: Baumarine AS (12%). During the year ended December 31, 2006, two of our customers accounted for more than ten percent of our voyage revenues: Baumarine AS (25%) and Oldendorff Carriers Gmbh (13%). Baumarine AS is a pool operator and therefore we do not consider Baumarine as representative of any single “customer” that charters vessels in the vessel charter markets. Given our exposure to, and focus on, the long-term and short-term, or spot, time charter markets, we do not foresee any one client providing a significant percentage of our income over an extended period of time.

Management of the Drybulk Fleet

We do not employ personnel to run our vessel operating and chartering business on a day-to-day basis. All of our vessels are managed by Cardiff. The Entrepreneurial Spirit Foundation, a family

43

foundation of Vaduz Liechtenstein, of which our Chief Executive Officer and members of his family are beneficiaries, owns 70% of the issued and outstanding capital stock of Cardiff. The remaining 30% of the issued and outstanding capital stock of Cardiff is held by Prestige Finance S.A., a Liberian corporation which is wholly owned by the sister of our Chief Executive Officer. Cardiff performs all of our technical and commercial functions relating to the operation and employment of our vessels pursuant to management agreements concluded between Cardiff and our vessel-owning subsidiaries which have an initial term of five years and will automatically be extended to successive five year terms, unless at least 30 days’ advance notice of termination is given by either party. Our Chief Executive Officer and Interim Chief Financial Officer, under the guidance of our board of directors, manage our business as a holding company, including our own administrative functions, and we monitor Cardiff’s performance under the fleet management agreement.

The management fee we pay to Cardiff, our manager, is Euro 575 per day, per vessel. In addition, the management agreements provide for payment to Cardiff of: (i) a fee of Euro 100 per day per vessel for services in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; (ii) Euro 400 for superintendent visits on board vessels in excess of five days per annum, per vessel, for each additional day, per superintendent; (iii) chartering commission of 1.25% on all freight, hire and demurrage revenues; (iv) a commission of 1.00% on all gross sale proceeds or purchase price paid of vessels since October 1, 2006; (v) a quarterly fee of $250,000 for services in relation to the financial reporting requirements of the Company under the Securities and Exchange Commission rules and the establishment and monitoring of internal controls over financial reporting; and (vi) 0.2% on derivative agreements and loan financing or refinancing. Until September 30, 2006, under the management agreement with Cardiff, Drybulk S.A. was acting as the chartering broker and sales and purchase broker for the Company in exchange for a commission of 1.25% on all freight, hire, demurrage revenues and a commission of 1.00% on all gross sale proceeds of, or purchase prices paid for, vessels. Since October 1, 2006 Cardiff has acted as the Company’s chartering broker and sales and purchase broker.

Cardiff also provides other management services for each of the drybulk carrier vessels. Cardiff provides commercial operations and freight collection services in exchange for a fee of Euro 85 per day, per vessel. Cardiff provides insurance services and obtains insurance policies for the vessels for a fee of 5.00% on the total insurance premia, per vessel. Furthermore, if required, Cardiff will also handle and settle all claims arising out of its duties under the management agreements (other than insurance, average and salvage claims) in exchange for a fee of Euro 150 per person, per day of eight hours.

Additionally, Cardiff provides us with financial accounts services in exchange for a fee of Euro 115 per day, per vessel. We also pay Cardiff a quarterly fee of Euro 250,000 for services rendered by Cardiff in connection with our financial accounting services, as amended. Pursuant to the terms of the management agreements, all fees payable to Cardiff will be adjusted upwards or downwards based upon the Greek consumer price index referring to the previous 12 calendar months. During the years ended December 31, 2007 and 2008, we incurred costs of $1,369,000 and $1,832,000, respectively, to reimburse Cardiff for additional services in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

Crewing and Employees

Cardiff employs approximately 250 people, all of whom are shore-based. In addition, Cardiff is responsible for recruiting, either directly or through a crewing agent, the senior officers and all other crew members for our vessels. We believe the streamlining of crewing arrangements will ensure that all our vessels will be crewed with experienced seamen that have the qualifications and licenses required by international regulations and shipping conventions.

44

Charterhire Rates

Charterhire rates paid for drybulk carriers are primarily a function of the underlying balance between vessel supply and demand, although at times other factors may play a role. Furthermore, the pattern seen in charter rates is broadly mirrored across the different charter types and between the different drybulk carrier categories. However, because demand for larger drybulk carriers is affected by the volume and pattern of trade in a relatively small number of commodities, charterhire rates (and vessel values) of larger ships tend to be more volatile than those for smaller vessels.

In the time charter market, rates vary depending on the length of the charter period and vessel specific factors such as age, speed and fuel consumption. In the voyage charter market, rates are influenced by cargo size, commodity, port dues and canal transit fees, as well as delivery and redelivery regions. In general, a larger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally command higher rates than routes with low port dues and no canals to transit.

Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo also are generally quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that is included in the calculation of the return charter to a loading area.

Within the drybulk shipping industry, the charterhire rate references most likely to be monitored are the freight rate indices issued by the Baltic Exchange. These references are based on actual charterhire rates under charter entered into by market participants as well as daily assessments provided to the Baltic Exchange by a panel of major shipbrokers. The Baltic Panamax Index is the index with the longest history. The Baltic Capesize Index and Baltic Handymax Index are of more recent origin. The Baltic Drybulk Index, or BDI, declined from a high of 11,793 in May 2008 to a low of 663 in December 2008, which represents a decline of 94%. The BDI fell over 70% during the month of October alone. Over the comparable period of May through December 2008, the high and low of the Baltic Panamax Index and the Baltic Capesize Index represent a decline of 96% and 99%, respectively. Based on industry sources, demand is expected to remain relatively weak in 2009.

Vessel Prices

Drybulk vessel prices, both for new-buildings and secondhand vessels, have decreased significantly during the past year as a result of the weakening of the drybulk shipping industry. The vessel values have also declined as a result of a slowdown in the availability of global credit. The lack of credit has resulted in the restriction to fund both vessel purchases and purchases of commodities carried by sea. There can be no assurance as to how long charterhire rates and vessel values will remain depressed or whether they will drop any further. Should the charterhire rates remain at these depressed levels for some time our revenue and profitability will be adversely affected.

The International Drybulk Shipping Industry

Drybulk cargo is cargo that is shipped in quantities and can be easily stowed in a single hold with little risk of cargo damage. According to industry sources, approximately 3,065 million tons of drybulk cargo was transported by sea, consisting of iron ore, coal and grains representing 27.5%, 25.87% and 10.24% of the total drybulk trade, respectively.

The demand for drybulk carrier capacity is determined by the underlying demand for commodities transported in drybulk carriers, which in turn is influenced by trends in the global economy. Between 2001 and 2007, trade in all drybulk commodities increased from 2,108 million tons to 2,961 million tons, an increase of 40.46%. One of the main reasons for that increase in drybulk trade was the growth in imports by China of iron ore, coal and steel products during the last eight years. Chinese imports of iron ore alone increased from 92.2 million tons in 2001 to approximately 382 million tons in 2007. In 2008, overall trade

45

in all drybulk commodities increased from 2,961 million tons in 2007 to 3,065 million tons, an increase of 3.5%. However, demand for drybullk shipping decreased dramatically in the second quarter of 2008 evidenced by the decrease in Chinese iron ore imports which decreased from a high of 119.5 million tons in the second quarter of 2008 to a low of 96.2 million tons during the fourth quarter of 2008 representing a decrease of 19.5%.

The global drybulk carrier fleet may be divided into four categories based on a vessel’s carrying capacity. These categories consist of:

• Capesize vessels, which have carrying capacities of more than 85,000 dwt. These vessels generally operate along long-haul iron ore and coal trade routes. There are relatively few ports around the world with the infrastructure to accommodate vessels of this size.

• Panamax vessels, which have a carrying capacity of between 60,000 and 85,000 dwt. These vessels carry coal, grains, and, to a lesser extent, minor bulks, including steel products, forest products and fertilizers. Panamax vessels are able to pass through the Panama Canal making them more versatile than larger vessels.

• Handymax vessels, which have a carrying capacity of between 35,000 and 60,000 dwt. The subcategory of vessels that have a carrying capacity of between 45,000 and 60,000 dwt called Supramax. These vessels operate along a large number of geographically dispersed global trade routes mainly carrying grains and minor bulks. Vessels below 60,000 dwt are sometimes built with on-board cranes enabling them to load and discharge cargo in countries and ports with limited infrastructure.

• Handysize vessels, which have a carrying capacity of up to 35,000 dwt. These vessels carry exclusively minor bulk cargo. Increasingly, these vessels have operated along regional trading routes. Handysize vessels are well suited for small ports with length and draft restrictions that may lack the infrastructure for cargo loading and unloading.

The supply of drybulk carriers is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss. The orderbook of new drybulk vessels scheduled to be delivered in 2009 represents approximately 28.3% of the world drybulk fleet. The level of scrapping activity is generally a function of scrapping prices in relation to current and prospective charter market conditions, as well as operating, repair and survey costs. Drybulk carriers at or over 25 years old are considered to be scrapping candidate vessels.

The Effect Of Recent Developments In The International Drybulk Shipping Industry On Our Business

The Baltic Dry Index, or BDI, a daily average of charter rates in 26 shipping routes measured on a time charter and voyage basis and covering Supramax, Panamax and Capesize drybulk carriers, declined from a high of 11,793 in May 2008 to a low of 663 in December 2008, which represents a decline of 94%. The BDI fell over 70% during the month of October alone. Over the comparable period of May through December 2008, the high and low of the Baltic Panamax Index and the Baltic Capesize Index represent a decline of 96% and 99%, respectively. The general decline in the drybulk carrier charter market is due to various factors, including the lack of trade financing for purchases of commodities carried by sea, which has resulted in a significant decline in cargo shipments, and the excess supply of iron ore in China, which has resulted in falling iron ore prices and increased stockpiles in Chinese ports.

The general decline in the drybulk carrier charter market has resulted in lower charter rates for some of our vessels exposed to the spot market and our time charters and bareboat charter linked to the BDI. Specifically, we have 13 vessels trading in the spot market that are currently exposed to the downturn in the drybulk charter rates, five newbuilding drybulk carriers that we expect will operate on spot charters when delivered in 2009 to 2010, as well as two vessels on time charter and one vessel on bareboat

46

charter at rates that adjust with the BDI. The duration of our spot charters is between 60 and 90 days. 13 of our spot charters expire in the first and second quarter of 2009. Should drybulk charter rates continue to decline or remain at their current low level, our charter revenue with respect to these vessels will remain low or decline even further.

In addition, the general decline in the drybulk carrier charter market has resulted in lower drybulk vessel values. We previously entered into contracts for the sale of MV La Jolla, MV Delray, MV Paragon and MV Toro for an aggregate purchase price of $190.4 million. As further discussed below, (i) we agreed with the buyers of the MV La Jolla to retain the vessel in exchange for aggregate compensation of $9.0 million and we expect to employ the vessel in the spot market; (ii) the sale of MV Delray will not close due to the buyer’s repudiation of its obligations under the memorandum of agreement. A deposit on the vessel in the amount of $5.6 million was made by the buyer. We are pursuing all legal remedies against the buyer; (iii) we reached an agreement with the buyers of the MV Paragon to sell the vessel for a reduced price of $30.8 million; and (iv) we entered into an agreement with Samsun, the buyers of the MV Toro, to sell the vessel at a reduced price of $36 million, including an additional deposit of $1.5 million, which we did not receive. We have commenced arbitration proceedings against Samsun claiming compensation for the difference between the current market price and the original contract price of $63.4 million pursuant to the terms of the agreement with Samsun.

Recent Developments in Our Drybulk Carrier Operations

Cancellation of Purchases of Four Panamax Vessels

We previously entered into separate agreements to acquire four Panamax vessels, including two newbuildings, for an aggregate purchase price of $400 million, from companies beneficially owned by George Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer. In December 2008, we agreed to cancel these transactions in exchange for a cash payment by us of $105.0 million in addition to the sellers’ retaining the deposits totaling $55.0 million we previously paid for the four vessels. The vessels were: (i) a 75,228 dwt Panamax vessel built in 2008, (ii) a 75,204 dwt Panamax vessel built in 2007, (iii) a 75,000 dwt Panamax vessel under construction in China scheduled to be delivered during the fourth quarter of 2008 and (iv) a 75,000 dwt Panamax vessel under construction in China scheduled to be delivered during the first quarter of 2009. As part of the termination agreement, we have the exclusive option to purchase the above mentioned four Panamax drybulk carriers on an en bloc basis at a fixed purchase price of $160.0 million until the purchase option terminates on December 31, 2009. The agreement was negotiated and approved by a committee consisting of the independent members of our board of directors.

Cancellation of Purchases of Nine Capesize Vessels

In October 2008, we agreed to purchase nine Capesize drybulk carriers for aggregate consideration of $1.17 billion, consisting of $19.4 million of our common shares and the assumption of an aggregate of $478.3 million in debt and future commitments. The sellers were clients of Cardiff including affiliates of George Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer, and unaffiliated parties. In light of the considerable decrease in the asset values of the nine Capesize vessels, we entered into agreements with the sellers to cancel this transaction. The consideration to cancel the transaction will consist of the issuance of 6.5 million of our common shares to unaffiliated entities nominated by the third-party sellers, which will be subject to a six month lock-up period. The consideration received by entities controlled by George Economou will consist solely of 3.5 million warrants with strike prices, depending on the relevant tranches, of between $20 to $30 per share. Each warrant entitles the holder to purchase one share of our common stock. The warrants will vest over an 18-month period and will expire after five years. This transaction has been approved by the independent members of the board of directors and is scheduled to close in April 2009.

Disposal of Three Capesize Newbuildings

In July 2007 and April 2008, we entered into separate agreements to acquire three Capesize newbuildings from unaffiliated third parties for an aggregate purchase price of $364.0 million. On January

47

15, 2009, we agreed to transfer our interests in the owning companies of these vessels to an entity that is not affiliated with us. In connection with this transfer of interest, the sellers will release us and our relevant subsidiaries from the purchase agreements for these vessels. This release reduces our aggregate obligations in the amount of $364.0 million in exchange for total consideration of $116.4 million.

Under the terms of the January 15, 2009 agreement, the consideration consisted of $36.4 million in previously paid deposits toward the acquisition of the three vessels, $30.0 million in cash that was paid to the purchaser, and two additional tranches of $25.0 million each payable to the purchaser within 30 and 60 days, respectively with such installments payable in cash, or at our option, by issuing 2.6 million shares of our common stock for each tranche. Due to the decline in our stock price subsequent to January 15, 2009, on March 18, 2009, we and the purchaser agreed to amended terms whereby we agreed to issue such number of shares as is equal to $50 million divided by the closing price of our common stock on the Nasdaq Global Select Market on the trading day immediately prior to such issuance. On March 19, 2009, we issued a total of 11,990,405 common shares to the nominees of the purchaser.

Cancellation of Sale of MV Delray

On March 15, 2008, we entered into a memorandum of agreement to sell the MV Delray (ex MV Lacerta), a 1994 built, 71,862 dwt Panamax drybulk carrier, to an unaffiliated third party for a sale price of $55.5 million. The sale will not close due to the buyer’s repudiation of its obligations under the memorandum of agreement. A deposit on the vessel in the amount of $5.6 million was made by the buyer. We are pursuing all legal remedies against the buyer

Sale of MV Tonga

In November 2008, we delivered the MV Tonga, a 1984 built, 66,798 dwt Panamax drybulk carrier, to her new owners for the sale price of $3.8 million, resulting in a loss of $3.0 million.

Developments with Respect to the MV Toro

We announced on February 6, 2009 that we had reached an agreement to sell the MV Toro at a reduced sale price. The purchaser of the MV Toro pursuant to this agreement, Samsun agreed to release its deposit of $6.3 million to us immediately and make a new deposit of $1.5 million. It thereafter was reported in the press that Samsun had filed for receivership, and we received notice of this receivership action. In addition, while Samsun released the initial deposit of $6.3 million to us, it failed to make the additional deposit of $1.5 million. As a result, we believe Samsun is in breach of this agreement. Samsun has not stated whether it intends to fulfill its agreement to purchase the MV Toro, and we have commenced arbitration proceedings against Samsun claiming compensation for the difference between the current market price and the contract price of $63.4 million pursuant to our agreement with Samsun.

Cancellation of Sale of the MV La Jolla

We previously entered into an agreement to sell the MV La Jolla, a 1997 built Panamax drybulk carrier, for a sale price of $66 million and we have agreed to settle the dispute with the buyers in connection with the buyers’ failure to take delivery under the relevant memorandum of agreement. Under the settlement agreement, we have agreed to retain the vessel in exchange for aggregate compensation in the amount of $9 million in respect of the cancellation.

Reduction of Sale Price for the MV Paragon

We previously entered into an agreement to sell the MV Paragon, a 1995 built 71,259 dwt Panamax drybulk carrier, for a sale price of approximately $61 million and we reached an agreement with the buyers to reduce the purchase price to $30.8 million. We expect to recognize a gain of approximately $2.4 million which will be recognized in the first quarter of 2009. On March 3, 2009, we delivered the vessel to the buyers.

48

Cancellation of Acquisition of MV Petalidi (ex MV Maple Valley)

In January 2009, we entered into an agreement to cancel the previously announced acquisition of the 2005 built Panamax drybulk carrier MV Petalidi (ex MV Maple Valley) for a purchase price of $61.0 million from an unrelated third party. In view of market conditions and following negotiations, we and the seller mutually agreed to cancel the memorandum of agreement to acquire the MV Petalidi (ex MV Maple Valley) in consideration of a payment of $8.0 million to the seller and the seller’s retention of the $6.1 million deposit that was previously paid. This cancellation reduced our 2009 capital expenditures by $46.9 million. Proceedings that had been pending in London and New York were both discontinued as a result of this agreement.

Adjustment in Contract Price for Two Panamax Newbuildings

We previously agreed to acquire two Panamax newbuildings, identified as Hulls 1518A and 1519A, for a purchase price in the amount of $33.6 million each. These vessels are scheduled for delivery from Hudong Shipbuilding in the second quarter of 2009 and the third quarter of 2010, respectively. An affiliated client of our manager, Cardiff, with which we are affiliated, has agreed to purchase Hull 1569A, a sister vessel to Hulls 1518A and 1519A. We have agreed to increase the purchase price for Hulls 1518A and 1519A by $5.0 million each in consideration of (i) a corresponding $10.0 million decrease in the purchase price of Hull 1569A and (ii) an undertaking that on delivery of Hulls 1518A and 1519A, the owner of Hull 1569A will repay us by effecting payment of $10.0 million to Hudong Shipbuilding. We will issue a guarantee to the shipyard for this increase in the purchase price of Hulls 1518A and 1519A. This transaction was approved on January 21, 2009 by the independent members of the board of directors as an accommodation to our manager.

Our Offshore Drilling Operations

Through most of 2008, the ultra deepwater drilling market continued to improve with a number of drilling contracts providing for day rates in the low to mid six-hundred thousands and forward start, term contracts extending out to 2013 and beyond. This demand for ultra deepwater units was supported by the belief in the industry that ultra deepwater units are the primary source of incremental supply. The growth in demand was driven primarily by non-OECD demand and that the fact that necessary incremental supply to meet this demand will be challenged by the accelerating natural decline of some of the very large mature oil fields. The deep water and ultra deepwater exploration success supported the thesis that deepwater drilling was a viable source of new supply. Large discoveries made in the lower Tertiary in the Gulf of Mexico. Brazil and Angola similarly confirmed new discoveries in the sub salt regions and substantial discoveries were also made in the emerging areas of India, South East Asia and West Africa. This unprecedented demand supported a massive new construction phase where more than 80 newbuilding drill ships and semi submersible drilling rigs were ordered in various shipyards around the world.

Early in the fourth quarter of 2008, the ultra deepwater market began to show signs of slowing, with less bid and general enquiry activity. The near-term market conditions have been adversely impacted by depressed commodity prices, the ongoing financial turmoil and economic recession. New fixtures have been relatively few. However, day rates in the ultra deepwater market remain robust, although lower than the highs existing in the middle of 2008. The economic uncertainty has prompted a number of international and independent energy and petroleum operators to postpone some near term activity and or delay making commitments on forward start contracts. The national oil companies, in contrast, remain active and have appeared to see the current economic downturn as an opportune period to lock up drilling capacity, especially near term capacity. The financial turmoil will also impact the supply of newbuild rig capacity. During the period from the fourth quarter 2008 to March 16, 2009, we believe a total of two newbuilding contracts have been cancelled in the ultra deepwater market. We expect this trend to continue as many of the new entrants may struggle to secure the necessary financing for their newbuild programs.

49

Longer-term, we believe the fundamentals are strong, growth in demand will likely return once the economic woes recede. and the supply of oil and gas will remain constrained, with deepwater basins being the primary source of incremental supply.

The drilling rig Leiv Eiriksson will complete its current contractual commitment on the later of (i) September 12, 2009, (ii) when the well that is in progress on this date is completed. The Leiv Eiriksson is currently employed on the Ormen Lange field in the Norwegian sector of the North Sea and is expected to carry on operations on this field and in British sector during the remaining contract period to September 2009. We received a letter of award on March 18, 2009 for the Leiv Eiriksson for a three year period with Petróleo Brasileiro S.A. at a day rate of $540,000 plus 8% incentive bonus based on operational performance. The letter of award is subject to the completion of definitive documentation. The contract is expected to commence in direct continuation from the current contract with Shell.

The Eirik Raude commenced the Tullow contract on October 8, 2008, arrived in Ghana on November 27, 2008 and commenced drilling operations on the Jubilee field. The day rate escalated from $611,000 to $629,000 on February 15, 2009. We have agreed to extend the date to exercise the option to extend the 3-year contract by one or two years from December 31, 2008 to March 31, 2009.

Competition

Our competition in the contract drilling industry ranges from large multinational companies to smaller, locally-owned companies. We believe we are competitive in terms of safety, pricing, performance, equipment, availability of equipment to meet customer needs and availability of experienced, skilled personnel. However, industry-wide shortages of supplies, services, skilled personnel and equipment necessary to conduct our business can occur. Competition for offshore drilling rigs and drillships is usually on a global basis, as these drilling rigs and drillships are highly mobile and may be moved, at a cost that may sometimes be substantial, from one region to another in response to customers’ drilling programs and demand.

Customers

Our offshore drilling customers generally fall within three categories: national oil companies, large integrated major oil companies and medium to smaller independent exploration and production companies. The customers that have contracted our rigs are predominantly the large integrated major oil companies. During 2008, our contract with Shell U.K. Limited, A/S Norske Shell and Shell E&P Ireland Limited accounted for 54% of our total offshore drilling revenues, our contract with ExxonMobil accounted for 26% of our total offshore drilling revenues and our contract with Tullow Oil accounted for 20% of our total offshore drilling revenues.

Management of Our Offshore Drilling Operations, Including Crewing and Employees

Our subsidiary, Ocean Rig AS, directly manages its two drill rigs, the Eirik Raude and the Leiv Eiriksson. As of December 31, 2008, the Ocean Rig group had 401 employees, compared to 323 as of December 31, 2007, of which 374 were directly employed by Ocean Rig and 27 short-term employees and permanent crew were engaged through agencies. The increase in the number of employees is due to Norwegian regulations which required a 50% increase in crew for Norwegian operations. 114 persons are employed on the Eirik Raude and 196 on the Leiv Eiriksson, and we also have a crew resource team with 10 employees. The remaining 54 are shore-based support and management positions, of which 40 employees are based at the Forus, Norway headquarters and a total of 14 employees are located at the drill rig’s shore bases in Stavanger, Norway and Accra, Ghana.

50

The supervision of the construction of our two newbuilding drillships identified as Hulls 1865 and 1866 is performed by our subsidiary Ocean Rig AS pursuant to two separate management agreements, each dated August 1, 2008.

On August 1, 2008, the owning companies of the two newbuilding drillships identified as Hulls 1837 and 1838, which we entered into a share purchase agreement to acquire, each entered into a separate management agreement with Ocean Rig AS for the supervision of the construction of these drillships on the same terms as our agreements with Ocean Rig AS.

Under the terms and conditions of these agreements, Ocean Rig AS, among other things, is responsible for (i) assisting in construction contract technical negotiations, (ii) securing contracts for the future employment the drillships, and (iii) providing commercial, technical and operational management for the drillships.

Pursuant to each of these agreements, Ocean Rig AS is entitled to: (i) a fee of $250 per day until steel cutting, (ii) a fee of $2,500 per day from the date of steel cutting until the date of delivery of the applicable drillship to its owner and (iii) $8,000 per day thereafter. The management fees are subject to an increase based on the U.S. Consumer Price Index for the preceding 12 months. Ocean Rig AS is also entitled to a commission fee equal to 0.75% of gross hire and charter hire for contracts or charter parties entered into during the -term of the management agreement, payable on the date that the gross or charter hire money is collected.

The agreements each terminate on December 31, 2020, unless earlier terminated by Ocean Rig AS for non-payment within fifteen working days of request.

We expect to enter into separate managements agreements with Cardiff, pursuant to which Cardiff will provide additional supervisory services in connection with the newbuilding drillships identified as Hull 1837, Hull 1838, Hull 1865 and Hull 1866 and will be responsible for, among other things: (i) arranging insurance, (ii) identifying and arranging financing and acting as the intermediary with the bank after entering into any loan, (iii) providing sale and purchase management services, (iv) cooperating with Sarbanes-Oxley Act compliance and (v) handling and settling all claims arising under the management agreements.

Pursuant to each of these agreements, Cardiff will be entitled to: (i) a fee of 500 Euros per day per person, plus expenses, for on-site visits to the newbuilding construction site; (ii) a daily fee of $40 per from October 1, 2008 to the date of steel cutting and a fee of $400 per day thereafter until 90 days after the delivery of the drillship; (iii) a commission of 5% of total insurance premiums, (iv) a commission of 0.20% of any loan amount financed or re-financed, (v) a monthly fee of $30,000 per loan for which Cardiff serves as intermediary, (vi) a commission of 1% of the purchase price set forth in any memorandum of agreement for any vessel bought or sold on our behalf and a fee of 400 Euros per day for inspection of vessels for purchase, (vii) a daily fee of 20 Euros per vessel for services in respect of Sarbanes-Oxley compliance and (viii) a fee of 150 Euros per man per day of eight hours for time spent carrying out obligations with respect to the handling and settling of claims.

Insurance for Our Offshore Drilling Rigs

We maintain insurance for our drilling units in accordance with industry standards. Our insurance is intended to cover normal risks in our current operations, including insurance against property damage, loss of hire, war risk and third-party liability, including pollution liability.

We have obtained insurance for the full assessed market value of our drilling units, as assessed by rig brokers. Our insurance provides for premium adjustments based on claims and is subject to deductibles and aggregate recovery limits. In the case of pollution liabilities, our deductible is $10,000 per event and in the case of other hull and machinery claims, our deductible is $1.5 million per event. Our insurance coverage may not protect fully against losses resulting from a required cessation of rig operations for environmental or other reasons.

51

We also have loss of hire insurance which becomes effective after 45 days of off-hire and coverage extends for approximately one year.

The principal risks which may not be insurable are various environmental liabilities and liabilities resulting from reservoir damage caused by our negligence. In addition, insurance may not be available to us at all or on terms acceptable to us, that we will maintain insurance or, if we are so insured, that our policy will be adequate to cover our loss or liability in all cases.

Environmental and Other Regulations in the Drybulk Shipping Industry

Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmental protection including the storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.

A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities such as the United States Coast Guard, harbor master or equivalent), classification societies; flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend the operation of one or more of our vessels.

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However, because such laws and regulations are frequently changed and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization

The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by ships, or the IMO, has adopted the International Convention for the Prevention of Marine Pollution, 1973, as modified by the related Protocol of 1978 relating thereto, which has been updated through various amendments, or the MARPOL Convention. The MARPOL Convention establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. The IMO adopted regulations that set forth pollution prevention requirements applicable to drybulk carriers. These regulations have been adopted by over 150 nations, including many of the jurisdictions in which our vessels operate.

52

In September 1997, the IMO adopted Annex VI to the MARPOL Convention, Regulations for the Prevention of Pollution from Ships, to address air pollution from ships. Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits deliberate emissions of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. We believe that all our vessels are currently compliant in all material respects with these regulations. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition. In October 2008, the IMO adopted amendments to Annex VI regarding nitrogen oxide and sulfur oxide emissions standards which are expected to enter into force on July 1, 2010. The amended Annex VI would reduce air pollution from vessels by, among other things, (i) implementing a progressive reduction of sulfur oxide emissions from ships, with the global sulfur cap reduced initially to 3.50% (from the current cap of 4.50%), effective from January 1, 2012, then progressively to 0.50%, effective from January 1, 2020, subject to a feasibility review to be completed no later than 2018; and (ii) establishing new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. Once these amendments become effective, we may incur costs to comply with these revised standards.

Safety Management System Requirements

IMO also adopted the International Convention for the Safety of Life at Sea, or SOLAS and the International Convention on Load Lines, or the LL Convention, which impose a variety of standards that regulate the design and operational features of ships. The IMO periodically revises the SOLAS and LL Convention standards. We believe that all our vessels are in substantial compliance with SOLAS and LL Convention standards.

Under Chapter IX of SOLAS, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, our operations are also subject to environmental standards and requirements contained in the ISM Code promulgated by the IMO. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that we and our technical manager have developed for compliance with the ISM Code. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. As of the date of this filing, each of our vessels is ISM code-certified.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We will obtain documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. The document of compliance, or the DOC, and safety management certificate, or the SMC, are renewed every five years but the DOC is subject to audit verification annually and the SMC at least every 2.5 years.

53

Pollution Control and Liability Requirements

IMO has negotiated international conventions that impose liability for oil pollution in international waters and the territorial waters of the signatory to such conventions. For example, IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements (beginning in 2009), to be replaced in time with mandatory concentration limits. The BWM Convention will not become effective until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping. To date there has not been sufficient adoption of this standard for it to take force.

Although the United States is not a party to these conventions, many countries have ratified and follow the liability plan adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended in 2000, or the CLC. Under this convention and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain defenses. The limits on liability outlined in the 1992 Protocol use the International Monetary Fund currency unit of Special Drawing Rights, or SDR. Under an amendment to the 1992 Protocol that became effective on November 1, 2003, for vessels between 5,000 and 140,000 gross tons (a unit of measurement for the total enclosed spaces within a vessel), liability is limited to approximately $6.73 million (4.51 million SDR) plus $941 (631 SDR) for each additional gross ton over 5,000. For vessels of over 140,000 gross tons, liability is limited to $133.87 million (89.77 million SDR). As the convention calculates liability in terms of a basket of currencies, these figures are based on currency exchange rates of 0.670561 SDR per U.S. dollar on February 13, 2009. The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s actual fault and under the 1992 Protocol where the spill is caused by the shipowner’s intentional or reckless conduct. Vessels trading with states that are parties to these conventions must provide evidence of insurance covering the liability of the owner. In jurisdictions where the CLC has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to that of the convention. We believe that our protection and indemnity insurance will cover the liability under the plan adopted by the IMO.

In March 2006, the IMO amended Annex I to MARPOL, including a new regulation relating to oil fuel tank protection, which became effective August 1, 2007. The new regulation will apply to various ships delivered on or after August 1, 2010. It includes requirements for the protected location of the fuel tanks, performance standards for accidental oil fuel outflow, a tank capacity limit and certain other maintenance, inspection and engineering standards.

The IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to impose strict liability on shipowners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention, which became effective on November 21, 2008, requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

IMO regulations also require owners and operators of vessels to adopt Ship Oil Pollution Emergency Plans. Periodic training and drills for response personnel and for vessels and their crews are required.

54

Anti-Fouling Requirements

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships, or the Anti-fouling Convention. The Anti-fouling Convention prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels after September 1, 2003. The exteriors of vessels constructed prior to January 1, 2003 that have not been in drydock must, as of September 17, 2008, either not contain the prohibited compounds or have coatings applied to the vessel exterior that act as a barrier to the leaching of the prohibited compounds. Vessels of over 400 gross tons engaged in international voyages must obtain an International Anti-fouling System Certificate and undergo a survey before the vessel is put into service or when the anti-fouling systems are altered or replaced. We have obtained Anti-fouling System Certificates for all of our vessels that are subject to the Anti-fouling Convention.

Compliance Enforcement

The flag state, as defined by the United Nations Convention on Law of the Sea, has overall responsibility for the implementation and enforcement of international maritime regulations for all ships granted the right to fly its flag. The “Shipping Industry Guidelines on Flag State Performance” evaluates flag states based on factors such as sufficiency of infrastructure, ratification of international maritime treaties, implementation and enforcement of international maritime regulations, supervision of surveys, casualty investigations and participation at IMO meetings. Our vessels are flagged in Malta, except for two vessels which are flagged in Antigua and Barbuda. Malta flagged vessels have historically received a good assessment in the shipping industry. We recognize the importance of a credible flag state and do not intend to use flags of convenience or flag states with poor performance indicators.

Noncompliance with the ISM Code or other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The U.S. Coast Guard and European Union authorities have indicated that vessels not in compliance with the ISM Code by the applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively. As of the date of this report, each of our vessels is ISM Code certified. However, there can be no assurance that such certificate will be maintained.

The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

The U.S. Oil Pollution Act of 1990 and Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States’ territorial sea and its 200 nautical mile exclusive economic zone. The United States has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, which applies to the discharge of hazardous substances other than oil, whether on land or at sea. Both OPA and CERCLA impact our operations.

Under OPA, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to include:

• natural resources damage and the costs of assessment thereof;

55

• real and personal property damage;

• net loss of taxes, royalties, rents, fees and other lost revenues;

• lost profits or impairment of earning capacity due to property or natural resources damage;

• net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and

• loss of subsistence use of natural resources.

Under amendments to OPA that became effective on July 11, 2006, the liability of responsible parties is limited to the greater of $950 per gross ton or $0.8 million per non-tank (e.g. drybulk) vessel that is over 300 gross tons (subject to periodic adjustment for inflation). CERCLA, which applies to owners and operators of vessels, contains a similar liability regime and provides for cleanup, removal and natural resource damages. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $0.5 million for any other vessel. These limits of liability do not apply if an incident was directly caused by violation of applicable U.S. federal safety, construction or operating regulations or by a responsible party’s gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with oil removal activities.

We currently maintain pollution liability coverage insurance in the amount of $625 million per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage it could have an adverse effect on our business and results of operation.

OPA also requires owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under OPA and CERCLA. On October 17, 2008, the U.S. Coast Guard regulatory requirements under OPA and CERCLA were amended to require evidence of financial responsibility in amounts that reflect the higher limits of liability imposed by the 2006 amendments to OPA, as described above. The increased amounts became effective on January 15, 2009. In addition, on September 24, 2008, the U.S. Coast Guard proposed adjustments to the limits of liability for non-tank vessels that would further increase the limits to the greater of $1,000 per gross ton or $848,000 and establish a procedure for adjusting the limits for inflation every three years. The Coast Guard is currently soliciting comments on the proposal. Under the regulations, vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance or guaranty. Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessels in the fleet having the greatest maximum liability under OPA.

The U.S. Coast Guard’s regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typically provided certificates of financial responsibility under pre-OPA laws, including the major protection and indemnity organizations, have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or are required to waive insurance policy defenses.

The U.S. Coast Guard’s financial responsibility regulations may also be satisfied by evidence of surety bond, guaranty or by self-insurance. Under the self-insurance provisions, the shipowner or operator must have a net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied with the U.S. Coast Guard regulations by providing a certificate of responsibility from third party entities that are acceptable to the U.S. Coast Guard evidencing sufficient self-insurance.

56

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for oil spills. In some cases, states, which have enacted such legislation, have not yet issued implementing regulations defining vessels owners’ responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call. We believe that we are in substantial compliance with all applicable existing state requirements. In addition, we intend to comply with all future applicable state regulations in the ports where our vessels call.

Other Environmental Initiatives

The U.S. Clean Water Act, or CWA, prohibits the discharge of oil or hazardous substances in U.S. navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. In addition, most U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law.

The U.S. Environmental Protection Agency, or EPA, historically exempted the discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. waters from CWA permitting requirements. However, on March 31, 2005, a U.S. District Court ruled that the EPA exceeded its authority in creating an exemption for ballast water. On September 18, 2006, the court issued an order invalidating the exemption in the EPA’s regulations for all discharges incidental to the normal operation of a vessel as of September 30, 2008, and directed the EPA to develop a system for regulating all discharges from vessels by that date. The District Court’s decision was affirmed by the Ninth Circuit Court of Appeals on July 23, 2008. The Ninth Circuit’s ruling meant that owners and operators of vessels traveling in U.S. waters would soon be required to comply with the CWA permitting program to be developed by the EPA or face penalties.

In response to the invalidation and removal of the EPA’s vessel exemption by the Ninth Circuit, the EPA has enacted rules governing the regulation of ballast water discharges and other discharges incidental to the normal operation of vessels within U.S. waters. Under the new rules, which took effect February 6, 2009, commercial vessels 79 feet in length or longer (other than commercial fishing vessels), or Regulated Vessels, are required to obtain a CWA permit regulating and authorizing such normal discharges. This permit, which the EPA has designated as the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, or VGP, incorporates the current U.S. Coast Guard requirements for ballast water management as well as supplemental ballast water requirements, and includes limits applicable to 26 specific discharge streams, such as deck runoff, bilge water and gray water.

For each discharge type, among other things, the VGP establishes effluent limits pertaining to the constituents found in the effluent, including best management practices, or BMPs, designed to decrease the amount of constituents entering the waste stream. Unlike land-based discharges, which are deemed acceptable by meeting certain EPA-imposed numerical effluent limits, each of the 26 VGP discharge limits is deemed to be met when a Regulated Vessel carries out the BMPs pertinent to that specific discharge stream. The VGP imposes additional requirements on certain Regulated Vessel types, that emit discharges unique to those vessels. Administrative provisions, such as inspection, monitoring, recordkeeping and reporting requirements are also included for all Regulated Vessels.

On August 31, 2008, the District Court ordered that the date for implementation of the VGP be postponed from September 30, 2008 until December 19, 2008. This date was further postponed until February 6, 2009 by the District Court. Although the VGP became effective on February 6, 2009, the VGP

57

application procedure, known as the Notice of Intent, or NOI, has yet to be finalized. Accordingly, Regulated Vessels will effectively be covered under the VGP from February 6, 2009 until June 19, 2009, at which time the “eNOI” electronic filing interface will become operational. Thereafter, owners and operators of Regulated Vessels must file their NOIs prior to September 19, 2009, or the Deadline. Any Regulated Vessel that does not file an NOI by the Deadline will, as of that date, no longer be covered by the VGP and will not be allowed to discharge into U.S. navigable waters until it has obtained a VGP. Any Regulated Vessel that was delivered on or before the Deadline will receive final VGP permit coverage on the date that the EPA receives such Regulated Vessel’s complete NOI. Regulated Vessels delivered after the Deadline will not receive VGP permit coverage until 30 days after their NOI submission. Our fleet is composed entirely of Regulated Vessels, and we intend to submit NOIs for each vessel in our fleet as soon after June 19, 2009 as practicable.

In addition, pursuant to §401 of the CWA which requires each state to certify federal discharge permits such as the VGP, certain states have enacted additional discharge standards as conditions to their certification of the VGP. These local standards bring the VGP into compliance with more stringent state requirements, such as those further restricting ballast water discharges and preventing the introduction of non-indigenous species considered to be invasive. The VGP and its state-specific regulations and any similar restrictions enacted in the future will increase the costs of operating in the relevant waters.

The U.S. Clean Air Act of 1970, as amended by the Clean Air Act Amendments of 1977 and 1990, or the CAA, requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas. Our vessels that operate in such port areas with restricted cargoes are equipped with vapor recovery systems that satisfy these requirements. The CAA also requires states to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in primarily major metropolitan and/or industrial areas. Several SIPs regulate emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. As indicated above, our vessels operating in covered port areas are already equipped with vapor recovery systems that satisfy these existing requirements. The EPA and the state of California, however, have each proposed more stringent regulations of air emissions from ocean-going vessels. On July 24, 2008, the California Air Resources Board of the State of California, or CARB, approved clean-fuel regulations applicable to all vessels sailing within 24 miles of the California coastline whose itineraries call for them to enter any California ports, terminal facilities, or internal or estuarine waters. The new CARB regulations require such vessels to use low sulfur marine fuels rather than bunker fuel. By July 1, 2009, such vessels are required to switch either to marine gas oil with a sulfur content of no more than 1.5% or marine diesel oil with a sulfur content of no more than 0.5%. By 2012, only marine gas oil and marine diesel oil fuels with 0.1% sulfur will be allowed. In the event our vessels were to travel within such waters, these new regulations would require significant expenditures on low-sulfur fuel and would increase our operating costs.

The U.S. National Invasive Species Act, or NISA, was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by ships in foreign ports. NISA established a ballast water management program for ships entering U.S. waters. Under NISA, mid-ocean ballast water exchange is voluntary, except for ships heading to the Great Lakes or Hudson Bay, or vessels engaged in the foreign export of Alaskan North Slope crude oil. However, NISA’s reporting and record-keeping requirements are mandatory for vessels bound for any port in the United States. Although ballast water exchange is the primary means of compliance with the act’s guidelines, compliance can also be achieved through the retention of ballast water on board the ship, or the use of environmentally sound alternative ballast water management methods approved by the U.S. Coast Guard. If the mid-ocean ballast exchange is made mandatory throughout the United States, or if water treatment requirements or options are instituted, the cost of compliance could increase for ocean carriers. Although we do not believe that the costs of compliance with a mandatory mid-ocean ballast exchange would be material, it is difficult to predict the overall impact of such a requirement on the drybulk shipping industry. The U.S. House of Representatives has recently passed a bill that amends NISA by prohibiting the

58

discharge of ballast water unless it has been treated with specified methods or acceptable alternatives. Similar bills have been introduced in the U.S. Senate, but we cannot predict which bill, if any, will be enacted into law. In the absence of federal standards, states have enacted legislation or regulations to address invasive species through ballast water and hull cleaning management and permitting requirements. For instance, the state of California has recently enacted legislation extending its ballast water management program to regulate the management of “hull fouling” organisms attached to vessels and adopted regulations limiting the number of organisms in ballast water discharges. In addition, in November 2008 the Sixth Circuit affirmed a District Court’s dismissal of challenges to the state of Michigan’s ballast water management legislation mandating the use of various techniques for ballast water treatment. Other states may proceed with the enactment of similar requirements that could increase the costs of operating in state waters.

Our operations occasionally generate and require the transportation, treatment and disposal of both hazardous and non-hazardous solid wastes that are subject to the requirements of the U.S. Resource Conservation and Recovery Act or comparable state, local or foreign requirements. In addition, from time to time we arrange for the disposal of hazardous waste or hazardous substances at offsite disposal facilities. If such materials are improperly disposed of by third parties, we may still be held liable for clean up costs under applicable laws.

European Union Regulations

In 2005, the European Union adopted a directive on ship-source pollution, imposing criminal sanctions for intentional, reckless or negligent pollution discharges by ships. The directive could result in criminal liability for pollution from vessels in waters of European countries that adopt implementing legislation. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

Greenhouse Gas Regulation

In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change, or the Kyoto Protocol, entered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases, which are suspected of contributing to global warming. Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol. However, the European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from vessels. In the United States, the Attorneys General from 16 states and a coalition of environmental groups in April 2008 filed a petition for a writ of mandamus, or petition, with the DC Circuit Court of Appeals, or the DC Circuit, to request an order requiring the EPA to regulate greenhouse gas emissions from ocean-going vessels under the Clean Air Act. Although the DC Circuit denied the petition in June 2008, any future passage of climate control legislation or other regulatory initiatives by the IMO, European Union or individual countries where we operate that restrict emissions of greenhouse gases could entail financial impacts on our operations that we cannot predict with certainty at this time.

Environmental and Other Regulations in the Offshore Drilling Industry

Our operations in the offshore drilling sector include activities that are subject to numerous international, federal, state and local laws and regulations, including MARPOL, OPA and CERCLA, each of which is discussed above, and the U.S. Outer Continental Shelf Lands Act. These laws govern the discharge of materials into the environment or otherwise relate to environmental protection.

For example, the IMO adopted MARPOL and Annex VI to MARPOL to regulate the discharge of harmful air emissions from ships, which include rigs and drillships. Rigs and drillships must comply with MARPOL limits on sulfur oxide and nitrogen oxide emissions, chlorofluorocarbons, and the discharge of other air pollutants, except that the MARPOL limits do not apply to emissions that are directly related to drilling, production, or processing activities.

59

Our drilling units are subject not only to MARPOL regulation of air emissions, but also to the Bunker Convention’s strict liability for pollution damage caused by discharges of bunker fuel in ratifying states. We believe that all of our drill units are currently compliant in all material respects with these regulations. As described above, in October 2008, MEPC adopted amendments to the Annex VI regulations that require a progressive reduction of sulfur oxide levels in heavy bunker fuels and create more stringent nitrogen oxide emissions standards for marine engines. We may incur costs to comply with these revised standards.

Furthermore, any drilling units we operate in the waters of the U.S., including the U.S. territorial sea and the 200 nautical mile exclusive economic zone around the U.S., would have to comply with OPA and CERCLA regulations, as described above, that impose liability (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges of oil or other hazardous substances, other than discharges related to drilling.

Numerous governmental agencies issue such regulations to implement and enforce the laws of the applicable jurisdiction, which often involve lengthy permitting procedures, impose difficult and costly compliance measures particularly in ecologically sensitive areas, and subject operators to substantial administrative, civil and criminal penalties or injunctive relief for failure to comply. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent and costly compliance could adversely affect our consolidated financial statements. While we believe that we are in substantial compliance with the current laws and regulations, there is no assurance that compliance can be maintained in the future.

Implementation of new environmental laws or regulations that may apply to ultra-deepwater drilling units may subject us to increased costs or limit the operational capabilities of our drilling units and could materially and adversely affect our operations and financial condition. See “Risk Factors—Governmental laws and regulations, including environmental laws and regulations, may add to our costs or limit our drilling activity”.

In addition to the MARPOL, OPA, and CERCLA requirements described above, our international operations in the offshore drilling segment are subject to various laws and regulations in countries in which we operate, including laws and regulations relating to the importation of and operation of drilling units and equipment, currency conversions and repatriation, oil and natural gas exploration and development, environmental protection, taxation of offshore earnings and earnings of expatriate personnel, the use of local employees and suppliers by foreign contractors and duties on the importation and exportation of drilling units and other equipment. New environmental or safety laws and regulations could be enacted, which could adversely affect our ability to operate in certain jurisdictions. Governments in some foreign countries have become increasingly active in regulating and controlling the ownership of concessions and companies holding concessions, the exploration for oil and natural gas and other aspects of the oil and natural gas industries in their countries. In some areas of the world, this governmental activity has adversely affected the amount of exploration and development work done by major oil and natural gas companies and may continue to do so. Operations in less developed countries can be subject to legal systems that are not as mature or predictable as those in more developed countries, which can lead to greater uncertainty in legal matters and proceedings.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the U.S. Maritime Transportation Security Act of 2002, or the MTSA came into effect. To implement certain portions of the MTSA, in July 2003, the U.S.

60

Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new chapter became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the newly created International Ship and Port Facility Security Code, or the ISPS Code. The ISPS Code is designed to protect ports and international shipping against terrorism. After July 1, 2004, to trade internationally, a vessel must attain an International Ship Security Certificate from a recognized security organization approved by the vessel’s flag state. Among the various requirements are:

• on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status;

• on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore;

• the development of a ship security plan;

• ship identification number to be permanently marked on a vessel’s hull;

• a continuous synopsis record kept onboard showing a vessel’s history including the name of the ship and of the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and

• compliance with flag state security certification requirements, which are reviewed every five years and are subject to intermediate verification every 2.5 years.

The U.S. Coast Guard regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures non-U.S. vessels that have on board, as of July 1, 2004, a valid International Ship Security Certificate attesting to the vessel’s compliance with SOLAS security requirements and the ISPS Code. Our managers intend to implement the various security measures addressed by MTSA, SOLAS and the ISPS Code, and we intend that our fleet will comply with applicable security requirements. We have implemented the various security measures addressed by the MTSA, SOLAS and the ISPS Code.

Inspection by Classification Societies

Every oceangoing vessel must be “classed” by a classification society. The classification society certifies that the vessel is “in class,” signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.

The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

For maintenance of the class certification, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed are required to be performed as follows:

Annual Surveys. For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant and where applicable for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate.

61

Intermediate Surveys. Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey.

Class Renewal Surveys. Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a shipowner has the option of arranging with the classification society for the vessel’s hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle. Upon a shipowner’s request, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal.

All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not exceed five years.

Most vessels are also drydocked every 30 to 36 months for inspection of the underwater parts and for repairs related to inspections. If any defects are found, the classification surveyor will issue a “recommendation” which must be rectified by the shipowner within prescribed time limits.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in class” by a classification society which is a member of the International Association of Classification Societies. All our vessels are certified as being “in class” by all the major Classification Societies (e.g., American Bureau of Shipping, Lloyd’s Register of Shipping). All new and secondhand vessels that we purchase must be certified prior to their delivery under our standard purchase contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel.

Class Surveys — drilling rigs. Class renewal surveys, also known as special surveys or class work, are carried out for the rig’s hull, machinery, drilling equipment, and for any special equipment classed, at the intervals indicated by the character of classification, normally every five years. At the special survey the rig is thoroughly examined. The classification society may grant a grace period for completion of the entire or parts of the special survey.

Substantial amounts of money have to be spent for renewals and repairs to pass a special survey, as several spares and components have a defined life-time of 5-15 years. This is accelerated if the rig experiences excessive wear and tear.

All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not exceed five years.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in class” by a classification society which is a member of the International Association of Classification Societies. Both our drilling rigs are certified as being “in class” by De Norske Veritas (DNV). The Leiv Eiriksson completed the 5-year class in 2006 and the Eirik Raude in 2007.

62

Risk of Loss and Liability Insurance

The operation of any drybulk vessel includes risks such as mechanical failure, hull damage, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental incidents, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of vessels trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for shipowners and operators trading in the United States market.

We maintain hull and machinery insurance, war risks insurance, protection and indemnity cover, and freight, demurrage and defense cover for our fleet in amounts that we believe to be prudent to cover normal risks in our operations. However, we may not be able to achieve or maintain this level of coverage throughout a vessel’s useful life. Furthermore, while we believe that the insurance coverage that we will obtain is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Hull & Machinery and War Risks Insurance

We maintain marine hull and machinery and war risks insurance, which includes the risk of actual or constructive total loss, for all of our vessels. Our vessels are each covered up to at least fair market value with deductibles of $100,000—$150,000 per vessel per incident. We also maintain increased value coverage for most of our vessels. Under this increased value coverage, in the event of total loss of a vessel, we will be able to recover the sum insured under the increased value policy in addition to the sum insured under the hull and machinery policy. Increased value insurance also covers excess liabilities which are not recoverable under our hull and machinery policy by reason of under insurance.

Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations, which insure liabilities to third parties in connection with our shipping activities. This includes third-party liability and other related expenses resulting from the injury or death of crew, passengers and other third parties, the loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Our P&I coverage is subject to and in accordance with the rules of the P&I Association in which the vessel is entered. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or “clubs.” Our coverage is limited to approximately $4.25 billion, except for pollution which is limited $1 billion and passenger and crew which is limited to $3 billion.

Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The fourteen P&I Associations that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. Each P&I Association has capped its exposure to this pooling agreement at $4.25 billion. As a member of a P&I Association which is a member of the International Group, we are subject to calls payable to the associations based on the group’s claim records as well as the claim records of all other members of the individual associations and members of the pool of P&I Associations comprising the International Group.

63

Permits and Authorizations

We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our vessels. The kinds of permits, licenses and certificates required depend upon several factors, including the commodity transported, the waters in which the vessel operates, the nationality of the vessel’s crew and the age of a vessel. We have been able to obtain all permits, licenses and certificates currently required to permit our vessels to operate. Additional laws and regulations, environmental or otherwise, may be adopted which could limit our ability to do business or increase the cost of us doing business.

C. Organizational Structure

As of December 31, 2008, the Company is the sole owner of all of the outstanding shares of the subsidiaries listed in Note 1 of our consolidated financial statements under item 18.

D. Property, Plant and Equipment

We do not own any real property. We lease office space in Athens, Greece from our Chief Executive Officer. Through our subsidiaries, we lease office space in Nicosia, Cyprus; Stavanger, Norway; London, UK; Taccoradi, Ghana and Accra, Ghana. Our interests in the drybulk vessels and drilling units in our fleet are our only material properties. See “Our Fleet” in this section.

Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

A. Operating Results

The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and accompanying notes included elsewhere in this report. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as those set forth in the section entitled “Risk Factors” and elsewhere in this report.

Our Drybulk Carrier Segment

Factors Affecting Our Results of Operations – Drybulk Carrier Segment

We charter our drybulk carriers to customers primarily pursuant to time charters. Under our time charters, the charterer typically pays us a fixed daily charter hire rate and bears all voyage expenses, including the cost of bunkers (fuel oil) and port and canal charges. We remain responsible for paying the chartered vessel’s operating expenses, including the cost of crewing, insuring, repairing and maintaining the vessel, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, and we also pay commissions to one or more unaffiliated ship brokers and to in -house brokers associated with the charterer for the arrangement of the relevant charter. Although the vessels in our fleet are primarily employed on short-term time charters ranging from two to twelve months, we may employ additional vessels on longer-term time charters in the future. We also charter three of our vessels on bareboat charters. Under a bareboat charter, the vessel is chartered for a stipulated period of time which gives the charterer possession and control of the vessel, including the right to appoint the master and the crew. Under bareboat charters all voyage costs are paid by the Company’s customers.

64

We believe that the important measures for analyzing trends in the results of our operations consist of the following:

• Calendar days. We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during that period.

• Voyage days. We define voyage days as the total number of days in a period during which each vessel in our fleet was in our possession net of off-hire days associated with major repairs, drydockings or special or intermediate surveys. The shipping industry uses voyage days (also referred to as available days) to measure the number of days in a period during which vessels actually generate revenues.

• Fleet utilization. We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our calendar days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades, drydockings or special or intermediate surveys.

• Spot Charter Rates. Spot charter rates are volatile and fluctuate on a seasonal and year to year basis. Fluctuations are caused by imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes.

• TCE rates. We define TCE rates as our voyage and time charter revenues less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. TCE rate, a non-GAAP measure, provides additional meaningful information in conjunction with revenues from our drybulk carriers, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. TCE rate is also a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts.

The following table reflects our voyage days, calendar days, fleet utilization and TCE rates for our drybulk carrier segment for the periods indicated.

(Dollars in thousands, except

Average Daily Results)

	Year Ended October 31, 2004		Two-Months Ended December 31, 2004		Year Ended December 31,
					2005		2006		2007		2008
Average number of vessels	5.9		6		21.6		29.76		33.67		38.56
Total voyage days for fleet	2,066		366		7,710		10,606		12,130		13,896
Total calendar days for fleet	2,166		366		7,866		10,859		12,288		14,114
Fleet Utilization	95.40	%	100.00	%	98.00	%	97.70	%	98.71	%	98.45	%
Time charter equivalent	28,062		39,516		28,446		21,918		45,417		58,155

65

Voyage Revenues

Our voyage revenues are driven primarily by the number of vessels in our fleet, the number of voyage days during which our vessels generate revenues and the amount of daily charterhire that our vessels earn under charters, which, in turn, are affected by a number of factors, including our decisions relating to vessel acquisitions and disposals, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in drydock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels, levels of supply and demand in the drybulk transportation market and other factors affecting spot market charter rates for drybulk carriers.

Vessels operating on period time charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the short-term, or spot, charter market during periods characterized by favorable market conditions. Vessels operating in the spot charter market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improvements in charter rates although we are exposed to the risk of declining charter rates, which may have a materially adverse impact on our financial performance. If we employ vessels on period time charters, future spot market rates may be higher or lower than the rates at which we have employed our vessels on period time charters.

We placed four of our vessels in the Baumarine pool during 2008, of which one vessel remained in the pool as of December 31, 2008. We are paid a percentage of revenues generated by the pool calculated in accordance with a “pool point formula,” which is determined by points awarded to each vessel based on the vessel’s age, dwt, speed, fuel consumption and certain other factors. For example, a younger vessel with higher carrying capacity and greater fuel efficiency would earn higher pool points than an older vessel with lower carrying capacity and lesser fuel efficiency. Revenues are paid every 15 days in arrears based on the points earned by each vessel. We believe that by placing our vessels in a pool of similar vessels, we benefit from certain economies of scale available to the pool relating to negotiations with major charterers and flexibility in positioning vessels to obtain maximum utilization.

Revenue from these pooling arrangements is accounted for on the accrual basis and is recognized when the collectability has been reasonably assured. Revenue from the pooling arrangements for the years ended December 31, 2006, 2007 and 2008 accounted for 25%, 12% and 6% of our voyage revenues, respectively.

A standard maritime industry performance measure used to evaluate performance is the daily time charter equivalent, or “Daily TCE.” Daily TCE revenues are voyage revenues minus voyage expenses (including net gain or loss on sale of bunkers) divided by the number of voyage days during the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter, as well as commissions. We believe that the Daily TCE neutralizes the variability created by unique costs associated with particular voyages or the employment of vessels on time charter or on the spot market and presents a more accurate representation of the revenues generated by our vessels.

Voyage Expenses and Voyage Expenses – related party

Voyage expenses and voyage expenses—related party primarily consist of commissions paid.

Vessel Operating Expenses

Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Our vessel operating expenses, which generally represent fixed costs, have historically increased as a result of the increase in the size of our fleet. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for insurance, may also cause these expenses to increase.

66

Depreciation

We depreciate our vessels on a straight-line basis over their estimated useful lives determined to be 25 years from the date of their initial delivery from the shipyard. Depreciation is based on cost less the estimated residual value. During the first quarter of 2008, the Company decided to change the method of accounting for dry-docking costs from the deferral method, under which costs associated with dry-docking a vessel are deferred and charged to expenses over the period to a vessel’s next scheduled dry-docking, to the direct expense method, under which the dry-docking costs are expensed as incurred. Management considers this a preferable method since it eliminates the subjectivity and significant amount of time that is needed in determining which costs related to dry-docking activities should be deferred and amortized over a future period.

This change was effected in the accompanying consolidated financial statements in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 154, “Accounting Changes and Error Corrections”, which requires that a change in accounting policy should be retrospectively applied to all prior periods presented. Accordingly, the previously reported financial information has been adjusted for all prior periods presented to account for this change in the method of accounting for dry-docking costs.

Management Fees - Related Party

We outsource all of our technical and commercial functions relating to the operation and employment of our drybulk carrier vessels to Cardiff pursuant to new management agreements effective July 1, 2008, with an initial term of five years and will automatically be extended to successive five year terms. In the case of a vessel having been sold, notice to terminate the relevant management agreement is not effective until 90 days following the date of the protocol of delivery, unless otherwise mutually agreed in writing.

The management fee we pay to Cardiff, our manager, is Euro 575 per day, per vessel. In addition, the management agreements provide for payment to Cardiff of: (i) a fee of Euro 100 per day per vessel for services in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; (ii) Euro 400 for superintendent visits on board vessels in excess of five days per annum, per vessel, for each additional day, per superintendent; (iii) chartering commission of 1.25% on all freight, hire and demurrage revenues; (iv) a commission of 1.00% on all gross sale proceeds or purchase price paid of vessels since October 1, 2006; (v) a quarterly fee of Euro 250,000 for services in relation to the financial reporting requirements of the Company under the Securities and Exchange Commission rules and the establishment and monitoring of internal controls over financial reporting; and (vi) 0.2% on derivative agreements and loan financing or refinancing. Until September 30, 2006, under the management agreement with Cardiff, Drybulk S.A. was acting as the chartering broker and sales and purchase broker for the Company in exchange for a commission of 1.25% on all freight, hire, demurrage revenues and a commission of 1.00% on all gross sale proceeds of, or purchase prices paid for, vessels. Since October 1, 2006, Cardiff has acted as our chartering broker and sales and purchase broker.

Management fees for the period from January 1 to December 31, 2007 were based at a daily fixed fee of $689 per vessel which was based on the Dollar/Euro exchange rate of $1.30 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter. Management fees for the period from January 1, 2008 to June 30, 2008 were based at a daily fixed fee of $775.50 per vessel which was based on the Dollar/Euro exchange rate of $1.41 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter.

67

Cardiff also provides other management services for our drybulk carriers. Cardiff provides commercial operations and freight collection services in exchange for a fee of 85 Euros per day, per vessel. Cardiff provides insurance services and obtains insurance policies for the vessels for a fee of 5.00% on the total insurance premiums, per vessel. In addition, if required, Cardiff has also agreed to handle and settle all claims arising out of its duties under the management agreements (other than insurance and salvage claims) in exchange for a fee of 150 Euros per person, per day of eight hours.

Additionally, Cardiff provides us with financial accounts services in exchange for a fee of 115 Euros per day, per vessel. We also pay Cardiff a quarterly fee of 250,000 Euros for services rendered by Cardiff in connection with our financial reporting requirements under the Securities Exchange Act of 1934, as amended. Pursuant to the terms of the management agreements, all fees payable to Cardiff will be adjusted upwards or downwards based upon the Greek consumer price index referring to the previous 12 calendar months. During the years ended December 31, 2007 and 2008, we incurred costs of $1,369,000 and $1,832,000, respectively, to reimburse Cardiff for additional services not covered by the management agreements in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002. For the year ended December 31, 2008, total fees paid to Cardiff amounted to $21.2 million.

General and Administrative Expenses and General Administrative Expenses -Related Party

Our general and administrative expenses mainly include executive compensation and the fees paid to Fabiana Services S.A. (“Fabiana”) a related party entity incorporated in the Marshall Islands. Fabiana provides the services of the individuals who serve in the positions of Chief Executive Officer and Chief Financial Officer. Fabiana is beneficially owned by our Chief Executive Officer, who also serves as our Interim Chief Financial Officer.

Interest and Finance Costs

We have historically incurred interest expense and financing costs in connection with vessel-specific debt of our subsidiaries. We used a portion of the proceeds of our initial public offering in February 2005 to repay all of our then-outstanding debt. We used a portion of the proceeds of our controlled equity offering through Cantor Fitzgerald as sales agent in 2006, 2007 and 2008 as well as a portion of the proceeds of our at the market offering through Merrill Lynch & Co. as sales agent in 2009 to repay existing indebtedness. We have incurred financing costs and we also expect to incur interest expenses under our credit facilities in connection with debt incurred to finance future acquisitions. However, we intend to limit the amount of these expenses and costs by repaying our outstanding indebtedness from time to time with the net proceeds of future equity issuances.

Inflation

Inflation has not had a material effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, administrative and financing costs.

Lack of Historical Operating Data for Vessels Before Their Acquisition

Although vessels are generally acquired free of charter, we have acquired (and may in the future acquire) some vessels with time charters. Where a vessel has been under a voyage charter, the vessel is usually delivered to the buyer free of charter. It is rare in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as the first charterer of the vessel in the hands of the buyer. In most cases, when a vessel is under time charter and the buyer wishes to assume that charter, the vessel

68

cannot be acquired without the charterer’s consent and the buyer entering into a separate direct agreement (called a “novation agreement”) with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charter because it is a separate service agreement between the vessel owner and the charterer.

Where we identify any intangible assets or liabilities associated with the acquisition of a vessel, we record all identified tangible and intangible assets or liabilities at fair value. Fair value is determined by reference to market data and the discounted amount of expected future cash flows. Where we have assumed an existing charter obligation or entered into a time charter with the existing charterer in connection with the purchase of a vessel at charter rates that are less than market charter rates, we record a liability, based on the difference between the assumed charter rate and the market charter rate for an equivalent vessel to the extent the vessel’s capitalized cost would not exceed its fair value without a time charter. Conversely, where we assume an existing charter obligation or enter into a time charter with the existing charterer in connection with the purchase of a vessel at charter rates that are above market charter rates, we record an asset, based on the difference between the market charter rate for an equivalent vessel and the contracted charter rate. This determination is made at the time the vessel is delivered to us, and such assets and liabilities are amortized to revenue over the remaining period of the charter.

During 2006, from April to October, we took delivery of seven secondhand vessels, the Lanzarote, Delray, Estepona, Ligari, Formentera, Maganari and Hille Oldendorff with charter party arrangements attached, which we agreed to assume through arrangements with the respective charterers. Upon delivery of the vessels we evaluated the charter contract assumed and recognized (a) an asset of $5.5 million, for two of the vessels, with a corresponding decrease in the vessels’ purchase price and (b) a liability of $11.5 million, for the other five vessels, with a corresponding increase in the vessels’ purchase price. The fair value of the assumed charters was determined based on reference to current market rates for similar contracts considering the remaining time charter period. Of the above mentioned vessels, all were acquired from third parties.

During 2007, the Company acquired three drybulk carrier vessels for $193.1 million which were under existing bareboat time charter contracts which the Company agreed to assume through arrangements with the respective charterers. The Company upon delivery of the above vessels evaluated the charter contracts assumed and recognized a liability of $38.7 million representing the fair value of below market acquired time charters, which is an equivalent of a present value of the excess of market rates of equivalent time charters prevailing at the time the foregoing vessels were delivered over existing rates of time charters assumed.

During 2008, the Company did not acquire any vessels which were under existing bareboat or time charter contracts.

When we purchase a vessel and assume or renegotiate a related time charter, we must take the following steps before the vessel will be ready to commence operations:

• obtain the charterer’s consent to us as the new owner;

• obtain the charterer’s consent to a new technical manager;

• in some cases, obtain the charterer’s consent to a new flag for the vessel;

• arrange for a new crew for the vessel, and where the vessel is on charter, in some cases, the crew must be approved by the charterer;

• replace all hired equipment on board, such as gas cylinders and communication equipment;

• negotiate and enter into new insurance contracts for the vessel through our own insurance brokers;

69

• register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;

• implement a new planned maintenance program for the vessel; and

• ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.

The following discussion is intended to help you understand how acquisitions of vessels affect our business and results of operations.

Our business is comprised of the following main elements:

• employment and operation of our drybulk vessels;

• drilling rigs; and

• management of the financial, general and administrative elements involved in the conduct of our business and ownership of our drybulk vessels and drilling rigs.

The employment and operation of our vessels require the following main components:

• vessel maintenance and repair;

• crew selection and training;

• vessel spares and stores supply;

• contingency response planning;

• onboard safety procedures auditing;

• accounting;

• vessel insurance arrangement;

• vessel chartering;

• vessel security training and security response plans (ISPS);

• obtain ISM certification and audit for each vessel within the six months of taking over a vessel;

• vessel hire management;

• vessel surveying; and

• vessel performance monitoring.

The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels requires the following main components:

• management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts;

• management of our accounting system and records and financial reporting;

• administration of the legal and regulatory requirements affecting our business and assets; and

• management of the relationships with our service providers and customers.

70

The principal factors that affect our profitability, cash flows and shareholders’ return on investment include:

• Charter rates and periods of charter hire for our drybulk vessels;

• day rates and duration of drilling contracts;

• utilization of rigs (earnings efficiency);

• levels of drybulk carrier and rig operating expenses;

• depreciation and amortization expenses;

• financing costs; and

• fluctuations in foreign exchange rates.

Our Offshore Drilling Segment

Factors Affecting Our Results of Operations – Offshore Drilling Segment

We charter our drilling rigs to customers primarily pursuant to long-term drilling contracts. Under the drilling contracts, the customer typically pays us a fixed daily rate, depending on the activity and up-time of the rig. The customer bears all fuel costs and logistics costs related to transport to/from the rig. We remain responsible for paying the rigs operating expenses, including the cost of crewing, catering, insuring, repairing and maintaining the rig, the costs of spares and consumable stores and other miscellaneous expenses.

We believe that the important measures for analyzing trends in the results of our operations consist of the following:

• Employment Days – We define employment days as the total number of days the drilling vessels are employed on a drilling contract.

• Day rates. We define drilling day rates as the maximum rate in Dollars possible to earn for drilling services for one day, under the drilling contract. Such day rate may be measured by quarter-hourly, half-hourly or hourly basis, and may be reduced depending on the activity performed according to the drilling contract.

• Earning efficiency on hire. Earning efficiency measures the effective earnings ratio reduced by certain operations paid at reduced rate, non-productive time at zero rate, or off hire without day rates, as a percentage of full earnings rate. Earning efficiency on hire measures the earning efficiency only for the period being on contract, not including off-hire periods.

• Mobilization / demobilization fees: In connection with drilling contracts the Company may receive revenues for preparation and mobilization of equipment and personnel or for capital improvements to the drilling vessels, day rate or fixed price mobilization and demobilization fees. For each contract, the Company determines whether the contract, for accounting purposes, is a multiple element arrangement and, if so, identifies all deliverables (elements). For each element the Company determines how and when to recognize revenue.

• Term contracts: These are contracts where the assignment is to operate the unit for a specified period of time. For these types of contracts, the Company determines whether the arrangement is a multi element arrangement, containing both a lease element and drilling services element.

71

• Lease accounting: For revenues derived from contracts that contain a lease, the lease elements are recognized to the income statement on a straight line basis, taking into consideration the different day rates, utilization and transit between locations that are anticipated to take place in the lease period. The drilling services element of mobilization and contributions from customers is recognized in the period in which the services are rendered. The Company will make a best effort estimate to split the contractual day rate into a lease element and a drilling services element in order to conduct such accounting. Direct incremental expenses of mobilization are deferred and recognized over the estimated duration of the drilling contracts. To the extent that deferred expenses exceed revenue to be recognized, they are expensed as incurred. Capital improvements to the rig are depreciated over the estimated useful lives of the asset. Demobilization fees and expenses are recognized over the demobilization period. Other operating expenses are expensed when incurred.

Revenue from Drilling Contracts

Our drilling revenues are driven primarily by the number of rigs in our fleet, the contractual day rates and the utilization of the rigs. This, in turn, is affected by a number of factors, including our decisions relating to rig acquisitions and disposals, the amount of time that our rigs spend on planned off-hire class work, unplanned off-hire maintenance and repair, off-hire upgrade and modification work, the age, condition and specifications of our rigs, levels of supply and demand in the rig market, the price of oil, and other factors affecting the market day rates for drilling rigs.

Rig Operating Expenses

Rig operating expenses include crew wages and related costs, catering, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, shore based costs and other miscellaneous expenses. Our rig operating expenses, which generally represent fixed costs, have historically increased as a result of the business climate in the offshore drilling sector. Specifically, wages and vendor supplied spares, parts and services have experienced a significant price increase over the last two to three years. Other factors beyond our control, some of which may affect the offshore drilling industry in general, including, but not limited to, developments relating to market prices for insurance, may also cause these expenses to increase.

Depreciation

We depreciate our rigs on a straight-line basis over their estimated useful lives. Bare-decks are depreciated over 30 years and other asset parts over 5-15 years. We expense the costs associated with a five year periodical class work.

Management Fees to Related Party

Not applicable.

Management Fees from Related Party

In August 2008, Ocean Rig entered into management agreements with the entities that own newbuilding Hulls 1837 and 1838 and with the Company in respect of newbuilding Hulls 1865 and 1866 for both the construction and operations period until end of 2020. The owner entities cover all designated costs of the manager. In addition, the manager receives in the pre steel-cutting construction period a fee of $250 per day per vessel, increasing to $2,500 after the steel-cutting in the construction period. The fee increases to $8,000 per day in the operations period.

72

General and Administrative Expenses

Our general and administrative expenses mainly include the costs of the Stavanger and London offices, including approximately 40 senior management and employees and related costs.

Interest and Finance Costs

Ocean Rig completed a global refinancing in 2008, replacing secured bank debt and two bond issuances with secured bank debt only. See below under “Current Credit Facilities – $1.04 billion revolving credit and term loan facility, dated September 17, 2008.” Historically, we have incurred interest expense and financing costs in connection debt covering the fleet and not with rig-specific debt.

RESULTS OF OPERATIONS

The following table reflects our voyage days, calendar days, fleet utilization and TCE rates for our drybulk vessels for the periods indicated.

Drybulk Carrier segment

(Dollars in thousands, except

Average Daily Results)

	2006		2007		2008
Average number of vessels	29.76		33.67		38.56
Total voyage days for fleet	10,606		12,130		13,896
Total calendar days for fleet	10,859		12,288		14,114
Fleet Utilization	97.70	%	98.71	%	98.45	%
Time charter equivalent	21,918		45,417		58,155

Drilling Rig segment

The following table reflects our day rates and earning efficiencies for the year ended December 31, 2008.

(Day rates in thousands of

Dollars, earning efficiency in

percent)

	Year Ended December 31, 2008
Average day rates	476
Average earning efficiency on hire	89%

Please see “Item 3. Key Information—A. Selected Financial Data” for information concerning the calculation of TCE rates.

73

Year ended December 31, 2008 compared to the year ended December 31, 2007

Following our acquisition and consolidation of Ocean Rig at May 14, 2008, we have two reportable segments, the Drybulk Carrier segment and the Drilling Rig segment.

Revenues

For the Drybulk Carrier segment, Voyage revenues increased by $278.7 million, or 47.8%, to $861.3 million for 2008 compared to $582.6 million for 2007. The increase is attributable to the substantially increased hire rates we earned over this period as a result of charter rates contracted for during the second quarter of 2008, and the increase in the average number of vessels operated from 33.7 during the year ended December 31, 2007 to 38.6 during the year ended December 31, 2008. Towards the end of the second quarter of 2008, drybulk rates began to steadily decline. In 2008, we had total voyage days of 13,896 compared to 12,130 in 2007. The average fleet time charter equivalent rate increased from $45,417 in 2007 to $58,155 in 2008.

Revenue from drilling rig contracts amounted to $219.4 million for 2008. We did not earn any revenues from drilling contracts for 2007.

Voyage Expenses

For the Drybulk Carrier segment, Voyage expenses (including gains from sale of bunkers) increased by $21.6 million, or 68.4%, to $53.2 million for 2008, compared to $31.6 million for 2007. The increase is mainly attributable to the increase in commissions incurred by $13.4 million as a result of increased voyage revenues. The Drilling Rig segment did not have any Voyage expenses for 2008.

Vessel and Rig Operating Expenses

For the Drybulk Carrier segment, vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, and maintenance and repairs increased by $16.5 million, or 26.1%, to $79.7 million for 2008 compared to $63.2 million for 2007. This increase is primary attributable to an increase in the number of calendar days from 12,288 in 2007 to 14,114 in 2008. The increase in calendar days during 2008 resulted from the enlargement of our fleet from an average of 33.7 vessels for the year ended December 31, 2007 to 38.6 vessels for the year ended December 31, 2008. Daily vessel operating expenses per vessel increased by $499, or 9.7%, to $5,644 for 2008 compared to $5,145 for 2007. This increase was mainly attributable to increased stores, spares and repairs.

For the Drilling Rig segment, drilling rig operating expenses amounted to $86.2 million during the year ended December 31, 2008. Daily rig operating expenses amounted to $186,643 per rig. The Drilling Rig segment did not have any drilling rig operations expenses for 2007.

Gain On Sale of Vessels

For the Drybulk Carrier segment, Gain on sale of vessels increased by $85.3 million or 61% to $223 million for the year ended December 31, 2008, compared to gain of $137.7 million for the year ended December 31, 2007. This gain is attributable to the disposal of seven vessels at higher rates during the year ended December 31, 2008, compared to twelve vessels at lower rates during the year ended December 31, 2007.

The Drilling Rig segment did not have any gains on vessel disposals during 2008.

74

Gain On Contract Cancellation

For the Drybulk Carrier segment we recorded a gain on contract cancellation of $9.1 million which represents the deposit we retained in connection with the cancellation of the sale of MV Primera. There were no such gains in 2007.

The Drilling Rig segment did not have any such gains during 2008.

Contract termination and forfeiture fees of vessel deposits-related party

For the Drybulk Carrier segment, an amount of $160 million was paid as a loss on contract termination deposits and forfeiture of vessel deposits for four Panamax drybulk carriers in 2008. There were no such losses for 2007.

The Drilling Rig segment did not have any loss on contract termination deposits and forfeiture of drilling rig deposits for 2008.

Goodwill impairment

A charge of $700.1 million was recognized in 2008, as a result of the impairment testing performed on goodwill at December 31, 2008. The goodwill arose as a result of the acquisition of Ocean Rig during 2008.

Depreciation and amortization

	Year Ended December 31,
(In thousands of Dollars)	2007		2008
Drybulk carrier segment depreciation expense	$	76,511	$	110,507
Drilling Rig segment depreciation expense		—	$	46,582
Amortization of intangible assets		—		890
Total	$	76,511	$	157,979

Depreciation increased by $81.5 million, or 106.5%, to $158.0 million for the year ended December 31, 2008, compared to $76.5 million for the year ended December 31, 2007. Of this increase, $34.0 million relates to the Drybulk Carrier segment and $47.5 million relates to the Drilling Rig segment. The increase from the Drybulk Carrier segment is due to the increase in the number of vessels operated from an average of 33.7 vessels for the year ended December 31, 2007 to 38.6 vessels for the year ended December 31, 2008, and the fact that we renewed our fleet with younger and more expensive vessels. The depreciation attributable to the Drilling Rig segment reflects the depreciation on the two drilling rigs for the year ended December 31, 2008. Amortization relates to intangible assets attributable to the Drilling Rig segment.

Management Fees

The fees paid to Cardiff for the management of our vessels in the Drybulk Carrier segment increased by $11.5 million, or 119.8%, to $21.1 million in 2008 from $9.6 million in 2007 pursuant to new management agreements signed on July 1, 2008 that provide for increased fees and the increase in the number of fleet calendar days from 12,288 in the year ended December 31, 2007 to 14,114 in the year ended December 31, 2008 due to the growth of the fleet.

75

Management fees for the period from January 1 to December 31, 2007 were based at a daily fixed fee of $689 per vessel which was based on the Dollar/Euro exchange rate of $1.30 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter. Management fees for the period from January 1, 2008 to June 30, 2008 were based at a daily fixed fee of $775.50 per vessel which was based on the Dollar/Euro exchange rate of $1.41 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter.

Additionally, Cardiff provides us with financial accounts services in exchange for a fee of 115 Euros per day, per vessel. We also pay Cardiff a quarterly fee of 250,000 Euros for services rendered by Cardiff in connection with our financial reporting requirements under the Securities Exchange Act of 1934, as amended. Pursuant to the terms of the management agreements, all fees payable to Cardiff will be adjusted upwards or downwards based upon the Greek consumer price index referring to the previous 12 calendar months. During the years ended December 31, 2007 and 2008, we incurred costs of $1,369,000 and $1,832,000, respectively, to reimburse Cardiff for additional services not covered by the management agreements in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002. For the year ended December 31, 2008, total fees paid to Cardiff amounted to $21.2 million.

The Drilling Rig segment did not have any Management fees for 2008.

General and Administrative Expenses

For the Drybulk Carrier segment, general and administrative expenses and general and administrative expenses – related parties increased by $60.7 million, or 809%, to $68.2 million in the year ended December 31, 2008 compared to $7.5 million for the year ended December 31, 2007. The increase is mainly due to amortization of non-cash stock based compensation in the amount of $31.5 million for shares we issued to Fabiana Services S.A. as described in Notes 6 and 16 to the consolidated financial statements herein, the increase in the number of fleet calendar days from 12,288 for the year ended December 31, 2007 to 14,114 for the year ended December 31, 2008, due to the growth of the fleet and the significant increase in the exchange rate between the Dollar and the Euro.

For the Drilling Rig segment, general and administrative expenses amounted to $14.0 million for the year ended December 31, 2008. There is no such expense for the year ended December 31, 2007.

Interest and Finance Costs

For the Drybulk Carrier segment, interest and finance costs increased by $29.1 million, or 56.8%, to $80.3 million for the year ended December 31, 2008, compared to $51.2 million for the year ended December 31, 2007. The increase resulted primarily from the increased amount of average indebtedness outstanding during the year ended December 31, 2008 ($3.1 billion) compared to the year ended December 31, 2007 ($1.2 billion) and increased interest rates in the first half of 2008.

For the Drilling Rig segment, interest and finance costs amounted to $32.9 million for the year ended December 31, 2008. There is no such expense for the year ended December 31, 2007.

76

Interest Income

For the Drybulk Carrier segment, interest income increased by $2.7 million, or 52.9%, to $7.8 million for the year ended December 31, 2008, compared to $5.1 million for the year ended December 31, 2007, primarily due to increased liquidity and increased interest rates in the first half of 2008.

For the Drilling Rig segment, interest income amounted to $5.4 million for the year ended December 31, 2008. There is no such income for the year ended December 31, 2007.

Gain/(Loss) On Interest Rate Swaps

For the Drybulk Carrier segment, loss on interest rate swaps increased by $142.5 million from a loss on the calculation at interest rate swaps amounting to $4.0 million for 2007 to a loss of $207.9 million for 2008. The change is attributable to the increased notional amount of 31 swaps that were entered into in 2008, compared to eight in 2007, and the adverse movement in interest rates during 2008. None of the interest rate swaps for the Drybulk Carrier segment qualifies for hedge accounting.

The Drilling Rig segment realized a loss on interest rate swaps which did not qualify for hedge accounting of $65.4 million during 2008. There is no such expense for the year ended December 31, 2007.

Other, Net

For the Drybulk Carrier segment, a loss of $12.6 million was realized during 2008 compared to a loss of $3.0 million during 2007. The loss in 2008 is mainly attributable to the commission of $9.9 million paid to Cardiff in connection with the acquisition of 69.6% of the issued and outstanding shares of Ocean Rig ASA.

The Drilling Rig segment did not have any Other, net for 2008.

Equity in Loss of Investee

Equity in loss of investees amounted to $0.3 million and $6.9 million in the years ended December 31, 2007 and 2008, respectively. This represents the amount of income that is attributable to the shareholding of DryShips Inc. prior to obtaining control of Ocean Rig for the period from December 21, 2007 to May 14, 2008.

Minority Interest

Minority interest amounted to an expense of $16.8 million in the year ended December 31, 2008. This represents the amount of consolidated income that is not attributable to the shareholding of DryShips Inc. There is no such expense for the year ended December 31, 2007.

RESULTS OF OPERATIONS

Year ended December 31, 2007 compared to the year ended December 31, 2006

Voyage revenues

Voyage revenues increased by $334.2 million, or 134.5%, to $582.6 million for 2007, compared to $248.4 million for 2006. The increase is attributable to the substantial increase in charterhire rates for the year ended December 31, 2007 as compared to December 31, 2006, and the increase in the average number of vessels operated from 29.76 during the year ended December 31, 2006 to 33.67 during the year ended December 31, 2007. In 2007 we had total voyage days of 12,130 compared to 10,606 in 2006. The increase in our voyage revenues discussed above was also due to the increase of the average fleet time charter equivalent rate from $21,918 in 2006 to $45,417 in 2007.

77

Voyage Expenses

Voyage expenses (including gains from sale of bunkers) increased by $15.6 million, or 97.5%, to $31.6 million for 2007, compared to $16.0 million for 2006. This increase is attributable to the increase in our voyage revenues discussed above which resulted in a substantial increase in commissions payable.

Vessel Operating Expenses

Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, and maintenance and repairs increased by $9.0 million, or 16.6%, to $63.2 million for 2007 compared to $54.2 million for 2006. This increase is primary attributable to an increase in the number of calendar days. In 2007, we had 12,288 calendar days compared to 10,859 in 2006. The increase in calendar days during 2007 resulted from the enlargement of our fleet from an average of 29.76 vessels for the year ended December 31, 2006 to 33.67 vessels for the year ended December 31, 2007. Daily vessel operating expenses per vessel increased by $157, or 3.1%, to $5,145 for 2007 compared to $4,988 for 2006. This increase was mainly attributable to increased stores, spares and repairs.

Gain on Sale of Vessels

Gain on sale of vessels increased to $137.7 million for the year ended December 31, 2007, compared to $8.8 million for the year ended December 31, 2006. The increase is attributable to the disposal of twelve vessels during the year ended December 31, 2007 as compared to one vessel during the year ended December 31, 2006.

Depreciation

(In thousands of Dollars)	Year Ended December 31,
	2006		2007
Vessels depreciation expense	$	58,011	$	76,511
Total	$	58,011	$	76,511

Depreciation increased by $18.5 million, or 31.9% to $76.5 million for 2007 compared to $58.0 million for 2006. This increase is primary attributable to an increase in the number of calendar days we achieved due to the enlargement of our fleet as described above.

Management Fees

The fees paid to Cardiff for the management of our vessels increased by $3.0 million or 45.5% to $9.6 million in 2007 from $6.6 million in 2006 as a direct result of the increase in the number of fleet calendar days from 10,859 in the year ended December 31, 2006 to 12,288 in the year ended December 31, 2007 due to the growth of the fleet.

General and Administrative Expenses

General and administrative expenses increased by $1.6 million or 27.1%, to $7.5 million for 2007 compared to $5.9 million for 2006. This increase is due mainly to the increase in audit fees and fees related to compliance with the requirements of the Sarbanes-Oxley Act of 2002, Section 404.

78

Interest and Finance Costs

Interest and finance costs increased by $8.8 million, or 20.8%, to $51.2 million for 2007 compared to $42.4 million for 2006. This increase resulted primarily from the increase in interest expense due to the increased amount of average indebtedness outstanding and the increased interest rates during the year ended December 31, 2007 compared to the year ended December 31, 2006.

Interest Income

Interest income was $5.1 million during 2007 compared to $1.7 million during 2006. This increase is attributable to the increased liquidity of the Company and interest rates in 2007. Cash and cash equivalents increased from $2.5 million for the year ended December 31, 2006 to $111.1 million for the year ended December 31, 2007.

Gain/(Loss) On Interest Rate Swaps

Gain/(loss) on interest rate swaps decreased by $4.7 million from a gain on the interest rate swaps amounting to $0.7 million for 2006 to a loss at $4.0 million for 2007.

Other, Net

A loss of $3.0 million was realized during 2007 compared to a gain of $0.2 million during 2006. The loss in 2007 reflects the commission of $4.0 million payable to Cardiff in connection with the acquisition of 30.4% of the issued and outstanding shares of Ocean Rig ASA

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of those consolidated financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. On an ongoing basis, we evaluate our estimates, including those related to bad debts, materials and supplies obsolescence, investments, property and equipment, intangible assets and goodwill, income taxes, pensions and share based compensation. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have described below what we believe are our most critical accounting policies that involve a high degree of judgment and the methods of their application. For a description of all of the company’s significant accounting policies, see Note 2 to the Company’s consolidated financial statements.

Goodwill: Goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired. Goodwill is reviewed for impairment whenever events or circumstances indicate possible impairment in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets.” This statement requires that goodwill and other intangible assets with an indefinite life not be amortized but instead tested for impairment at least annually. The Company tests for impairment each year on December 31.

79

The Company tests goodwill for impairment by first comparing the carrying value of each reporting unit, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management, to its fair value. The fair value of our reporting units was estimated based on discounted expected future cash flows using a weighted-average cost of capital rate. The estimates and assumptions regarding expected cash flows and the appropriate discount rates require considerable judgment and are based upon existing contracts, historical experience, financial forecasts and industry trends and conditions. If the fair value of a reporting unit exceeds its carrying value, then no further testing is required. If the fair value is determined to be less than carrying value, a second step is performed to compute the amount of the impairment, if any. In this process, an implied fair value for goodwill is estimated, based in part on the fair value of the operations, and is compared to its carrying value. The shortfall of the implied fair value of goodwill below its carrying value represents the amount of goodwill impairment. To determine the fair value of each reporting unit, the Company uses a combination of generally accepted valuation methodologies, including both income and market approaches. For its drilling rig reporting unit, the Company estimates the fair market value using estimated discounted cash flows and publicly traded company multiples. The Company discounts projected cash flows using a long-term weighted average cost of capital, which is based on the Company’s estimate of the investment returns that market participants would require for each of its reporting units. To develop the projected cash flows associated with the Company’s drilling rig reporting unit, which are based on estimated future utilization and dayrates, the Company considers key factors that include assumptions regarding future commodity prices, credit market uncertainties and the effect these factors may have on the Company’s contract drilling operations and the capital expenditure budgets of its customers. The Company derives publicly traded company multiples for companies with operations similar to the Company’s reporting units using information on shares traded on stock exchanges and, when they are available, from analyses of recent acquisitions in the marketplace. For the Company’s drilling rig reporting unit, the Company estimates fair market value using estimated discounted cash flows based on assumptions for future commodity prices, projected demand for its services, rig availability and day rates.

The Company’s finite-lived acquired intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: Trade names, 10 years; Software, 10 years; and fair value of below and above market acquired time charters, over the life of the associated contract. The finite-lived intangibles are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of any asset may not be recoverable based on estimates of future undiscounted cash flows. In the event of impairment, the asset is written down to its fair market value. An impairment loss, if any, is measured as the amount by which the carrying amount of the asset exceeds its fair value.

Equity method investments: Investments in entities that the Company does not control, but has the ability to exercise significant influence over the operating and financial policies, are accounted for using the equity method. The Company’s ownership interest is recorded in “Long term investment” in the consolidated balance sheets. Earnings or losses from equity method investments are recorded in “Equity in loss of investees” in the accompanying consolidated statements of income.

Business Combinations: In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141 (“Business Combinations”), the purchase price of acquired businesses or properties is allocated to tangible and identified intangible assets and liabilities based on their respective fair values. The excess of the purchase price over the respective fair value of net assets acquired is recorded as goodwill. Costs incurred in relation to pursuing any business acquisition are capitalized when they are directly related to the business acquisition and the acquisition is probable. Acquisition costs also include fees paid to bankers in connection with obtaining related financing. Such financing costs are an element of the effective interest cost of the debt; therefore they are classified as a contra to debt upon the business combination and the receipt of the related debt proceeds and are amortized using the effective interest method through the term of the respective debt.

80

Impairment of Long-Lived Assets: The Company follows SFAS 144, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company should evaluate the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset as provided by third parties. In this respect, management regularly reviews the carrying amount of the vessels in comparison with the fair value of the asset as provided by third parties for each of the Company’s vessels. The Company reviews its vessels for impairment on a vessel by vessel basis when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. No impairment losses were recorded in the years ended December 31, 2006 and 2007.

As December 31, 2008, the Company performed an impairment review of the Company’s long-lived and intangible assets, due to the global economic downturn and the prevailing conditions in the shipping industry. The Company compared undiscounted cash flows to the carrying values for the Company’s long-lived and intangible assets to determine if the assets were impaired. Significant management judgment is required in forecasting future operating results, used in this method. These estimates are consistent with the plans and forecasts used by management to conduct its business.

Accounting for Revenue and Related Expenses:

Drybulk Carrier vessels: The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered using time and bareboat charters, where a contract exists, the price is fixed, service is provided and collection of the related revenue is reasonably assured, revenue is recognized as it is earned ratably on a straight-line basis over the duration of the period of each time charter as adjusted for the off-hire days that the vessel spends undergoing repairs, maintenance and upgrade work depending on the condition and specification of the vessel. Deferred revenue includes cash received prior to the balance sheet date and is related to revenue earned after such date.

For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula, which is determined by points awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics. Revenue under pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and collectability has been reasonably assured.

The allocation of such net revenue may be subject to future adjustments by the pool however, historically, such changes have not been material.

Voyage related and vessel operating costs are expensed as incurred. Under a time charter, specified voyage costs, such as fuel and port charges are paid by the charterer and other non-specified voyage expenses, such as commissions are paid by the Company. Vessel operating costs including crews, maintenance and insurance are paid by the Company. Under a bareboat charter, the charterer assumes responsibility for all voyage and vessel operating expenses and risk of operation.

81

Drilling rigs: The majority of revenues are derived from contracts including day rate based compensation for drilling services. In connection with drilling contracts the Company may receive revenues for preparation and mobilization of equipment and personnel or for capital improvements to the drilling rigs and day rate or fixed price mobilization and demobilization fees. For each contract the Company determines whether the contract, for accounting purposes, is a multiple element arrangement and, if so, identifies all deliverables (elements).

For each element the Company determines how and when to recognize revenue. There are two types of drilling contracts: well contracts and term contracts.

Well contracts: These are contracts where the assignment is to drill a certain number of wells. Revenue from day rate based compensation for drilling operations is recognized in the period during which the services are rendered at the rates established in the contracts. Mobilization fees, expenses and contributions from customers for capital improvements are recognized over the estimated duration of the drilling period. Demobilization fees and expenses are recognized over the demobilization period.

Term contracts: These are contracts where the assignment is to operate the unit for a specified period of time. For these types of contracts the Company determines whether the arrangement is a multi element arrangement containing both a lease element and drilling services element. The lease element of revenue is recognized to the income statement on a straight line basis. The drilling services element of mobilization revenues, contributions from customers and the direct incremental expenses of mobilization are deferred and recognized over the estimated duration of the drilling contracts. To the extent that deferred expenses exceed revenue to be recognized, it is expensed as incurred. Demobilization fees and expenses are recognized over the demobilization period.

For revenues derived from contracts that contain a lease, the lease elements are recognized in the income statement on a straight line basis, taking into consideration the different day rates, utilization and transit between locations that are anticipated to take place in the lease period. The drilling services element is recognized in the period in which the services are rendered at rates at fair value.

Fair value of above/below market acquired time charter: Where the Company identifies any assets or liabilities associated with the acquisition of a vessel, the Company records all such identified assets or liabilities at fair value. Fair value is determined by reference to market data. The Company values any asset or liability arising from the market value of the time charters assumed when a vessel is acquired. The amount to be recorded as an asset or liability at the date of vessel delivery is based on the difference between the current fair values of a charter with similar characteristics as the time charter assumed and the net present value of future contractual cash flows from the time charter contract assumed. When the present value of the time charter assumed is greater than the current fair value of such charter, the difference is recorded as “Above market acquired time charter”. When the opposite situation occurs, the difference is recorded as “Below market acquired time charter” (“Deferred revenue” in 2006). Such assets and liabilities, respectively, are amortized as a reduction of, or an increase in, revenue over the period of the time charter assumed.

Financial Instruments: The Company designates its derivatives based upon SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities (“SFAS No 133”) which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS 133, as amended by SFAS No 138 “Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No 133” and SFAS No.149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”, requires all derivative instruments to be recorded on the balance sheet as either an asset or liability measured at its fair value, with changes in fair value recognized in earnings unless specific hedge accounting criteria are met.

82

The fair value of the derivative instruments equals the amount that would be paid by the Company to cancel such derivative instruments at the reporting date, taking into account current interest rates and currency rates.

At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy undertaken for the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

The Company is party to interest swap agreements where it receives a floating interest rate and in exchange pays a fixed interest rate for a certain period. Contracts which meet the strict criteria for hedge accounting are accounted for as cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability, or a highly probable forecasted transaction that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognized directly as a component of Other comprehensive income in equity, while the ineffective portion, if any, is recognized immediately in current period earnings.

The Company discontinues cash flow hedge accounting if the hedging instrument expires, is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Company revokes the designation. At that point in time, any cumulative gain or loss on the hedging instrument recognized in equity is kept in equity until the forecasted transaction occurs. When the forecasted transaction occurs, any cumulative gain or loss on the hedging instrument is recognized in profit or loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in equity is transferred to net profit or loss for the year as financial income or expense.

Changes in the fair value of derivative instruments that have not been designated as hedging instruments are reported in current period earnings.

The off-balance sheet risk in outstanding derivative agreements involves the risk of a counter party not performing under the terms of the contract. The Company monitors its positions, the credit ratings of counterparties and the level of contracts it enters into with any one party. The Company has a policy of entering into contracts with parties that meet stringent qualifications and, given the high level of credit quality of its derivative counterparties, the Company does not believe it is necessary to obtain collateral.

Stock-based compensation: Stock-based compensation represents restricted common stock granted to employees and directors for their services. The Company calculates total compensation expense for the award based on its fair value on the grant date and amortizes the total compensation on a straight-line basis over the vesting period of the award. Expense concerning restricted common stock granted to employees is included in “General and administrative expenses – related parties” in the consolidated statements of income, whereas expense concerning restricted common stock granted to directors is included in “General and administrative expenses” in the consolidated statements of income.

Segment Reporting: SFAS No. 131 ‘‘Disclosure about Segments of an Enterprise and Related Information’’ requires disclosure of descriptive information about the Company’s reportable operating segments. The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. The Company does not have discrete financial information to evaluate the operating results for each such charter. Althought revenue can be indentified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief

83

operating officer, reviews results solely by revenue per day and operating results of the drybulk carrier and drilling rig fleets. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and as a result, the disclosure of geographic information is impracticable. The Company’s acquisition of Ocean Rig has resulted in the Company determining that it operates under two reportable segments, as a provider of drybulk commodities for the steel, electric utility, construction and agri-food industries (Drybulk carrier segment) and as a provider of ultra deep water drilling rig services (Drilling rig segment). The accounting policies applied to the reportable segments is the same as those used in the preparation of the Company’s consolidated financial statements.

Recent Accounting Pronouncements:

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” or “SFAS No. 141(R)”. SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS No.141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, and will be adopted by the Company in the first quarter of fiscal 2009. The Company will adopt SFAS 141(R) for any new business combinations with an acquisition date on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51”, or “SFAS No. 160”. SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008, and will be adopted by the Company in the first quarter of fiscal 2009. The adoption of SFAS No.160 will not have a material impact on the Company’s consolidated financial statements.

In March 2008, FASB issued Statement SFAS No 161. “Disclosure about Derivative Instruments and Hedging Activities”, an amendment of FASB Statement No. 133” or “SFAS No.161”. SFAS No.161 amends and expands the disclosure requirements of FASB No. 133 with the intent to provide users of financial statements with enhanced understanding of derivative instruments and hedging activities. SFAS No.161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This statement does not require comparative disclosures for earlier periods at initial adoption. The adoption of this standard is not expected to have a material effect on the consolidated financial statements.

In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets”, or “FSP FAS No.142-3”. FSP FAS No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset, FSP FAS No. 142-3 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years, requiring prospective application to intangible assets acquired after the effective date. The Company will be required to adopt the principles of FSP FAS No. 142-3 with respect to intangible assets acquired on or after January 1, 2009. Due to the prospective application requirement, the Company is unable to determine the effect, if any, that the adoption of FSP FAS 142-3 will have on our consolidated statement of financial position, results of operations or cash flows.

84

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, or “SFAS No. 162”, which identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with US GAAP. SFAS No. 162 was effective December 31, 2008 following the SEC's approval of certain amendments to auditing standards proposed by the Public Company Accounting Oversight Board. We have adopted SFAS No. 162 as of December 31, 2008. The adoption of SFAS No. 162 did not have an effect on the Company’s consolidated statement of financial position, results of operations or cash flows for the year ended December 31, 2008.

In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”, or “FSP EITF 03-6-1”. FSP EITF 03-6-1 clarifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. Awards of this nature are considered participating securities, and the two-class method of computing basic and diluted earnings per share must be applied. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. We expect to adopt FSP EITF 03-6-1 in the first quarter of 2009.

In December 2008, the FASB issued FSP No. FAS 132R-1, “Employers' Disclosures about Postretirement Benefit Plan Assets”, or “FSP FAS 132R-1”, which provides additional guidance regarding required disclosures for plan assets of a defined benefit pension or other postretirement plan. FSP FAS 132R-1 is effective for fiscal years ending after December 15, 2009. The adoption of this standard is not expected to have a material effect on the consolidated financial statements.

B. Liquidity and Capital Resources

Historically our principal source of funds has been equity provided by our shareholders, operating cash flow and long-term borrowing. Our principal use of funds has been capital expenditures to establish and grow our fleet, maintain the quality of our drybulk carriers, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, make principal repayments on outstanding loan facilities, and pay dividends. Our board of directors determined to suspend the payment of cash dividends beginning with the fourth quarter of 2008.

Our practice has been to acquire drybulk carriers using a combination of funds received from equity investors and bank debt secured by mortgages on our drybulk carriers. Our business is capital intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition of newer drybulk carriers and the selective sale of older drybulk carriers. These acquisitions will be principally subject to management’s expectation of future market conditions as well as our ability to acquire drybulk carriers on favorable terms.

Breach of Loan Covenants

Our loan agreements require that we maintain certain financial and other covenants. The current low drybulk charter rates and drybulk vessel values have affected our ability to comply with these covenants. A violation of these covenants constitutes an event of default under our credit facilities, which would, unless waived by our lenders, provide our lenders with the right to require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our fleet, reclassify our indebtedness as current liabilities and accelerate our indebtedness, which would impair our ability to continue to conduct our business. A total of $1.8 billion of indebtedness relating to our drybulk fleet has been reclassified as current liabilities in our audited consolidated balance sheet for the year ended December 31, 2008 included in this annual report as a result of the breach of certain covenants contained in our loan agreements.

85

As of December 31, 2008, we had a working capital deficit of $1.8 billion. Several of our lenders, which collectively held $1.8 billion of our indebtedness relating to our drybulk fleet as of December 31, 2008, have notified us that we are in breach of certain financial and other covenants contained in our loan agreements.

Set forth below is information concerning the credit facilities for which we have received notice and/or communications from our lenders regarding our breach of loan covenants.

With respect to our $800 million credit facility with Nordea Bank, as Agent, we have entered into a covenant waiver and amendment agreement regarding the waiver of certain covenants including the minimum required security cover, the required minimum monthly retentions and the undertaking to prepay certain indebtedness in an amount equal to 50% of the net proceeds of new equity issued by us. The material terms of the covenant waiver and amendment agreement with Nordea Bank are as follows: (1) the Company will pay a restructuring fee of 0.15% on the outstanding loan amount under the facility plus an amount equal to 1.00% per annum on the loan outstanding for the period from January 9, 2009 until February 12, 2009; (2) $75 million of principal repayment due February 2009 will be postponed until May 2009; (3) the margin on the facility will increase by 1.00% to 3.125% per annum; (4) regular principal payments will resume as of August 2009; (5) the Company and its subsidiaries Primelead Ltd. and Primelead Shareholders, will ensure that Ocean Rig maintains $180 million in restricted cash in accounts with Nordea Bank and DnB Nor Bank from February 12, 2009 through May 12, 2009; (6) beginning June 12, 2009, the Company will make monthly deposits of $16.7 million up to the amount of the next scheduled payment under the facility, and (7) if the Company issues equity, bonds or other unsecured debt after January 1, 2009, then upon completion of such issue, the Company will repay an amount equal to (i) 100% of the net proceeds from the first batch of $100 million of shares sold, (ii) 50% of the net proceeds from the second batch of $100 million of shares sold, (iii) 25% of the net proceeds from the third and fourth batch of $100 million of shares sold, and (iv) 0% of the net proceeds from any additional shares sold above the first $400 million of shares sold. As per this clause, the Company has repaid $195 million of the loan from the proceeds of the January 28, 2009 ATM Equity Offering Sales Agreement with Merrill Lynch. In addition, among other things, lender consent will be required for the acquisition of drillship hulls 1837 and 1838, for new cash capital expenditures or commitments and for new acquisitions for cash until the loan has been repaid to below $375 million. The waiver agreement effective date will not exceed August 12, 2009.

With respect to our loan agreements with Piraeus Bank, dated October 5, 2007 and March 13, 2008, we are in breach of various financial and asset coverage covenants. We have reached a preliminary agreement for covenant waivers and to restructure these facilities. There can be no assurance that we will be able to reach a definitive agreement with Piraeus Bank. As of December 31, 2008, we had outstanding borrowings in the amount of $166.0 million under this facility.

The material terms of the preliminary restructuring and covenant waiver agreement with Piraeus Bank are as follows: (1) a waiver of all financial and asset coverage covenants that require the minimum aggregate value of the MV Lacerta, MV Mernorca, MV Toro, and MV Paragon to be above 125% of the loan agreement value or $162.5 million through January 1, 2011; (2) an increased applicable margin; and (3) a reduction in the term of the loan. We expect that the final documentation would require, among other things, a substantial reduction of the outstanding amount in the event that any of five collateralized vessels, which are the MV Toro, MV Paragon, MV Delray, MV Samatan and MV Pachino, were disposed. We completed the sale of the MV Paragon on March 3, 2009. As discussed in “Item 8. Financial Information – Legal Proceedings” we have commenced arbitration proceedings against the buyers of the MV Toro.

With respect to our senior and junior loan agreements with HSH Nordbank AG or HSH, each dated March 31, 2006, we are in breach of various covenants which require us to maintain (i) an aggregate market value of the collateralized vessels of not less than 200% and 170% for the senior and junior loan agreements respectively, and (ii) minimum market value adjusted net worth of the Company. As of December 31, 2008, we had outstanding borrowings in the amount of $673.4 million under these agreements.

86

With respect to our loan agreement with WestLB AG, dated June 20, 2008, we are in breach of various covenants which require us to maintain an aggregate market value of the collateralized vessels of not less than 135% of the aggregate of (i) the loan and (ii) the swap exposure, which as of any relevant date is the aggregate amount payable by the Company to WestLB AG in the event of an early termination with respect to all continuing swap transactions between the Company and WestLB AG. As of December 31, 2008, we had outstanding borrowings in the amount of $78.4 million under this facility.

Other than with respect to our senior and junior loan agreements with HSH, the market values of the collateralized vessels has declined below the amounts outstanding under the respective loan agreements as of December 31, 2008.

In addition, we are in breach of various other financial covenants contained in our other loan agreements. We may not be successful in obtaining waivers and amendments to our credit facilities. If our indebtedness is accelerated, it would be very difficult in the current financing environment for us to refinance our debt or obtain additional financing and we could lose our vessels if our lenders foreclose their liens. If the value of our vessels deteriorates significantly from their currently depressed levels, we may have to record an impairment adjustment to our financial statements, which would adversely affect our financial results and further hinder our ability to raise capital. Further, as discussed below, our independent registered public accounting firm has issued their opinion with an explanatory paragraph in connection with our audited financial statements included in this report that expresses substantial doubt about our ability to continue as a going concern.

Moreover, in connection with any waivers and/or amendments to our loan agreements, our lenders may impose additional operating and financial restrictions on us and/or modify the terms of our existing loan agreements. These restrictions may limit our ability to, among other things, pay dividends, make capital expenditures and/or incur additional indebtedness, including through the issuance of guarantees. In addition, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness.

We are currently in negotiations with our lenders to obtain waivers and restructure our debt. Our management expects that the lenders will not demand payment of the loans before their maturity, provided that we pay loan installments and accumulated or accrued interest as they fall due under the existing credit facilities. Our management plans to settle the loan interest and capital installments with cash generated from operations as well as funding from equity offerings. We filed a prospectus supplement pursuant to Rule 424(b) under the Securities Act of 1993, as amended, on January 28, 2009 relating to the offer and sale of up to $500 million of our common stock. As of March 6, 2009, we had raised $370.5 million in net proceeds from this offering. Our management does not expect that cash be generated from the operations of the vessels and the drillships owned by the Company together with the maximum net proceeds of the $500 million equity offering to be sufficient to repay the total balance of loans in breach if such debt is accelerated by the lenders.

In addition, $1.8 billion of our indebtedness relating to our drybulk fleet is reflected as current due to our inability to meet our loan covenants. While we believe that our lenders will not declare an event of default so long as we pay loan installments and accumulated or accrued interest as they fall due under the existing credit facilities, if our lenders declare an event of default under our credit facility agreements, the lenders could elect to declare the outstanding debt, together with accrued interest and other fees, to be immediately due and payable and proceed against the collateral securing that debt, which could constitute all or substantially all of our assets. Our independent registered public accounting firm has issued their opinion with an explanatory paragraph in connection with our financial statements included in this annual report that expresses substantial doubt about our ability to continue as a going concern. We believe that we will generate sufficient cash from operations and proceeds from new equity to satisfy our liquidity needs for the next 12 months and enable us to continue as a going concern. As of March 11, 2009, we had issued and sold a total of 71,265,000 common shares pursuant to our at the market offering under our ATM Equity Offering^SM Sales Agreement, dated January 28, 2009, by and between us and Merrill Lynch, Pierce, Fenner & Smith Incorporated as our agent for the sale of up to $500 million of our common shares, resulting in net proceeds of $370.5 million. However, there is a material uncertainty related to events or conditions that raises significant doubt on our ability to continue as a going concern and, therefore, we may be unable to realize our assets and discharge our liabilities in the normal course of business. See Note 3 to our audited consolidated financial statements included in this annual report.

87

Existing Credit Facilities

$1.04 billion revolving credit and term loan facility, dated September 17, 2008

In September and October 2008, Ocean Rig, our wholly-owned subsidiary, drew down a total of $1.0 billion under this credit facility, which was used to repay all other outstanding Ocean Rig debt in the amount of $776 million and for general corporate purposes. This credit facility consists of a guarantee facility which provides us with a letter of credit in the amount of up to $20 million, three revolving credit facilities in the amounts of up to $350 million, $250 million and $20 million, respectively, and a term loan facility in the amount of up to $400 million. This loan bears interest at LIBOR plus a margin, and is repayable in 20 quarterly installments plus a balloon payment of $400 million, payable together with the last installment on September 17, 2013. As of December 31, 2008, we had outstanding borrowings in the amount of $982.5 under this facility, and as of March 26, 2009, we had outstanding borrowings in the amount of $931 under this facility.

The loan contains various finance covenants, including restrictions as to payment of dividends, distribution to shareholders, and the reduction of share capital without the bank’s prior consent. The loan is secured by (i) first and second priority mortgages over Ocean Rig’s two ultra-deepwater drilling rigs; (ii) first and second priority assignment of all insurances and earnings of the mortgaged drilling rigs; (iii) pledges of shares of Ocean Rig Norway AS, Ocean Rig 1 AS, Ocean Rig 2 AS, Ocean Rig North Sea AS, Ocean Rig Ghana Ltd., Ocean Rig Ltd., Ocean Rig 1 Inc. and Ocean Rig 2 Inc.; and (iv) first and second mortgages over the machinery and plant of Ocean Rig 1 Inc. and Ocean Rig 2 Inc. As of December 31, 2008, we were in compliance with all covenants under this facility.

Under this loan, Ocean Rig is restricted from paying dividends if there is less than six months on the contract for the Eirik Raude with Tullow Oil Plc, which expires October 2011, and no other contract with equally satisfactory terms has been entered into.

Two $562.5 million credit facilities, each dated July 18, 2008

As of December 2008, Drillship Kithira Owners Inc. and Drillship Skopelos Owners Inc., our wholly-owned subsidiaries, each drew down $86.7 million under these credit facilities, which was used to partially finance the construction costs of Drillship Hulls 1865 and 1866, including payment of the loan financing fees, incidental vessel costs, commitment fees, loan interest, and a portion of the second yard installments. Both of these loans bear interest at LIBOR plus a margin and are repayable in 18 semi-annual installments through November 2020. The first installment is payable six months after delivery of the vessels, which is expected to be in the third quarter of 2011. As of December 31, 2008, we had outstanding borrowings in the aggregate amount of $173.4 million under these credit facilities, and as of March 26, 2009, we had outstanding borrowings in the aggregate amount of $174.2 million under these credit facilities. As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 25% and (ii) the market value adjusted net worth must be greater than or equal to $500 million.

$126.4 million term loan facility, dated July 23, 2008

In July 2008, Cretan Traders Inc., our wholly-owned subsidiary, drew down $126.4 million under this term loan facility, which was used to partially finance the acquisition of the secondhand vessel, to be named Flecha. This loan bears interest at LIBOR plus a margin, and is repayable in 40 quarterly installments, plus a balloon payment of $20.4 million payable with the last installment in July 2018. As of

88

December 31, 2008, we had outstanding borrowings in the amount of $123.75 million under this term loan facility, and as of March 26, 2009, we had outstanding borrowings in the amount of $121.1 under this term loan facility. As of December 31, 2008, we were not in compliance with a covenant for this facility which requires that the market value to loan amount ratio be equal to or greater than 125%.

Under this loan, we are restricted from paying dividends if we are in default of the loan or the payment of dividends would result in a default of the loan.

$103.2 million loan facility, dated June 20, 2008

In June and July 2008, Aegean Traders Inc. and Iguana Shipping Company Limited, our wholly-owned subsidiaries, drew down $32.5 million and $51.6 million under this loan facility, respectively, to partially finance the acquisition cost of the vessels Sorrento and Iguana. This loan bears interest at LIBOR plus a margin, and is repayable in 32 quarterly installments, plus a balloon payment of $16 million payable with the last installment in July 2016 for the Sorento, and 20 quarterly installments, with the last installment in June 2013 for the Iguana. As of December 31, 2008, we had outstanding borrowings in the amount of $78.4 under this loan facility, and as of March 26, 2009, we had outstanding borrowings in the amount of $74.6 million under this loan facility. As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 20%, (ii) the market value adjusted net worth must be equal to or greater than $250 million and (iii) the market value to loan amount ratio must be greater than or equal to 135%.

$125 million loan facility, dated May 13, 2008

In May and June 2008, Norwalk Star Owners Inc. and Ionian Traders Inc., our wholly-owned subsidiaries, drew down $81.8 million and $43.2 million, respectively, under this loan facility to partially finance the acquisition cost of the vessels Capri and Positano. This loan bears interest at LIBOR plus a margin, and is repayable in 32 quarterly installments, plus a balloon payment of $19 million payable with the last installment in June 2016. As of December 31, 2008, we had outstanding borrowings in the amount of $112 million under this loan facility, and as of March 26, 2009, we had outstanding borrowings in the amount of $105.5 million under this loan facility. As of December 31, 2008, we were not in compliance with the following covenants for this facility i) the market-adjusted equity ratio must be greater than or equal to 25%, and ii) the market value to loan amount ratio must be greater than or equal to125%.

Under this loan, we are restricted from paying dividends without the lender’s consent if we are in default of the loan.

$800 million credit facility and NOK 5.0 billion guarantee facility, dated May 9, 2008

In May and June 2008, Primelead Limited, our wholly-owned subsidiary, drew down a total of $800 million under this credit facility, which was used to guarantee the purchase price and finance the acquisition of the Ocean Rig shares that were acquired through the mandatory offering and to refinance existing debt. This loan bears interest at LIBOR plus a margin, and is repayable in four quarterly installments of $75 million each, followed by four quarterly installments of $50 million each plus a balloon payment of $300 million, payable with the last installment on May 12, 2010. As of December 31, 2008, we had outstanding borrowings in the amount of $650 million under this credit facility, and as of March 26, 2009, we had outstanding borrowings in the amount of $460 million. As of December 31, 2008, we were not in compliance with the following covenant, among others, for this facility: the market-adjusted equity ratio must be greater than or equal to 30%. We have obtained a waiver agreement effective until August 12, 2009, at which time we expect to be in compliance with the restructured loan covenants.

89

Under this guarantee facility, we need the written consent of the lender to pay any dividends. Under this credit facility, we are restricted from paying dividends (i) if we are in default, (ii) if the payment of dividends would result in a default, or (iii) if after payment of dividends our liquid funds would be less than $100.0 million. In addition, no dividend may exceed $0.25 per share.

The material terms of the covenant waiver and amendment agreement with Nordea Bank are as follows:

(1) the Company will pay a restructuring fee of 0.15% on the outstanding loan amount under the facility plus an amount equal to 1.00% per annum on the loan outstanding for the period from January 9, 2009 until February 12, 2009; (2) $75.0 million of principal repayment due February 2009 will be postponed until May 2009; (3) the margin on the facility will increase by 1.00% to 3.125% per annum; (4) regular principal payments will resume as of August 2009; (5) the Company and its subsidiaries Primelead Ltd. and Primelead Shareholders, will ensure that Ocean Rig maintains $180 million in restricted cash in accounts with Nordea Bank and DnB Nor Bank from February 12, 2009 through May 12, 2009; and (6) beginning June 12, 2009, the Company will make monthly deposits of $16.7 million up to the amount of the next scheduled payment under the facility. In addition, among other things, lender consent will be required for the acquisition of drillship hulls 1837 and 1838, for new cash capital expenditures or commitments and for new acquisitions for cash until the loan has been repaid to below $375 million. The waiver agreement effective date will not exceed August 12, 2009, at which time the Company expects to be in compliance with the restructured loan covenants. As of December 31, 2008, we had outstanding borrowings in the amount of $650 million under this facility.

$90 million loan facility dated May 5, 2008

In June 2008, Dalian Star Owners Inc, our wholly-owned subsidiary, drew down $90 million under this loan facility to partially finance the acquisition cost of the secondhand vessel Mystic. The loan bears interest at LIBOR plus a margin, and is repayable in 14 semi-annual installments, with a balloon payment of $27 million, payable together with the last installment in December 2015. As of December 31, 2008 and March 26, 2009, we had outstanding borrowings in the amount of $80 million under this loan facility. As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 20%, (ii) the market value adjusted net worth must be greater than or equal to $250 million and (iii) the market value to loan amount ratio must be greater than or equal to 125%.

$130 million loan facility, dated March 13, 2008

In March 2008, Annapolis Shipping Company Limited, Atlas Owning Company Limited, Farat Shipping Company Limited and Lansat Shipping Company Limited, our wholly-owned subsidiaries, drew down $130 million under this loan facility in order to obtain additional liquidity and for general corporate purposes. The vessels Lacerta, Menorca, Toro and Paragon were released from their previous loan and related security obligations, and were provided as collateral under this loan facility. On June 27, 2008, the vessel Menorca was sold and its loan balance outstanding at such date of $33 million was fully repaid. On December 9, 2008, the vessel Lacerta was renamed Delray. On March 3, 2009, the vessel Paragon was sold and its outstanding loan balance of $28.5 million was fully repaid. The loan bears interest at LIBOR plus a margin and is repayable in 28 quarterly installments plus a balloon payment of $33.6 million, payable with the last installment in March 2015. As of December 31, 2008, we had outstanding borrowings in the amount of $84 million under this loan facility, and as of March 26, 2009, we had outstanding borrowings in the amount of $53 million under this loan facility. As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 25%, and (ii) the market value to loan amount ratio must be greater than or equal to 125%.

90

$101.2 million loan facility, dated December 4, 2007

In December 2008 and January 2009, Team-Up Owning Company Limited and Orpheus Owning Company Limited, our wholly-owned subsidiaries, drew down an aggregate of $101.2 million under this loan facility in order to partially finance the acquisition cost of the second hand vessels Saldahna (ex. Shino Brilliance) and Avoca. The loan bears interest at LIBOR plus a margin, and is repayable in 28 quarterly installments, with a balloon payment of $32.2 million, payable together with the last installment in January 2015. As of December 31, 2008, we had outstanding borrowings in the amount of $91.8 million under this loan facility, and as of March 26, 2009, we had outstanding borrowings of $88.7 million under this loan facility. As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 30%, and (ii) the market value to loan amount ratio must be greater than or equal to 125%.

$47 million loan facility dated November 16, 2007

In December 2007, Iason Owning Company Limited, our wholly-owned subsidiary, drew down $47 million under this loan facility in order to partially finance the acquisition cost of the second hand vessel Oregon (ex. Athina Zafirakis). The loan bears interest at LIBOR plus a margin, and is repayable in 32 quarterly installments, with a balloon payment of $12 million, payable together with the last installment in December 2015. As of December 31, 2008 and March 26, 2009, we had outstanding borrowings in the amount of $38 million under this loan facility. As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 20%, (ii) market value adjusted net worth greater than or equal to $180 million, and (iii) the market value to loan amount must be greater than or equal to 130%.

$90 million loan facility dated October 5, 2007

In October and November 2007, Boone Star Owners Inc. and Iokasti Owning Company Limited, our wholly-owned subsidiaries, drew down $90 million under this loan facility in order to partially finance the acquisition cost of the second hand vessels Samatan and VOC Galaxy. The loan bears interest at LIBOR plus a margin depending on corporate leverage, and is repayable in 32 quarterly installments beginning in the first quarter of 2008, with a balloon payment of $24.3 million, payable together with the last installment in the first quarter of 2016. As of December 31, 2008, we had outstanding borrowings in the amount of $82 million under this loan facility, and as of March 26, 2009, we had outstanding borrowings of $80 million under this loan facility. As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 25%, (ii) the market value adjusted net worth must be greater than or equal to $250 million and (iii) the market value to loan amount ratio must be greater than or equal to 125%.

$35 million loan facility dated October 2, 2007

In October 2007, Ioli Owning Company Limited, our wholly-owned subsidiary, drew down $35 million under this loan facility in order to partially finance the acquisition cost of the secondhand vessel Clipper Gemini. The loan bears interest at LIBOR plus a margin, and is repayable in 36 quarterly installments beginning in the first quarter of 2008, with a balloon payment of $11 million, payable together with the last installment in the first quarter of 2017. As of December 31, 2008, we had outstanding borrowings in the amount of $29 million under this loan facility, and as of March 26, 2009, we had outstanding borrowings of $27.5 under this loan facility. As of December 31, 2008, we were not in compliance with the market value to loan covenant. The Company’s ratio must be greater than or equal to 125%. If we are in default of this loan, we may not pay dividends without the lender’s consent.

91

$628.8 million senior and junior loan facilities, dated March 31, 2006

In April, 2006, we drew down $628.8 million in order to refinance the then outstanding balance of our prior indebtedness ($528.3 million as at 2005), to provide us with working capital, and to partially finance the acquisition cost of the second hand vessels Hille Oldendorff, Maganari, Ligari and Lanzarote. These facilities are comprised of (i) term loan and short-term credit facilities of up to $557.5 million in the aggregate (senior loan facility) and (ii) term loan and short-term credit facilities of up to $71.3 million in the aggregate (junior loan facility). The senior and junior loan facilities were subsequently amended and supplemented (as described below). As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) market-adjusted equity ratio and (ii) minimum market value adjusted net worth of $750 million.

Under these facilities, dividends may not exceed more than 50% of our net income for that year, as evidenced by the relevant annual audited financial statements.

$557.5 million senior loan facility

The senior loan facility bears interest at LIBOR plus a margin. The term loan facility is repayable in 40 quarterly installments, with a balloon payment of up to $17.2 million, payable together with the last installment on May 31, 2016. Each advance from the short term credit facility is repayable in quarterly installments with the next term loan facility installment As of December 31, 2008, we had outstanding borrowings in the amount of $561 million under this loan facility, and as of March 26, 2009, we had outstanding borrowings of $544.8 million under this loan facility.

As of December 31, 2008, we were not in compliance with the following covenants for this facility: i) the market-adjusted equity ratio must be greater than or equal to 40% and ii) the market value adjusted net worth must be greater than or equal to $750 million.

Under this loan facility, we may not pay dividends in excess of 50% of net income.

$71.3 million junior loan facility

The junior loan facility bears interest at LIBOR plus a margin. The term loan facility is repayable in 40 quarterly installments, with a balloon payment of up to $17.2 million, payable with the last installment on May 31, 2016. Each advance from the short term credit facility is repayable in quarterly installments with the next term loan facility installment. As of December 31, 2008, we had outstanding borrowings in the amount of $112.5 million under this loan facility, and as of March 26, 2009, we had outstanding borrowings of $109.2 million under this loan facility.

Under this loan facility, we may not pay dividends in excess of 50% of net income.

As of December 31, 2008, we were not in compliance with the following covenants for this facility: (i) the market-adjusted equity ratio must be greater than or equal to 40% and (ii) the market value adjusted net worth must be greater than or equal to $750 million.

92

Supplemental Letter agreements, each dated May 15, 2006 to the senior and junior loan facilities

During May 2006, we obtained the lenders’ consent to draw down $26,512,500 to partially finance the acquisition of the vessel Maganari, an amount exceeding 75% of the market value of the ship. The lenders’ also gave consent to a separate repayment schedule for this amount.

Supplemental letter agreements, each dated November 28, 2006, to increase the aggregate amounts under the senior and junior loan facilities by $82.3 million to $711.1 million

We increased the amount of the term loan and short-term credit facility by up to $11.6 million and $70.8 million, respectively. During 2006, we drew down $82.3 million to repay the $61.5 million loan facility, dated September 7, 2006, to partially finance the acquisition cost of the vessel Redondo ($11.6 million) and to provide us with working capital ($9.3 million).

Amending and restating agreements, each dated May 23, 2007, to increase the aggregate amounts under the senior and junior loan facilities, as amended in November 2006, by up to $181.0 million and to include a re-borrowing option for mandatory repayment due to sale of vessels of up to $200.0 million

During 2007, we drew down $319.7 million under the amending and restating agreements in order to partially finance the acquisition cost of the second hand vessels Samsara, Bargara, Marbella, Primera, Brisbane, Majorca, Heinrich Oldendorff, Menorca, Capitola and Ecola and any additional vessels. The loan bears interest at LIBOR plus a margin, and is repayable in 37 variable quarterly installments, with a balloon installment of $157.5 million, payable together with the last installment on May 31, 2016. The amending and restating agreements have been further supplemented (as described below).

Supplemental letter agreements, each dated February 27, 2008, to the senior and junior loan facilities, as amended and restated

Financial covenants in the loan were amended so that our required minimum market value adjusted net worth was increased from $225 million to $500 million for the years subsequent to the year ended December 31, 2008, and increasing the amount of free cash required from $20 million to $40 million.

In April 2008, we drew down $49.4 million in order to partly finance the acquisition of the vessel Conquistador.

Supplemental letter agreements, each dated April 23, 2008, to the senior and junior loan facilities, as amended and restated

In April 2008, the senior and junior loan facilities were amended to provide as follows: (i) the Company’s market value net worth must be higher than $750 million for the year ended December 31, 2008, $800 million for the year ended December 31, 2009, and $1 billion for subsequent years, (ii) the Company must maintain minimum available cash of $100 million, and (iii) the Company must have current charters for 25% of its vessels until December 31, 2009 and 35% of its vessels following that date.

93

All of our credit facilities discussed in this section other than the $1.04 billion revolving credit and term loan facility, dated September 17, 2008, are secured by a first priority mortgage over the collateralized vessels, a corporate guarantee, and a first assignment of all freights, earnings, insurances and requisition compensation. Each of the loans contain covenants including restrictions with respect to (1) changes in management and ownership of the vessels, (2) incurring additional indebtedness and (3) mortgaging the collateralized vessels without the bank’s prior consent as well as certain financial covenants relating to our financial position, operating performance and liquidity. In addition, we must maintain minimum cash deposits, as defined in the loan agreements, which at December 31, 2007 and 2008, amounted to $20 million and $280 million, respectively, and are classified as “restricted cash”, and other non-current assets in our consolidated balance sheets. Furthermore, we are not permitted to pay dividends under the loans so long as such amount of dividends does not exceed 50% of our net income as evidenced by our relevant annual audited financial statements. Our board of directors has determined to suspend the payment of cash dividends beginning with the fourth quarter of 2008.

Repaid Credit Facilities

$260 million credit facility, dated December 17, 2007

In December, 2007, Primelead Limited, our wholly-owned subsidiary, drew down $243.1 million under this credit facility in order to partially finance the acquisition cost of 51,778,647 shares of common stock of Ocean Rig. The loan bears interest at LIBOR plus a margin, and is repayable in eight quarterly installments, with a balloon payment of $121.6 million, payable with the last installment in December 2009. However, as of May 2008, the then outstanding loan balance of 227.9 million was refinanced with the $800 million facility outlined above.

$30.1 million bridge facility, dated August 30, 2007

In September 2007, we drew down $30.1 million under this bridge facility in order to part finance the acquisition cost of the vessels Athina Zafirakis, Nord Mercury, Shinyo Brilliance and VOC Galaxy. The loan bore interest at LIBOR plus a margin, and was repaid in one installment on February 19, 2008.

$30.0 million short-term credit facility, dated May 23, 2007

In June and July 2007, we drew down $30 million under this short-term credit facility in order to partially finance the acquisition of the vessels Menorca, Bargara, Capitola, Primera, Marbella, Ecola, Majorca and Brisbane. This loan bore interest at LIBOR plus a margin, and was fully repaid on August 21, 2007.

$181 million bridge loan facility dated April 19, 2007

In May, 2007, we drew down $181 million under this bridge loan facility in order to partially finance the acquisition cost of the vessels Marbella, Bargara, Brisbane, Capitola, Primera and Menorca. This loan bore interest at LIBOR plus a margin, and was fully repaid on May 30, 2007.

94

$33 million short-term bridge loan facility, dated April 5, 2007

In April, 2007, we drew down $33 million under this short-term bridge loan facility in order to partially finance the acquisition cost of the vessel Primera. The loan bore interest at LIBOR plus a margin, and was fully repaid on April 23, 2007.

As of March 26, 2009, we had outstanding borrowings in the aggregate amount of $1.9 billion under our credit facilities with various institutions and unutilized lines of credit with two lenders in the amount of $951.6 million and cash and cash equivalents (including restricted cash) of $762.3 million. We expect to draw down these available facilities in connection with the construction of drillship Hulls 1865 and 1866. Our weighted average interest rate (including the margin) for the years ended December 31, 2006, 2007 and 2008 was 6.59%, 6.48% and 4.28%, respectively.

$185 million loan facility, dated November 12, 2004

During 2004, we drew down $185 million under this loan facility in order to refinance prior indebtedness and partially finance certain of our vessels. This loan facility consists of term loan facility in the amount of up to $160 million and a reducing revolving loan facility in the amount of $25 million. The loan bore interest at LIBOR plus a margin. The term loan facility was repayable in 36 quarterly installments, and the reducing revolving loan facility was repayable in four quarterly installments. This loan facility has been fully repaid.

Derivatives

Interest rate cap and floor agreements: As of December 31, 2007 and 2008, the Company had outstanding eight and thirty, respectively, interest rate cap and floor agreements in order to hedge its exposure to interest rate fluctuations with respect to its borrowings. Such agreements did not qualify for hedge accounting and therefore changes in their fair value are reflected in earnings. The summary terms of the agreements outstanding as of December 31, 2008 are as follows:

(1) From May 2005, for a period of nine years through February 2014, for a notional amount of $154.2 million. Under the cap and floor provisions of the agreement the Company pays interest at 5.59% if three-month LIBOR is between 5.59% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.59%.

(2) From May 2005, for a period of ten years through May 2015, for a notional amount of $120.6 million. Under the cap provisions of the agreement the Company pays interest at 5.8% if three-month LIBOR is between 5.8% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.8%.

(3) From June 2005, for a period of eight years through March 2013, for a notional amount of $22.0 million. Under the cap provisions of the agreement the Company pays interest at 5.66% if three-month LIBOR is between 5.66% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.66%.

(4) From June 2005, for a period of six years through March 2011, for a notional amount of $194.3 million. Under the cap provisions of the agreement the Company pays interest at 5.85% if three-month LIBOR is between 5.85% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.85%.

(5) From July 2005, for a period of ten years through April 2015, for a notional amount of $42.4 million. Under the cap provisions of the agreement the Company pays interest at 5.66% if three-month LIBOR is between 5.66% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.66%.

(6) From July 2005, for a period of seven years through April 2012, for a notional amount of $22.3 million. Under the cap provisions of the agreement the Company pays interest at 5.64% if three-month LIBOR is between 5.64% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.64%.

Under the floor provisions of all the above agreements, the Company pays 3.0% if three-month LIBOR is equal or less than 3.0%.

(7) From August 2007, for a period of four years through November 2011, for a notional amount of $60 million. Under the cap provisions of the agreement the Company pays

95

interest at 5.34% if three-month LIBOR is between 5.34% and 7.0% and at three-month LIBOR if LIBOR exceeds 7.0%. Under the floor provisions of the agreement the Company pays interest at 2.75% if three-month LIBOR is equal or less than 1.75%.

(8) From August 2007, for a period of four years through November 2011, for a notional amount of $75 million. Under the cap provisions of the agreement the Company pays interest at 5.25% if three-month LIBOR is between 5.25% and 7.0% and at three-month LIBOR if LIBOR exceeds 7.0%. Under the floor provisions of the agreement the Company pays interest at 2.75% if three-month LIBOR is equal or less than 1.75%.

(9) From May 2008, for a period of five years through May 2013, for a notional amount of $357 million. Under the provisions of the agreement the Company pays a fixed rate of 3.92% and receives the three-month LIBOR.

(10) From June 2008, for a period of eight years through May 2016, for a notional amount of $144.2 million. Under the provisions of the agreement the Company pays a fixed rate of 4.385% and receives the three-month LIBOR.

(11) From June 2008, for a period of eight years through May 2016, for a notional amount of $66 million. Under the provisions of the agreement the Company pays a fixed rate of 4.38% and receives the three-month LIBOR.

(12) From July 2008, for a period of seven years through July 2015, for a notional amount of $124.8 million. Under the provisions of the agreement the Company pays a fixed rate of 4.13% and receives the three-month LIBOR.

(13) From July 2008, for a period of seven years through January 2015, for a notional amount of $94.9 million. Under the provisions of the agreement the Company pays a fixed rate of 4.09% and receives the three-month LIBOR.

(14) From May 2008, for a period of five years through May 2013, for a notional amount of $65 million. Under the provisions of the agreement the Company pays a fixed rate of 3.92% and receives the three-month LIBOR.

(15) From May 2008, for a period of seven years through November 2015, for a notional amount of $45 million. Under the provisions of the agreement the Company pays a fixed rate of 4.2% and receives the three-month LIBOR.

(16) From June 2008, for a period of five years through July 2013, for a notional amount of $28.7 million. Under the provisions of the agreement the Company pays a fixed rate of 3.7% and receives the three-month LIBOR.

(17) From July 2008, for a period of nine years through September 2017, for a notional amount of $174.6 million. The agreement is divided into two periods. For the first period of three years through September 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through September 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR.

(18) From July 2008, for a period of nine years through September 2017, for a notional amount of $58.2 million. The agreement is divided into two periods. For the first period of three years through September 2011, under the cap provisions of the agreement, the Company

96

pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through September 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR.

(19) From July 2008, for a period of six years through September 2014, for a notional amount of $58.2 million. The agreement is divided into two periods. For the first period of three years through September 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through September 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR.

(20) From July 2008, for a period of six years through September 2014, for a notional amount of $19.39 million. The agreement is divided into two periods. For the first period of three years through September 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through September 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR.

(21) From July 2008, for a period of nine years through November 2017, for a notional amount of $175.5 million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through November 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR.

(22) From July 2008, for a period of nine years through November 2017, for a notional amount of $58.5million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through November 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR.

(23) From July 2008, for a period of six years through November 2014, for a notional amount of $58.5 million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through November 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR.

(24) From July 2008, for a period of six years through November 2014, for a notional amount of $19.5 million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company

97

pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through November 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR.

(25) From December 2008, for a period of five years through June 2013, for a notional amount of $28.5 million. Under the provisions of the agreement the Company pays a fixed rate of 3.69% and receives the three-month LIBOR.

(26) From October 2008, for a period of five years through October 2013, for a notional amount of $49.9 million. Under the provisions of the agreement the Company pays a fixed rate of 3.97% and receives the three-month LIBOR.

(27) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.1% and receives the three-month LIBOR.

(28) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.07% and receives the three-month LIBOR.

(29) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.07% and receives the three-month LIBOR.

(30) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.05% and receives the three-month LIBOR.

Interest swap agreements: In September 2008, Ocean Rig entered into three interest swap agreements for an amount of $100 million, $300 million and $350 million, respectively, for a period of 5 years. Under the $100 million interest swap (with a bullet structure), the Company receives a floating interest rate and in exchange, pays a fixed interest rate of 3.77%. Under the $300 million interest swap (with a bullet structure), the Company receives a floating interest rate and in exchange, pays a fixed interest rate of 3.80%. Under the $350 million interest swap (reducing quarterly linearly to zero and a net position as per December 31, 2008 of $332.5 million), the Company receives a floating interest rate and in exchange, pays a fixed interest rate of 3.53%. As of December 31, 2008, the market value of the interest swaps was a liability of $47.2 million (2007: liability $0.3 million).

Foreign exchange transactions: In January 2006, the Company engaged in a total of 12 foreign currency call options, maturing in monthly intervals from February 2006 to January 2007, under one foreign exchange transaction involving the USD against the Euro. As of December 31, 2006, the Company had one open foreign currency call option which matured in January 2007. The strike rate under this option was 1.21 USD per Euro, for an amount of Euro 200,000.

In January 2006, the Company engaged in a total of 12 forward foreign exchange contracts, maturing in monthly intervals from February 2006 to January 2007. As of December 31, 2006, the Company had on forward foreign exchange contract, maturing in January 2007. The strike rate was 1.2320 USD per Euro for an amount of Euro 200,000. The forward rate under this forward transaction was 1.2320 USD per Euro for an amount of Euro 200,000.

As of December 31, 2008, Ocean Rig had forward foreign exchange sale contracts of $16.5 million outstanding with a negative fair market value of $1.6 million recorded in the caption market value of financial instruments in the balance sheet. The forward exchange contracts are not designated as hedges for accounting purposes. Realized and unrealized gains and losses are included as financial items in the consolidated income statement. The company recorded a loss of $2.5 million from these instruments in 2008.

98

The interest rate hedge described above qualifies as an effective hedge under FAS 133, as the notional and principal amounts, term, re-pricing dates, dates of interest and principal receipts and payments, and the basis for measuring interest rates are the same for the hedging instrument and the hedged item. At the maturity of the swap, its fair value will be zero, just as it was at inception, and each change in value of the swap over its term will be recorded as adjustments to both the swap asset or liability and other comprehensive income.

Forward freight agreements: During the year ended December 31, 2006, the Company entered into seventeen forward freight agreements (“FFAs”) with the objective to utilize them as economic hedging instruments in order to reduce its exposure to market price fluctuations with respect to its fleet. Such agreements did not qualify for hedge accounting and therefore changes in their fair value were reflected in earnings. As of December 31, 2007 and 2008, no FFAs remain open.

Cash Flows

Year ended December 31, 2008 compared to year ended December 31, 2007

Our cash and cash equivalents increased to $303.1 million as of December 31, 2008, compared to $111.1 million as of December 31, 2007, primarily due to increased cash provided by operating and financing activities. Working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. Our working capital deficit was $1.8 billion as of December 31, 2008 compared to a working capital deficit of $86.3 million as of December 31, 2007. The deficit increase is due to the large increase in the current portion of long-term debt resulting from our breach of loan covenants coupled with the prolonged and continuing deterioration of the drybulk charter market. If we were not in breach of our loan covenants, and $1.8 billion of indebtedness relating to our drybulk fleet were not reclassified to current liabilities as a result of such breach, our working capital deficit would be $49.8 million.

If our working capital deficit continues to grow, lenders may be unwilling to provide future financing or will provide future financing at significantly increased interest rates, which will negatively affect our earnings, liquidity and capital position, and our ability to make timely payments on our newbuilding purchase contracts and to meet our debt repayment obligations.

We are currently in negotiations with our lenders to obtain waivers with respect to financial covenants and restructure our debt. Management expects that the lenders will not demand payment of the loans before their maturity, provided that we pay loan installments and accumulated or accrued interest as they fall due under the existing credit facilities. Management plans to settle the loan interest and scheduled loan repayments with cash generated from operations as well as funding from equity offerings. We filed a prospectus supplement pursuant to Rule 424(b) under the Securities Act of 1993, as amended, on January 28, 2009 relating to the offer and sale of up to $500 million of our common stock. As of March 16, 2009, we had raised $370.5 million in net proceeds from this offering. Management does not expect that cash generated from the operations of the vessels and the drillships owned by the Company together with the maximum net proceeds of the $500 million equity offering would be sufficient to repay the total balance of loans in breach if such debt is accelerated by the lenders.

Net Cash Provided By Operating Activities

Net cash provided by operating activities increased by $132.2 million, or 32%, to $540.1 million for the year ended December 31, 2008 compared to $407.9 million for the year ended December 31, 2007. This increase is primarily due to the increased time charter rates we earned during the year ended December 31, 2008 and the enlargement of our fleet. We expect our net cash provided by operating activities to decline as a result of the recent severe decline in drybulk charter market rates.

99

Net Cash Used In Investing Activities

Net cash used in investing activities was $2.1 billion for the year ended December 31, 2008, consisting of $991.3 million paid to acquire Ocean Rig, $742.8 million in payments for vessel acquisitions, $507.3 million in advances for vessel acquisitions and vessels under construction, $16.6 million in payments for rig improvements, $262.7 million in payments to restricted cash, partly offset by an amount of $410.2 million representing the net proceeds received from the sale of the vessels Matira, Menorca, Netadola, Lanzarotte, Waikiki Solana and Tonga during the year ended December 31, 2008. Net cash used in investing activities also includes an increase of $262.7 million in restricted cash due to changes in the classification of the loan balances from long-term to current liabilities.

Net cash used in investing activities was $955.7 million during 2007. This reflects the amount of $406.0 million invested in Ocean Rig ASA for the acquisition of 30.4% or 51,778,647 of the issued share capital, the acquisition cost of the fifteen vessels delivered during the period from February to December 2007 amounting to $799.5 million less an amount of $105.2 million representing advances for vessels’ acquisitions made during 2007, and the amount of $38.7 million that represents the attached charter parties debited to vessels’ cost. Furthermore an amount of $351.8 million represents the proceeds from the sale of eleven vessels during 2007.

Net Cash Provided By/Used In Financing Activities

Net cash provided by financing activities was $1.8 billion for the year ended December 31, 2008, consisting mainly of $2.9 billion drawdown under short-term and long-term facilities and $662.7 million from net proceeds from the issuance of common stock, partly offset by payments under short-term and long-term credit facilities in the aggregate amount of $1.7 billion and $33.2 million of cash dividends paid to stockholders.

Net cash provided by financing activities was $656.4 million for the year ended December 31, 2007, consisting mainly of $860.8 million drawdown under short and long term loan facilities and $127.1 million from net proceeds from the issuance of common stock, partly offset by payments of loans in the aggregate amount of $296.7 million and $28.4 million of cash dividends paid to stockholders.

C. Research and Development, Patents and Licenses etc.

Not Applicable.

D. Trend Information

Not Applicable.

E. Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

100

F. Tabular Disclosure of Contractual Obligations

The following table sets forth our contractual obligations and their maturity dates as of December 31, 2008:

	Payments due by period
Obligations	Total	1 year	2-3 years	4-5 years	More than 5 years
(In thousands of Dollars)
Long-term debt (1)	3,198,234	2,396,660	279,074	522,500	—
Interest and borrowing fees (2)	836,555	147,948	235,033	257,383	196,191
Shipbuilding contracts-Vessels (3)	47,237	47,237	—	—	—
Shipbuilding contracts-Drillships (4)	1,162,771	21,695	1,141,076	—	—
Newbuilding purchases (5)	560,855	389,945	170,910	—	—
Retirement Plan Benefits (6)	18,402	1,463	3,149	3,472	10,318
Operating leases (7)	4,882	1,481	2,565	836	—
Office space rent (8)	36	13	23	—	—
Total	5,828,972	3,006,442	1,831,830	784,191	206,509

(1) As further discussed in Note 11 to our audited consolidated financial statements, the outstanding balance of our long-term debt at December 31, 2008, was $3,198.2 million (gross of unamortized deferred financing fees of $39.4 million), which were used to partially finance the expansion of our fleet, the construction of drilling rigs and the acquisition of Ocean Rig. The loans bear interest at LIBOR plus a margin. The amounts in the table under “Long Term Debt” do not include any projected interest payments.

(2) Our long-term debt outstanding as of December 31, 2008 bears variable interest at margin over LIBOR, but such variable interest is fixed by our existing interest rate swaps. The calculation of interest payments is based on the weighted average fixed interest rate of 4.06% as of December 31, 2008.

(3) In September 2006, the Company entered into two shipbuilding contracts with a Chinese shipyard for the construction of two Panamax dry-bulk vessels for a contract price of $38.6 million each. As of December 31, 2008, an amount of $20.0 million was paid to the shipyard representing the first, second and third installments for the construction cost of the two vessels which are expected to be delivered from the shipyard in the last quarter of 2009 and the first quarter of 2010. We previously agreed to acquire two Panamax newbuildings, identified as Hulls 1518A and 1519A, for a purchase price in the amount of $33.6 million each. These vessels are scheduled for delivery from Hudong Shipbuilding in the second quarter of 2009 and the third quarter of 2010, respectively. An affiliated client of our manager, Cardiff, with which we are affiliated, has agreed to purchase Hull 1569A, a sister vessel to Hulls 1518A and 1519A. We have agreed to increase the purchase price for Hulls 1518A and 1519A by $5.0 million each in consideration of (i) a corresponding $10.0 million decrease in the purchase price of Hull 1569A and (ii) an undertaking that on delivery of Hulls 1518A and 1519A, the owner of Hull 1569A will repay us by effecting payment of $10.0 million to Hudong Shipbuilding.

(4) In April 2008, the Company exercised its option to acquire two advanced capability drillships for use in ultra-deepwater drilling locations, identified as Hull 1865 and Hull 1866, for an expected cost of approximately $800 million per unit. The drillships will be constructed by Samsung Heavy Industries and are expected to be delivered from the shipyard in the first and second quarter of 2011, respectively. As of December 31, 2008, an amount of $411.9 million was paid to the shipyard representing the first and second installment for the construction cost of the two drillships.

(5) On July 27, 30, April 30 and August 13, 2008 the Company concluded seven memoranda of agreement for the construction of three 180,000 dwt Capesize drybulk carriers, one 177,000 dwt Capesize drybulk carrier, two 82,000 dwt Kamsarmax drybulk carriers and one 76,000 dwt Panamax drybulk carrier for a total consideration of $647.5 million. As of December 31, 2008, an amount of $87.0 million was paid to the sellers representing a portion of the total purchase price of the six newbuilding vessels varying from 10% to 30% which are expected to be delivered from the shipyard in the last quarter of 2009 and the third quarter of 2010.

101

(6) The Company has six defined benefit plans for employees managed and funded through Norwegian life insurance companies at December 31, 2008. The pension plans covered 237 employees by year end 2008. Pension liabilities and pension costs are calculated based on the actuarial cost method as determined by an independent third party actuary.

(7) The Company entered into a new five year office lease agreement with Vestre Svanholmen 6 AS which commenced on July 1, 2007. This lease includes an option for an additional five year term, which must be exercised at least six months prior to the end of the term of the contract which expires in June 2012. The lease agreements relating to office space are considered to be operational lease contracts.

(8) The Company leases office space in Athens, Greece, from Mr. George Economou, our Chairman and CEO.

Dividend Payments

On January 9, April 2, July 18 and September 30, 2008 the Company declared dividends in the aggregate amount of $33.2 million ($7.3 million ($0.20 per share, paid on January 31, 2008 to the stockholders of record as of January 18, 2008), $8.5 million ($0.20 per share, paid on April 30, 2008 to the stockholders of record as of April 17, 2008), $8.7 million ($0.20 per share, paid on August 22, 2008 to the stockholders of record as of August 8, 2008), $8.7 million ($0.20 per share, paid on October 31, 2008 to the stockholders of record as of October 15, 2008)), respectively.

In light of a lower freight rate environment and a highly challenged financing environment, our board of directors, beginning with the fourth quarter of 2008, has suspended our common share dividend. Our dividend policy will be assessed by the board of directors from time to time. The suspension allows us to preserve capital and use the preserved capital to enhance our liquidity. The payment of dividends to our shareholders in the future is subject to limitations imposed by our lenders.

The declaration and payment of dividends will be subject at all times to the discretion of our board of directors. The timing and amount of dividends will depend on our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends, or if there is no surplus, dividends may be declared or paid out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year.

G. Safe Harbor

See section “forward looking statements” at the beginning of this annual report.

Item 6. Directors and Senior Management

A. Directors and Senior Management

On December 19, 2008, Mr. Angelos Papoulias resigned as a member of our board of directors, effective December 19, 2008. This resignation was accepted by us on December 22, 2008, on which date our board of directors appointed Mr. Evangelos Mytilinaios as a member of the board and as the chairman of our audit committee to succeed Mr. Papoulias.

Set forth below are the names, ages and positions of our directors, executive officers and key employees. Our board of directors is elected annually on a staggered basis. Each director elected holds office until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected.

102

Name	Age	Position
George Economou	55	Chairman, President, Chief Executive Officer and Interim Chief Financial Officer; Class A Director
Evangelos Mytilinaios	59	Class B Director
George Xiridakis	44	Class B Director
Chryssoula Kandylidis	54	Class C Director
George Demathas	53	Class C Director
Pankaj Khanna	39	Chief Operating Officer
Iro Bei	26	Secretary

The term of our Class B directors expires at the annual general shareholders meeting in 2009. Our Class B directors are Evangelos Mytilinaios and George Xiridakis. The term of our Class C directors expires at the annual general shareholders meeting in 2010. Our Class C directors are George Demathas and Chryssoula Kandylidis. The term of our Class A director expires at the annual general shareholders meeting in 2011.

The business address of each officer and director is the address of our principal executive offices, which are located at 80, Kifissias Avenue, GR 15125, Amaroussion, Greece.

Biographical information with respect to each of our directors, executives and key personnel is set forth below:

George Economou has over 25 years of experience in the maritime industry. He has served as Chairman, President and Chief Executive Officer of DryShips Inc since its inception in 2004. He successfully took the Company public in February 2005. Economou has overseen the Company’s growth into the largest U.S. listed drybulk company in fleet size and revenue, and the second largest Panamax owner in the world. Mr. Economou began his career in 1976 when he commenced working as a Superintendent Engineer in Thenamaris Ship Management in Greece. From 1981-1986 he held the position of General Manager of Oceania Maritime Agency in New York. Between 1986 and 1991 he invested and participated in the formation of numerous individual shipping companies and in 1991 he founded Cardiff Marine Inc., Group of Companies (“Cardiff”). Mr. Economou is a member of ABS Council, Intertanko Hellenic Shipping Forum and Lloyds Register Hellenic Advisory Committee. He was born and raised in Athens, Greece and is a graduate of Athens College. Mr. Economou completed his higher education at the Massachusetts Institute of Technology where, in 1976, he earned both a Bachelor of Science and a Master of Science degree in Naval Architecture and Marine Engineering, and a Master of Science in Shipping and Shipyard Management. Effective May 30 2007, Mr. Economou was appointed by the DryShips Board as the Interim Chief Financial Officer.

George Demathas was appointed to the Board of Directors of DryShips Inc. on July 18, 2006 to fill the vacancy resulting from the resignation of Mr. Nikolas Tsakos. Mr. Demathas has a BA in Mathematics and Physics from Hamilton College in New York and an M.S. in Electrical Engineering and Computer Science from Columbia University. As a principal in Marketing Systems Ltd, he supplied turnkey manufacturing equipment to industries in the USSR. Since 1991, Mr. Demathas has been involved in Malden Investment Trust Inc. in association with Lukoil, working in the Russian petrochemical industry. Since 1996 he has invested in natural gas trunk pipelines in Central Asia. He is based in Moscow and travels widely in Europe and the U.S.A.

103

George Xiradakis was appointed to the Board of Directors of DryShips Inc. in May 2006. Since 1999, Mr. Xiradakis has been the Managing Director of XRTC Business Consultants Ltd., a consulting firm providing financial advice to the maritime industry, including financial and state institutions. XRTC acted as the commercial representative of international banks including the French banking groups Credit Lyonnais and NATIXIS in Greece. Mr. Xiradakis is also the advisor of various shipping companies, as well as international and state organizations. Mr. Xiradakis has served as a President of the Hellenic Real Estate Corporation and Hellenic National Center of Port Development. He also serves as the General Secretary of the Association of Banking and Shipping Executives of Hellenic Shipping. Mr. Xiradakis has a certificate as a Deck Officer from the Hellenic Merchant Marine and he is a graduate of the Nautical Marine Academy of Aspropyrgos, Greece. He also holds a postgraduate Diploma in Commercial Operation of Shipping from London Guildhall University formerly known as City of London Polytechnic in London. Mr. Xiradakis holds an MSc., in Maritime Studies from the University of Wales.

Chryssoula Kandylidis was appointed to the Board of Directors of DryShips Inc. on March 5, 2008, to fill the vacancy resulting from the resignation of Mr. Aristidis Ioannidis. Mrs. Kandylidis is the beneficial owner of all the issued and outstanding capital stock of Prestige Finance S.A., a Liberian corporation which owns 30% of the outstanding capital stock of Cardiff. Mrs. Kandylidis has also served as an Advisor to the Minister of Transport and Communications in Greece for matters concerning People with Special Abilities for the past three years on a voluntary basis. Mrs. Kandylidis graduated from Pierce College in Athens, Greece and from the Institut Francais d’ Athenes. She also holds a degree in Economics from the University of Geneva.

Evangelos Mytilinaios was appointed to the Board of Directors of DryShips Inc. on December 19, 2008, to fill the vacancy resulting from the resignation of Mr. Angelos Papoulias. Mr. Mytilinaios has over 20 years of experience in the shipping industry. He served as a senior executive in the Peraticos and Inlessis Group of Companies, which are involved in the drybulk and tanker shipping sectors. He presently heads a diversified group of companies involved in tourism and real estate development in Greece and the United Kingdom. After attending the Athens University of Economics, he started his career by joining and heading his family’s aluminum production enterprise, Mytilineos Holdings S.A., one of the largest aluminum product manufacturers in Greece. Mr. Mytilinaios is the chairman of our audit committee.

Pankaj Khanna was appointed as the Company’s Chief Operating Officer in March 2009. Mr. Khanna has 19 years of experience in the shipping industry. Prior to joining the Company, Mr. Khanna was the Chief Strategy Officer for Excel Maritime Carriers Ltd from. Mr. Khanna also previously served as Chief Operating Officer of Alba Maritime Services S.A. Prior to joining Alba Maritime Services S.A., Mr. Khanna was Vice President of Strategic Development at Teekay Corporation where he headed vessel sales & purchase activities, newbuilding ordering activities, and other strategic development projects from 2001 through 2007. Prior to this, Mr. Khanna was a Senior Analyst at SSY, a large multinational shipbroker. Mr. Khanna graduated from Blackpool and the Fylde College, Fleetwood Nautical Campus and also received a post-graduate diploma in international trade and transport from London Metropolitan University.

Iro Bei was appointed as corporate secretary of the Company with effect from August 21, 2008. Ms. Bei is an attorney-at-law and is an associate at Deverakis Law Office. Ms. Bei graduated from the School of Law, University College London, U.K. with an LL.B. (2003) and an LL.M. (2004) and she is a member of the Athens Bar Association (2008).

B. Compensation of Directors and Senior Management

We paid an aggregate amount of $9.9 million as compensation to our executive directors for the fiscal year ended December 31, 2008. Non-executive directors received annual compensation in the aggregate amount of $85,000 plus reimbursement of their out-of-pocket expenses. We do not have a retirement plan for our officers or directors.

104

We entered into an agreement with Fabiana with an effective date of February 2008, a related-party entity incorporated in the Marshall Islands in October 2008. Fabiana is beneficially owned by the Company’s Chief Executive Officer. Under the agreement, Fabiana provides the services of the individuals who serve in the positions of Chief Executive and Chief Financial Officer of the Company. The agreement is for a period of five years unless terminated earlier in accordance with the terms of the agreement. Pursuant to the agreement, the Company is obligated to pay (i) annual remuneration to Fabiana in the amount of $2,000,000; (ii) potential bonus compensation for the services provided at the end of each year with any such bonus to be determined by the Compensation Committee; and (iii) a grant to Fabiana one million (1,000,000) shares of common stock out of the 1,834,055 shares reserved in the Company’s 2008 Equity Incentive Plan (described below). Such shares vest quarterly in eight equal installments beginning in May 2008. Our Chief Executive Officer also serves as our Interim Chief Financial Officer.

On January 21, 2009 the Company’s Chief Executive Officer received a retroactive bonus of Euro 5,000.

Equity Incentive Plan

On January 16, 2008, the Company’s Board of Directors approved the 2008 Equity Incentive Plan (the “Plan”). Under this Plan, officers, key employees, and directors are eligible to receive, with respect to the Company’s common stock, awards of stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock units and unrestricted stock. A total of 1,834,055 shares of common stock have been reserved for issuance under the Plan, subject to adjustment for changes in capitalization as provided in the Plan. The Plan is administered by our board of directors. Unless terminated earlier by our board of directors, the plan will expire after January 16, 2018, which is the tenth anniversary of the date the Plan was adopted. As of December 31, 2008, we have awarded 1,000,000 common shares to Fabiana. The shares vest quarterly in eight equal installments with the first, second, third and fourth installments of 125,000 common shares vesting on May 28, 2008, August 28, 2008 and November 28, 2008 and February 28, 2009, respectively. As of March 26, 2009, 500,000 of these common shares have vested.

The stock based compensation is being recognized to expenses over the vesting period and based on the fair value of the shares on the grant date ($75.09 per share). The related stock based compensation expense for the year ended December 31, 2008 amounted to $31.2 million and is included in “General and administrative expenses - related parties” in the accompanying consolidated statements of income.

The fair value of each share on the grant date was $75.09. The fair value of the 1,000,000 common shares on the grant date amounted to $75.1 million, or $75.09 per share, and will be recognized as compensation in the consolidated accompanying statements of income over the two year vesting period.

On October 2, 2008, the Company’s Board of Directors and Compensation Committee approved grants in the amount of 9,000 vested shares and 9,000 unvested shares to the non-executive directors of the Company. The unvested common shares will vest ratably over a three year period with the first vesting date being January 1, 2009. The fair value of each vested share on the grant date was $33.59 and will be recognized as compensation in the consolidated income statements over the three year vesting period quarterly in twelve equal installments.

For the shares granted to the directors on October 2, 2008, the fair value of each share on the grant date was $33.59. The fair value of the non-vested shares granted amounted to $0.3 million and will be recognized as compensation in the accompanying consolidated statements of income over the three year vesting period. Stock based compensation for our directors for the year ended December 31, 2008 amounted to $0.3 million and is included in “General and administrative expenses” in the accompanying consolidated statements of income.

105

Stock options and stock appreciation rights may be granted under the Plan with a per share exercise price equal to the per share fair market value of our common stock on the date of grant, unless otherwise determined by the Plan’s administrator, but in no event will the exercise price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights may be exercisable at times and under conditions as determined by the Plan’s administrator, but in no event will they be exercisable later than ten years from the date of grant. Awards of restricted stock, restricted stock units and phantom stock units may be granted under the Plan subject to vesting and forfeiture provisions and other terms and conditions as determined by the Plan’s administrator. The Plan’s administrator may grant dividend equivalents with respect to grants of restricted stock units and phantom stock units.

Adjustments may be made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In the event of a “change in control” (as defined in the Plan), unless otherwise provided by the Plan’s administrator in an award agreement, awards then outstanding will become fully vested and exercisable in full.

C. Board Practices

Committees of the Board of Directors

The Board has established an audit committee comprised of three independent directors: Evangelos Mytilinaios, George Demathas and George Xiradakis. The Audit Committee is governed by a written charter, which is approved by the Board. The Board has determined that the members of the Audit Committee meet the applicable independence requirements under SEC Rule 10A-3 that all members of the Audit Committee fulfill the requirement of being financially literate and that George Xiradakis qualifies as an audit committee financial expert as defined under current SEC regulations. The Audit Committee is appointed by the Board and is responsible for, among other matters:

• engaging the Company’s external and internal auditors;

• approving in advance all audit and non-audit services provided by the auditors;

• approving all fees paid to the auditors;

• reviewing the qualification and independence of the Company’s external auditors;

• reviewing the Company’s relationship with external auditors, including considering audit fees which should be paid as well as any other fees which are payable to auditors in respect of non-audit activities, discussing with the external auditors such issues as compliance with accounting principles and any proposals which the external auditors have made vis-à-vis the Company’s accounting principles and standards and auditing standards;

• overseeing the Company’s financial reporting and internal control functions;

• overseeing the Company’s whistleblower’s process and protection; and

• overseeing general compliance with related regulatory requirements.

In March 2008, the board of directors appointed a compensation committee consisting of two independent directors, Mr. George Xiradakis and Mr. George Demathas, who serves as Chairman. The compensation committee is responsible for determining the compensation of the Company’s executive officers. Previously, the full board of directors performed the function of the compensation committee. In March 2008, the board of directors appointed a nominating committee consisting of two independent directors, Mr. George Demathas and Mr. George Xiradakis, who serves as Chairman. The nominating

106

committee is responsible for identifying, evaluating and recommending to the board individuals for membership on the board, as well as considering nominees proposed by shareholders in accordance with the Company’s by-laws. Previously, the full board of directors performed the functions of the nominating committee.

D. Employees

As of December 31, 2008, the Company employed two persons with respect to its operations in the drybulk shipping sector: our Chairman, Chief Executive Officer and Interim Chief Financial Officer, Mr. Economou, and our internal auditor, both of whom are located in Athens, Greece. As of December 31, 2008, the Company employed approximately 401 skilled employees in its offshore drilling sector, the majority of whom are employed on the Leiv Eiriksson and the Eirik Raude.

Mr. Pankaj Khanna joined the Company as Chief Operations Officer in March 2009.

E. Share Ownership

With respect to the total amount of common stock owned by all of our officers and directors, individually and as a group, see Item 7 “Major Shareholders and Related Party Transactions”.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

The following table sets forth information regarding the owners of more than five percent of our common stock as at March 26, 2009. All of our shareholders, including the shareholders listed in this table, are entitled to one vote for each share of common stock held.

Title of Class	Identity of Person or Group	Amount Owned	Percentage of Common Stock
Common Stock, par value $0.01	George Economou *	13,163,089	8.6	%

* Mr. Economou may be deemed to beneficially own 10,944,910 of these shares through Elios Investments Inc., which is a wholly-owned subsidiary of the Entrepreneurial Spirit Foundation, a Lichtenstein foundation, the beneficiaries of which are Mr. Economou and members of his family. Mr. Economou may be deemed to beneficially own 1,000,000 of these shares through Fabiana Services S.A., a Marshall Islands corporation, of which Mr. Economou is the controlling person. Mr. Economou may be deemed to beneficially own 963,667 of these shares through Sphinx Investment Corp., a Marshall Islands corporation, of which Mr. Economou is the controlling person. Mr. Economou may be deemed to beneficially own 254,512 of these shares through Goodwill Shipping Company Limited, a Malta corporation, of which Mr. Economou is the controlling person.

B. Related Party Transactions

Mr. George Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer, controls the Entrepreneurial Spirit Foundation (the “Foundation”), a Liechtenstein foundation that owns 70.0% of the issued and outstanding capital stock of Cardiff, our manager. The other shareholder of Cardiff is Prestige Finance S.A., a Liberian corporation, all of the issued and outstanding capital of which is beneficially owned by Mr. Economou’s sister, Ms. Chryssoula Kandylidis, who serves on our board of directors. The Foundation also owns 100% of the common stock of Elios Investments Inc., or Elios, which holds 7.7% of our common stock.

107

Cardiff Management and Services Agreements: We outsource all of our technical and commercial functions relating to the operation and employment of our drybulk carrier vessels to Cardiff pursuant to new management agreements effective July 1, 2008, with an initial term of five years and will automatically be extended to successive five year terms. In the case of a vessel having been sold, notice to terminate the relevant management agreement is not effective until 90 days following the date of the protocol of delivery, unless otherwise mutually agreed in writing.

The management fee we pay to Cardiff, our manager, is Euro 575 per day, per vessel. In addition, the management agreements provide for payment to Cardiff of: (i) a fee of Euro 100 per day per vessel for services in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; (ii) Euro 575 for superintendent visits on board vessels in excess of five days per annum, per vessel, for each additional day, per superintendent; (iii) chartering commission of 1.25% on all freight, hire and demurrage revenues; (iv) a commission of 1.00% on all gross sale proceeds or purchase price paid of vessels since October 1, 2006; (v) a quarterly fee of Euro 250 for services in relation to the financial reporting requirements of the Company under the Securities and Exchange Commission rules and the establishment and monitoring of internal controls over financial reporting; and (vi) 0.2% on derivative agreements and loan financing or refinancing. Until September 30, 2006, under the management agreement with Cardiff, Drybulk S.A. was acting as the chartering broker and sales and purchase broker for the Company in exchange for a commission of 1.25% on all freight, hire, demurrage revenues and a commission of 1.00% on all gross sale proceeds of, or purchase prices paid for, vessels. Since October 1, 2006 Cardiff has acted as the Company’s chartering broker and sales and purchase broker.

Management fees for the period from January 1 to December 31, 2007 were based at a daily fixed fee of $689 per vessel which was based on the Dollar/Euro exchange rate of $1.30 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter. Management fees for the period from January 1, 2008 to June 30, 2008 were based at a daily fixed fee of $775.50 per vessel which was based on the Dollar/Euro exchange rate of $1.41 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter.

Cardiff also provides other management services for each of the drybulk carrier vessels. Cardiff provides commercial operations and freight collection services in exchange for a fee of 85 Euros per day, per vessel. Cardiff provides insurance services and obtains insurance policies for the vessels for a fee of 5.00% on the total insurance premia, per vessel. Furthermore, if required, Cardiff will also handle and settle all claims arising out of its duties under the management agreements (other than insurance, average and salvage claims) in exchange for a fee of 150 Euros per person, per day of eight hours.

Additionally, Cardiff provides us with financial accounts services in exchange for a fee of 115 Euros per day, per vessel. We also pay Cardiff a quarterly fee of 250,000 Euros for services rendered by Cardiff in connection with our financial reporting requirements under the Securities and Exchange Act of 1934, as amended. Pursuant to the terms of the management agreements, all fees payable to Cardiff will be adjusted upwards or downwards based upon the Greek consumer price index referring to the previous 12 calendar months. During the years ended December 31, 2007 and 2008, we incurred costs of $1,369,000 and $1,832,000, respectively, to reimburse Cardiff for additional services not covered by the management agreements in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

Transactions with Cardiff in Euros are settled on the basis of the average EURO/USD exchange rate calculated internally for each quarter which was EURO/USD 1.23, 1.34. and 1.41 for the years ended December 31, 2006, 2007 and 2008, respectively.

108

Dividend Reinvestment and Repayment of Indebtedness: On October 31, 2006, we issued an aggregate of 235,585 common shares to Elios, Advice Investment S.A., or Advice, and Magic Management S.A., or Magic, pursuant to share purchaser agreements whereby each of Elios, Advice and Magic agreed to invest such stockholder’s $0.20 per share dividend payment in respect of the third quarter of 2006 which was paid on October 31, 2006 to stockholders of record on September 29, 2006. In addition, under the same agreement, we issued 254,512 common shares to Goodwill Shipping Company Limited, or Goodwill, a corporation organized under the laws of Malta and controlled by Mr. Economou, in payment of $3,327,000 of principal and interest due under a seller’s credit agreement in connection with the acquisition of the vessel Hille Oldendorf. The common shares issued to the selling stockholders and Goodwill were issued at a price of $13.07 per share, which is the average closing price of the Company’s common stock on the Nasdaq Global Select Market for the eight trading days ended October 24, 2006. In December 2006, the Company filed a registration statement on Form F-3 on behalf of Elios, Advice and Magic registering for resale an aggregate of 15,890,097 of our common shares held by them.

Appointment of Cardiff’s General Manager to our Board of Directors: On May 29, 2007, Mr. Aristidis Ioannidis, the General Manager of Cardiff, was appointed to our board of directors. Mr. Ioannidis resigned in March 2008.

Office Lease: We lease office space in Athens, Greece, from Mr. George Economou, our Chairman, CEO, and Interim CFO. On October 1, 2005 and effective as of the same date, we entered into a rental agreement with our Chief Executive Officer to lease office space in Athens, Greece. The agreement is for duration of 5 years beginning October 1, 2005 and expires on September 30, 2010. The annual rental for the first two years is Euro 9,000 and thereafter it will be adjusted annually for inflation increases.

Consultancy Agreement: We entered into an agreement with Fabiana, a related-party entity incorporated in the Marshall Islands, in October 2008, with an effective date of February 2008. Fabiana is beneficially owned by the Company’s Chief Executive Officer. Under the agreement, Fabiana provides the services of the individuals who serve in the positions of Chief Executive and Chief Financial Officer of the Company. The agreement is for a period of five years unless terminated earlier in accordance with the terms of the agreement. Pursuant to the agreement, the Company is obligated to pay (i) annual remuneration to Fabiana in the amount of $2,000,000; (ii) potential bonus compensation for the services provided at the end of each year with any such bonus to be determined by the Compensation Committee; and (iii) a grant to Fabiana one million (1,000,000) shares of common stock out of the 1,834,055 shares reserved in the Company’s 2008 Equity Incentive Plan (described below). Such shares vest quarterly in eight equal installments beginning in May 2008. Our Chief Executive Officer also serves as our Interim Chief Financial Officer.

Right of First Refusal: Mr. Economou has entered into a letter agreement which includes a provision requiring Mr. Economou to (i) use commercially reasonable efforts to cause each company affiliated with Cardiff that owns a bareboat chartered vessel (meaning a vessel for which the charterer bears all operating expense and risk) to sell its vessels upon redelivery from its bareboat charterer and allow the Company to exercise a right of first refusal to acquire that bareboat chartered vessel once an agreement that sets forth the terms of the sale is entered into, and (ii) allow the Company to exercise a right of first refusal to acquire any drybulk carrier, after Mr. Economou, or any of his other affiliates, enters into an agreement that sets forth terms upon which he or it would acquire that drybulk carrier. Pursuant to this letter agreement, Mr. Economou will notify our audit committee of any agreement that he or his other affiliates have entered into to purchase a drybulk carrier (or to sell the bareboat chartered vessel) and will provide the audit committee a 7 calendar day period in respect of a single vessel transaction, or a 14 calendar day period in respect of a multi-vessel transaction, from the date that he delivers such notice to our audit committee of that opportunity, within which to decide whether or not to accept the opportunity and nominate a subsidiary of the Company to become the purchaser of such drybulk carrier, before Mr. Economou will accept the opportunity or offer it to any of his other affiliates. Our audit committee, which consists of our independent directors, will require a simple majority vote to accept or reject this offer.

109

Purchase of derivatives from related parties: In order to maintain the minimum hedging ratio of the loan amendment with HSH Nordbank, on June 22, 2007 the Company acquired the following interest rate derivatives which were valued on that date by the financial institutions which were counterparties to these agreements at an amount of $1.3 million (asset), from the following two related companies, which are controlled by Mr. Economou:

(i) Sea Glory Navigation Ltd. which originally entered into an interest rate cap and floor agreement on November 3, 2004 for a period of seven years through November 2011, for a notional amount of $60 million. Under the cap leg of the agreement interest rate is 5.34% if three-month USD LIBOR lies between 5.34% and 7%. If three-month USD LIBOR is above 7% the interest rate is three-month USD LIBOR. Under the floor leg of the agreement interest rate is 2.75% if the three-month USD LIBOR is equal or less than 1.75%.

(ii) River Camel Shipping Co which originally entered into an interest rate cap and floor agreement for a period of seven years through November 2011, for a notional amount of $75 million. Under the cap leg of the agreement interest rate is 5.25% if three-month USD LIBOR is within the range of 5.25% and 7%. If three-month USD LIBOR exceeds 7%, then interest rate is three-month USD LIBOR. Under the floor leg of the agreement interest rate is 2.75%, if the three-month USD LIBOR is equal or less than 1.75%.

Purchase of Ocean Rig ASA shares: On December 20, 2007 Primelead, a wholly owned subsidiary of DryShips acquired 51,778,647 shares in Ocean Rig ASA following its nomination as a buyer from Cardiff. This represented 30.4% of the issued shares in Ocean Rig. A commission was paid to Cardiff amounting to $4.0 million. The commission was treated as an internal cost and is included in “Other, net” in the Company’s consolidated statements of income. This commission was paid on February 1, 2008.

In April 2008, 7,546,668 shares, representing 4.4% of the share capital of Ocean Rig, were purchased from companies controlled by the Company’s Chief Executive Officer and Interim Chief Financial Officer for a consideration of $66.8 million, which is the U.S. dollar equivalent of NOK 45 per share, which is the price that was offered to all shareholders in the mandatory offering.

A commission of $9.9 million was paid to Cardiff for services rendered in relation to the acquisition of the remaining shares in Ocean Rig ASA. This above commission was paid on December 5, 2008 and is reflected in “Other, net” in the company’s consolidated statements of income.

Cancellation of Purchases of Four Panamax Vessels: We previously entered into separate agreements to acquire four Panamax vessels, including two newbuildings, for an aggregate purchase price of $400 million, from companies beneficially owned by George Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer. In December 2008, we agreed to cancel these transactions in exchange for a cash payment by us of $105.0 million in addition to the sellers’ retaining the deposits totaling $55.0 million we previously paid for the four vessels. The vessels were: (i) a 75,228 dwt Panamax vessel built in 2008, (ii) a 75,204 dwt Panamax vessel built in 2007, (iii) a 75,000 dwt Panamax vessel under construction in China scheduled to be delivered during the fourth quarter of 2008 and (iv) a 75,000 dwt Panamax vessel under construction in China scheduled to be delivered during the first quarter of 2009. As part of the termination agreement, we will have the exclusive option to purchase the abovementioned four Panamax drybulk carriers on an en bloc basis at a fixed purchase price of $160.0 million. The exclusive purchase option granted to us by the selling companies will terminate on December 31, 2009.

Cancellation of Purchases of Nine Capesize Vessels: In October 2008, we agreed to purchase nine Capesize drybulk carriers for consideration aggregating $1.17 billion, consisting of 19.4 million of our common shares and the assumption of an aggregate of $478.3 million in debt and future

110

commitments. The sellers were clients of Cardiff, including affiliates of George Economou, our Chairman, Chief Executive Officer and Interim Chief Financial Officer, and unaffiliated parties. In light of the considerable decrease in asset values of the nine Capesize vessels, we have reached an agreement with the sellers to cancel this transaction. The consideration to cancel the transaction will consist of the issuance of 6.5 million of our common shares to entities that are unaffiliated with us nominated by the third-party sellers, which will be subject to a six month lock-up period. The consideration received by entities controlled by George Economou will consist solely of 3.5 million warrants with strike prices, depending on the relevant tranches, of between $20 to $30 per share. Each warrant entitles the holder to purchase one share of our common stock. The warrants will vest over an 18-month period and will expire after five years.

Adjustment in Contract Price for Two Panamax Newbuildings: We previously agreed to acquire two Panamax newbuildings, identified as Hulls 1518A and 1519A, for a purchase price in the amount of $33.6 million each. These vessels are scheduled for delivery from Hudong Shipbuilding in the fourth quarter of 2009 and the first quarter of 2010, respectively. An affiliated client of our manager, Cardiff, with which we are affiliated, has agreed to purchase Hull 1569A, a sister vessel to Hulls 1518A and 1519A. We have agreed to increase the purchase price for Hulls 1518A and 1519A by $5.0 million each in consideration of (i) a corresponding $10.0 million decrease in the purchase price of Hull 1569A and (ii) an undertaking that on delivery of Hulls 1518A and 1519A, the owner of Hull 1569A will repay us by effecting payment of $10.0 million to Hudong Shipbuilding. We will issue a guarantee to the shipyard for this increase in the purchase price of Hulls 1518A and 1519A.

Acquisition of Newbuilding Drillships Identified as Hulls 1837 and 1838: On October 3, 2008, we entered into a share purchase agreement to acquire the equity interests of DrillShips Holdings, which owns two newbuilding advanced capability drillships for use in ultra deepwater drilling locations, identified as Hull 1837 and Hull 1838, and is controlled by clients of Cardiff, including Mr. Economou. The drillships are sister vessels to drillship hulls 1865 and 1866 and are also being constructed by Samsung Heavy Industries. The expected cost of construction is approximately $747.6 million per unit. As of March 26, 2009, $413.0 million has been paid in installments for these hulls. In connection with the acquisition of these drillships, we will assume installment payments totaling $1.1 billion and will assume or have incurred total debt obligations of $261.1 million. We have not yet obtained financing for this $1.1 billion of installment payments for Hulls 1837 and 1838, which amounts to approximately 70% of the purchase price of these drillships.

The consideration payable to the sellers of DrillShips Holdings for these two ultra deepwater drillships will be in the form of newly issued shares of Primelead Shareholders. Primelead Shareholders will issue to the sellers of DrillShips Holdings such number of shares that will be equal to 25% of its then issued and outstanding shares. The percentage of common shares to be issued to the sellers of DrillShips Holdings was determined based on valuations of the two newbuilding drillships prepared by third party appraisers. If the spin off of Primelead Shareholders does not occur, we currently anticipate that we will not complete on our acquisitions of Hulls 1837 and 1838. In October 2008, we advanced on behalf of the owning companies of newbuilding Hulls 1837 and 1838 installment payments in the aggregate amount of $5.0 million. In conjunction with these payments, we entered into an indemnity agreement with these owning companies, pursuant to which such owning companies undertook to reimburse us for such installment payments, plus interest at a fixed rate of five percent, if the spin off does not occur. DrillShips Holdings had not been consolidated with DryShips Inc. as of December 31, 2008, as the closing of the acquisition has not occurred.

C. Interests of Experts and Counsel

Not Applicable.

111

Item 8. Financial Information

A. Consolidated statements and other financial information.

See Item 18.

Legal Proceedings

We have not been involved in any legal proceedings which may have, or have had, a significant effect on our business, financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our business, financial position, results of operations or liquidity. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expect that these claims would be covered by insurance, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

In July 2006, Ocean Rig commenced London arbitration proceedings against Irving Shipbuilding, Inc., or ISI in relation to ISI’s role in the completion of the Eirik Raude in 2001 and 2002. The proceedings principally concern ISI’s financial management of the project in respect of which Ocean Rig will seek substantial damages from ISI.

A contingent liability of $3.1 million has been recognized, based on a claim from an investment bank in relation to our acquisition of Ocean Rig. The maximum exposure to the claim is $24 million.

We previously entered into an agreement with Samsun Logix Corporation, or Samsun, the buyers of the MV Toro, to sell the vessel at a reduced price. The buyers were obligated to remit an additional deposit of $1.5 million. We received notice from Samsun that it filed for receivership. Following Samsun’s failure to pay the additional deposit, we commenced arbitration proceedings against Samsun.

On March 15, 2008, we entered into a memorandum of agreement to sell the MV Delray (ex MV Lacerta), a 1994 built, 71,862 dwt Panamax drybulk carrier, to an unaffiliated third party for a sale price of $55.5 million. The sale will not close due to the buyer’s repudiation of its obligations under the memorandum of agreement. A deposit on the vessel in the amount of $5.6 million was made by the buyer. We are pursuing all legal remedies against the buyer.

In January 2009, we entered into an agreement to cancel the previously announced acquisition of the 2005 built Panamax drybulk carrier MV Petalidi (ex MV Maple Valley) for a purchase price of $61.0 million from an unrelated third party. In view of market conditions and following negotiations, we and the seller mutually agreed to cancel the memorandum of agreement to acquire the MV Petalidi (ex MV Maple Valley) in consideration of a payment of $8.0 million to the seller and the seller’s retention of the $6.1 million deposit that was previously paid. This cancellation reduced our 2009 capital expenditures by $46.9 million. Proceedings that had been pending in London and New York were both discontinued as a result of this agreement.

On March 5, 2009, a complaint against the Company’s current board of directors and a former director was filed in the High Court of the Republic of the Marshall Islands for an unspecified amount of damages alleging that such directors had breached their fiduciary duty of good faith in connection with the termination of the acquisition of four Panamax drybulk carriers and nine Capesize drybulk carriers. The complaint also seeks the disgorgement of all payments made in connection with the termination of these acquisitions. The Company has just received the complaint and is currently studying it. See “Item 4. Information on the Company – Business Overview – Recent Developments in Our Drybulk Carrier Operations – Cancellation of Purchases of Four Panamax Vessels” and “– Cancellation of Purchases of Nine Capesize Vessels.”

112

Dividend Policy

In light of a lower freight rate environment and a highly challenged financing environment, our board of directors, beginning with the fourth quarter of 2008, suspended our common share dividend. Our dividend policy will be assessed by the board of directors from time to time. The suspension allows us to preserve capital and use the preserved capital to capitalize on market opportunities as they may arise. Until market conditions improve, it is unlikely that we will reinstate the payment of dividends. In addition, other external factors, such as our lenders imposing restrictions on our ability to pay dividends under the terms of our loan agreements, may limit our ability to pay dividends. Further, we may not be permitted to pay dividends if we are in breach of the covenants contained in our loan agreements.

Our previous dividend policy was to declare and pay quarterly dividends from our net profits of $0.20 per common share to shareholders each January, April, July and October. Declaration and payment of any dividend is subject to the discretion of our Board of Directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of distributions to shareholders and other factors.

Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends, if any, in the future, will depend on the earnings and cash flow of our subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the drybulk charter market, our earnings would be negatively affected thus limiting our ability to pay dividends, if any, in the future. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividend.

We believe that, under current law, our dividend payments from earnings and profits will constitute “qualified dividend income” and as such will generally be subject to a 15% United States federal income tax rate with respect to non -corporate individual stockholders. Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of a United States stockholder’s tax basis in its common stock on a dollar-for-dollar basis and thereafter as capital gain. Please see the section of this report entitled “Tax Considerations” for additional information relating to the tax treatment of our dividend payments.

B. Significant Changes

See note 19 of item 18.

113

Item 9. The Offer and Listing

Our common stock currently trades on The NASDAQ Global Select Market under the symbol “DRYS”. Since our initial public offering in February 2005, the price history of our common stock was as follows:

PRICE RANGE OF COMMON STOCK

Our common stock currently trades on the NASDAQ Global Select Market under the symbol “DRYS”. Since the filing of our Annual Report on Form 20-F for the fiscal year ended December 31, 2008, the high and low closing price of our common stock were as follows:

	Sales Price
For the Period	High		Low
2009
January	$	16.58	$	6.63
February	$	7.16	$	3.47
March 1 through March 26	$	5.52	$	2.79
2008
Fourth quarter	$	35.45	$	3.54
December		12.43		3.71
November		21.94		3.54
October		35.45		14.05
Third quarter	$	79.61	$	33.15
September		68.78		33.15
August		79.61		66.30
July		79.13		70.58
Second quarter	$	110.74	$	59.98
First quarter	$	87.45	$	52.18
2007
1st Quarter ended March 31, 2007	$	23.61	$	16.85
2nd Quarter ended June 30, 2007	$	43.38	$	23.24
3rd Quarter ended September 30, 2007	$	91.40	$	44.14
4th Quarter ended December 31, 2007	$	130.97	$	69.67
Year ended December 31, 2007	$	130.97	$	16.85
2006
Year ended December 31, 2006	$	18.06	$	8.50
	High		Low
2005
February 3, 2005 to December 31, 2005	$	23.90	$	11.81

On March 26, 2009, the closing price for our common stock on the Nasdaq Global Select Market was $5.11 per share.

Item 10. Additional Information

A. Share Capital

Not Applicable.

114

B. Memorandum and Articles of Association

Directors

Our current amended and restated articles of incorporation have been filed with the SEC as Exhibit 3.1 to our Registration Statement on Form 8-A (File No. 001-33922) on January 18, 2008, and our current amended and restated bylaws have been filed with the SEC as Exhibit 3.2 to our Registration Statement on Form 8-A (File No. 001-33922) on January 18, 2008. The information contained in these exhibits is incorporated by reference herein.

Our directors are elected by a plurality of the votes cast by stockholders entitled to vote in an election. Our articles of incorporation provide that cumulative voting shall not be used to elect directors. Our board of directors must consist of at least three members. The exact number of directors is fixed by a vote of at least 66 ²/3% of the entire board. Our bylaws provide for a staggered board of directors whereby directors shall be divided into three classes: Class A, Class B and Class C which shall be as nearly equal in number as possible. Shareholders, acting as at a duly constituted meeting, or by unanimous written consent of all shareholders, initially designated directors as Class A, Class B or Class C. Class A directors served for a term expiring at the 2005 annual meeting of shareholders. Directors designated as Class B directors served for a term expiring at the 2006 annual meeting. Directors designated Class C directors served for a term expiring at the 2007 annual meeting. At annual meetings for each initial term, directors to replace those whose terms expire at such annual meetings will be elected to hold office until the third succeeding annual meeting. For instance, the current Class C directors were elected to hold office at the 2007 annual meeting and therefore their terms do not expire until the 2010 annual meeting. Each director serves his respective term of office until his successor has been elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office. Our board of directors has the authority to fix the amounts which shall be payable to the members of the board of directors for attendance at any meeting or for services rendered to us.

Stockholder Meetings

Under our bylaws, annual stockholder meetings will be held at a time and place selected by our board of directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called by the board of directors, chairman of the board or by the president. Our board of directors may set a record date between 15 and 60 days before the date of any meeting to determine the stockholders that will be eligible to receive notice and vote at the meeting.

Dissenters’ Rights of Appraisal and Payment

Under the BCA, our stockholders have the right to dissent from various corporate actions, including any merger or consolidation, sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our amended and restated articles of incorporation, a stockholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting stockholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting stockholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which the Company’s shares are primarily traded on a local or national securities exchange.

Stockholders’ Derivative Actions

Under the BCA, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relates.

115

Indemnification of Officers and Directors

Our bylaws includes a provision that entitles any director or officer of the Corporation to be indemnified by the Corporation upon the same terms, under the same conditions and to the same extent as authorized by the BCA if he acted in good faith and in a manner reasonably believed to be in and not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

We are also authorized to carry directors’ and officers’ insurance as a protection against any liability asserted against our directors and officers acting in their capacity as directors and officers regardless of whether the Company would have the power to indemnify such director or officer against such liability by law or under the provisions of our by laws. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

The indemnification provisions in our bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Anti-Takeover Provisions of Our Charter Documents

Several provisions of our articles of incorporation and by-laws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these anti -takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a stockholder may consider in its best interest and (2) the removal of incumbent officers and directors.

Blank Check Preferred Stock

Under the terms of our articles of incorporation, our board of directors has authority, without any further vote or action by our stockholders, to issue up to 500 million shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.

Stockholders Rights Agreement

We entered into a Stockholders Rights Agreement with American Stock Transfer & Trust Company, as Rights Agent, as of January 18, 2008. Under this Agreement, we declared a dividend payable of one preferred share purchase right, or Right, to purchase one one-thousandth of a share of the Company’s Series A Participating Preferred Stock for each outstanding share of DryShips Inc. common stock, par value U.S.$0.01 per share. The Right will separate from the common stock and become exercisable after (1) a person or group acquires ownership of 15% or more of the company’s common stock or (2) the 10th business day (or such later date as determined by the company’s board of directors) after a person or group announces a tender or exchange offer which would result in that person or group holding 15% or more of the company’s common stock. On the distribution date, each holder of a right will be entitled to purchase for $250 (the “Exercise Price”) a fraction ( ¹/1000th) of one share of the company’s preferred stock which has similar economic terms as one share of common stock. If an acquiring person

116

(an “Acquiring Person”) acquires more than 15% of the company’s common stock then each holder of a right (except that acquiring person) will be entitled to buy at the exercise price, a number of shares of the company’s common stock which has a market value of twice the exercise price. Any time after the date an Acquiring Person obtains more than 15% of the company’s common stock and before that Acquiring Person acquires more than 50% of the company’s outstanding common stock, the company may exchange each right owned by all other rights holders, in whole or in part, for one share of the company’s common stock. The rights expire on the earliest of (1) February 4, 2018 or (2) the exchange or redemption of the rights as described above. The company can redeem the rights at any time prior to a public announcement that a person has acquired ownership of 15% or more of the company’s common stock. The terms of the rights and the Stockholders Rights Agreement may be amended without the consent of the rights holders at any time on or prior to the Distribution Date. After the Distribution Date, the terms of the rights and the Stockholders Rights Agreement may be amended to make changes, which do not adversely affect the rights of the rights holders (other than the Acquiring Person). The rights do not have any voting rights. The rights have the benefit of certain customary anti-dilution protections.

Classified Board of Directors

Our articles of incorporation provide for a board of directors serving staggered, three-year terms. Approximately one-third of our board of directors will be elected each year. The classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay stockholders who do not agree with the policies of the board of directors from removing a majority of the board of directors for two years.

Election and Removal of Directors

Our articles of incorporation prohibit cumulative voting in the election of directors. Our by-laws require shareholders to give advance written notice of nominations for the election of directors. Our by-laws also provide that our directors may be removed only for cause and only upon affirmative vote of the holders of at least 66 ²/3% of the outstanding voting shares of the Company. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Limited Actions by Stockholders

Our by-laws provide that if a quorum is present, and except as otherwise expressly provided by law, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the shareholders. Shareholders may act by way of written consent in accordance with the provisions of Section 67 of the BCA.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder’s notice must be received at our principal executive offices not less than 150 days nor more than 180 days prior to the one year anniversary of the preceding year’s annual meeting. Our bylaws also specify requirements as to the form and content of a shareholder’s notice. These provisions may impede shareholders’ ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.

C. Material Contracts

For a description of our loan agreements, please see Item 5. “Operating Financial Review and Prospects – B. Liquidity and Capital Resources – Current Credit Facilities.” Other than as discussed in this annual report, we have no other material contracts, other than contracts entered into in the ordinary course of business, to which the Company or any member of the group is a party.

117

D. Exchange Controls

Under Marshall Islands and Greek law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non -resident holders of our common stock.

E. Taxation

United States Taxation

The following discussion is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed U.S. Treasury Department regulations, administrative rulings, pronouncements and judicial decisions, all as of the date of this Annual Report. This discussion assumes that decisions, all as of the date of this Annual Report. This discussion assumes that we do not have an office or other fixed place of business in the United States.

Taxation of the Company’s Shipping Income: In General

The Company anticipates that it will derive gross income from the use and operation of vessels in international commerce and that this income will principally consist of freights from the transportation of cargoes, hire or lease from time or voyage charters and the performance of services directly related thereto, which the Company refers to as “shipping income.”

Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States will be considered to be 50% derived from sources within the United States. Shipping income attributable to transportation that both begins and ends in the United States will be considered to be 100% derived from sources within the United States. The Company is not permitted by law to engage in transportation that gives rise to 100% U.S. source income. Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping Income derived from sources outside the United States will not be subject to U.S. federal income tax.

Based upon the Company’s anticipated shipping operations, the Company’s vessels will operate in various parts of the world, including to or from U.S. ports. Unless exempt from U.S. taxation under Section 883 of the Code, the Company will be subject to U.S. federal income taxation, in the manner discussed below, to the extent its shipping income is considered derived from sources within the United States.

Application of Code Section 883

Under the relevant provisions of Section 883 of the Code and the final regulations interpreting Section 883, as promulgated by the U.S. Treasury Department, the Company will be exempt from U.S. taxation on its U.S. source shipping income if:

(i) It is organized in a “qualified foreign country” which is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of each category of shipping income for which exemption is being claimed under Section 883 and which the Company refers to as the “country of organization requirement”; and

(ii) It can satisfy any one of the following two (2) stock ownership requirements:

• more than 50% of the Company’s stock, in terms of value, is beneficially owned by individuals who are residents of a qualified foreign country, which the Company refers to as the “50% Ownership Test”; or

118

• the Company’s stock is “primarily and regularly” traded on an established securities market located in the United States or in a qualified foreign country, which the Company refers to as the “Publicly Traded Test”.

The U.S. Treasury Department has recognized (i) the Marshall Islands, the country of incorporation of the Company and of thirty-four of its ship-owning subsidiaries and (ii) Malta, the country of incorporation of twenty-seven of the Company’s ship-owning subsidiaries, as qualified foreign countries. Accordingly, the Company and its subsidiaries satisfy the country of organization requirement.

Therefore, the Company’s eligibility to qualify for exemption under Section 883 is wholly dependent upon being able to satisfy one of the stock ownership requirements. For the 2008 taxable year, the Company believes that it satisfied the Publicly-Traded Test since, for more than half the days of the Company’s 2008 taxable year, the Company’s stock was “primarily and regularly traded” on the Nasdaq Global Select Market which is an “established securities market” in the United States within the meaning of the Section 883 regulations and intends to take this position on its 2008 United States income tax returns.

Taxation in Absence of Internal Revenue Code Section 883 Exemption

To the extent the benefits of Section 883 are unavailable with respect to any item of U.S. source income, the Company’s U.S. source shipping income would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions. Since under the sourcing rules described above, no more than 50% of the Company’s shipping income would be treated as being derived from U.S. sources, the maximum effective rate of U.S. federal income tax on the Company’s shipping income would never exceed 2% under the 4% gross basis tax regime.

Based on the U.S. source Shipping Income for 2007 and 2008, the Company would be subject to U.S. federal income tax of approximately $1.13 and $1.7 million respectively under Section 887 in the absence of an exemption under Section 883.

Gain on Sale of Vessels

Regardless of whether we qualify for exemption under Section 883, we will not be subject to United States federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under U.S. federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by us will be considered to occur outside of the United States.

United States Taxation of Our Other Income

In addition to our shipping operations, we provide drilling services to third parties on the United States Outer Continental Shelf through our indirect wholly-owned subsidiary, Ocean Rig USA LLC. Ocean Rig USA LLC is engaged in a trade or business in the United States. Therefore, Ocean Rig USA LLC is subject to United States federal income tax on a net basis on its taxable income. The amount of such taxable income and such United States federal income tax liability will vary depending upon the level of Ocean Rig USA LLC’s operations in the United States in any given taxable year. Distributions from Ocean Rig USA LLC to our subsidiary that owns the interests in Ocean Rig USA LLC may be subject to United States federal withholding tax at a 30% rate.

119

United States Federal Income Taxation of Holders

United States Federal Income Taxation of United States Holders

As used herein, the term “United States Holder” means a beneficial owner of common stock that is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common stock, you are encouraged to consult your tax advisor.

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common stock to a United States Holder will generally constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the United States Holder’s tax basis in his common stock on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United States corporation, United States Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common stock will generally be treated as “passive category income” or, in the case of certain types of United States Holders, “general category income” for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

Dividends paid on our common stock to a United States Holder who is an individual, trust or estate (a “United States Individual Holder”) will generally be treated as “qualified dividend income” that is taxable to such United States Individual Holders at preferential tax rates (through 2010) provided that (1) the common stock is readily tradable on an established securities market in the United States (such as the Nasdaq National Market, on which our common stock will be listed); (2) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be); and (3) the United States Individual Holder has owned the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a United States Individual Holder. Legislation has been previously introduced in the United States Congress which, if enacted, would preclude our dividends from qualifying for such preferential rates prospectively from the date of the enactment. Any dividends paid by the Company which are not eligible for these preferential rates will be taxed as ordinary income to a United States Holder.

Special rules may apply to any “extraordinary dividend” generally, a dividend in an amount which is equal to or in excess of ten percent of a stockholder’s adjusted basis (or fair market value in certain circumstances) in a share of common stock paid by us. If we pay an “extraordinary dividend” on our common stock that is treated as “qualified dividend income,” then any loss derived by a United States Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend.

120

Sale, Exchange or other Disposition of Common Stock

Assuming we do not constitute a passive foreign investment company for any taxable year, a United States Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the United States Holder from such sale, exchange or other disposition and the United States Holder’s tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if the United States Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as United States-source income or loss, as applicable, for United States foreign tax credit purposes. A United States Holder’s ability to deduct capital losses is subject to certain limitations.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special United States federal income tax rules apply to a United States Holder that holds stock in a foreign corporation classified as a passive foreign investment company for United States federal income tax purposes. In general, we will be treated as a passive foreign investment company with respect to a United States Holder if, for any taxable year in which such holder held our common stock, either:

• at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or

• at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income.

For purposes of determining whether we are a passive foreign investment company, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25 percent of the value of the subsidiary’s stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

Based on our current operations and future projections, we do not believe that we are, nor do we expect to become, a passive foreign investment company with respect to any taxable year. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a passive foreign investment company, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the tankers, should not constitute passive assets for purposes of determining whether we are a passive foreign investment company. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing passive foreign investment companies, the Internal Revenue Service or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a passive foreign investment company with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a passive foreign investment company for any taxable year, a United States Holder would be subject to different taxation rules depending on

121

whether the United States Holder makes an election to treat us as a “Qualified Electing Fund,” which election we refer to as a “QEF election.” As an alternative to making a QEF election, a United States Holder should be able to make a “mark-to-market” election with respect to our common stock, as discussed below.

Taxation of United States Holders Making a Timely QEF Election

If a United States Holder makes a timely QEF election, which United States Holder we refer to as an “Electing Holder,” the Electing Holder must report each year for United States federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder’s adjusted tax basis in the common stock will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common stock and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common stock. A United States Holder would make a QEF election with respect to any year that our company is a passive foreign investment company by filing IRS Form 8621 with his United States federal income tax return. If we were aware that we were to be treated as a passive foreign investment company for any taxable year, we would provide each United States Holder with all necessary information in order to make the QEF election described above.

Taxation of United States Holders Making a “Mark-to-Market” Election

Alternatively, if we were to be treated as a passive foreign investment company for any taxable year and, as we anticipate, our stock is treated as “marketable stock,” a United States Holder would be allowed to make a “mark-to-market” election with respect to our common stock, provided the United States Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the United States Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common stock at the end of the taxable year over such holder’s adjusted tax basis in the common stock. The United States Holder would also be permitted an ordinary loss in respect of the excess, if any, of the United States Holder’s adjusted tax basis in the common stock over its fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A United States Holder’s tax basis in his common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the United States Holder.

Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, if we were to be treated as a passive foreign investment company for any taxable year, a United States Holder who does not make either a QEF election or a “mark-to-market” election for that year, whom we refer to as a “Non-Electing Holder,” would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on our common stock in a taxable year in excess of 125 percent of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common stock), and (2) any gain realized on the sale, exchange or other disposition of our common stock. Under these special rules:

• the excess distribution or gain would be allocated ratably over the Non-Electing Holders’ aggregate holding period for the common stock;

122

• the amount allocated to the current taxable year and any taxable year before we became a passive foreign investment company would be taxed as ordinary income; and

• the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

These penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of our common stock. If a Non-Electing Holder who is an individual dies while owning our common stock, such holder’s successor generally would not receive a step-up in tax basis with respect to such stock.

United States Federal Income Taxation of “Non-United States Holders”

A beneficial owner of common stock that is not a United States Holder is referred to herein as a “Non-United States Holder.”

Dividends on Common Stock

Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to our common stock, unless that income is effectively connected with the Non-United States Holder’s conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States.

Sale, Exchange or Other Disposition of Common Stock

Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock, unless:

• the gain is effectively connected with the Non-United States Holder’s conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States; or

• the Non-United States Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

If the Non-United States Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the common stock, including dividends and the gain from the sale, exchange or other disposition of the stock that is effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of United States Holders. In addition, if you are a corporate Non-United States Holder, your earnings and profits that are attributable to the effectively connected income, which are subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty.

123

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to a holder of common shares will be subject to information reporting requirements. Such payments will also be subject to backup withholding tax if paid to a non-corporate United States Holder who:

• fails to provide an accurate taxpayer identification number;

• is notified by the Internal Revenue Service that he has failed to report all interest or dividends required to be shown on his federal income tax returns; or

• in certain circumstances, fails to comply with applicable certification requirements.

Non-United States Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable.

If a Non-United States Holder sells common stock to or through a United States office or broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless the Non-United States Holder certifies that you are a non-United States person, under penalties of perjury, or you otherwise establish an exemption. If a Non-United States Holder sells common stock through a non-United States office of a non-United States broker and the sales proceeds are paid to the Non-United States Holder outside the United States then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to the Non-United States Holder outside the United States, if the Non-United States Holder sells common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States.

Backup withholding tax is not an additional tax. Rather, a taxpayer generally may obtain a refund of any amounts withheld under backup withholding rules that exceed the taxpayer’s income tax liability by filing a refund claim with the Internal Revenue Service.

Marshall Islands Tax Considerations

We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our stockholders.

Other Tax Considerations

In addition to the tax consequences discussed above, we may be subject to tax in one or more other jurisdictions where we conduct activities. The amount of any such tax imposed upon our operations may be material.

Ocean Rig provides offshore drilling services to third parties through fully owned subsidiaries of Ocean Rig ASA. Such services may be provided in countries where the tax legislation requires the drilling revenue to be subject to withholding tax or other corporate taxes and where the operating cost may also be increased due to tax requirements. The amount of such taxable income and liability will vary depending upon the level of Ocean Rig’s operations in such jurisdiction in any given taxable year. Distributions from subsidiaries may be subject to withholding tax.

124

Ocean Rig does not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority. If any tax authority successfully challenges our operational structure, inter-company pricing policies or the taxable presence of our key subsidiaries in certain countries; or if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure; or if we lose a material tax dispute in any country, particularly in the U.S., Canada, U.K. , or Norway, our effective tax rate on our world-wide earnings could increase substantially and our earnings and cash flows from operations could be materially adversely affected.

F. Dividends and Paying Agents

Not Applicable

G. Statement by Experts

Not Applicable

H. Documents on display

We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or from the SEC’s website http://www.sec.gov. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330 and you may obtain copies at prescribed rates.

I. Subsidiary information

Not Applicable

Item 11. Quantitative and Qualitative Disclosures about Market Risk

Our Risk Management Policy

Our primary market risks relate to adverse movements in the charter hire rates for our fleet, in both the drybulk carrier sector and the drilling rig sector, and any declines that may occur in the value of our assets which are made up primarily of the vessels and drilling rigs. Our policy is to also continuously monitor our exposure to other business risks, including the impact of changes in interest rates, currency rates, and charterer rates and bunker prices on earnings and cash flows. We intend to assess these risks and, when appropriate, enter into derivative contracts with credit-worthy counter parties to minimize our exposure to the risks. In regard to charterer rates and bunker prices, as our employment policy for our vessels and rigs has been, and is expected to continue to be, with a high percentage of our fleet on period employment, we are not directly exposed to increases in bunker fuel prices as these are the responsibility of the charterer under period charter arrangements.

Under the terms of our loan agreements, we are required to maintain compliance with minimum valuation covenants in regard to the vessels that are mortgaged to those banks. As such, to monitor on a regular basis the current market value of our fleet and thus to highlight any downturn in its value, we obtain on a semi-annual basis two independent valuations of all of our vessels from two international sale and purchase brokers to determine the ongoing market value of our fleet, including the drybulk vessels and the drilling rigs. These valuations are used in the assessment regarding the necessary ongoing level of depreciation that we are recording in our books.

125

Interest rate risk

Our exposure to market risk for changes in interest rates relates primarily to our long-term and short-term debt. The international drybulk and offshore drilling industries are capital intensive industries, requiring significant amounts of investment. Much of this investment is provided in the form of long-term debt. Our debt usually contains interest rates that fluctuate with LIBOR. Increasing interest rates could adversely impact future earnings.

Historically, we have been subject to market risks relating to changes in interest rates, because we have had significant amounts of floating rate debt outstanding. We manage this risk by entering into interest rate swap agreements in which we exchange fixed and variable interest rates based on agreed upon notional amounts. We use such derivative financial instruments as risk management tools and not for speculative or trading purposes. In addition, the counterparty to the derivative financial instrument is a major financial institution in order to manage exposure to nonperformance counterparties.

Our interest expense is affected by changes in the general level of interest rates. As an indication of the extent of our sensitivity to interest rate changes, an increase of 100 basis points would have decreased our net income and cash flows in the current year by approximately $1.1 million based upon our debt level at December 31, 2008. A 1% increase in LIBOR would have increased our interest expense for the year ended December 31, 2008 from $109.8 million to $110.9 million.

For a description of our derivatives, see “Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Resources – Derivatives”.

Foreign currency exchange risk

We generate all of our revenues in Dollars but currently incur approximately 50% of our operating expenses and the majority of our management expenses in currencies other than the U.S. dollar, primarily the Euro. For accounting purposes, expenses incurred in Euros are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. Because a significant portion of our expenses are incurred in currencies other than the U.S. dollar, our expenses may from time to time increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. dollar and the Euro, which could affect the amount of net income that we report in future periods.

Our international operations expose us to foreign exchange risk. We use a variety of techniques to minimize the exposure to foreign exchange risk, such as the use of foreign exchange derivative instruments. Fluctuations in foreign currencies typically have not had a material impact on our overall results. In situations where payments of local currency do not equal local currency requirements, foreign exchange derivative instruments, specifically foreign exchange forward contracts, or spot purchases, may be used to mitigate foreign currency risk. A foreign exchange forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent U.S. dollar payment equal to the value of such exchange. We do not enter into derivative transactions for speculative purposes. At December 31, 2008, we had no open foreign exchange derivative contracts.

Item 12. Description of Securities Other than Equity Securities

A. Debt securities

Not Applicable

126

B. Warrants and rights

Not Applicable

C. Other securities

Not Applicable

D. American depository shares

Not Applicable

PART II.

Item 13. Defaults, Dividend Arrearages and Delinquencies

See “Item 4.B. – Business Overview – Recent Developments – Discussions Concerning Waiver and Amendment of our Loan Agreement Covenants” and “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Breach of Loan Covenants.”

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Pursuant to Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s management, under the supervision and with the participation of the Chief Executive Officer/Interim Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2008. The term disclosure controls and procedures are defined under SEC rules as controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based on that evaluation, our Chief Executive Officer/Interim Chief Financial Officer has concluded that our disclosure controls and procedures are effective, as December 31, 2008.

(b) Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is identified in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance

127

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorization of its management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the Company’s assets that could have a material effect on its consolidated financial statements.

Our management, with the participation of Chief Executive Officer/Interim Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, the Company used the control criteria framework of the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) published in its report entitled Internal Control-Integrated Framework. As a result of its assessment, the Chief Executive Officer/Interim Chief Financial Officer concluded that the Company’s internal controls over financial reporting are effective as of December 31, 2008.

We have excluded from our assessment of our internal control over financial reporting, the internal control over financial reporting of Ocean Rig ASA. We acquired 30.4% of the issued shares in Ocean Rig on December 20, 2007. The company accounted for its investment in Ocean Rig for the year ended December 31, 2007 and for period from January 1, 2008 to May 14, 2008 using the equity method of accounting. Ocean Rig is consolidated in our financial statements for the year 2008, only as of May 15, 2008. The total consolidated assets of Ocean Rig as of December 31, 2008 were $1.5 billion, which represented 31% of our total consolidated assets as at the same date. The revenues of Ocean Rig for the period from May 15, 2008 to December 31, 2008, for which we consolidated Ocean Rig in our financial statements for 2008, were $202 million and represented 19% of our total revenues before adjustments and eliminations for the same year. We intend to take the necessary action in order to ensure that for the year ending December 31, 2009 our evaluation of internal control over financial reporting will be appropriately expanded to cover the internal controls of Ocean Rig in accordance with applicable laws of the United States and SEC regulations.

(c) Report of Independent Registered Public Accounting Firm

Deloitte, Hadjipavlou, Sofianos and Cambanis S.A., or Deloitte., an independent registered public accounting firm, as auditors of our consolidated financial statements for the year ended December 31, 2008, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2008. Such report appears on page F-5.

(d) Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer/Interim Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no

128

evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Item 16A. Audit Committee Financial Expert

The Board of Directors of the Company has determined that Mr. Xiradakis, whose biographical details are included in Item 6, a member of our Audit Committee, qualifies as a financial expert and is considered to be independent under SEC Rule 10A-3.

Item 16B. Code of Ethics

The Company has adopted a code of ethics that applies to its directors, officers and employees. In March 2008, the Board of Directors adopted an amendment to our code of ethics that would permit officers, directors and employees of the Company who own common shares to transact in the Company’s securities pursuant to trading plans adopted in reliance upon Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. A copy of our code of ethics is posted in the “Investor Relations” section of the Dryships Inc. website, and may be viewed at http://www.dryships.com. We will also provide a hard copy of our code of ethics free of charge upon written request of a shareholder. Shareholders may direct their requests to the attention of Investor Relations, DryShips Inc., 80, Kifissias Avenue, 151 25 Amaroussion, Greece.

Item 16C. Principal Accountant Fees and Services

Ernst & Young (Hellas), Certified Auditors Accountants S.A, or Ernst & Young, have audited our annual financial statements acting as our independent auditor for the fiscal year ended December 31, 2006. On May 28, 2007 the Company retained Deloitte, Hadjipavlou, Sofianos and Cambanis S.A., or Deloitte as auditors of the Company for the fiscal year ended December 31, 2008 and 2007.

The table below sets forth the total fees for the services performed by Deloitte in 2008 and 2007, Ernst&Young (Hellas) in 2006 and, Ernst and Young (Norway) in 2008 for our subsidiary Ocean Rig ASA, and Deloitte in 2008 and identifies these amounts by category of services.

	2006		2007		2008
Audit fees	$	633,937	$	1,028,925	$	1,550,618
Audit related fees		—		108,688		—
Tax fees		—		—		—
All other fees		—		—		—
Total fees	$	633,937	$	1,137,613	$	1,550,618

129

Audit fees

The 2008 amount of Euro 1,550,618 relates to audit services provided in connection with the audit of our consolidated financial statements, SAS 100 reviews, the issuance of 4,759,000 common shares in March 2008 and the issuance of 27,050,000 common shares from October through December 2008 under our controlled equity offering sales agreement. There were no tax, audit-related, or other fees billed in 2008.

The 2007 amount of Euro 1,028,925 relates to audit services provided in connection with the audit of our consolidated financial statements, SAS 100 reviews and the issuance of 1,190,000 shares of our common stock from October through December 2007 under a controlled equity offering sales agreement. The audit-related fees billed relate to a potential offering which was not pursued. There were no tax or other related fees billed in 2007.

The 2006 amount of Euro 633,937 relates to audit services provided in connection with the audit of our consolidated financial statements, SAS 100 reviews and the issuance of 4,650,000 shares of our common stock from May through August 2006 under a controlled equity offering sales agreement. There were no tax, audit-related, or other fees billed in 2006.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not Applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not Applicable.

Item 16F. Changes in Registrant’s Certifying Accountant

Not Applicable.

Item 16G. Corporate Governance

Exemptions from Nasdaq corporate governance rules

As a foreign private issuer, the Company is exempt from many of the corporate governance requirements other than the requirements regarding the disclosure of a going concern audit opinion, notification of material non-compliance with Nasdaq corporate governance practices, the establishment and composition of an audit committee that complies with SEC Rule 10A-3 and a formal audit committee charter. The practices followed by the Company in lieu of Nasdaq’s corporate governance rules are described below:

• In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company complies with provisions of the Marshall Islands Business Corporations Act, or BCA, providing that the Board of Directors approves share issuances.

• The Company’s Board does not hold regularly scheduled meetings at which only independent directors are present.

• As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law and as provided in our bylaws, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us between 150 and 180 days advance notice to properly introduce any business at a meeting of shareholders.

130

Other than as noted above, we are in full compliance with all other applicable Nasdaq corporate governance standards.

Item 17. Financial Statements

See Item 18.

Item 18. Financial Statements

The following financial statements, beginning on page F-1, together with the report of Deloitte, Hadjipavlou, Sofianos and Cambanis S.A. thereon, are filed as a part of this report.

The following financial statements, beginning on page F-1, together with the report of Ernst and Young (Hellas) Certified Auditors and Accountants S.A. thereon, are filed as a part of this report.

The following financial statements, beginning on page F-1, together with the report of Ernst and Young (Norway) Certified Auditors and Accountants AS. thereon, are filed as a part of this report.

Item 19. Exhibits

(a) Exhibits, Exhibit Number, Description

1.1	Articles of Amendment to Articles of Incorporation of the Company (1)
1.2	Amended and Restated Bylaws of the Company (2)
2.1	Form of Share Certificate
4.1	2008 Equity Incentive Plan of the Company (3)
4.2	Loan Agreement dated November 12, 2004 by and between certain subsidiaries of the Company, Commerzbank AG and HSH Nordbank AG relating to a facility of up to $185,000,000 (4)
4.3	Senior Loan Agreement dated March 31, 2006 by and between the Company, HSH Nordbank AG and certain other financial institutions listed therein relating to a term loan and short-term credit facilities of up to $518,750,000 (5)
4.4	Junior Loan Agreement dated March 31, 2006 by and between the Company, HSH Nordbank AG and certain other financial institutions listed therein relating to a term loan and short-term credit facilities of up to $110,000,000 (6)
4.5	Supplemental Letter Agreement dated May 15, 2006 to the HSH Nordbank Senior and Junior Loan Agreement
4.6	Supplemental Agreement dated November 28, 2006 to the HSH Nordbank Senior Loan Agreement (7)
4.7	Supplemental Agreement dated November 28, 2006 to the HSH Nordbank Junior Loan Agreement (8)
4.8	Amending and Restating Agreement dated May 23, 2007 to the HSH Nordbank Senior Loan Agreement (9)
4.9	Amending and Restating Agreement dated May 23, 2007 to the HSH Nordbank Junior Loan Agreement (10)
4.10	Supplemental Agreement dated February 27, 2008 to the HSH Nordbank Senior Loan Agreement
4.11	Supplemental Agreement dated February 27, 2008 to the HSH Nordbank Junior Loan Agreement
4.12	Supplemental Letter Agreement dated April 23, 2008 to the HSH Nordbank Senior Loan Agreement
4.13	Supplemental Letter Agreement dated April 23, 2008 to the HSH Nordbank Junior Loan Agreement
4.14	Subordinated Term Note dated April 5, 2007 by and between Kronos Owning Company Limited and Elios Investments Inc. for the principal amount of $33,000,000
4.15	Loan Agreement dated April 19, 2007 by and between the Company and certain financial institutions listed therein relating to a bridge loan facility of up to $150,000,000 (initially), which may be increased to an amount of up to $181,000,000 (11)
4.16	Subordinated Term Note dated May 23, 2007 by and between the Company and Elios Investments Inc. for the principal amount of $30,000,000
4.17	Loan Agreement dated August 30, 2007 by and between the Company and HSH Nordbank AG relating to a bridge loan facility of up to $30,076,250
4.18	Controlled Equity Offering Sales Agreement dated October 12, 2007 by and between the Company and Cantor Fitzgerald & Co. (12)

131

4.19	Contract for the Construction and Sale of a Drillship (Hull No. 1837) dated September 17, 2007 by and between Drillship Hydra Owners Inc. and Samsung Heavy Industries Co., Ltd. (13)
4.20	Contract for the Construction and Sale of a Drillship (Hull No. 1838) dated September 17, 2007 by and between Drillship Paros Owners Inc. and Samsung Heavy Industries Co., Ltd. (14)
4.21	Loan Agreement dated October 2, 2007 by and between Ioli Owning Company Limited and Deutsche Schiffsbank Aktiengesellschaft relating to a secured loan of up to $35,000,000 (15)
4.22	Loan Agreement dated October 5, 2007 by and between Boone Star Owners Inc., Iokasti Owning Company Limited and Piraeus Bank A.E. relating to a loan facility of up to $90,000,000
4.23	Loan Agreement dated November 16, 2007 by and between Iason Owning Company Limited and EFG Eurobank Ergasias S.A. relating to a loan of up to $47,000,000 (16)
4.24	Loan Agreement dated December 4, 2007 by and between Team-Up Owning Company Limited, Orpheus Owning Company Limited and DnB NOR Bank ASA relating to a loan of up to $101,150,000 (17)
4.25	Sale and Purchase Agreement dated December 6, 2007 by and between certain entities managed by Cheyne Capital Management (UK) LLP and Cardiff Marine Inc. relating to the purchase of shares of Ocean Rig ASA (18)
4.26	Loan Agreement dated December 17, 2007 by and between Primelead Limited and Nordea Bank Finland Plc relating to a credit facility of up to $260,000,000 (19)
4.27	Contract for Construction and Sale of a Drillship (Hull No. 1865) dated January 24, 2008 by and between Drillship Kithira Owners Inc. and Samsung Heavy Industries Co., Ltd. (20)
4.28	Contract for Construction and Sale of a Drillship (Hull No. 1866) dated January 24, 2008 by and between Drillship Skopelos Owners Inc. and Samsung Heavy Industries Co., Ltd. (21)
4.29	Agreement dated January 24, 2008 by and between Drillship Kithira Owners Inc. and Samsung Heavy Industries Co., Ltd. relating to Hull No. 1865
4.30	Agreement dated January 24, 2008 by and between Drillship Skopelos Owners Inc. and Samsung Heavy Industries Co., Ltd. relating to Hull No. 1866
4.31	Addendum No. 1 dated March 21, 2008 to the Contract for Construction and Sale of a Drillship (Hull No. 1866) by and between Drillship Skopelos Owners Inc. and Samsung Heavy Industries Co., Ltd.
4.32	Addendum No. 1 dated March 21, 2008 to the Contract for Construction and Sale of a Drillship (Hull No. 1865) by and between Drillship Kithira Owners Inc. and Samsung Heavy Industries Co., Ltd.
4.33	Loan Agreement dated March 13, 2008 by and between Annapolis Shipping Company Limited, Atlas Owning Company Limited, Farat Shipping Company Limited, Lansat Shipping Company Limited and Piraeus Bank A.E. relating to a loan facility of up to $130,000,000
4.34	Loan Agreement dated May 5, 2008 by and between Dalian Star Owners Inc., Dresdner Bank AG and other financial institutions listed therein relating to a term loan facility of up to $90,000,000
4.35	International Swap Dealers Association Inc. Master Agreement dated May 7, 2008 by and between the Company and EFG Eurobank Ergasias S.A.
4.36	Loan and Guarantee Facility Agreement dated May 9, 2008 by and between Primelead Limited, Nordea Bank Finland Plc and DnB NOR Bank ASA relating to credit facility of up to $800,000,000 and a guarantee facility of up to NOK5,000,000,000
4.37	Waiver Agreement dated February 12, 2009, to the Nordea Bank $800,000,000 Loan and Guarantee Facility
4.38	Loan Agreement dated May 13, 2008 by and between Ionian Traders Inc., Norwalk Star Owners Inc., Deutsche Schiffsbank Aktiengesellschaft Bayerische Hypo-Und Vereinsbank AG, and certain other financial institutions listed therein relating to a secured loan of $125,000,000
4.39	Consultancy Agreement dated May 28, 2008 by and between the Company and Fabiana Services S.A.
4.40	Loan Agreement dated June 20, 2008 by and between Aegean Traders Inc., Iguana Shipping Company Limited and WestLB AG relating to a loan facility of up to $103,200,000
4.41	Loan Agreement dated July 23, 2008 by and between Cretan Traders Inc. and Norddeutsche Landesbank Girozentrale relating to a term loan facility of up to $126,400,000
4.42	Credit Facility Agreement dated July 18, 2008 by and between Drillship Skopelos Owners Inc., Deutsche Bank A.G. and certain financial institutions listed therein for a maximum of $562,500,000 (22)

132

4.43	Credit Facility Agreement dated July 18, 2008 by and between Drillship Kithira Owners Inc., Deutsche Bank A.G. and certain financial institutions listed therein for a maximum of $562,500,000 (23)
4.44	Guarantee, Revolving Credit and Term Loan Facility Agreement dated September 17, 2008 by and between Ocean Rig ASA, Ocean Rig Norway AS and certain financial institutions listed therein for $1,040,000,000
4.45	Share Purchase Agreement dated October 3, 2008 by and between Primelead Shareholders Inc., Entrepreneurial Sprit Holdings Inc., Advice Investments S.A., Magic Management Inc. and Deep Sea Investments Inc. (24)
4.46	Agreement dated January 15, 2009 by and between the Company and Central Mare Inc., as amended on March 18, 2009.
4.47	ATM Equity Offering Sales Agreement dated January 28, 2009 by and between the Company and Merrill Lynch, Pierce, Fenner & Smith, Incorporated (25)
4.48	Termination and Release Agreement, dated March 6, 2009, by and between the Company and the purchasers named therein (26)
4.49	Securities Purchase Agreement, dated March 6, 2009, by and between the Company and the purchasers named therein (27)
8.1	Subsidiaries of the Company
12.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
12.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
13.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of Independent Registered Public Accounting Firm (Ernst & Young Hellas)
15.2	Consent of Independent Registered Public Accounting Firm (Ernst & Young Norway)
15.3	Consent of Independent Registered Public Accounting Firm (Deloitte)

(1) Filed as Exhibit 3.1 to the Company’s Registration Statement on Form 8-A (File No. 001-33922) on January 18, 2008.

(2) Filed as Exhibit 3.2 to the Company’s Registration Statement on Form 8-A (File No. 001-33922) on January 18, 2008.

(3) Filed as Exhibit 1 to the Company’s Current Report on Form 6-K on January 24, 2008.

(4) Filed as Exhibit 10.2 to the Company’s Registration Statement on Form F-1 (File No. 333-122008) on January 13, 2005.

(5) Filed as Exhibit 4.4 to the Company’s Annual Report on Form 20-F on April 21, 2006.

(6) Filed as Exhibit 4.5 to the Company’s Annual Report on Form 20-F on April 21, 2006.

(7) Filed as Exhibit 4.5 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(8) Filed as Exhibit 4.6 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(9) Filed as Exhibit 4.8 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(10) Filed as Exhibit 4.9 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(11) Filed as Exhibit 4.7 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(12) Filed as an Exhibit 1.1 to the Company’s Current Report on Form 6-K on October 15, 2007.

(13) Filed as Exhibit 10.2 to the Company’s Post-Effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (File No. 333-146540) on October 20, 2008.

(14) Filed as Exhibit 10.3 to the Company’s Post-Effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (File No. 333-146540) on October 20, 2008.

(15) Filed as Exhibit 4.10 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(16) Filed as Exhibit 4.11 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(17) Filed as Exhibit 4.12 to the Company’s Annual Report on Form 20-F on March 31, 2008.

133

(18) Filed as Exhibit 4.14 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(19) Filed as Exhibit 4.13 to the Company’s Annual Report on Form 20-F on March 31, 2008.

(20) Filed as Exhibit 10.4 to the Company’s Post-Effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (File No. 333-146540) on October 20, 2008.

(21) Filed as Exhibit 10.5 to the Company’s Post-Effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (File No. 333-146540) on October 20, 2008.

(22) Filed as Exhibit 10.6 to the Company’s Post-Effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (File No. 333-146540) on October 20, 2008.

(23) Filed as Exhibit 10.7 to the Company’s Post-Effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (File No. 333-146540) on October 20, 2008.

(24) Filed as Exhibit 10.1 to the Company’s Post-Effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (File No. 333-146540) on October 20, 2008.

(25) Filed as Exhibit 1.4 to the Company’s Current Report on Form 6-K on January 29, 2009.

(26) Filed as Exhibit 1 to the Company’s Current Report on Form 6-K on March 10, 2009.

(27) Filed as Exhibit 2 to the Company’s Current Report on Form 6-K on March 10, 2009.

134

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	DRYSHIPS INC.
	(Registrant)
Date: March 27, 2009	By:	/s/    George Economou
		George Economou
		Chief Executive Officer & Interim Chief Financial Officer

DRYSHIPS INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm (Ernst & Young Hellas)	F-2
Report of Independent Registered Public Accounting Firm (Ernst & Young AS)	F-3
Report of Independent Registered Public Accounting Firm (Deloitte Hadjipavlou, Sofianos & Cambanis S.A.)	F-4
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	F-5
Consolidated Balance Sheets as of December 31, 2007 and 2008	F-6
Consolidated Statements of Income for the years ended December 31, 2006, 2007 and 2008	F-7
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2006, 2007 and 2008	F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2007 and 2008	F-9
Notes to Consolidated Financial Statements	F-10

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of DryShips Inc.

We have audited the accompanying consolidated statements of income, stockholders’ equity, and cash flows of DryShips Inc. (the “Company”) for the year ended December 31, 2006. Our audit also included the 2006 financial statement schedule listed in the Index at Item 18.

These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations of DryShips Inc. for the year ended December 31, 2006, and its cash flows for year then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 5 to the consolidated financial statements, in 2008 the Company changed its method of accounting for dry-docking costs, and retrospectively adjusted the 2006 consolidated financial statements.

Ernst & Young (Hellas) Certified Auditors Accountants S.A.

/s/ Athens, Greece

April 27, 2007

(except for Note 5 and the 2006 financial statement schedule listed in the Index at Item 18

to which the date is March 27, 2009)

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Ocean Rig ASA

We have audited the accompanying consolidated balance sheet of Ocean Rig ASA and subsidiaries (“the Company”) as of December 31, 2008, and the related consolidated statements of income, shareholders’ equity, and cash flows for the period May 15, 2008 to December 31, 2008 (not presented separately herein). These financial statements are the responsibility of the Company’s management and the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

IAS 1 requires that financial statements be presented with comparative financial information. These consolidated financial statements have been prepared solely for the purpose of meeting the requirements of Rule 2-05 of Regulation S-X as it relates to the results of operations of the Company for the period following the date control of the Company was acquired by DryShips Inc. through December 31, 2008. Accordingly no comparative financial information is presented.

In our opinion, except for the omission of comparative information as discussed in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ocean Rig ASA and subsidiaries at December 31, 2008, and the consolidated results of their operations and their cash flows for the period May 15, 2008 to December 31, 2008, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

International Financial Reporting Standards as issued by the International Accounting Standards Board differ in certain respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 21 to the consolidated financial statements.

The accompanying consolidated financial statements have been prepared assuming that Ocean Rig ASA and subsidiaries will continue as a going concern. As more fully described in Note 14, Ocean Rig ASA is a wholly owned subsidiary of DryShips Inc. On a consolidated basis, DryShips Inc. reported a current portion of long-term debt of $2,370,556 as of 31 December 2008 due to DryShip Inc.’s inability to comply with financial covenants under its current debt agreements and a negative working capital position. These conditions raise substantial doubt about DryShips Inc.’s ability to continue as a going concern. Because of the aforementioned conditions relating to DryShips Inc., and the uncertainties surrounding its plans to address its liquidity needs, the parent entity’s actions could have a substantial effect on Ocean Rig ASA and subsidiaries’ assets; therefore, there is also substantial doubt about whether Ocean Rig ASA and subsidiaries will continue as a going concern. The 2008 consolidated financial statements of Ocean Rig ASA and subsidiaries do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ Ernst & Young AS

Stavanger, Norway

March 27, 2009

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of DryShips Inc.

We have audited the accompanying consolidated balance sheets of DryShips Inc. and subsidiaries (the “Company”) as of December 31, 2007 and 2008, and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended. Our audits also included the financial statement schedule as of and for the years ended December 31, 2007 and 2008, listed in the Index at Item 18. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits. We did not audit the financial statements of Ocean Rig ASA and subsidiaries (a consolidated subsidiary) as of December 31, 2008 and for the period from May 15, 2008 to December 31, 2008. Such statements reflect total assets constituting 30.5% of consolidated total assets as of December 31, 2008 and total revenues constituting 18.7% of consolidated total revenues for the period May 15, 2008 to December 31, 2008, prior to the allocation of the Company’s purchase price to Ocean Rig ASA and subsidiaries’ net assets. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Ocean Rig ASA and subsidiaries, is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements present fairly, in all material respects, the financial position of DryShips Inc. and subsidiaries as of December 31, 2007 and 2008, and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.

The accompanying consolidated financial statements for the year ended December 31, 2008, have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company’s inability to comply with financial covenants under its current loan agreements as of December 31, 2008, difficulties in meeting its financing needs, its negative working capital position, and other matters discussed in Note 3 raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 1 to the consolidated financial statements, in 2008 the Company changed its method of accounting for dry-docking costs and retrospectively adjusted the 2007 consolidated financial statements to reflect the change.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 27, 2009, expressed an unqualified opinion on the Company’s internal control over financial reporting based on our audit.

/s/ Deloitte.

Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 27, 2009

F-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of DryShips Inc.

We have audited the internal control over financial reporting of DryShips Inc. and subsidiaries (the “Company”) as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in the Management’s Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Ocean Rig ASA and subsidiaries, which was acquired on May 14, 2008, and whose financial statements constitute 31.2% and 30.5% of consolidated net and total assets, respectively, as of December 31, 2008, and 18.7% of revenues of the consolidated financial statement amounts for the period May 15, 2008 to December 31, 2008. Accordingly, our audit did not include the internal control over financial reporting at Ocean Rig ASA and subsidiaries. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2008, of the Company and our report dated March 27, 2009, expressed an unqualified opinion on those financial statements and financial statement schedule and included explanatory paragraphs regarding substantial doubt about the Company’s ability to continue as a going concern and the Company’s change in accounting for dry-docking costs during 2008.

/s/ Deloitte.

Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 27, 2009

F-5

DRYSHIPS INC.

Consolidated Balance Sheets

As of December 31, 2007 and 2008

(Expressed in thousands of U.S. Dollars - except for share and per share data)

	2007 (as adjusted)		2008
	(Note 1 and 5)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	111,068	$	303,114
Restricted cash (Note 11)		6,791		320,560
Trade accounts receivable, net of allowance for doubtful receivables of $0 and $957 as of December 31, 2007 and 2008, respectively		9,185		52,441
Insurance claims		4,807		1,179
Due from related parties (Note 6)		9,963		17,696
Inventories		3,912		3,488
Financial instruments (Note 12)		—		779
Other current assets		7,309		21,170
Total current assets		153,035		720,427
FIXED ASSETS, NET:
Advances for vessels under construction and acquisitions (Note 7)		118,652		535,616
Vessels, net (Note 8)		1,643,867		2,134,650
Drilling rigs, machinery and equipment, net (Note 9)		—		1,393,158
Total fixed assets, net		1,762,519		4,063,424
OTHER NON-CURRENT ASSETS:
Long term investment (Note 10)		405,725		—
Restricted cash (Note 11)		20,000		—
Intangible assets, net (Note 10)		—		14,143
Above market acquired time charter		—		12,960
Other non-current assets (Note 12)		3,153		31,726
Total non-current assets, net		428,878		58,829
Total assets	$	2,344,432	$	4,842,680
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 11)	$	194,999	$	2,370,556
Accounts payable		7,166		17,122
Accrued liabilities		20,014		63,073
Deferred revenue		16,916		23,009
Financial instruments (Note 12)		—		44,795
Other current liabilities		209		6,493
Total current liabilities		239,304		2,525,048
NON-CURRENT LIABILITIES
Below market acquired time charter		32,509		28,006
Long term debt, net of current portion (Note 11)		1,048,779		788,314
Financial instruments (Note 12)		1,768		208,961
Other non-current liabilities		343		779
Total non-current liabilities		1,083,399		1,026,060
COMMITMENTS AND CONTINGENCIES (Note 17)		—		—
STOCKHOLDERS’ EQUITY:
Preferred stock, $ 0.01 par value; 30,000,000 and 500,000,000 shares authorized at December 31, 2007 and 2008 respectively, none issued or outstanding		—		—
Common stock, $ 0.01 par value; 75,000,000 and 1,000,000,000 shares authorized at December 31, 2007 and 2008 respectively; 36,681,097 and 70,600,000 shares issued and outstanding at December 31, 2007 and 2008, respectively		367		706
Accumulated other comprehensive loss		—		(44,847	)
Additional paid-in capital (Note 14)		454,538		1,148,365
Retained earnings		566,824		187,348
Total stockholders’ equity		1,021,729		1,291,572
Total liabilities and stockholders’ equity	$	2,344,432	$	4,842,680

The accompanying notes are an integral part of these consolidated financial statements.

F-6

DRYSHIPS INC.

Consolidated Statements of Income

December 31, 2006, 2007 and 2008

(Expressed in thousands of U.S. Dollars - except for share and per share data)

	2006 (as adjusted)			2007 (as adjusted)			2008
	(Note 1 and 5)			(Note 1 and 5)
REVENUES:
Voyage revenues	$	248,431		$	582,561		$	846,830
Voyage revenues-related party (Note 6)		—			—			14,466
Revenue from drilling contracts		—			—			219,406
		248,431			582,561			1,080,702
EXPENSES:
Loss on forward freight agreements (Note 12)		22,473			—			—
Voyage expenses (Note 18)		12,909			24,488			42,636
Voyage expenses – related party (Note 6)		3,056			7,159			10,536
Vessels’ operating expenses (Note 18)		54,164			63,225			79,662
Drilling rigs operating expenses		—			—			86,229
Depreciation and amortization		58,011			76,511			157,979
Gain on sale of vessels (Note 8)		(8,845	)		(137,694	)		(223,022	)
Gain on contract cancellation (Note 8)		—			—			(9,098	)
Contract termination fees and forfeiture of vessels deposits-related parties (Note 7)		—			—			160,000
Management fees—related party (Note 6)		6,609			9,579			21,129
Goodwill impairment charge (Note 10)		—			—			700,457
General and administrative expenses		2,737			3,664			25,193
General and administrative expenses – related party (Note 6)		3,194			3,829			43,036
Operating income/(loss)		94,123			531,800			(14,035	)
OTHER INCOME / (EXPENSES):
Interest and finance costs (Note 19)		(41,999	)		(50,617	)		(113,194	)
Interest and finance costs – related parties (Note 6)		(393	)		(614	)		—
Interest income		1,691			5,073			13,085
Gain/(loss) on interest rate swaps (Note 12)		676			(3,981	)		(207,936	)
Other, net (Note 6)		214			(3,037	)		(12,640	)
Total other (expenses), net		(39,811	)		(53,176	)		(320,685	)
INCOME/(LOSS) BEFORE INCOME TAXES, EQUITY IN LOSS OF INVESTEE AND MINORITY INTEREST		54,312			478,624			(334,720	)
Income taxes (Note 22)		—			—			(2,844	)
Equity in loss of investee		—			(299	)		(6,893	)
Minority interest		—			—			(16,825	)
Net income/(loss)		54,312			478,325			(361,282	)
EARNINGS/(LOSS) PER COMMON SHARE, BASIC AND DILUTED (Note 21)	$	1.68		$	13.40			(8.11	)
WEIGHTED AVERAGE NUMBER OF SHARES , BASIC AND DILUTED (Note 21)		32,348,194			35,700,182			44,598,585

The accompanying notes are an integral part of these consolidated financial statements

F-7

DRYSHIPS INC.

Consolidated Statements of Stockholders’ Equity

For the years ended December 31, 2006, 2007 and 2008

(Expressed in thousands of U.S. Dollars - except for share data)

						Additions	Accumulated Other				Total
	Comprehensive			Capital Stock		Paid-in	Comprehensive		Retained		Stockholders’
	Income/(loss)			# of Shares	Par Value	Capital	Loss		Earnings		Equity
BALANCE DECEMBER 31, 2005 (as reported)		—		30,350,000	304	264,600	—		91,597		356,501
Cumulative effect adjustment from change in accounting policy for dry-dockings	$	—		—	—	—	—		(3,781	)	(3,781	)
BALANCE, December 31, 2005 (as adjusted) (Note 1 and 5)				30,350,000	304	264,600	—		87,816		352,720
Net income		54,312		—	—	—			54,312		54,312
Issuance of common stock				4,650,000	46	56,444			—		56,490
Issuance of common stock to settle dividends				235,585	2	3,078			—		3,080
Issuance of common stock to settle liabilities				254,512	3	3,324			—		3,327
Dividends declared and paid ($0.80 per share)		—		—	—	—			(25,237	)	(25,237	)
Comprehensive income		54,312
BALANCE, December 31, 2006 (as adjusted) (Note 1 and 5)				35,490,097	355	327,446	—		116,891		444,692
Net income		478,325		—	—	—	—		478,325		478,325
Issuance of common stock				1,191,000	12	127,092	—				127,104
Dividends declared and paid ($0.80 per share)				—	—	—	—		(28,392	)	(28,392	)
Comprehensive income	$	478,325
BALANCE, December 31, 2007 (as adjusted) (Note 1 and 5)				36,681,097	367	454,538	—		566,824		1,021,729
Net loss		(361,282	)	—	—	—	—		(361,282	)	(361,282	)
Issuance of common stock				32,918,903	329	662,335	—		—		662,664
Issuance of restricted shares and amortization of stock based compensation				1,000,000	10	31,492	—		—		31,502
Unrealized loss on cash flow hedges		(46,548	)	—	—	—	(46,548	)	—		(46,548	)
Increase in minimum pension liability		1,701		—	—	—	1,701		—		1,701
Redeemable minority interest				—	—	—	—		15,050		15,050
Dividends declared and paid ($0.80 per share)				—	—	—	—		(33,244	)	(33,244	)
Comprehensive loss	$	(406,129	)
BALANCE, December 31, 2008				70,600,000	706	1,148,365	(44,847	)	187,348		1,291,572

F-8

DRYSHIPS INC.

Consolidated Statements of Cash Flows

For the years ended December 31, 2006, 2007 and 2008

(Expressed in thousands of U.S. Dollars)

	Year ended December 31,
	2006			2007			2008
	(as adjusted) Notes 1 and 5			(as adjusted) Notes 1 and 5
Cash Flows from Operating Activities:
Net income/(loss)	$	54,312		$	478,325		$	(361,282	)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation and amortization		58,011			76,511			157,979
Commitments fees on undrawn line of credit		—			—			2,855
Amortization, write-off of financing costs and premium paid over withdrawn loans		3,785			2,190			15,980
Amortization of fair value of acquired time charters		(2,967	)		(7,185	)		(34,638	)
Gain on sale of vessels		(8,845	)		(137,694	)		(223,022	)
Gain on contract cancellation		—			—			(9,098	)
Goodwill impairment charge		—			—			700,457
Forfeiture of advances for vessel acquisitions		—			—			55,000
Amortization of stock based compensation		—			—			31,502
Change in fair value of derivatives		1,910			128			204,964
Payment of margin call for derivatives		—			—			(31,600	)
Interest on credit facility from related parties		77			—			—
Minority interest		—			—			16,825
Equity in loss of investee		—			299			6,893
Amortization of free lubricants benefit		(119	)		(257	)		(276	)
Changes in operating assets and liabilities:
Trade accounts receivable		2,327			(6,303	)		23
Insurance claims		(564	)		(7,296	)		(994	)
Due from related parties		(3,353	)		(6,610	)		(2,770	)
Inventories		(1,245	)		(1,341	)		462
Other current assets		(2,232	)		(1,741	)		965
Accounts payable		2,944			(4,257	)		556
Due to related parties		(6,374	)		(86	)		—
Other current liabilities		—			—			(847	)
Accrued liabilities		(203	)		13,017			10,770
Deferred revenues		1,618			10,199			(575	)
Net Cash Provided by Operating Activities		99,082			407,899			540,129
Cash Flows from Investing Activities:
Insurance proceeds		—			3,160			4,622
Business acquisitions, net of cash acquired		—			(406,024	)		(991,306	)
Advances for vessel acquisitions / rigs under construction		(27,380	)		(105,242	)		(507,322	)
Advances for rigs under construction – related party		—			—			(4,963	)
Vessel acquisitions and improvements		(270,993	)		(799,456	)		(742,844	)
Drilling rigs, equipment and other improvements		—			—			(16,584	)
Proceeds from sale of vessels		10,861			351,813			410,204
Restricted cash		—			—			(262,659	)
Net Cash Used in Investing Activities		(287,512	)		(955,749	)		(2,110,852	)
Cash Flows from Financing Activities:
Restricted cash		(2,563	)		(177	)		—
Advances to Baumarine Pool		(591	)		—			—
Proceeds from long-term credit facility		706,875			787,298			2,443,987
Proceeds from short-term credit facility		95,337			73,476			430,926
Payment of short-term credit facility		(70,337	)		(68,400	)		(793,416	)
Principal payments and repayments of long-term debt		(573,612	)		(228,278	)		(914,347	)
Net proceeds from common stock issuance		56,490			127,104			662,664
Dividends paid		(22,157	)		(28,392	)		(33,244	)
Payment of financing costs		(3,659	)		(6,250	)		(33,801	)
Net Cash Provided by Financing Activities		185,783			656,381			1,762,769
Net increase in cash and cash equivalents		(2,647	)		108,531			192,046
Cash and cash equivalents at beginning of period		5,184			2,537			111,068
Cash and cash equivalents at the end of the period	$	2,537		$	111,068		$	303,114
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	39,321		$	47,342		$	98,968
Income taxes		—			—			2,566
Non cash financing and investing activities:
Issuance of restricted stock		—			—			10
Settlement of Sellers’ credit in Company’s common stock		(3,327	)		—			—
Settlement of dividends in Company’s common stock		(3,080	)		—			—
Fair value of below market charter acquired		(11,492	)		(38,687	)		—
Amounts owed for capital expenditures		—			(671	)		—

The accompanying notes are an integral part of these consolidated financial statements.

F-9

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

1. Basis of Presentation and General Information:

The accompanying consolidated financial statements include the accounts of DryShips Inc. and its subsidiaries (collectively, the “Company” or “DryShips”). DryShips was formed on September 9, 2004, under the laws of the Marshall Islands. On October 18, 2004, all of the outstanding shares of the vessel owning companies listed under 1 through 6 in the table below (collectively, the “Contributed Companies”), were contributed to the Company through the Entrepreneurial Spirit Foundation (the “Foundation”), a family foundation of Vaduz, Liechtenstein. The Company’s Chief Executive Officer, Mr. George Economou and members of his immediate family (the “Family”) control and are beneficiaries of the Foundation. The transaction described above constituted a reorganization of companies under common control, and has been accounted for in a manner similar to a pooling of interests. The Contributed Companies are presented at historical cost as the control of the Contributed Companies before and after the reorganization was with the Family.

In February 2005 the Company completed its initial public offering in the United States under the United States Securities Act of 1933. After the consummation of its initial public offering and through December 31, 2005, the Company took delivery of twenty-one secondhand drybulk carrier vessels, through newly established wholly owned subsidiaries.

During 2006 the Company (a) took delivery of eight secondhand drybulk carrier vessels through newly established wholly owned subsidiaries; (b) concluded the sale of five drybulk carrier vessels of which one was delivered to her new owners in 2006 while four were delivered in January 2007; (c) concluded agreements to purchase three secondhand drybulk carriers which were delivered in the first, second and third quarters of 2007; and (d) concluded two contracts for the construction of two drybulk carrier vessels with expected delivery dates in the fourth quarter of 2009 and the first quarter of 2010, respectively.

During 2007 the Company (a) took delivery of fifteen secondhand drybulk carrier vessels through newly established consolidated subsidiaries; (b) concluded the sale of eleven drybulk carrier vessels of which four were contracted during 2006 and two contracted during 2007, which were delivered in the first and the second quarter of 2008; (c) concluded agreements to purchase three secondhand drybulk carriers which were delivered in during the first and second quarter of 2008, respectively; (d) concluded six contracts for the construction of six drybulk carrier newbuildings which were delivered in the second quarter of 2008 and are expected to be delivered in the second quarter of 2010; and (e) acquired 51,778,647 shares in Ocean Rig ASA (“Ocean Rig”) which represented 30.4% of the issued shares in Ocean Rig.

During 2008 the Company (a) took delivery of six secondhand drybulk carrier vessels and one newbuilding, through newly established wholly owned subsidiaries; (b) concluded the sale of seven drybulk carrier vessels, of which two were contracted during 2007 and five were contracted during 2008; (c) contracted for the sale of five vessels during 2008; however two of the agreements were cancelled during 2008 and another two during 2009; (d) concluded an agreement to purchase one secondhand drybulk carrier which was cancelled in 2009; (e) entered into fourteen contracts including the construction of eight drybulk carrier newbuildings (six Capesize and two Panamax) with expected delivery dates between the first quarter of 2009 and third quarter of 2010, (f) exercised an option for the acquisition of two drillships with expected delivery dates between the fourth quarter of 2010 and third quarter of 2011; (g) entered into contacts to acquire two newbuildings ultra deep water drilling rigs identified as Hulls 1837 and 1838 and (h) acquired the remaining issued and outstanding shares of Ocean Rig to increase the Company’s ownership to 100% during 2008. The Company is engaged in the ocean transportation services of drybulk cargoes worldwide through the ownership and operation of the drybulk carrier vessels and deepwater drilling rig services through the ownership of ultra deep water drilling rigs.

F-10

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

The Company’s consolidated subsidiaries and contracted future acquisitions as of December 31, 2008, are listed below:

	Ship-owning Companies with vessels in operations at December 31, 2008	Country of Incorporation	Vessel
1.	Malvina Shipping Company Limited (“Malvina”)	Malta	Coronado
2.	Arleta Navigation Company Limited (“Arleta”)	Malta	Xanadu
3.	Selma Shipping Company Limited (“Selma”)	Malta	La Jolla
4.	Samsara Shipping Company Limited (“Samsara”)	Malta	Ocean Crystal
5.	Lansat Shipping Company Limited (“Lansat”)	Malta	Paragon
6.	Farat Shipping Company Limited (“Farat”)	Malta	Toro
7.	Iguana Shipping Company Limited (“Iguana”)	Malta	Iguana
8.	Borsari Shipping Company Limited (“Borsari”)	Malta	Catalina
9.	Onil Shipping Company Limited (“Onil”)	Malta	Padre
10.	Fabiana Navigation Company Limited (“Fabiana Navigation”)	Malta	Alameda
11.	Karmen Shipping Company Limited (“Karmen”)	Malta	Sonoma
12.	Thelma Shipping Company Limited (“Thelma”)	Malta	Manasota
13.	Celine Shipping Company Limited (“Celine”)	Malta	Mendocino
14.	Lotis Traders Inc.(“Lotis”)	Marshall Islands	Delray
15.	Tempo Marine Co. (“Tempo”)	Marshall Islands	Maganari
16.	Star Record Owning Company Limited (‘Star”)	Marshall Islands	Ligari
17.	Argo Owning Company Limited (“Argo”)	Marshall Islands	Redondo
18.	Rea Owning Company Limited (“Rea”)	Marshall Islands	Ecola
19.	Gaia Owning Company Limited (“Gaia”)	Marshall Islands	Samsara
20.	Kronos Owning Company Limited (“Kronos”)	Marshall Islands	Primera
21.	Trojan Maritime Co. (“Trojan”)	Marshall Islands	Brisbane
22.	Dione Owning Company Limited (“Dione”)	Marshall Islands	Marbella
23.	Phoebe Owning Company Limited (“Phoebe”)	Marshall Islands	Majorca
24.	Uranus Owning Company Limited (“Uranus”)	Marshall Islands	Heinrich Oldendorff
25.	Selene Owning Company Limited (“Selene”)	Marshall Islands	Bargara
26.	Tethys Owning Company Limited (“Tethys”)	Marshall Islands	Capitola
27.	Ioli Owning Company Limited (“Ioli”)	Marshall Islands	Paros I (ex Clipper Gemini)
28.	Iason Owning Company Limited (“Iason”)	Marshall Islands	Oregon
29.	Orpheus Owning Company Limited (“Orpheus”)	Marshall Islands	Avoca (Note 8)
30.	Team up Owning Company Limited (“Team-up”)	Marshall Islands	Saldanha
31.	Iokasti Owning Company Limited (“Iokasti”)	Marshall Islands	Pachino (ex VOC Galaxy)
32.	Boone Star Owners Inc. (“Boone”)	Marshall Islands	Samatan
33.	Norwalk Star Owners Inc. (“Norwalk”)	Marshall Islands	Capri (Note 8)
34.	Ionian Traders Inc.(“Ionian”)	Marshall Islands	Positano (Note 8)
35.	NT LLC Investors Ltd. (“NT”)	Marshall Islands	Conquistador (Note 8)
36.	Dalian Star Owners Inc. (“Dalian”)	Marshall Islands	Mystic (Note 8)
37.	Aegean Traders Inc. (“Aegean”)	Marshall Islands	Sorrento (Note 8)
38.	Cretan Traders Inc. (“Cretan”)	Marshall Islands	Flecha (Note 8)
	Ship-owning Companies with vessels under construction	Country of Incorporation	Vessel
39.	Roscoe Marine Ltd. (“Roscoe”)	Marshall Islands	Hull 1518A
40.	Monteagle Shipping S.A. (“Monteagle”)	Marshall Islands	Hull 1519A
41.	Iktinos Owning Company Limited (“Iktinos”)	Marshall Islands	Hull SS058
42.	Kallikrates Owning Company Limited (“Kallikrates”)	Marshall Islands	Hull SS059
43.	Faedon Owning Company Limited (“Faedon”)	Marshall Islands	Hull 2089
44.	Mensa Enterprises Inc. (“Mensa”)	Marshall Islands	Hull 0002 (Note 23)
45.	Mandarin Shipholding Co. (“Mandarin”)	Marshall Islands	Hull 0003 (Note 23)
46.	Belulu Limited (“Belulu”)	Marshall Islands	Hull 1128 (Note 23)
47.	Drillship Kithira Owners Inc. (“Kithira”)	Marshall Islands	Drillship Hull 1865
48.	Drillship Skopelos Owners Inc. (“Skopelos”)	Marshall Islands	Drillship Hull 1866

F-11

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

1. Basis of Presentation and General Information-(continued):

	Ship-owning Companies with vessels sold	Country of Incorporation	Vessel
49.	Tolan Shipping Company Limited(“Tonga”)	Malta	Tonga (sold-Nov 2008) (Note 8)
50.	Thassos Traders Inc.(“Thassos”)	Marshall Islands	Sidari (cancelled Dec 08)(Note 8)
51.	Milos Traders Inc. (“Milos”)	Marshall Islands	Petani (cancelled Dec 08)(Note 8)
52.	Sifnos Traders Inc(“Sifnos”)	Marshall Islands	Hull 1568A(cancelled Dec 08)(Note 8)
53.	Tinos Traders Inc (“Tinos”)	Marshall Islands	Hull 1569A(cancelled Dec 08)(Note 8)
54.	Felicia Navigation Company Limited ) (“Felicia”)	Malta	Solana (sold - August 2008) (Note 8)
55.	Zatac Shipping Company Limited (“Zatac”)	Malta	Waikiki (sold – July 2008) (Note 8)
56.	Atlas Owning Company Limited (“Atlas”)	Marshall Islands	Menorca (sold-June 2008) (Note 8)
57.	Maternal Owning Company Limited (“Maternal”)	Marshall Islands	Lanzarote (sold-June 2008) (Note 8)
58.	Royerton Shipping Company Limited (“Royerton”)	Malta	Netadola (sold- April 2008) (Note 8)
59.	Lancat Shipping Company Limited (“Lancat”)	Malta	Matira (sold – February 2008) (Note 8)
60.	Paternal Owning Company Limited (“Paternal”)	Marshall Islands	Formentera (sold – December 2007)
61.	Fago Shipping Company Limited (“Fago”)	Malta	Lanikai (sold –July 2007)
62.	Hydrogen Shipping Company Limited (“Hydrogen”)	Malta	Mostoles (sold - July 2007)
63.	Madras Shipping Company Limited (“Madras”)	Malta	Alona (sold – June 2007)
64.	Seaventure Shipping Limited (“Seaventure”)	Marshall Islands	Hille Oldendorff (sold June 2007)
65.	Classical Owning Company Limited (“Classical”)	Marshall Islands	Delray (sold – May 2007)
66.	Oxygen Shipping Company Limited (“Oxygen”)	Malta	Shibumi (sold – April 2007)
67.	Human Owning Company Limited (“Human”)	Marshall Islands	Estepona (sold – April 2007)
68.	Helium Shipping Company Limited (“Helium”)	Malta	Striggla (sold – January 2007)
69.	Blueberry Shipping Company Limited (“ Blueberry ”)	Malta	Panormos (sold – January 2007)
70.	Platan Shipping Company Limited (“Platan”)	Malta	Daytona (sold – January 2007)
71.	Silicon Shipping Company Limited (“Silicon”)	Malta	Flecha (sold – December 2006)
72.	Annapolis Shipping Company (“Annapolis”)	Malta	Lacerta
	Ocean Rig Subsidiaries
73.	Ocean Rig ASA	Norway
74.	Ocean Rig Norway AS	Norway
75.	Ocean Rig AS	Norway
76.	Ocean Rig UK Ltd	UK
77.	Ocean Rig Ltd	UK
78.	Ocean Rig Ghana Ltd	Ghana
79.	Ocean Rig USA AS	Norway
80.	Ocean Rig USA LLC	USA
81.	Ocean Rig 1 AS	Norway
82.	Ocean Rig 2 AS	Norway
83.	Ocean Rig Canada Inc.	Canada
84.	Ocean Rig North Sea AS	Norway
85.	Ocean Rig 1 Inc.	Marshall Islands
86.	Ocean Rig 2 Inc.	Marshall Islands
	Contracted future acquisitions
87.	Drillship Hydra Owners Inc (“Hydra”)	Marshall Islands	Drillship Hull 1837 (Note 6)
88.	Drillship Paros Owners Inc.(“Paros”)	Marshall Islands	Drillship Hull 1838 (Note 6)
89.	Callicles Challenge Inc. (“Callicles”)	Marshall Islands	Hull 1154 (Note 23)
90.	Antiphon Challenge Inc. (“Antiphon”)	Marshall Islands	Hull 1155 (Note 23)
91.	Cratylus Challenge Inc. (“Cratylus”)	Marshall Islands	Hull 1129 (Note 23)
92.	Protagoras Challenge Inc. (“Protagoras”)	Marshall Islands	Hull 1119 (Note 23)
93.	Lycophron Challenge Inc. (“Lycophron”)	Marshall Islands	Hull 1106 (Note 23)
94.	Thrasymachus Challenge Inc. (“Thrasymachus”)	Panama	Morgiana (Note 23)
95.	Hippias Challenge Inc. (“Hippias”)	Liberia	Fernandina (Note 23)
96.	Prodigus Challenge Inc. (“Prodigus”)	Marshall Islands	Pompano (Note 23)
97.	Gorgias Challenge Inc. (“Gorgias”)	Marshall Islands	Ventura (Note 23)
98.	Kerkyra Traders Inc. (“Kerkyra”)	Marshall Islands	Petalidi (Note 8)
	Other companies		Activity
99.	Wealth Management Inc. (“Wealth”)	Marshall Islands	Cash Manager
100.	Primelead Limited (“Primelead”)	Cyprus	Investment Company
101.	Primelead Shareholders Inc.	Marshall Islands	Investment Company

F-12

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

1. Basis of Presentation and General Information-(continued):

Acquisition of Ocean Rig ASA and its consolidated subsidiaries (collectively as “Ocean Rig”)

As of December 31, 2007 the Company held 51,778,647 shares in Ocean Rig ASA (“Ocean Rig”) which represented 30.4% of its issued shares of Ocean Rig and was accounted for under the equity method. Following the acquisition of additional shares of Ocean Rig during the second quarter of 2008 and the mandatory tender offer for all the remaining outstanding shares in Ocean Rig discussed in Note 10 below, the Company held 100% of the outstanding shares of Ocean Rig as of December 31, 2008. Therefore, Ocean Rig is a fully consolidated subsidiary at December 31, 2008.

Major Customers

Charterers individually accounting for more than 10% of the Company’s voyage revenues and drilling rig revenues during the years ended December 31, 2006, 2007 and 2008 were as follows:

	Year ended December 31,
Charterer	2006		2007	2008
Oldendorff Carriers Gmbh	13	%	—	—
Cargill International Ltd.	—		—	16	%
Shell	—		—	10	%

In addition, 25%, 12% and 6% of the Company’s voyage revenues during the years ended December 31, 2006, 2007 and 2008, respectively, were derived from the participation of certain of the Company’s vessels in a drybulk pool.

The Company’s Manager

The operations of the Company’s vessels are managed by Cardiff Marine Inc. (the “Manager”), a related party entity incorporated in Liberia. The Manager also acts as the Company’s charter and sales and purchase broker. The majority shareholding (70%) of the Manager is owned by the Foundation. As discussed above, the Company’s Chief Executive Officer, Mr. George Economou and members of his immediate family control and are beneficiaries of the Foundation. The other 30% shareholding of the Manager is held by Prestige Finance S.A., a Liberian corporation, which is wholly owned by the sister of the Company’s Chief Executive Officer, who is also a director of the Company.

F-13

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

1. Basis of Presentation and General Information-(continued):

Change in Accounting Policy

During the first quarter of 2008, the Company decided to change the method of accounting for dry-docking costs from the deferral method, under which costs associated with dry-docking a vessel are deferred and charged to expenses over the period to a vessel’s next scheduled dry-docking, to the direct expense method, under which the dry-docking costs are expensed as incurred. Management considers this a preferable method since it eliminates the subjectivity and significant amount of time that is needed in determining which costs related to dry-docking activities should be deferred and amortized over a future period.

This change was effected in the accompanying consolidated financial statements in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 154, “Accounting Changes and Error Corrections”, which requires that a change in accounting policy should be retrospectively applied to all prior periods presented. Accordingly, the previously reported financial information has been adjusted for all prior periods presented to account for this change in the method of accounting for dry-docking costs. (Note 5)

2. Significant Accounting Policies:

(a) Principles of Consolidation: The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and include the accounts and operating results of DryShips Inc. and its wholly-owned subsidiaries referred to in Note 1 above. Intercompany balances and transactions have been eliminated on consolidation.

(b) Equity method investments: Investments in entities that the Company does not control, but has the ability to exercise significant influence over the operating and financial policies, are accounted for using the equity method. The Company’s ownership interest is recorded in “Long term investment” in the consolidated balance sheets. Earnings or losses from equity method investments are recorded in “Equity in loss of investees” in the accompanying consolidated statements of income.

(c) Business Combinations: In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations”, the purchase price of acquired businesses or properties is allocated to tangible and identified intangible assets and liabilities based on their respective fair values. The excess of the purchase price over the respective fair value of net assets acquired is recorded as goodwill. Costs incurred in relation to pursuing any business acquisition are capitalized when they are directly related to the business acquisition and the acquisition is probable. Acquisition costs also include fees paid to bankers in connection with obtaining related financing. Such financing costs are an element of the effective interest cost of the debt; therefore they are classified as a contra to debt upon the business combination and the receipt of the related debt proceeds and are amortized using the effective interest method through the term of the respective debt.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies-Recent-(continued):

(d) Goodwill and intangible assets: Goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired. Goodwill is reviewed for impairment whenever events or circumstances indicate possible impairment in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets”. This statement requires that goodwill and other intangible assets with an indefinite life not be amortized but instead tested for impairment at least annually. The Company tests for impairment each year on December 31.

F-14

The Company tests goodwill at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The impairment of goodwill is tested by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of the impairment loss, if any. For the year ended December 31, 2008, the Company concluded that the goodwill relating to its drilling rig reporting unit was impaired (Note 10). To determine the fair value of each reporting unit, the Company uses a combination of generally accepted valuation methodologies, including both income and market approaches. For its drilling rig reporting unit, the Company estimates the fair market value using estimated discounted cash flows and publicly traded company multiples. The Company discounts projected cash flows using a long-term weighted average cost of capital, which is based on the Company’s estimate of the investment returns that market participants would require for each of its reporting units. To develop the projected cash flows associated with the Company’s drilling rig reporting unit, which are based on estimated future utilization and dayrates, the Company considers key factors that include assumptions regarding future commodity prices, credit market uncertainties and the effect these factors may have on the Company’s contract drilling operations and the capital expenditure budgets of its customers. The Company derives publicly traded company multiples for companies with operations similar to the Company’s reporting units using information on shares traded on stock exchanges and, when they are available, from analyses of recent acquisitions in the marketplace. For the Company’s drilling rig reporting unit, the Company estimates fair market value using estimated discounted cash flows based on assumptions for future commodity prices, projected demand for its services, rig availability and dayrates.

The Company’s finite-lived acquired intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: Trade names, 10 years; Software, 10 years; and fair value of below and above market acquired time charters, over the life of the associated contract. The finite-lived intangibles are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of any asset may not be recoverable based on estimates of future undiscounted cash flows. In the event of impairment, the asset is written down to its fair market value. An impairment charge, if any, is measured as the amount by which the carrying amount of the asset exceeds its fair value.

(e) Use of Estimates: The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies Recent-(continued):

(f) Other Comprehensive Income/(Loss): The Company follows the provisions of SFAS No. 130, “Reporting Comprehensive Income/(Loss)”, which requires separate presentation of certain transactions, which are recorded directly as components of stockholders’ equity. For the years ended December 31, 2006, and 2007 the Company had no such transactions which affected comprehensive income and, accordingly, comprehensive income equals net income for all periods presented. As of December 31, 2008 the Company had Other Comprehensive Loss of $46,548 relating to the change of the fair value at derivatives that qualify for hedge accounting and Other Comprehensive Income of $1,701 relating to the increase in minimum pension liability.

F-15

(g) Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.

(h) Restricted Cash: Restricted cash includes bank deposits that are required under the Company’s borrowing arrangements which are used to fund the loan installments coming due and minimum liquidity required under the loan agreements. The funds can only be used for the purposes of loan repayment.

(i) Concentration of Credit Risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents trade accounts receivable and derivative contracts (interest rate swaps, foreign currency contracts and forward freight agreements). The Company places its cash and cash equivalents, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions. The Company is exposed to credit risk in the event of non-performance by counter parties to derivative instruments; however, the Company limits its exposure by diversifying among counter parties with high credit ratings. The Company limits its credit risk with trade accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its trade accounts receivable.

(j) Foreign Currency Translation: The functional currency of the Company is the U.S. Dollar since the Company’s vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Company’s books of accounts are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies, are translated into U.S. Dollars at the year-end exchange rates. Resulting gains or losses are included in “General and administrative expenses” in the accompanying consolidated statements of income.

(k) Trade Accounts Receivable: The amount shown as accounts receivable, trade, at each balance sheet date, includes receivables from charterers for hire of vessels and drilling rigs, freight and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts at December 31, 2007 and 2008 totalled $0 and $957, respectively, and are summarized as follows:

Balance December 31, 2007	$	0
Additions		957
Balance December 31, 2008	$	957

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies- (continued):

(l) Insurance Claims: The Company records insurance claim recoveries for insured losses incurred on damage to fixed assets and for insured crew medical expenses. Insurance claim recoveries are recorded, net of any deductible amounts, at the time the Company’s fixed assets suffer insured damages or when crew medical expenses are incurred, recovery is probable under the related insurance policies, and the claim is not subject to litigation.

(m) Inventories: Inventories consist of consumable bunkers (if any), lubricants and victualling stores, which are stated at the lower of cost or market value. Cost is determined by the first in, first out method.

F-16

(n) Fixed Assets, Net: Drybulk Carrier vessels are stated at cost, which consists of the contract price and any material expenses incurred upon acquisition (initial repairs, improvements, delivery expenses and other expenditures to prepare the vessel for its initial voyage). Subsequent expenditures for major improvements are also capitalized when they appreciably extend the useful life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise these amounts are charged to expense as incurred. The cost of each of the Company’s vessels is depreciated beginning when the vessel is ready for its intended use, on a straight-line basis over the vessel’s remaining economic useful life, after considering the estimated residual value. Vessel’s residual value is equal to the product of its lightweight tonnage and estimated scrap rate per ton. With the exception of the vessel Tonga, management estimates the useful life of the Company’s vessels to be 25 years from the date of initial delivery from the shipyard. The useful life of the vessel Tonga is estimated to be 26 years, which coincides with the validity of the class certificate. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted.

(ii) Drilling rigs are stated at cost less accumulated depreciation. Such costs include the cost of adding/replacing parts of drilling rig machinery and equipment when that cost is incurred if the recognition criteria are met. The recognition criteria require that the cost incurred extends the useful life of a drilling rig. The carrying amounts of those parts that are replaced are written off and the cost of the new parts are capitalised. Depreciation is calculated on a straight-straight- line basis over the useful life of the assets as follows: baredeck 30 years and other asset parts 5-15 years.

(iii) Drilling rig machinery and equipment, IT and office equipment, are recorded at cost and is depreciated on a straight-line basis over the estimated useful lives.

(o) Long lived assets held for sale: It is the Company's policy to dispose of long lived assets when suitable opportunities occur and not necessarily to keep them until the end of their useful life. The Company classifies long lived assets as being held for sale when: management has committed to a plan to sell the long lived assets; the long lived assets are available for immediate sale in their present condition; an active program to locate a buyer and other actions required to complete the plan to sell the long lived assets have been initiated; the sale of the long lived assets is probable and transfer of the asset is expected to qualify for recognition as a completed sale within one year; the long lived assets are being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Long lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These long lived assets are not depreciated once they meet the criteria to be classified as held for sale.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies - (continued):

(o) Long lived assets held for sale - continued:

When the Company concludes a Memorandum of Agreement for the disposal of a vessel/rig which has still to complete a time charter contract, it is considered that the held for sale criteria discussed under SFAS No. 144, paragraph 30 are not met until the time charter contract has been completed. As a result, such vessels/rigs are classified as held for sale.

When the Company concludes a Memorandum of Agreement for the disposal of a vessel/rig which has no time charter contract to complete, it is considered that the held for sale criteria discussed under SFAS No 144 paragraph 30 are met. As a result such vessels/rigs are classified as held for sale.

Furthermore, in the period a long-lived asset meets the held for sale criteria of SFAS 144, a loss is recognized for any reduction of the long-lived asset’s carrying amount to its fair value less cost to sell. No such adjustments were identified for the years ended December 31, 2006, 2007 and 2008. (Note 8)

F-17

(p) Fair value of above/below market acquired time charter: Where the Company identifies any assets or liabilities associated with the acquisition of a vessel or drilling rigs the Company records all such identified assets or liabilities at fair value. Fair value is determined by reference to market data. The Company values any asset or liability arising from the market value of the time charters assumed when a vessel and/or rig is acquired. The amount to be recorded as an asset or liability at the date of delivery of a vessel or drilling rig is based on the difference between the current fair values of a charter with similar characteristics as the time charter assumed and the net present value of future contractual cash flows from the time charter contract assumed. When the present value of the time charter assumed is greater than the current fair value of such charter, the difference is recorded as “Fair value of above market acquired time charter”. When the opposite situation occurs, the difference is recorded as “Fair value of below market acquired time charter” (“Deferred revenue” in 2006). Such assets and liabilities are amortized as a reduction of, or an increase in revenue, respectively over the period of the time charter assumed.

(q) Impairment of Long-Lived Assets: The Company follows SFAS 144, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company evaluates the asset for an impairment charge. Measurement of the impairment charge is based on the fair value of the asset. In this respect, management regularly reviews the carrying amount of the vessels, rigs and intangible assets in comparison with the fair value of the asset for each of the Company’s vessels, rigs and intangibles. The Company reviews its vessels, rigs and intangible assets for impairment on an asset by asset basis when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. No impairment charges were recorded in the years ended December 31, 2006 and 2007.

At December 31, 2008, the Company performed an impairment review of the Company’s long-lived and intangible assets due to the global economic downturn and the prevailing conditions in the shipping industry. The Company compared undiscounted cash flows to the carrying values for the Company’s long-lived and intangible assets to determine if the assets were impaired. Significant management judgment is required in forecasting future operating results, used in this method. These estimates are consistent with the plans and forecasts used by management to conduct its business. As a result of this analysis, no assets were considered to be impaired and the Company has not recognized any impairment charge for any long-lived or intangible assets for the year ended December 31, 2008.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies - (continued):

(r) Accounting for Dry-docking Costs:

(i) Drybulk Carrier vessels: During the first quarter of 2008, the Company changed the method of accounting for dry-docking costs from the deferral method to the direct expense method whereby costs are expensed in the period incurred. This change was effected in the accompanying consolidated financial statements in accordance with FASB Statement No. 154 “Accounting Changes and Error Corrections”, which requires that a change in accounting policy should be retrospectively applied to all prior periods presented, unless it is impractical to determine the prior period impacts. Please also refer to Notes 1 and 5.

(ii) Drilling rigs: The Company follows the direct expense method of accounting for dry-docking costs whereby costs are expensed in the period incurred.

(s) Financing Costs: Fees paid to lenders or required to be paid to third parties on the lender’s behalf for obtaining new loans or refinancing existing ones are recorded as deferred charges and classified contra to debt. Such fees are deferred and amortized to interest and finance costs over the life of the related debt

F-18

using the effective interest method. Unamortized fees relating to loans repaid or refinanced as debt extinguishments are expensed as interest and finance costs in the period the repayment or extinguishment is made.

(t) Accounting for Revenue and Related Expenses:

(i) Drybulk Carrier vessels:

Time and bareboat charters: The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered using time and bareboat charters and where a contract exists, the price is fixed, service is provided and collection of the related revenue is reasonably assured, revenue is recognized as it is earned ratably on a straight-line basis over the duration of the period of each time charter as adjusted for the off-hire days that the vessel spends undergoing repairs, maintenance and upgrade work depending on the condition and specification of the vessel. Deferred revenue includes cash received prior to the balance sheet date and is related to revenue earned after such date.

Pooling Arrangement: For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula, which is determined by points awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics. Revenue under pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and the collectability is reasonably assured.

The allocation of such net revenue may be subject to future adjustments by the pool however, historically, such changes have not been material.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies - (continued):

Voyage related and vessel operating costs: Voyage related and vessel operating costs are expensed as incurred. Under a time charter, specified voyage costs, such as fuel and port charges are paid by the charterer and other non-specified voyage expenses, such as commissions, are paid by the Company. Vessel operating costs including crews, maintenance and insurance are paid by the Company. Under a bareboat charter, the charterer assumes responsibility for all voyage and vessel operating expenses and risk of operation.

(t) Accounting for Revenue and Related Expenses - continued:

(ii) Drilling Rigs: The majority of revenues are derived from contracts including day rate based compensation for drilling services. In connection with drilling contracts the Company may receive revenues for preparation and mobilization of equipment and personnel or for capital improvements to the drilling rigs and day rate or fixed price mobilization and demobilization fees. For each contract the Company determines whether the contract, for accounting purposes, is a multiple element arrangement and, if so, identifies all deliverables (elements).

For each element the Company determines how and when to recognize revenue. There are two types of drilling contracts: well contracts and term contracts.

• Well contracts: These are contracts where the assignment is to drill a certain number of wells. Revenue from day rate based compensation for drilling operations is recognized in the period during which the services are rendered at the rates

F-19

established in the contracts. Mobilization fees, expenses and contributions from customers for capital improvements are recognized over the estimated duration of the drilling period. Demobilization fees and expenses are recognized over the demobilization period.

• Term contracts: These are contracts where the assignment is to operate the unit for a specified period of time. For these types of contracts the Company determines whether the arrangement is a multiple element arrangement containing both a lease element and drilling services element. For revenues derived from contracts that contain a lease, the lease elements are recognized in the income statement on a straight line basis, taking into consideration the different day rates, utilization and transit between locations that are anticipated to take place in the lease period. The drilling services element is recognized in the period in which the services are rendered at rates at fair value. Revenues related to mobilization and direct incremental expenses of mobilization are deferred and recognized over the estimated duration of the drilling contracts. To the extent that expenses exceed revenue to be recognized, it is expensed as incurred. Demobilization fees and expenses are recognized over the demobilization period.

(u) Earnings/(loss) per Common Share: Basic earnings per common share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the year. Diluted earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised.

The Company had no dilutive securities during the years ended December 31, 2006 and 2007. On March 5, 2008, the Company granted to a related party 1,000,000 non vested restricted shares which are to be vested quarterly in eight equal installments (Note 6). Furthermore, on October 2, 2008 the Company granted to the non-executive directors a total of 9,000 non-vested restricted shares are to be vested annually in three equal installments. The effect of these grants is anti-dilutive for the year ended December 31, 2008, as the Company had a loss from continuing operations.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies - (continued):

(v) Segment Reporting: SFAS No. 131 “Disclosure about Segments of an Enterprise and Related Information” requires disclosure of descriptive information about the Company’s reportable operating segments. The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. The Company does not have discrete financial information to evaluate the operating results for each such time charter. Although revenue can be identified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating officer reviews results solely by revenue per day and operating results of the drybulk carrier and drilling rig fleets. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and as a result, the disclosure of geographic information is impracticable. The Company’s acquisition of Ocean Rig during 2008 has resulted in the Company determining that it operates under two reportable segments, as a provider of drybulk commodities for the steel, electric utility, construction and agri-food industries (Drybulk carrier segment) and as a provider of ultra deep water drilling rig services (Drilling rig segment). The accounting policies applied to the reportable segments is the same as those used in the preparation of the Company’s consolidated financial statements.

(w) Financial Instruments: The Company designates its derivatives based upon SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities (“SFAS No 133”) which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS 133, as amended by SFAS No 138 “Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB

F-20

Statement No 133” and SFAS No.149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”, requires all derivative instruments to be recorded on the balance sheet as either an asset or liability measured at its fair value, with changes in fair value recognized in earnings unless specific hedge accounting criteria are met.

(i) Hedge Accounting: At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy undertaken for the hedge. The documentation includes identification of the hedging instrument, hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting exposure to changes in the hedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine whether they actually have been highly effective throughout the financial reporting periods for which they were designated.

The Company is party to interest swap agreements where it receives a floating interest rate and pays a fixed interest rate for a certain period in exchange. Contracts which meet the strict criteria for hedge accounting are accounted for as cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability, or a highly probable forecasted transaction that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognized directly as a component of Other comprehensive income in equity, while any ineffective portion, if any, is recognized immediately in current period earnings.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies - (continued):

(w) Financial Instruments - (continued): The Company discontinues cash flow hedge accounting if the hedging instrument expires and it no longer meets the criteria for hedge accounting or designation is revoked by the Company. At that time, any cumulative gain or loss on the hedging instrument recognized in equity is kept in equity until the forecasted transaction occurs. When the forecasted transaction occurs, any cumulative gain or loss on the hedging instrument is recognized in profit or loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in equity is transferred to net profit or loss for the year as financial income or expense.

(ii) Other Derivatives: Changes in the fair value of derivative instruments that have not been designated as hedging instruments are reported in current period earnings.

(iii) Counter Party Risk: The off-balance sheet risk in outstanding derivative agreements involves the risk of a counter party not performing under the terms of the contract. The Company monitors its positions, the credit ratings of counterparties and the level of contracts it enters into with any one party. The Company has a policy of entering into contracts with parties that meet stringent qualifications and, given the high level of credit quality of its derivative counterparties, the Company does not believe it is necessary to obtain collateral.

(x) SFAS 157 “Fair Value Measurements”: Effective January 1, 2008, the Company adopted SFAS No 157 “Fair Value Measurements” (“SFAS No. 157”). In addition, on January 1, 2008, the Company made no election to account for its monetary assets and liabilities at fair values as allowed by FASB statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). In February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2, “Effective Date of FASB Statement 157”, which deferred the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis to fiscal years beginning after November 15, 2008.

F-21

(y) Stock-based compensation: Stock-based compensation represents restricted common stock granted to employees and directors, for their services. The Company calculates total compensation expense for the award based on its fair value on the grant date and amortizes the total compensation on a straight-line basis over the vesting period of the award. Expense concerning restricted common stock granted to employees is included in “General and administrative expenses – related parties” in the consolidated statements of income (Note 6), whereas expense concerning restricted common stock granted to directors is included in “General and administrative expenses” in the consolidated statements of income.

(z) Income Taxes: Income taxes have been provided for based upon the tax laws and rates in effect in the countries in which the Company operates are conducted and income is earned. There is no expected relationship between the provision for or benefit from income taxes and income or loss before income taxes because the countries in which the Company operates have taxation regimes that vary not only with respect to the nominal rate, but also in terms of the availability of deductions, credits and other benefits. Variations also arise because income earned and taxed in any particular country or countries may fluctuate from year to year. Deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Company assets and liabilities using the applicable jurisdictional tax rates in effect at the year end. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. The Company accrues interest and penalties related to its liabilities for unrecognized tax benefits as a component of income tax expense.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies - (continued):

(aa) Pension and retirement benefit obligation: Administrative personnel employed by Ocean Rig are covered by state-sponsored pension funds under Norwegian law. Both employees and the Company are required to contribute a portion of the employees’ gross salary to the fund. Upon retirement, the state-sponsored pension funds are responsible for paying the employees retirement benefits and accordingly the Company has no such obligation. Administrative personnel are entitled to an indemnity in case of dismissal or retirement unless they resign or are dismissed with cause. The determination of the Company’s liability for pension and retirement benefits is based on an actuarial valuation.

(ab) Recent accounting pronouncements:

(i) In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS No.141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, and will be adopted by the Company in the first quarter of fiscal 2009. The Company will adopt SFAS 141(R) for any new business combinations with an acquisition date on or after January 1, 2009.

(ii) In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51 (“SFAS No. 160”)”. SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership

F-22

interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008, and will be adopted by the Company in the first quarter of fiscal 2009. The adoption of SFAS No.160 will not have a material impact on the Company’s consolidated financial statements.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies - (continued)

(ab) Recent accounting pronouncements - (continued):

(iii) In March 2008, FASB issued Statement SFAS No 161, “Disclosure about Derivative Instruments and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.162”). SFAS No.161 amends and expands the disclosure requirements of FASB No. 133 with the intent to provide users of financial statements with enhanced understanding of derivative instruments and hedging activities. SFAS No.161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This statement does not require comparative disclosures for earlier periods at initial adoption. The adoption of this standard is not expected to have a material effect on the consolidated financial statements.

(iv) In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS No.142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset, FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years, requiring prospective application to intangible assets acquired after the effective date. The Company will be required to adopt the principles of FSP FAS 142-3 with respect to intangible assets acquired on or after January 1, 2009. Due to the prospective application requirement, the Company is unable to determine the effect, if any, that the adoption of FSP FAS 142-3 will have on the Company’s consolidated statement of financial position, results of operations or cash flows.

(v) In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No.162”), which identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with US GAAP. SFAS No.162 was effective December 31, 2008 following the SEC’s approval of certain amendments to auditing standards proposed by the Public Company Accounting Oversight Board. The Company has adopted SFAS No.162 as of December 31, 2008. The adoption of SFAS No. 162 did not have an effect on the Company’s consolidated statement of financial position, results of operations or cash flows for the year ended December 31, 2008.

F-23

(vi) In June 2008, the FASB issued FSP EITF 03-61, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. Awards of this nature are considered participating securities, and the two-class method of computing basic and diluted earnings per share must be applied. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. The Company will adopt FSP EITF 03-6-1 in the first quarter of 2009.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

2. Significant Accounting Policies-(continued)

(ab) Recent accounting pronouncements (continued):

(vii) In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets (“FSP FAS 132R-1”), which provides additional guidance regarding required disclosures for plan assets of a defined benefit pension or other postretirement plan. FSP FAS 132R-1 is effective for fiscal years ending after December 15, 2009. The adoption of this standard is not expected to have a material effect on the consolidated financial statements.

3. Going Concern:

As of December 31, 2008, the Company was in breach of the vessel fair value to outstanding loan balance minimum net worth and other covenants contained in the Company’s loan agreements relating to $1.8 billion of the Company’s debt. These constitute a potential event of default and could result in the lenders requiring immediate repayment of the loans. As a result of these breaches, the Company has classified the related debt as current as discussed in Note 11 to the consolidated financial statements.

The Company is currently in negotiations with its lenders to obtain waivers and restructure the debt. Management expects that the lenders will not demand payment of the loans before their maturity, provided that the Company pays loan installments and accumulated or accrued interest as they fall due under the existing credit facilities. Management plans to settle the loan interest and scheduled loan repayments with cash generated from operations as well as funding from equity offerings. The Company filed a prospectus supplement pursuant to Rule 424 under the Securities Act of 1933, as amended, on January 28, 2009 relating to the offer and sale of up to $500,000 of the Company’s common stock. As of March 6, 2009 the Company had raised $370,531 net proceeds from this offering. Management does not expect that cash generated from the operations of the vessels and the drillships owned by the Company together with the maximum net proceeds of the $500,000 equity offering to be sufficient to repay the total balance of loans in default if such debt is accelerated by the lenders.

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts the amounts and classification of liabilities, or any other adjustments that might result should the Company be unable to continue as a going concern, except for the current classification of debt discussed in and at Note 11.

F-24

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

4. Change in classification of changes in restricted cash, gain/loss on interest rate swaps and gain on sale of bunkers

During the first quarter of 2008, the Company elected to change the classification of changes in restricted cash (Note 12) in its statement of cash flows from a financing activity to an investing activity, as deposits and withdrawals of principal balances in restricted cash accounts represent the creation or return of investment. The change in classification is applied prospectively, as the effect on prior periods was determined to be immaterial.

During the fourth quarter of 2008, the Company elected to separately present Gain/Loss on interest rate swaps in its statements of income. These amounts were previously classified within Other, net. This change is applied retrospectively.

Also, during the fourth quarter of 2008, the Company elected to reclassify Gain on sale of bunkers, which was separately presented in its statement of income, into Voyage expenses, as these amounts represent the settlement of bunker reimbursements on completed voyages. The change in classification is applied retrospectively.

5. Change in Accounting for dry-docking costs:

As discussed in Note 1, during the first quarter of 2008, the Company decided to change the method of accounting for dry-docking costs from the deferral method to the direct expense method. This change was effected in the accompanying consolidated financial statements in accordance with FASB Statement No. 154 “Accounting Changes and Error Corrections”, which requires that a change in accounting policy should be retrospectively applied to all prior periods presented, unless it is impractical to determine the prior period impacts.

Accordingly, the previously reported financial information has been adjusted for all prior periods presented to account for this change in the method of accounting for dry-docking costs as follows:

Consolidated Balance Sheets

	December 31, 2007				December 31, 2008
	As originally reported under the deferral method	As adjusted under the direct expense method	Effect of change		As computed under the deferral method	As reported under the direct expense method	Effect of change
Increase (decrease)
Deferred charges	2,492	—	(2,492	)	5,142	—	(5,142	)
Total non-current assets	431,370	428,878	(2,492	)	63,971	58,829	(5,142	)
Total assets	2,346,924	2,344,432	(2,492	)	4,847,822	4,842,680	(5,142	)
Retained earnings	569,316	566,824	(2,492	)	192,490	187,348	(5,142	)
Total stockholders equity	1,024,221	1,021,729	(2,492	)	1,296,714	1,291,572	(5,142	)
Total liabilities and stockholders’ equity	2,346,924	2,344,432	(2,492	)	4,847,822	4,842,680	(5,142	)

F-25

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

5. Change in Accounting for dry-docking costs-(continued):

Consolidated Statements of Income

	December 31, 2006						December 31, 2007						December 31, 2008
	As originally reported under the deferral method		As adjusted under the direct expense method		Effect of change		As originally reported under the deferral method		As adjusted under the direct expense method		Effect of change		As computed under the deferral method		As reported under the direct expense method		Effect of change
Income (expense)
Vessels’ operating expenses	(47,889	)	(54,164	)	(6,275	)	(61,409	)	(63,225	)	(1,816	)	(75,019	)	(79,662	)	(4,643	)
Amortization of dry-docking costs	(3,594	)	—		3,594		(2,793	)	—		2,793		(1,593	)	—		1,593
Gain on sale of vessel	8,583		8,845		262		134,963		137,694		2,731		222,621		223,022		401
Operating income/(loss)	96,542		94,123		(2,419	)	528,092		531,800		3,708		(11,386	)	(14,035	)	(2,649	)
Income/(loss) before income taxes, equity in loss of investee and minority interest	56,731		54,312		(2,419	)	474,916		478,624		3,708		(332,071	)	(334,720	)	(2,649	)
Net income/(loss)	56,731		54,312		(2,419	)	474,617		478,325		3,708		(358,633	)	(361,282	)	(2,649	)
Earnings/(loss) per common share, basic and diluted	1.75		1.68		(0.07	)	13.29		13.40		0.11		(8.03	)	(8.11	)	(0.06	)
Consolidated Statements of Cash Flows
	December 31, 2006						December 31, 2007						December 31, 2008
	As originally reported under the deferral method		As adjusted under the direct expense method		Effect of change		As originally reported under the deferral method		As adjusted under the direct expense method		Effect of change		As computed under the deferral method		As reported under the direct expense method		Effect of change
Inflow / (outflow)
Net income/(loss)	56,731		54,312		(2,419	)	474,617		478,325		3,708		(358,633	)	(361,282	)	(2,649	)
Amortization of deferred dry-docking costs	3,594		—		(3,594	)	2,793		—		(2,793	)	1,593		—		(1,593	)
Payments for dry-docking	(6,275	)	—		6,275		(1,406	)	—		1,406		(2,306	)	—		2,306
(Gain) on sale of vessel	(8,583	)	(8,845	)	(262	)	(134,963	)	(137,694	)	(2,731	)	(222,621	)	(223,022	)	(401	)
Accrued Liabilities	(203	)	(203	)	—		12,607		13,017		410		8,433		10,770		2,337

The amounts disclosed under the deferral method for the year ended and at December 31, 2008 are based on the estimated effect of not changing the dry-docking accounting method to the direct expense method for this period. Accordingly, these estimated period amounts have not been previously reported, but are being disclosed in accordance with the requirements of SFAS No. 154.

F-26

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

6. Transactions with Related Parties:

Cardiff Marine Inc. (“the Manager”): The management fee the Company pays to the Manager is Euro 575 per day, per vessel. In addition, the management agreements provide for payment to Cardiff of:

(i) a fee of Euro 100 per day per vessel for services in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; (ii) Euro 400 for superintendent visits on board vessels in excess of five days per annum, per vessel, for each additional day, per superintendent; (iii) chartering commission of 1.25% on all freight, hire and demurrage revenues; (iv) a commission of 1.00% on all gross sale proceeds or purchase price paid of vessels since October 1, 2006; (v) a quarterly fee of $250 for services in relation to the financial reporting requirements of the Company under the Securities and Exchange Commission rules and the establishment and monitoring of internal controls over financial reporting; and (vi) 0.2% on derivative agreements and loan financing or refinancing. Until September 30, 2006, under the management agreement with Cardiff, Drybulk S.A. was acting as the chartering broker and sales and purchase broker for the Company in exchange for a commission of 1.25% on all freight, hire, demurrage revenues and a commission of 1.00% on all gross sale proceeds of, or purchase prices paid for, vessels. Since October 1, 2006, the Manager has acted as the Company’s chartering broker and sales and purchase broker.

Cardiff also provides other management services for each of the drybulk carrier vessels. Cardiff provides commercial operations and freight collection services in exchange for a fee of Euro 85 per day, per vessel. Cardiff provides insurance services and obtains insurance policies for the vessels for a fee of 5.00% on the total insurance premia, per vessel. Furthermore, if required, Cardiff will also handle and settle all claims arising out of its duties under the management agreements (other than insurance, average and salvage claims) in exchange for a fee of Euro 150 per person, per day of eight hours.

Additionally, Cardiff provides us with financial accounts services in exchange for a fee of Euro 115 per day, per vessel. We also pay Cardiff a quarterly fee of Euro 250,000 for services rendered by Cardiff in connection with our financial accounting services, as amended. Pursuant to the terms of the management agreements, all fees payable to Cardiff will be adjusted upwards or downwards based upon the Greek consumer price index referring to the previous 12 calendar months. During the years ended December 31, 2007 and 2008, we incurred costs of $1,369,000 and $1,832,000, respectively, to reimburse Cardiff for additional services in connection with compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

Management fees for the period from January 1, 2007 to December 31, 2007 were based at a daily fixed fee of $650 per vessel which was based on the Dollar/Euro exchange rate of $1.30 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter. Management fees for the period from January 1, 2008 to June 30, 2008 were based at a daily fixed fee of Euro 575 per vessel which was based on the Dollar/Euro exchange rate of $1.41 per Euro. At the beginning of each calendar quarter, the daily fixed per vessel fee was adjusted upwards or downwards according to the Dollar/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two business days before the end of the immediately preceding calendar quarter.

Transactions with the Manager in Euros are settled on the basis of the average EURO/USD. In addition, during the years ended December 31, 2006, 2007 and 2008, amounts of $815, $11,689 and $11,831 respectively were charged by the Manager relating to the acquisition and sale of vessels. Of these amounts, amounts of $698, $8,060 and $7,710 relating to the acquisition of vessels were charged by the Manager for the years ended December 31, 2006, 2007 and 2008, respectively. These amounts are capitalized as a vessel acquisition cost and included in “Vessels, net” in the accompanying consolidated balance sheets. Of these amounts, amounts of $117, $3,629 and $4,121 relating to vessel sales are included in “Gain on sale of Vessels” in the accompanying consolidated statements of income.

F-27

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

6. Transactions with Related Parties - (continued):

The amounts due from the Manager at December 31, 2007 and 2008 totaled $9,963 and $12,733, respectively, representing payments in advance by the Company to the Manager.

Drybulk S.A: An amount of $2,011 was charged by Drybulk S.A, a related party, during the year ended December 31, 2007 for chartering commissions.

Lease Agreement: Under the rental agreement in effect between the Company and its Chief Executive Officer, the Company leases office space in Athens, Greece. The related rent expense for the years ended December 31, 2006, 2007 and 2008 totaled $12, $12 and $13, respectively, and is included in “General and administrative expenses - related parties” in the accompanying consolidated statements of income.

Consultancy Agreements: Under two consultancy agreements concluded on February 3, 2005 between the Company and Fabiana Services S.A. (“Fabiana”), a related party entity incorporated in the Marshall Islands, Fabiana provides the services of the individual who serves in the positions of Chief Executive and Interim Chief Financial Officer of the Company.

The Chairman and Chief Executive Officer, Mr. George Economou, also serves as the Interim Chief Financial Officer. Following the expiration of the above agreements in March 2008, the Company’s Board of Directors approved a new agreement with Fabiana, for the continuing provision of all services until December 31, 2012, under which the annual remuneration is $2,000.

The fees charged by Fabiana for the years ended December 31, 2006, 2007 and 2008 amounted to $1,383, $1,448 and $2,031, respectively, and are included in “General and administrative expenses - related parties” in the accompanying consolidated statements of income.

In addition, on March 5, 2008, 1,000,000 non-vested common stock out of the 1,834,055 shares reserved in the Company’s 2008 Equity Incentive Plan (Note 15) were granted to Fabiana for the CEO and interim CFO. The shares vest quarterly in eight equal installments with the first, second and third installments of 125,000 shares each vesting on May 28, August 28, and November 28, 2008 in accordance with the consultancy agreement. The stock based compensation is being recognized to expenses over the vesting period and based on the fair value of the shares on the grant date ($75.09 per share). This grant’s stock based compensation expense for the year ended December 31, 2008 amounted to $31,175 and is included in “General and administrative expenses - related parties” in the accompanying consolidated statements of income.

Further, on January 21, 2009 the Compensation Committee approved a Euro 5,000,000 ($6.98 million) bonus payable to George Economou in December 2008 for services rendered during 2008 and are included in “General and Administrative expenses - related parties” in the accompanying consolidated statements of income.

At December 31, 2007 and 2008, there were no balances payable to Fabiana. Fabiana is beneficially owned by the Company’s Chief Executive Officer.

Short-term credit facility: During 2007, the Company borrowed an aggregate amount of $63,000 from Elios Investment Inc., a wholly owned subsidiary of the Foundation (Note 1) in order to partly finance the acquisition cost of vessels Bargara, Marbella, Primera, Brisbane, Menorca, Capitola, Ecola and Majorca. The loan was provided in two tranches: $33,000 in April 2007 and $30,000 in May 2007 and was fully repaid as of June 15, 2007. Interest paid during December 31, 2007 amounted to $614.

Purchase of derivatives from related parties: In order to maintain the minimum hedging ratio of one of its loans, on June 22, 2007 the Company acquired the following interest rate derivatives which were valued on that date by the financial institutions which were counterparties to these agreements at an amount of $1,290 (asset), from the following two related companies, each of which is managed by Cardiff

F-28

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

6. Transactions with Related Parties - (continued):

(i) Sea Glory Navigation Ltd. which originally entered into an interest rate cap and floor agreement on November 3, 2004 for a period of seven years through November 2011, for a notional amount of $60,000 . Under the cap leg of the agreement, the interest rate is 5.34% if three-month USD LIBOR is between 5.34% and 7%. If three-month USD LIBOR is above 7%, the interest rate is three-month USD LIBOR. Under the floor leg of the agreement, the interest rate is 2.75% if the three-month USD LIBOR is equal or less than 1.75%.

(ii) River Camel Shipping Co. which originally entered into an interest rate cap and floor agreement for a period of seven years through November 2011, for a notional amount of $75,000 . Under the cap leg of the agreement interest rate is 5.25% if three-month USD LIBOR is between 5.25% and 7%. If three-month USD LIBOR exceeds 7%, then the interest rate is three-month USD LIBOR. Under the floor leg of the agreement, the interest rate is 2.75%, if the three-month USD LIBOR is equal or less than 1.75%.

Purchase of Ocean Rig ASA from a related party: On December 20, 2007 Primelead acquired 51,778,647 shares in Ocean Rig ASA from Cardiff Marine Inc., who acted as an intermediary, for a consideration of $406,024. This represented 30.4% of the issued shares in Ocean Rig. A commission was paid to Cardiff Marine Inc. amounting to $4,050 which at December 31, 2007 was included in “Accrued Liabilities” in the accompanying consolidated balance sheet and in “Other, net” in the accompanying consolidated statements of income. The above commission was paid on February 1, 2008.

As further discussed in Note 10 below, in April 2008, 7,546,668 shares, representing 4.4% of the share capital of Ocean Rig were purchased from companies controlled by the Company’s Chief Executive Officer and Interim Chief Financial Officer for a consideration of $66,782, which is the U.S. dollar equivalent NOK 45 per share, which is the price that was offered to all shareholders in a mandatory offering.

In addition, a commission was paid to Cardiff Marine Inc. amounting to $9,925 for services rendered in relation to the acquisition of the remaining shares in Ocean Rig ASA. The above commission was paid on December 5, 2008 and is reflected in “Other, net” in the accompanying consolidated statements of income.

Chartering agreement: During 2008, Thelma and Argo (Note 1) concluded charter party agreements with Classic Maritime Inc., a related party entity incorporated in the Marshall Islands and controlled by the Company’s Chief Executive Officer and Interim Chief Financial Officer. As of September 3, 2008 Classic Maritime Inc. was no longer a related party, since it was sold to an unrelated third party. Under the agreements, the Company charters the vessels Manasota and Redondo for a daily rate ranging from $35 to $67 and for periods of 1 month to 5 years. In accordance with the agreements, as of December 31, 2008, the vessels Manasota and Redondo were delivered to the charterer and related revenue amounted to $14,466 is separately reflected under “Voyage revenues-related party” in the accompanying consolidated statements of income.

Acquisition of vessels: On June 25, 2008, the Company entered into two memoranda of agreement to acquire the vessels Sidari and Petani built in 2007 and 2008 for $200,000 in total from companies beneficially owned by the Company’s Chief Executive Officer and Interim Chief Financial Officer. The vessels were expected to be delivered by the end of 2008 with their existing time charters attached for a period of approximately four years each with an unrelated party for a daily rate of $43.8 each. On July 10, 2008, the Company paid $40,000 representing an advance payment of 20% in accordance with the related clauses of the memoranda of agreement. On December 10, 2008, the Company entered an agreement to cancel the acquisition of these vessels for a total consideration of $80,000 (Note 7).

F-29

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

6. Transactions with Related Parties - (continued):

Acquisition of companies: In July 2008, the Company entered into two agreements to acquire all of the issued and outstanding shares of two owning companies beneficially owned by the Company’s Chief Executive Officer and Interim Chief Financial Officer. The aggregate purchase price was $140,000, which represents the fair value of the sole assets of the two companies. In exchange for the aggregate purchase price, the Company agreed to acquire two newbuilding Panamax vessels that were scheduled to be delivered in the fourth quarter of 2008 and the first quarter of 2009, respectively, net of advances of $60,000 in total to be made under the shipbuilding contract by the Company. During October and November 2008 the Company paid $15,000 representing advances for the newbuilding hulls. On December 10, 2008, the Company entered an agreement to cancel the acquisition of these companies for a total consideration of $80,000 (Note 7).

The acquisition of vessels and companies noted in the above two preceding paragraphs are hereafter referred to as the “four panamax drybulk carriers.”

Acquisition of nine Capesize vessels: In October 2008, the Company agreed to purchase the ship-owning companies of nine Capesize drybulk carriers for an aggregate purchase price of $1.17 billion from clients of Cardiff Marine Inc. including affiliates of George Economou, the Company’s Chairman and Chief Executive Officer, and third parties consisting of 19,400 of the Company’s common shares and the assumption of an aggregate of $478,300 in debt and future commitments. In light of the considerable decrease in the asset values of the nine Capesize vessels, in 2009 the Company reached an agreement with the sellers to cancel this transaction. The consideration to cancel the transaction is 6.5 million shares issued to entities that are unaffiliated with the Company nominated by the third-party sellers, which will be subject to a six-month lock-up period. The consideration received by entities controlled by George Economou consists solely of 3.5 million “out of the money” warrants. Each warrant entitles the holder to purchase one share of the Company’s common stock. These warrants will have a cost of $0.01 and will have strike prices, depending on the relevant tranches, of between $20 and $30 per share. The warrants will vest over an 18-month period and expire after five years. The cancellation of the acquisition was approved by the independent members of the Board of Directors on January 21, 2009 and the agreements were signed on March 6, 2009. The cancellation fee will be paid and recorded in 2009.

Acquisition of drillships: On October 3, 2008, the Company’s wholly owned subsidiary, Primelead Shareholders Inc., entered into a share purchase agreement to acquire the equity interests of DrillShips Holdings, which owns two newbuilding advanced capability drillships for use in ultra-deep water drilling locations, identified as Hull 1837 and Hull 1838, and is controlled by clients of the Company’s manager, Cardiff Marine Inc., including George Economou. The drillships are being constructed by Samsung Heavy Industries and are expected to be delivered from the shipyard in the fourth quarter of 2010 and the first quarter of 2011, respectively. The expected cost of construction is approximately $747,500 per drillship. The drillships are sister vessels to the two drillships, Hulls 1865 and 1866, ordered by the Company early in 2008 from Samsung Heavy Industries and which are expected to be delivered in the third quarter of 2011. This transaction is expected to be consummated in 2009.

In October 2008, the Company advanced on behalf of the related party ship-owning companies of newbuilding Hulls 1837 and 1838, installment payments in the aggregate amount of $5 million which are reflected in “Due from related parties” in the accompanying consolidated balance sheets. In conjunction with this payment, the Company entered into an indemnity agreement with these ship- owning companies, pursuant to which such ship-owning companies undertook to reimburse the Company for such installment payments, plus interest at a fixed rate of five percent, if a spin-off of the drilling rig segment does not occur.

F-30

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

7. Advances for Vessels - Drillships under Construction / Acquisitions and cancellations:

The amounts shown in the accompanying consolidated balance sheets include milestone payments relating to the shipbuilding contracts with the shipyards, milestone payments relating to the contracts with the engineering firm, and any material related expenses incurred during the construction periods capitalized in accordance with the accounting policy discussed in Note 2.

As of December 31, 2007 and 2008, the advances for vessel and drillship acquisitions and newbuildings are set forth below:

				December 31, 2007				December 31, 2008
Vessel name	Expected delivery	Contract amount		Contract payments	Capitalized expenses	Total		Contract payments		Capitalized expenses	Total
H1518A	June 2009	$	33,593	6,650	519	$	7,169	$	9,975	1,029	$	11,004
H1519A	June 2009		33,593	6,650	519		7,169		9,975	992		10,967
HSS058	August 2010		54,250	10,850	220		11,070		10,850	749		11,599
HSS059	October 2010		54,250	10,850	220		11,070		10,850	749		11,599
H0002	November 2009		105,500	10,550	220		10,770		10,550	734		11,284
H0003	January 2010		105,500	10,550	219		10,769		10,550	734		11,284
H2089	June 2009		114,000	22,800	634		23,434		22,800	1,678		24,478
H1128			—	—	—		—		15,300	705		16,005
Petalidi			—	—	—		—		6,100	—		6,100
H1865	July 2011		701,555	—	—		—		205,939	4,703		210,642
H1866	September 2011		701,555	—	—		—		205,939	4,715		210,654
HN-1001	Delivered 2008		147,500	14,750	276		15,026		—	—		—
Avoca	Delivered 2008		69,500	6,950	—		6,950		—	—		—
Capri	Delivered 2008		152,250	15,225	—		15,225		—	—		—
		$	2,273,046	115,825	2,827	$	118,652	$	518,828	16,788	$	535,616

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

7. Advances for Vessels - Drillships under Construction / Acquisitions and cancellations-continued):

In July 2008, the Company entered into two agreements to acquire all of the issued and outstanding shares of two ship-owning companies (Note 6) for an aggregate purchase price of $140,000. In exchange for the aggregate purchase price, the Company agreed to acquire the ship-owning companies of two newbuilding Panamax vessels that were scheduled to be delivered in the fourth quarter of 2008 and the first quarter of 2009, respectively, net of advances of $60,000 in total to be made under the shipbuilding contract by the Company. During 2008, $15,000 was paid by the Company for advances under the contract to the yard. As previously mentioned, the acquisition of Sidari, Petani and these two newbuilding Panamax vessels are referred to as “the four Panamax drybulk carriers.”

On December 10, 2008, the Company agreed to cancel its acquisition of the four Panamax drybulk carriers, including two newbuildings, (Note 6 and Note 23) from companies beneficially owned by George Economou, Chairman, Chief Executive Officer and Interim Chief Financial Officer of the Company. The cancellation fee consisted of forfeiture of the Company’s deposits totalling $55,000, plus a cash payment of $26,250 per vessel. The total cancellation fee of $160,000 is included in contract termination fees and forfeiture of vessel deposits-related parties in the consolidated statement of income. In addition, the Company has entered into an agreement with the selling companies of the above vessels, providing the Company with the exclusive option to purchase the abovementioned four Panamax drybulk carriers on an en bloc basis at a fixed purchase price of $160,000. (The fair value of

F-31

such option as of December 31, 2008 is deemed to be zero.) The exclusive purchase option granted to the Company by the seller will terminate on December 31, 2009. The agreement was negotiated and approved by a committee consisting of the independent members of the Company’s Board of Directors.

On August 13, 2008, the Company entered into a memorandum of agreement to acquire vessel Petalidi for total consideration of $61,000. The vessel was expected to be delivered during the first quarter of 2009 with its existing time charters attached for a period of approximately 5 years with an unrelated party for a daily rate of $28. In September 2008, the Company paid $6,100 representing an advance payment of 10% in accordance with the related clauses of the memorandum of agreement. On January 29, 2009, the Company entered into an agreement to cancel the previously announced acquisition of the Petalidi for a purchase price of $61,000 from an unrelated third party. The Company and the seller have mutually agreed to cancel the Memorandum of Agreement to acquire the vessel in consideration of a payment of $8,000 to the seller and the seller’s retention of the $6,100 deposit that was previously paid. The New York and London proceedings between the Seller and the Company have been discontinued. (Note 17)

During the years ended December 31, 2007 and 2008, the movement of the advances for vessels/drillships under construction and acquisitions was as follows:

	December 31,
	2007			2008
Balance at beginning of period	$	27,380		$	118,652
Advances for vessels/drillships under construction and related costs		105,242			509,165
Advances forfeited due to cancellation of the four Panamaxes		—			(55,000	)
Vessels delivered		(13,970	)		(37,201	)
Balance at end of period	$	118,652		$	535,616

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

8. Vessels, net:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

	Vessel Cost			Accumulated Depreciation		Net Book Value
Balance, December 31, 2006	$	1,197,053		(112,129	)	$	1,084,924
Vessel acquisitions		851,006		—			851,006
Vessel disposals		(253,875	)	38,323			(215,552	)
Depreciation		—		(76,511	)		(76,511	)
Balance, December 31, 2007		1,794,184		(150,317	)	$	1,643,867
Vessel acquisitions		779,374		—			779,374
Vessel disposals		(222,712	)	44,628			(178,084	)
Depreciation		—		(110,507	)		(110,507	)
Balance, December 31, 2008	$	2,350,846		(216,196	)	$	2,134,650

F-32

During 2008, the vessels Avoca, Conquistador, Capri, Positano, Flecha, Sorrento and Mystic were delivered to the Company for $779,374. The vessels Matira, Netadola, Lanzarote, Menorca, Waikiki, Solana and Tonga were sold for net proceeds of $401,106 realizing a gain from the sale of $223,022.

In addition during 2008, the Company concluded Memoranda of Agreement for the sale of vessels, MV Paragon, MV Delray, MV Toro and MV La Jolla for $245,400. After negotiations the final sales price for these vessels was adjusted to $132,800. The purchaser of MV Toro, Samsun Logix Corporation (“Samsun”) agreed to release its deposit of $6,300 to the Company immediately and make a new deposit of $1,500. While Samsun released the initial deposit of $6,300 to the Company, it failed to make an additional deposit as required by the agreement to purchase the MV Toro. As a result, Samsun is in breach of this agreement. The Company has received notice of receivership action by Samsun. In addition Samsun has not stated whether it intends to fulfill its agreement to purchase the MV Toro, and the Company intends to explore its legal options with respect to Samsun’s breach. The sale of MV La Jolla was also cancelled as it was, agreed for the Company to retain the vessel and the deposit of $9,000. The Company has commenced arbitration proceedings for the difference between the current market price and the original contract price of $63,400. (Note 17). The sale of MV Delray will not close due to the buyer’s repudiation of its obligations under the memorandum of agreement. A deposit on the vessel in the amount of $5.6 million was made by the buyer. We are pursuing all legal remedies against the buyer.

On May 19, 2008 the Company entered into a memorandum of agreement for the sale of vessel Primera for $75,000. The sale agreement was subsequently cancelled on October 15, 2008 and the advance of $9,098 was retained by the Company.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

8. Vessels, net-(continued):

During the year ended December 31, 2007, the vessels Samsara, Primera, Marbella, Bargara, Brisbane, Capitola, Menorca, Majorca, Heinrich Oldendorff, Ecola, Clipper Gemini, Samatan, Voc Galaxy, Saldanha and Oregon were acquired for a total consideration of $851,006.

During the year ended December 31, 2007, the vessels Panormos, Striggla, Daytona, Estepona, Shibumi, Delray, Hille Oldendorff, Alona, Mostoles, Lanikai and Formentera were sold for net proceeds of $351,813, which resulted in realizing a total gain from sale of vessels of $137,694. This gain is separately reflected in the accompanying 2007 consolidated statement of income.

All of the Company’s vessels have been pledged as collateral to secure the bank loans discussed in Note 11. As of December 31, 2008, two vessels were operating under a drybulk pool (Note 2) while the remaining vessels were operating under time charters except for MV Heinrich Oldendorff, Clipper Gemini and VOC Galaxy which are employed under bareboat charter. The last time charter expires in August, 2018.

9. Drilling rigs, machinery and equipment, net:

Through its acquisition of Ocean Rig in 2008, the Company operates two ultra deep-water drilling rigs, the “Leiv Eiriksson” and “Eirik Raude.” Ocean Rig is a drilling contractor in the area of offshore exploration, development and production.

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

	Net book Value
Drilling rigs, machinery and equipment acquired	$	1,423,156
- Drilling rigs improvement, machinery and equipment		16,584
- Depreciation for the period		(46,582	)
Balance, December 31, 2008	$	1,393,158

F-33

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

10. Acquisition of Ocean Rig ASA:

On December 20, 2007, Primelead acquired 51,778,647 or 30.4% of the issued shares in Ocean Rig. Ocean Rig, incorporated on September 26, 1996 and domiciled in Norway, was a public limited company whose shares previously traded on the Oslo Stock Exchange.

The Company accounted for its investment in Ocean Rig for the year ended December 31, 2007, and for the period from January 1, 2008 to May 14, 2008 using the equity method of accounting.

The carrying amount of the Company’s investment in Ocean Rig as of December 31, 2007 was $405,725 and is reflected as “Long term investments” in the accompanying consolidated balance sheet.

The quoted market price of the investment at December 31, 2007 was Norwegian Kroner (NOK) 39.70 and the aggregate market value of the investment in Ocean Rig at December 31, 2007 was $377,984.

The Company’s equity in the loss of Ocean Rig is shown in the accompanying consolidated statements of income for the year ended December 31, 2007 and 2008 as “Equity in loss of investee” and amounted to a loss of $299 and $6,893, respectively.

After acquiring 33% of Ocean Rig’s outstanding shares on April 22, 2008, the Company, as required by Norwegian Law, launched a mandatory bid for the remaining shares of Ocean Rig at a price of NOK45 per share ($8.89 per share). The Company acquired additional shares of Ocean Rig, resulting in the Company gaining control over Ocean Rig on May 14, 2008. The results of operations related to the acquisition are included in the consolidated financial statements as of May 15, 2008. The mandatory bid expired on June 11, 2008. As of July 10, 2008, the total shares held by the Company in Ocean Rig amounted to 100% (163.6 million shares) at July 10, 2008. Out of the total shares acquired as discussed above, 4.4% of the share capital of Ocean Rig was purchased from companies controlled by the Company’s Chairman, Chief Executive Officer and Interim Chief Financial Officer (Note 6).

F-34

The Company had recorded minority interest on its balance sheet as of June 30, 2008 in accordance with EITF Topic D-98 “Classification and Measurement of Redeemable Securities.” The resulting minority interest carrying value of $21,457 was recorded at redemption value, which was higher than the amount that would result from applying consolidation accounting under ARB 51 “Consolidated Financial Statements.” resulting in $15,050 of additional minority interest expense recorded in the condensed accompanying consolidated statement of income for the year ended December 31, 2008.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

10. Acquisition of Ocean Rig ASA - (continued):

The total purchase price of Ocean Rig was comprised of the following:

Cash consideration	$	1,397,856
Transaction costs		10,797
Total purchase price	$	1,408,653

The following table summarizes the aggregate fair values of the assets acquired and liabilities assumed by the Company as of the dates of the step acquisitions:

Total current assets	$	108,563
Drilling rigs, machinery and equipment		1,419,640
Intangible assets		15,033
Above market acquired time charter		15,053
Goodwill		700,457
TOTAL ASSETS ACQUIRED		2,258,746
Total current liabilities		(423,874	)
Total non current liabilities		(393,990	)
Below market acquired time charter		(32,229	)
TOTAL LIABILITIES ASSUMED		(850,093	)
TOTAL PURCHASE PRICE	$	1,408,653

A contingent liability of $3,143 has been recognized, based on a claim from an investment bank in relation to DryShips acquisition of Ocean Rig. The maximum exposure to this claim is $24,000.

The total purchase price of $1.4 billion includes $11,306 in treasury shares assumed from Ocean Rig. Goodwill included in the drilling rig segment constitutes a premium paid by the Company over the fair value of the net assets of Ocean Rig, which is attributable to anticipated benefits from Ocean Rig’s unique position to take advantage of the extremely attractive fundamentals of the ultra deep water drilling market. Goodwill is not deductible for income tax purposes.

F-35

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

10. Acquisition of Ocean Rig ASA - (continued):

In connection with the acquisition, the Company acquired drilling contracts for the future contract drilling services of Ocean Rig, some of which extend through 2011. These contracts include fixed day rates that are above and below day rates available as of the acquisition date. After determining the aggregate fair values of these drilling contracts as of the acquisition, the Company recorded the respective contract fair values on the consolidated balance sheet as non-current liabilities and non-current assets under “Fair value of below/above market acquired time charters”. These will be amortized into revenues using the straight-line method over the respective contract periods (1 and 3 years for the respective contracts). The amount amortized as of December 31, 2008 amounted to $17,297.

Additionally, the Company identified finite-lived intangible assets associated with the trade names and software that will be amortized over their useful life which is determined to be 10 years. The amount acquired for trade names and software was $9,145 and $5,888 respectively and are included in “Intangible assets, net” in the accompanying consolidated balance sheets.

	Amount Acquired	Amortized to Dec 31, 2008	Amount to be Amortized as of December 31
			2009	2010	2011	2012	2013-18
Trade names	9,145	541	914	914	914	914	4,948
Software	5,888	349	589	589	589	589	3,183
	15,033	890	1,503	1,503	1,503	1,503	8,131

Summarized financial information of the Company’s equity method of investees that representing 100% of the investees’ financial information, is as follows:

Financial Positions as of:	December 31, 2007
Current assets	93,648
Non-current assets	1,168,672
Current liabilities	145,115
Non-current liabilities	656,524

F-36

	December 20, to December 31, 2007		January 1 to May 14, 2008
Results of Operations for the period:
Revenues	8,227		98,229
Operating income/ (loss)	(927	)	19,553
Net Loss	(985	)	(20,854	)

Pro forma results of operations (unaudited) – The following unaudited pro forma financial data for the periods ended December 31, 2007 and 2008, give effect to the acquisition of Ocean Rig, as though the business combination had been completed at the beginning of each period:

	December 31,
	2007	2008
Pro forma:
Revenues	813,510	1,184,432
Net Operating Income	562,366	334
Net Income/(loss)	395,790	(369,553	)
Earnings per Shares, basic and diluted	11.09	(8.29	)

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

10. Acquisition of Ocean Rig ASA - (continued):

The unaudited pro forma financial information includes adjustments for additional depreciation based on the fair market value of the drilling rigs, interest expense and financing fees on debt incurred to finance the acquisition of Ocean Rig, amortization of intangibles arising from the series of acquisitions and amortization of the fair value above and below market with respect to the time charter acquired. The unaudited pro forma financial information is not necessarily indicative of the result of operations for any future periods. The pro forma information does not give effect to any potential revenue enhancement cost synergies or other operational efficiencies that could result from the acquisitions. The actual results of the operations of Ocean Rig are included in the consolidated financial statements of the Company only from the respective date of the acquisition.

Impairment Charge

At December 31, 2008, the Company performed its annual impairment testing for Goodwill. As a result of its impairment testing, the Company determined that the Goodwill associated with its drilling rigs reporting unit was impaired. Accordingly, the Company recognized an impairment charge for the full carrying amount of the Goodwill associated with this reporting unit in the amount of $700,457, which had no tax effect.

The Goodwill balance and changes in the Goodwill is as follows:

Balance May 14, 2008	$	700,457
Goodwill impairment charge		(700,457	)
Balance December 31, 2008	$	—

11. Long-term Debt:

The amount of long-term debt shown in the accompanying consolidated balance sheets is analyzed as follows:

	December 31, 2007			December 31, 2008
DryShips -Term loans	$	1,220,605		$	2,215,734
DryShips - Bridge loans		30,076			—
Ocean Rig - Term loans		—			982,500
Less deferred financing costs		(6,903	)		(39,364	)
Total		1,243,778			3,158,870
Less: Current portion		(194,999	)		(2,370,556	)
Long-term portion	$	1,048,779		$	788,314

On February 19, 2008, the Company fully repaid its bridge facility of $30,076 obtained to partly finance the acquisition cost of the vessels Oregon, Avoca, Saldanha and VOC Galaxy. On May 12, 2008 the Company fully refinanced the loan facility of $227,907 obtained in order to partly finance the acquisition cost of Ocean Rig’s common stock. In addition, in July 2008 the Company fully repaid the $252,340 senior unsecured callable bond. In September 2008 the Company fully repaid the $250,000 bridge facility. During the year ended December 31, 2008, the Company made scheduled principal payments of $863,466 and repaid an amount of $83,974 against the outstanding loan balances for vessels sold Matira, Netadola, Menorca, and Tonga.

F-37

The Company’s loan agreements are described below:

a) On January 29, 2008, the Company drew down an amount of $48,650 from a loan of $101,150 concluded in December 2007 in order to partly finance the acquisition cost of vessels Saldanha and Avoca. The loan bears interest at LIBOR plus a margin and is repayable in twenty-eight quarterly installments plus a balloon payment of $32,150 through January 2015. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 30%, ii) market value to loan amount greater than or equal to 125%.

b) On February 27, 2008, the Company concluded a supplemental agreement to a previous loan obtained in March 2006 to partly finance the acquisition cost of certain of the Company’s vessels and obtained the lenders’ consent for the release of certain of the Company’s vessels from the related security obligations. During April, 2008 the Company drew down $49,400 to partly finance the acquisition of vessel Conquistador. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 40% and ii) market value adjusted net worth greater than or equal to $750,000, and (iii) market value to loan amount greater than or equal to 150%.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

11. Long-term Debt - (continued):

c) On March 13, 2008 the Company concluded a loan agreement of up to $130,000 to obtain additional liquidity. The vessels Lacerta, Menorca, Toro and Paragon were released from their previous loan and related security obligations and were provided as collateral for this new loan facility. On June 27, 2008 the vessel Menorca was sold and its loan balance outstanding at such date was fully repaid. On December 9, 2008 the vessel Lacerta was renamed Delray. The loan bears interest at LIBOR plus a margin and is repayable in twenty-eight quarterly installments plus a balloon payment of $31,599 through March 2015. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 25%, ii) market value adjusted net worth greater than or equal to $180,000, and iii) market value to loan amount greater than or equal to 125%.

d) On May 5, 2008 the Company concluded a loan agreement of up to $90,000 in order to partly finance the acquisition cost of the vessel Mystic. The loan bears interest at LIBOR plus a margin and is repayable in fourteen semi-annual installments, plus a balloon payment of $27,000, payable with the last installment in December 2015. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 20%, ii) market value adjusted net worth greater than or equal to $250,000, and iii) market value to loan amount greater than or equal to 125%.

e) On May 9, 2008, the Company concluded a guarantee facility of NOK 5.0 billion (approximately $974.500 ) and a term loan of $800,000 in order to guarantee the purchase price of the Ocean Rig shares to be acquired through the mandatory offering, to finance the acquisition cost of the Ocean Rig shares and to refinance existing debt. The term loan is repayable in four quarterly installments of $75,000 followed by four quarterly installments of $50,000 plus a balloon payment of $300,000 payable together with the last installment, on May 12, 2010. As of December 31, 2008, the Company drew down the total amount of $800,000 and repaid $150,000. The facility contains various covenants, including a market-adjusted equity ratio greater than or equal to 30%.

As of December 31, 2008, the Company was not in compliance with the aforementioned covenants for this facility. The Company obtained a waiver from the bank with respect to its December 31, 2008 default, for a period up to August 12, 2009.

f) On May 13, 2008 the Company concluded a loan agreement of up to $125,000 in order to partly finance the acquisition cost of the vessels Capri and Positano. The loan bears interest at LIBOR plus a margin and is repayable in thirty two quarterly installments, plus a balloon payment of $19,000, through September 2016. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 25%, ii) market value adjusted net worth greater than or equal to $180 million, and iii) market value to loan amount greater or equal to 125%.

F-38

g) On June 20, 2008 the Company concluded a loan agreement of up to $103,200 in order to partly finance the acquisition cost of the vessel Sorrento and partly refinance part of the acquisition cost of the vessel Iguana. During the year ended December 31, 2008, the Company drew down an amount of $32,500 to refinance part of the acquisition cost of the vessel Iguana and an amount of $51,600 to partly finance the acquisition cost of the vessel Sorrento. The loan bears interest at LIBOR plus a margin and is repayable in thirty-two quarterly installments plus a balloon payment of $16,000 through July 2016 for the vessel Sorento and twenty quarterly instalments through December 2013 for vessel Iguana. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 20%, ii) market value adjusted net worth greater than or equal to $250,000, and iii) market value to loan amount greater than or equal to 135%.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

11. Long-term Debt-(continued):

h) On July 18, 2008 the Company concluded two facility agreements for an aggregate amount of $1,125,000 in order to partly finance the construction cost of Drillship Hulls 1865 and 1866. During the year ended December 31, 2008, the Company drew down $171,363 which was used to pay the loan financing fees, incidental vessel costs, commitment fees and loan interest and a portion of the second yard installment. The loans bear interest at LIBOR plus a margin and are repayable in eighteen semi-annual installments through November 2020. The first installment is payable six months after the delivery of the vessels, which is expected to be in the third quarter of 2011. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 25% and ii) market value adjusted net worth greater than or equal to $500,000.

i) On July 23, 2008 the Company concluded a facility agreement for an amount of $126,400 in order to partly finance the acquisition of a secondhand vessel, to be named Flecha. The loan bears interest at LIBOR plus a margin and is repayable in forty quarterly installments, plus a balloon payment of $20,400, payable with the last installment in July 2018. The facility contains various covenants, including maintaining a market value to loan amount equal to or greater than 125%.

j) On July 9, 2008, Ocean Rig entered into an addendum to an existing financing arrangement in the amount of $250,000 to refinance the Ocean Rig’s $250,000 senior unsecured callable bond. Ocean Rig drew down the full amount of the loan which was repaid in September, 2008 by Ocean Rig’s new credit facility discussed below.

k) On September 17, 2008, the Ocean Rig entered into a new five-year secured credit facility for the amount of up to $1.04 billion in order to refinance Ocean Rig’s existing loan indebtedness and for general corporate purposes. In September and October, 2008, Ocean Rig drew down $1.02 billion of the new credit facility. The drawdown proceeds were used to repay all other Ocean Rig outstanding debt at the date of the drawdown amounting to $776,000 including the $250,000 loan discussed above. The credit facility consists of a guarantee facility, three revolving credit facilities (A, B and C) and a term loan.

The aggregate amount of the term loan is up to $400,000 and the aggregate amount under the revolving credit facility A is up to $350,000. The aggregate amount under the revolving credit facility B is up to $250,000 and under the revolving credit facility C is up to $20,000. The guarantee facility provides Ocean Rig with a credit facility of up to $20,000.

The commitment under credit facility A was reduced by $17,500 on December 17, 2008 and will continue to be reduced by $17,500 quarterly thereafter until September 17, 2013, which is 60 months after the date of the agreement. The loan bears interest at LIBOR plus a margin and is repayable in twenty quarterly instalments. The term loan will be repaid by one balloon payment of $400,000 on September 17, 2013. The commitment under credit facility B will be reduced quarterly by 12 unequal quarterly instalments with a final maturity date of not later than the earlier of the expiry of the time charter of the drilling rig the Eirik Raude, which is scheduled to expire in October 2011 and September 17, 2011.

F-39

This loan contains various financial covenants including restrictions as to payments of dividends, distribution to shareholders or reduction of share capital without the bank’s prior consent.

This loan is secured by (i) first and second priority mortgages over Ocean Rig’s two ultra-deep water drilling rigs; (ii) first and second priority assignment of all insurances and earnings of the mortgaged drilling rigs; (iii) pledge of shares of Ocean Rig AS, Ocean Rig Norway AS, Ocean Rig 1 AS, Ocean Rig 2 AS, Ocean Rig North Sea AS, Ocean Rig Ghana Ltd, Ocean Rig Ltd, Ocean Rig 1 Inc and Ocean Rig 2 Inc, and (iv) first and second mortgages over the machinery and plant of Ocean Rig 1 Inc and Ocean Rig 2 Inc.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

11. Long-term Debt-(continued):

(l) On October 2, 2007 the Company concluded a loan agreement of up to $ 35,000 in order to partly finance the acquisition cost of the second-hand vessel Clipper Gemini. The loan bears interest at LIBOR plus a margin and will be repaid in thirty-six quarterly installments through July 2016. The facility contains various covenants, including a market value to loan amount greater than or equal to 125%.

(m) On October 5, 2007 the Company concluded a loan agreement of up to $ 90,000 in order to partly finance the acquisition cost of the second-hand vessels Samatan and VOC Galaxy. The loan bears interest at LIBOR plus a margin and will be repaid in thirty-two quarterly installments through November 2015. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 25%, ii) market value adjusted net worth greater than or equal to $250 million, and iii) market value to loan amount greater than or equal to 125%.

(n) On November 16, 2007 the Company concluded a loan agreement of up to $ 47,000 in order to partly finance the acquisition cost of the second-hand vessel Oregon. The loan bears interest at LIBOR plus a margin and will be repaid in thirty-two quarterly installments through December 2015. The facility contains various covenants, including i) market-adjusted equity ratio greater than or equal to 20%, ii) market value adjusted net worth greater than or equal to $180,000, and iii) market value to loan amount greater than or equal to 130%.

As of December 31, 2008, the Company was not in compliance with the aforementioned covenants as related to the facilities described in (a) through (i), and (l) through (n) above. As a result of this non-compliance, the lenders currently have the ability to call the related debt due immediately. However, although the Company has not yet obtained compliance waivers from the lenders, except for the facility described in (e) above for which a waiver has been obtained, the Company is currently in discussions with the lenders and does not believe the lenders will call the related debt. The Company was in compliance with all debt covenants as of December 31, 2007.

The above loans (a to i, and l to m) are secured by a first priority mortgage over the vessels, corporate guarantee, a first assignment of all freights, earnings, insurances and requisition compensation. The loans contain covenants including restrictions, without the bank’s prior consent, as to changes in management and ownership of the vessels, additional indebtedness and mortgaging of vessels, change in the general nature of the Company’s business, and maintaining an established place of business in the United States or the United Kingdom. In addition, the vessel owning companies are not permitted to pay any dividends to DryShips Inc. nor DryShips Inc. to its shareholders without the lender’s prior consent. The loans also contain certain financial covenants relating to the Company’s financial position, operating performance and liquidity.

In terms of the loan agreement, the Company is required to hold bank deposits which are used to fund the loan installments coming due. These funds can only be used for the purposes of loan repayments and are shown as “Restricted cash” under current assets that at December 31, 2007 and 2008 amounted to $6,791 and $320,560, respectively, in the accompanying consolidated balance sheets. Restricted cash also includes additional minimum cash deposits required to be maintained with certain banks under the Company’s borrowing arrangements.

F-40

Included in the Restricted cash balances above are minimum required cash deposits, as defined in the loan agreements, which amounted to $20,000 and $280,000, at December 31, 2007 and 2008 respectively and are classified as non-current assets and current assets, respectively, in the accompanying consolidated balance sheets. Restricted cash has been classified as current as of December 31, 2008 as the related debt has been classified as current discussed above.

The vessel-owning subsidiary companies with outstanding loans had restricted net assets amounting to $221,716 and $727,038 as of December 31, 2007 and 2008, respectively.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

As of and for the Years Ended December 31, 2006, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

11. Long-term Debt - (continued):

Total interest incurred on long-term debt for the years ended December 31, 2006, 2007 and 2008 amounted to $37,364, $50,887 and $106,200, respectively. Of these amounts, for the years ended December 31, 2006, 2007 and 2008 amounts of $110, $2,597 and $13,058, respectively, were capitalized as part of advances paid for vessels under construction. Interest expense, net of interest capitalized, is included in “Interest and finance costs” in the accompanying consolidated statements of income. The Company’s weighted average interest rate (including the margin) for the years ended December 31, 2006, 2007, and 2008 was 6.59%, 6.48% and 4.28% respectively, at the year end.

The principal payments required to be made after December 31, 2008 for the loans discussed above are as follows:

Year ending December 31,	Amount
2009	$	2,396,660
2010		139,980
2011		139,094
2012		70,000
2013		452,500
		3,198,234
Less-Financing fees		(39,364	)
	$	3,158,870

As of December 31, 2007 and 2008 the Company’s unutilized line of credit totaled $48,650 and $951,574, respectively and the Company is required to pay a quarterly commitment fee of 0.60% per annum of the unutilized portion of the unutilized line of credit.

The Company was in default of certain of its financial covenants (for loans (a) to (i) and (l) through (n), discussed above) as of December 31, 2008. In accordance with FASB Statement No. 78, “Classification of Obligations that are Callable by the Creditor”, the Company has classified all of its long-term debt in breach amounting to $1.8 billion to current at December 31, 2008. As of the date of the filing of the annual report for the year ended December 31, 2008, of which these consolidated financial statements are a part, negotiations with all of its lenders have not been finalized and final waivers have not yet been obtained. However the Company was not in default for the loan discussed under (k) above at December 31, 2008.

F-41

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

12. Derivatives:

Under SFAS No. 157, the interest rate (LIBOR) used in the measurement of the fair value of the below financial instruments fall into level 2 of the fair value hierarchy for ranking the quality and reliability of the information used to determine fair values.

For assets, the information is presented as follows:

	Fair Value Measurements at Reporting Date Using
	December 31, 2008		Significant Other Observable Inputs (Level 2)
Derivatives	$	779	$	779
Total	$	779	$	779

For liabilities, the information is presented as follows:

	Fair Value Measurements at Reporting Date Using
	December 31, 2008		Significant Other Observable Inputs (Level 2)
Derivatives	$	204,999	$	204,999
Total	$	204,999	$	204,999

12.1 Interest rate swaps, cap and floor agreements: As of December 31, 2007 and 2008, the Company had outstanding eight and thirty interest rate swap, cap and floor agreements respectively maturing from June 2011 through November 2017. These contracts do not qualify for hedge accounting and as such changes in their fair values are reported to earnings. The fair value of these agreements equates to the amount that would be paid by the Company if the agreements were cancelled at the reporting date, taking into account current interest rates and creditworthiness of the Company.

(1) In May 2005, for a period of nine years through February 2014, for a notional amount of $154.2 million. Under the cap and floor provisions of the agreement the Company pays interest at 5.59% if three-month LIBOR is between 5.59% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.59%, if LIBOR is below or equal to 3%, then Company pays 3%;

(2) In May 2005, for a period of ten years through May 2015, for a notional amount of $120.6 million. Under the cap provisions of the agreement the Company pays interest at 5.8% if three-month LIBOR is between 5.8% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.8%, if LIBOR is below or equal to 3%, then Company pays 3%;

(3) In June 2005, for a period of eight years through March 2013, for a notional amount of $22.0 million. Under the cap provisions of the agreement the Company pays interest at 5.66% if three-month LIBOR is between 5.66% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.66%, if LIBOR is below or equal to 3%, then Company pays 3%;

F-42

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

12. Derivatives - (continued):

12.1 Interest rate swaps, cap and floor agreements-(continued):

(4) In June 2005, for a period of six years through June 2011, for a notional amount of $194.3 million. Under the cap provisions of the agreement the Company pays interest at 5.85% if three-month LIBOR is between 5.85% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.85%, if LIBOR is below or equal to 3%, then the Company pays 3%;

(5) In July 2005, for a period of ten years through April 2015, for a notional amount of $42.4 million. Under the cap provisions of the agreement the Company pays interest at 5.66% if three-month LIBOR is between 5.66% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.66%, if LIBOR is below or equal to 3%, then the Company pays 3%;

(6) In July 2005, for a period of seven years through April 2012, for a notional amount of $22.3 million. Under the cap provisions of the agreement the Company pays interest at 5.64% if three-month LIBOR is between 5.64% and 8.0% and at three-month LIBOR if LIBOR exceeds 8.0% or if it is between 3.0% and 5.64%, if LIBOR is below or equal to 3%, then the Company pays 3%;

(7) In August 2007, for a period of four years through November 2011, for a notional amount of $60 million. Under the cap provisions of the agreement the Company pays interest at 5.34% if three-month LIBOR is between 5.34% and 7.0% and at three-month LIBOR if LIBOR exceeds 7.0%. Under the floor provisions of the agreement the Company pays interest at 2.75% if three-month LIBOR is equal or less than 1.75%;

(8) In August 2007, for a period of four years through November 2011, for a notional amount of $75 million. Under the cap provisions of the agreement the Company pays interest at 5.25% if three-month LIBOR is between 5.25% and 7.0% and at three-month LIBOR if LIBOR exceeds 7.0%. Under the floor provisions of the agreement, the Company pays interest at 2.75% if three-month LIBOR is equal or less than 1.75%;

(9) From May 2008, for a period of five years through May 2013, for a notional amount of $357 million. Under the provisions of the agreement the Company pays a fixed rate of 3.92% and receives the three-month LIBOR;

(10) From June 2008, for a period of eight years through May 2016, for a notional amount of $144.2 million. Under the provisions of the agreement the Company pays a fixed rate of 4.385% and receives the three-month LIBOR;

(11) From June 2008, for a period of eight years through May 2016, for a notional amount of $66 million. Under the provisions of the agreement the Company pays a fixed rate of 4.38% and receives the three-month LIBOR;

(12) From July 2008, for a period of seven years through July 2015, for a notional amount of $124.75 million. Under the provisions of the agreement the Company pays a fixed rate of 4.13% and receives the three-month LIBOR;

(13) From July 2008, for a period of seven years through January 2015, for a notional amount of $94.9 million. Under the provisions of the agreement the Company pays a fixed rate of 4.09% and receives the three-month LIBOR;

F-43

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

12. Derivatives - (continued):

12.1 Interest rate swaps, cap and floor agreements - (continued):

(14) From May 2008, for a period of five years through May 2013, for a notional amount of $65 million. Under the provisions of the agreement the Company pays a fixed rate of 3.92% and receives the three-month LIBOR;

(15) From May 2008, for a period of seven years through November 2015, for a notional amount of $45 million. Under the provisions of the agreement the Company pays a fixed rate of 4.155% and receives the three-month LIBOR;

(16) From June 2008, for a period of five years through July 2013, for a notional amount of $28.65 million. Under the provisions of the agreement the Company pays a fixed rate of 3.7275% and receives the three-month LIBOR;

(17) From July 2008, for a period of nine years through September 2017, for a notional amount of $174.56 million. The agreement is divided into two periods. For the first period of three years through September 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through September 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR;

(18) From July 2008, for a period of nine years through September 2017, for a notional amount of $58.18 million. The agreement is divided into two periods. For the first period of three years through September 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through September 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR;

(19) From July 2008, for a period of six years through September 2014, for a notional amount of $58.18 million. The agreement is divided into two periods. For the first period of three years through September 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through September 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR;

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

12. Derivatives - (continued):

12.1 Interest rate swaps cap and floor agreements - (continued):

(20) From July 2008, for a period of six years through September 2014, for a notional amount of $19.39 million. The agreement is divided into two periods. For the first period of three years

F-44

through September 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through September 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR;

(21) From July 2008, for a period of nine years through November 2017, for a notional amount of $175.45 million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through November 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR;

(22) From July 2008, for a period of nine years through November 2017, for a notional amount of $58.48 million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of six years through November 2017 the Company pays a fixed rate of 5.45% and receives the three-month LIBOR;

(23) From July 2008, for a period of six years through November 2014, for a notional amount of $58.48 million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through November 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR;

(24) From July 2008, for a period of six years through November 2014, for a notional amount of $19.49 million. The agreement is divided into two periods. For the first period of three years through November 2011, under the cap provisions of the agreement, the Company pays interest at 5.10% if three-month LIBOR is over 5.10% and at three-month LIBOR if LIBOR is between 2.50% and 5.10%; under the floor provisions of the agreement the Company pays 3.75% if three-month LIBOR is below 2.50%. For the second period of three years through November 2014 the Company pays a fixed rate of 5.40% and receives the three-month LIBOR;

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

12. Derivatives - (continued)

12.1 Interest rate swaps cap and floor agreements - (continued):

(25) From December 2008, for a period of five years through June 2013, for a notional amount of $28.5 million. Under the provisions of the agreement the Company pays a fixed rate of 3.69% and receives the three-month LIBOR;

F-45

(26) From October 2008, for a period of five years through October 2013, for a notional amount of $49.85 million. Under the provisions of the agreement the Company pays a fixed rate of 3.97% and receives the three-month LIBOR;

(27) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.095% and receives the three-month LIBOR;

(28) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.065% and receives the three-month LIBOR;

(29) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.0675% and receives the three-month LIBOR;

(30) From October 2008, for a period of five years through October 2013, for a notional amount of $100 million. Under the provisions of the agreement the Company pays a fixed rate of 4.05% and receives the three-month LIBOR;

The fair value of each of these thirty interest rate swaps, cap and floor agreements equates to the amount that would be received or paid by the Company if the agreements were cancelled. The aggregate fair value of all such agreements at December 31, 2007 was a liability of $1,768 and at December 31, 2008 was an asset of $779 and a liability of $204,999, which amounts are included in “Financial instruments” in the accompanying consolidated balance sheets. A gain of $676, a loss of $3,981 and a loss of $207,936, respectively, are included in “Gain/ (Loss) on interest rate swaps” in the accompanying consolidated statements of income for the years ended December 31, 2006, 2007 and 2008.

As of December 31, 2008, deposits (margin call) of $15,700 and $15,900 for Hull 1865 and Hull 1866, respectively, were paid and were recorded as deposits in “Other non current assets” in the accompanying consolidated balance sheets. These deposits are required by the counterparty due to the market loss in the swap agreements for the year ended December 31, 2008.

12.2 Interest rate swap agreements: As of December 31, 2008, the Company had three interest rate swap agreements outstanding maturing on September 17, 2013. The fair value of these agreements equate to the amount that would be paid by the Company if the agreements were cancelled at the reporting date, taking into account current interest rates and creditworthiness of the Company. Such fair value at December 31, 2008, was a liability of $47,168.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

12. Derivatives - (continued)

12.2 Interest rate swap agreements - (continued):

As of December 31, 2008 the Company’s three interest rate swaps that qualified as cash flow hedges and the changes in their fair value are recognized in accumulated other comprehensive loss:

Bank	Notional Amount		Fixed rate		Trade rate	Value date	Maturity Date	Fair market value as of December 31, 2008
Bank A	$	300,000	3.80	%	19/09/2008	30/09/2008	17/09/2013	$	24,771
Bank B		100,000	3.77	%	12/09/2008	30/09/2008	17/09/2013		7,932
Bank C		332,500	3.53	%	22/09/2008	30/09/2008	17/09/2013		14,465
Total fair value of interest rate swaps								$	47,168

F-46

As of December 31, 2008, the loss of $46,548 is reflected in “Accumulated other comprehensive loss” in the accompanying consolidated statements of stockholders equity.

12.3 Forward contracts: As of December 31, 2008 the Company had outstanding four forward contracts to sell $6,000 for NOK 31.4 million and seven forward contracts to sell $10,500 for NOK 72.9 million. Such fair value at December 31, 2008 was a liability of $1,589.

The change in the fair value of such agreements for the year ended December 31, 2008 amounted to a loss of $2,512, and is reflected under “Other, net” in the accompanying consolidated statements of income.

12.4 Foreign exchange transactions: During 2007, the Company had one open foreign currency call option which matured in January 2007. The strike rate under this option was 1.21 USD per Euro, for an amount of Euro 200,000.

Additionally, during 2007, the Company had one forward foreign exchange contract, maturing in January 2007. The forward rate was 1.2320 USD per Euro for an amount of Euro 200,000.

A gain of $206 and a loss of $8 respectively, have been included in “General and administrative expenses” in the accompanying consolidated statements of income for the years ended December 31, 2006 and 2007.

12.5 Forward freight agreements: During the year ended December 31, 2006, the Company entered into seventeen forward freight agreements (“FFAs”) with the objective to utilize them as economic hedging instruments in order to reduce its exposure to market price fluctuations with respect to its fleet. Such agreements did not qualify for hedge accounting and therefore changes in their value were reflected in earnings. During the year ended December 31, 2006 and 2007, the loss of FFAs amounted to $22,473 and $0 respectively. As of December 31, 2007 and 2008, no FFAs remain open.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

13. Financial Instruments:

The carrying values of cash accounts receivable and accounts payable are reasonable estimates of their fair value due to the short-term nature of these financial instruments. The fair values of long-term bank loans approximate the recorded values, due to their variable interest rates.

14. Common Stock and Additional Paid-in Capital:

In October 2007, the Company filed a universal shelf registration statement on Form F-3 and related prospectus pursuant to the Controlled Equity Offering Sales Agreement by and between the Company and Cantor Fitzgerald & Co., dated October 13, 2007, relating to the offer and sale of up to 6,000,000 common shares. From October through December 2007, an amount of 1,191,000 shares of common stock with par value $0.01 were issued. The net proceeds, after underwriting commissions ranging between 2% to 2.5% and other issuance fees, amounted to $127,104. From January through March 2008, an amount of 4,759,000 shares of common stock with par value $0.01 were issued. The net proceeds, after underwriting commissions ranging between 1.5% to 2% and other issuance fees, amounted to $352,748.

F-47

In January 2008, the Company increased the aggregate number of authorized shares of its common stock from 75,000,000 registered shares to 1,000,000,000 registered shares with a par value of $0.01 and increased the aggregate number of authorized shares of preferred stock from 30,000,000 registered shares; par value $0.01 per share to 500,000,000 registered preferred shares with a par value of $0.01 per share.

In March 2008, the Company filed a prospectus supplement pursuant to Rule 424(b) relating to the offer and sale of up to 6,000,000 shares of common stock, par value $0.01 per share, pursuant to the Company’s Registration Statement on Form F-3 ASR.

On May 6 and 7, 2008, the Company issued 1,109,903 shares of common stock with par value $0.01 per share pursuant to the Company’s Controlled Equity Offering made under the Company’s shelf registration statement on Form F-3ASR and related prospectus supplement discussed above. The net proceeds, after underwriting commissions of 1.75% and other issuance fees, amounted to $101,574.

In October 2008, the Company issued 2,069,700 shares of common stock with par value $0.01 per share pursuant to the Company’s Controlled Equity Offering made under the Company’s shelf registration statement on Form F-3 ASR and related prospectus supplement. The net proceeds, after underwriting commissions of 1.75% and other issuance fees, amounted to $41,891.

In November 2008, the Company filed a prospectus supplement pursuant to rule 424(b) relating to the offer and sale of up to 25,000,000 common shares. In November and December 2008, the Company issued 24,980,300 shares of common stock with par value $0.01 per share pursuant to the Company’s Controlled Equity Offering made under the Company’s shelf registration statement on Form F-3 ASR and related prospectus supplement. The net proceeds, after underwriting commissions of 2.5% to 3% and other issuance fees, amounted to $167,057.

In December 2008, the Board of Directors approved the suspension of the Company’s dividend in light of the lower freight rate environment.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

14. Common Stock and Additional Paid-in Capital-(continued):

Stockholders Rights Agreement

On January 18, 2008, the Company entered into a Stockholders Rights Agreement. Under this Agreement, the Company declared a dividend payable of one preferred share purchase right, or Right (a “Right”), to purchase, under certain specified circumstances one one-thousandth of a share of the Company’s Series A Participating Preferred Stock for each outstanding share of DryShips Inc. common stock, par value $0.01 per share. As of December 31, 2008, none of the Rights has become exercisable.

15. Equity Incentive Plan:

On January 16, 2008, the Company’s Board of Directors approved the 2008 Equity Incentive Plan (the “Plan”). Under this Plan, officers, key employees, and directors are eligible to receive, with respect to the Company’s common stock, awards of stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock units and unrestricted stock.

On March 5, 2008, 1,000,000 non-vested common stock out of the 1,834,055 shares reserved in the Company’s 2008 Equity Incentive Plan were granted to Fabiana for the CEO and interim CFO (Note 6).

F-48

The shares vest quarterly in eight equal installments with the first, second and third installments of 125,000 shares each vesting on May 28, August 28, and November 28, 2008 in accordance with the consultancy agreement. The stock based compensation is being recognized to expenses over the vesting period and based on the fair value of the shares on the grant date ($75.09 per share). Stock based compensation expense for the year ended December 31, 2008 amounted to $31,175 and is included in “General and administrative expenses - related parties” in the accompanying consolidated statements of income.

The fair value of each share on the grant date was $75.09. The fair value of the non-vested shares granted amounted to $75,090 and will be recognized as compensation in the accompanying consolidated statements of income over the four year vesting period quarterly in sixteen equal installments.

On October 2, 2008, the Company’s Board of Directors and Compensation Committee approved grants for the non executive directors of the Company. On October 2, 2008, 9,000 fully vested shares and 9,000 non vested common shares were granted to the non-executive directors. The non vested common shares will vest evenly over a three- year period with the first vesting date commencing on January 1, 2009.

For the director vested shares, the fair value of each share on the grant date was $33.59. The fair value of the non-vested shares granted amounted to $302 and will be recognized as compensation in the accompanying consolidated statements of income over the vesting period. Stock based compensation for the year ended December 31, 2008 amounted to $327 and is included in “General and administrative expenses” in the accompanying consolidated statements of income.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

15. Equity Incentive Plan - (continued):

A summary of the status of the Company’s non vested shares as December 31, 2008, and movement during the year ended December 31, 2008, is presented below. There were no shares awards in 2006 or 2007.

	Number of non vested shares		Weighted average grant date fair value per non vested shares
Balance as at January 1, 2008	—		$	—
Granted	1,018,000			74.36
Vested	(384,000	)		74.12
Balance December 31, 2008	634,000		$	74.50

F-49

	Number of vested shares	Weighted average grant date fair value per non vested shares
Balance as at January 1, 2008		$	—
Granted	9,000		33.59
Non vested shares granted and vested 2008	375,000		75.09
As at December 31, 2008	384,000	$	74.12

Dividends of $0.20 per share were declared and paid to the vested and non-vested shares during 2008.

As of December 31, 2008, there was $44,192 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3 years. The total fair value of shares vested during the year ended December 31, 2008, was $28,461.

16. Pension and retirement benefit obligation:

DryShip’s fully consolidated subsidiary, Ocean Rig ASA has six retirement benefit plans for employees managed and funded through Norwegian life insurance companies. The pension plans cover 237 employees. The pension scheme is in compliance with the Norwegian law on required occupational pension.

The Company uses a January 1 measurement date for net periodic benefit cost and a December 31 measurement date for benefit obligations and plan assets.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

16. Pension and retirement benefit obligation - (continued):

The change in projected benefit obligation, change in plan assets, funded status and the amounts recognised in the accompanying consolidated balance sheets are shown in the table below:

	December 31, 2008
Change in projected benefit obligation
Projected benefit obligation at May 14, 2008	$	9,374
Service cost for benefits earned		1,989
Interest cost		155
Settlement		(298	)
Actuarial loss (gains)/losses		(1,210	)
Payroll tax of employer contribution		(367	)
Foreign currency exchange rate changes		(2,610	)
Projected benefit obligation at end of year	$	7,033

	December 31, 2008
Change in plan assets
Fair value of plan assets at May 14, 2008	$	6,904
Expected return on plan assets		270
Actual return on plan assets		(1,222	)
Employer contributions		2,600
Settlement		(105	)
Foreign currency exchange rates changes		(2,126	)
Fair value of plan assets at end of year		6,321
Unfunded projected benefit obligation	$	712

F-50

The unfunded projected benefit obligation is reflected in “Other non-current liabilities” in the accompanying consolidated balance sheets as of December 31, 2008.

Net periodic benefit cost included the following components:

	December 31,2008
Components of net periodic benefit cost
Expected return on plan assets	$	(140	)
Service cost		883
Interest cost		120
Amortization of prior service cost		190
Amortization of actuarial loss		77
Net periodic benefit cost		1,130
Increase in minimum pension liability included in other comprehensive loss	$	(1,701	)

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

16. Pension and retirement benefit obligation - (continued):

Pension obligations are actuarially determined and are affected by assumptions including expected return on plan assets, discount rates, compensation increases and employee turnover rates. The Company evaluates its assumptions periodically and makes adjustments to these assumptions and the recorded liabilities as necessary. Two of the most critical assumptions used in calculating the Company’s pension expense and liabilities are the expected long-term rate of return on plan assets and the assumed discount rate. The Company evaluates assumptions regarding the estimated long-term rate of return on plan assets based on historical experience and future expectations on investment returns, which are calculated by an unaffiliated investment advisor utilizing the asset allocation classes held by the plan’s portfolios. Changes in these and other assumptions used in the actuarial computations could impact the Company’s projected benefit obligations, pension liabilities, pension expense and other comprehensive income. The Company bases its determination of pension expense on a market-related valuation of assets that reduces year-to-year volatility. This market-related valuation recognizes investment gains or losses over a five-year period from the year in which they occur. Investment gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and the actual return based on the market-related value of assets.

The following are the weighted–average assumptions used to determine net periodic benefit cost:

	As of December 31, 2008
Weighted average assumptions:
Expected return on plan assets	5.80	%
Discount rate	3.80	%
Compensation increases	4.25	%

F-51

The Company reviews its investments and policies annually. In determining its asset allocation strategy, the Company reviews models presenting many different asset allocation scenarios to assess the most appropriate target allocation to produce long-term gains without taking on undue risk.

The following pension benefits payments are expected to be paid by the Company during the years ending:

December 31,
2009	1,463
2010	1,536
2011	1,613
2012	1,694
2013	1,779
2014-2019	10,318

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

17. Commitments and Contingencies:

17.1 Legal proceedings

Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. Except as described below, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.

The Company accrues the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. A minimum of up to $1 billion of the liabilities associated with the individual vessels actions, mainly for sea pollution, are covered by the Protection and Indemnity (P&I) Club insurance.

On March 15, 2008, the Company entered into a Memorandum of Agreement for the sale of the vessel MV Lacerta for $55,500. In November 2008, the Company commenced arbitration proceedings against the buyers due to the buyers’ repudiation of its obligations under the memorandum of agreement and failure to take delivery of the vessel MV Lacerta.

On July 17, 2008, the Company entered into an agreement to sell the MV Toro, a 1995 built 73,034 dwt Panamax drybulk carriers, for a price of approximately $63,400. On January 29, 2009 the Company reached an agreement with the buyers whereby the price will be reduced to $36,000. The MV Toro is currently employed in the spot market.

As part of the agreement the buyers will release the deposit of $6,300 to the Company immediately and will make a new deposit of $1,500. If the buyers fail to remit the remainder of the new purchase price, the Company will retain the vessel and will be entitled to claim compensation for the difference between the

F-52

current market price and the original contract price of $63,400. The vessel is expected to be delivered to the Buyers by April 2009. On February 13, 2009 the Company proceeded with the cancellation of the sale agreement because Buyers failed to pay the new deposit of $1,500. The Company has commenced arbitration proceedings for the difference between the current market price and the original contract price of $63.400.

On January 29, 2009, the Company entered into an agreement to cancel the previously announced acquisition of the 2005 built Panamax drybulk carrier MV Petalidi for a purchase price of $61,000 from an unrelated third party. The Company and the seller have mutually agreed to cancel the Memorandum of Agreement to acquire the vessel in consideration of a payment of $8,000 to the seller and the seller’s retention of the $6,100 deposit that was previously paid. The London arbitration and the New York proceeding between the Seller and the Company are both being discontinued.

A contingent liability of $3,143 has been recognized, based on a claim from an investment bank in relation to DryShips acquisition of Ocean Rig. The maximum dispute to this claim is $24,000.

In July 2006, Ocean Rig commenced London arbitration proceedings against Irving Shipbuilding, Inc. (“ISI”) in relation to ISI’s role in the completion of Eirik Raude in 2001 and 2002. The proceedings principally concern ISI’s financial management of the project in respect of which Ocean Rig will seek substantial damages from ISI.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

17. Commitments and Contingencies - (continued):

17.2 Purchase obligations

As of December 31, 2008, the Company has entered into separate memoranda of agreement and shipbuilding contracts to acquire nine vessels and two drillships newbuilding ultra deep water drilling rigs, namely H1865 and H1866.

In addition, during 2008 the Company entered into share purchase agreements to acquire the equity interests of Drillships Holdings Inc which owns two newbuilding ultra deep water drilling rigs under construction identified as Hull 1837 and Hull 1838.

The following table sets forth the Company’s contractual obligations and their maturity dates as of December 31, 2008:

Obligations	Total		1 year		2-3 years
Vessels
Shipbuilding contracts	$	47,237	$	47,237		—
Newbuilding purchases		560,855		389,945		170,910
Drillships
Shipbuilding contracts		1,162,771		21,695		1,141,076
Total	$	1,770,863	$	458,877	$	1,311,986

17.3 Contractual charter revenue

Future minimum contractual charter revenue, based on vessels committed to noncancelable, long-term time and bareboat charter contracts as of December 31, 2008, will be $582,763 during 2009, $587,371 during 2010, $522,409 during 2011, $236,013 during 2012 and $373,087 during 2013 and thereafter. These amounts do not include any assumed off-hire.

F-53

17.4 Rental payments

The Company leases office space in Athens, Greece, from Mr. George Economou, its Chairman, Chief Executive Officer and Interim Chief Financial Officer. The future obligations as of December 31, 2008 amount to $13 for 2009, $13 for 2010 and $10 for 2011. The contract expires in 2011.

Ocean Rig entered into a new five year office lease agreement with Vestre Svanholmen 6 AS which commenced on July 1, 2007. This lease includes an option for an additional five years term which must be exercised at least six months prior to the end of the term of the contract which expires in June 2012. The future obligations as of December 31, 2008 amount to $1,481 for 2009, $2,565 for 2010 and 2011 and $836 for 2012.

18. Voyage and vessel Operations Expenses:

The amounts in the accompanying consolidated statements of income are analyzed as follows:

	Year ended December 31,
	2006			2007			2008
Voyage Expenses
Port charges	$	1,231		$	748		$	1,041
Bunkers		729			717			5,952
Gain on sale of bunkers		(3,320	)		(7,467	)		(9,473	)
Commissions charged by third parties		8,229			24,450			39,181
Charter in – hire expense		6,040			6,040			5,935
Total		12,909			24,488			42,636
Commissions charged by a related party		3,056			7,159			10,536
Total	$	15,965		$	31,647		$	53,172

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

18. Voyage and vessel Operations Expenses - (continued):

On December 31, 2008, the Company reclassified the “Gain on sale of bunkers” to “Voyage Expenses” in the accompanying consolidated statements of income. These amounts represent the net gain or loss arising from the purchase and sale of bunkers on board vessels employed under time charter agreements, between the Company and the charterers.

	Year ended December 31,
	2006		2007		2008
Vessel Operating Expenses
Crew wages and related costs	$	21,444	$	28,187	$	36,723
Insurance		4,698		5,636		7,596
Repairs and maintenance		12,639		10,247		18,229
Spares and consumable stores		15,155		18,856		16,599
Tonnage taxes		228		299		515
Total	$	54,164	$	63,225	$	79,662

Voyage expenses for 2006, 2007 and 2008 include $6,040, $6,040 and $5,935 respectively, representing hire paid to an unrelated party for the charter-in of the vessel Darya Tara. Based on the charter party agreement concluded in November 2005, the vessel was chartered-in by the Company for a period of thirty-six to thirty-eight months at a daily hire rate of $16.5.

Concurrently with the aforementioned agreement, the Company concluded a charter party agreement with an unrelated party for the charter-out of the vessel Darya Tara over the same period and at a daily rate of $16.7. The revenue recognized on the above agreement for 2006, 2007 and 2008 amounted to $6,114, $6,114 and $6,004, respectively, and is included in “Voyage revenues” in the accompanying consolidated statements of income.

In 2005, the Manager concluded twenty-one agreements with an unrelated international supplier for the exclusive supply of lubricants to certain fleet vessels. Under the terms of this agreement a fixed quantity of main engine oils for each vessel will be supplied free of charge. The above discount offer assumes that

F-54

the Company will remain exclusively supplied by the specific supplier for at least four to five years following the date of the first supply. In the event the contract does not run for its full contractual term, the free lubricants acquired until the date of the premature termination will be charged at market prices to the Company at 100% of their volume if the contract is terminated within the first year, then reducing by 20% each year until the year the contract expires. The Company classifies lubricants expense in spares and consumable stores in the aforementioned table of “Voyage and Vessel Operating expenses”. During free lubricant periods, the Company records the market value of the lubricants consumed as an expense and amortizes the benefit of the free lubricants consumed on a straight-line basis to vessel operating expenses over the periods from the first supply through the date of their expiration as provided in the related contracts. The unamortized balance of the above benefits at December 31, 2007 and 2008 amounted to $552 and $398, respectively, and is reflected in “Other current liabilities” ($209 and $331 as of December 31, 2007 and 2008, respectively) and “Non-current liabilities” ($343 and $67 as of December 31, 2007 and 2008, respectively) in the accompanying consolidated balance sheets.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

19. Interest and finance Costs:

The amounts in the accompanying consolidated statements of income are analyzed as follows:

	Year ended December 31,
	2006			2007			2008
Interest on long-term debt	$	37,254		$	48,290		$	93,142
Long-term debt commitment fees		995			223			3,208
Bank charges		110			238			817
Amortization and write-off of financing fees		3,785			1,869			15,848
Other		(145	)		(3	)		179
		41,999			50,617			113,194
Interest on short-term credit facilities – related parties		393			293			—
Amortization and write-off of financing fees – related parties		—			321			—
	$	42,392		$	51,231		$	113,194

20. Segment information:

The table below presents information about the Company’s reportable segments as of December 31, 2008 and for the year ended December 31, 2008. No comparatives are disclosed as the Company acquired control of Ocean Rig and entered into the two drillship construction contracts during 2008. Ocean Rig is consolidated from May 15, 2008 (Note 10). The accounting policies followed in the preparation of the reportable segments are the same with those followed in the preparation of the Company’s consolidated financial statements.

	Drybulk carriers		Drilling Rigs			Total
Revenues from external customers	$	861,296	$	219,406		$	1,080,702
Depreciation		110,507		47,472			157,979
Income tax expenses		—		2,844			2,844
Net income/(loss)		380,060		(741,342	)		(361,282	)
Interest and finance cost		80,339		32,855			113,194
Interest income		7,730		5,355			13,085
Total Assets		2,424,049		2,418,631			4,842,680

F-55

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

21. Earnings per share:

Earnings per share has been calculated by dividing the net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if non vested common stock was vested. All of the Company’s shares (including non-vested common stock issued under the Plan) participate equally in dividend distributions. For the purpose of calculating basic earnings per common stock, any non-vested shares are not considered outstanding until the time based vesting restriction has elapsed.

In addition, dividends declared during the period for non-vested common stock are deducted from net income as reported for purposes of calculating net income available to common shareholders for the computation of basic earnings per share.

For purposes of calculating diluted earnings per share, dividends declared during the period for non-vested common stock are not deducted from net income as reported since such calculation assumes non vested common stock is fully vested from the grant date. However, the denominator of the diluted earnings per share calculation includes the incremental shares assumed issued under the treasury stock method weighted for the period the non-vested common stock is outstanding. The Company had no potentially dilutive securities for the year ended December 31, 2007. For the year ended December 31, 2008, the Company had a net loss from continuing operations and therefore the effect of the non-vested common stock outstanding under the Company’s 2008 Equity Incentive Plan was anti-dilutive and is not included in shares outstanding for purposes of computing diluted earnings per share. The Company calculates the number of shares outstanding for the calculation of basic and diluted earnings/(loss) per share as follows:

	For the year ended December 31,
	2006		2007		2008
Net income/(loss)	$	54,312	$	478,325	$	(361,282	)
Less: Dividends declared during the period for non vested common stock		—		—		(527	)
Net income/(loss) available to common stockholders	$	54,312	$	478,325	$	(361,809	)
Weighted average common shares outstanding, basic and diluted		32,348,194		35,700,182		44,598,585
Earnings/(loss) per share basic and diluted	$	1.68	$	13.40	$	(8.11	)

22. Income Taxes

Drybulk Carrier Segment

Neither the Marshall Islands nor Malta imposes a tax on international shipping income earned by a “non-resident” corporation thereof. Under the laws of the Marshall Islands and Malta, the countries in which the vessels owned by subsidiaries of the Company are registered, the Company’s subsidiaries (and their vessels) are subject to registration fees and tonnage taxes, as applicable, which have been included in Vessels’ operating expenses in the accompanying consolidated statements of income.

F-56

Pursuant to Section 883 of the United States Internal Revenue Code (the “Code”) and the regulations thereunder, a foreign corporation engaged in the international operation of ships is generally exempt from U.S. federal income tax on its U.S.-source shipping income if the foreign corporation meets both of the following requirements: (a) the foreign corporation is organized in a foreign country that grants an “equivalent exemption” to corporations organized in the United States for the types of shipping income (e.g., voyage, time, bareboat charter) earned by the foreign corporation and (b) more than 50% of the value of the foreign corporation’s stock is owned, directly or indirectly, by individuals who are “residents” of the foreign corporation’s country of organization or of another foreign country that grants

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

22. Income Taxes - (continued):

an “equivalent exemption” to corporations organized in the United States (the “50% Ownership Test”). For purposes of the 50% Ownership Test, stock owned in a foreign corporation by a foreign corporation whose stock is “primarily and regularly traded on an established securities market” in the United States (the “Publicly-Traded Test”) will be treated as owned by individuals who are “residents” in the country of organization of the foreign corporation that satisfies the Publicly-Traded Test.

The Marshall Islands and Malta, the jurisdictions where the Company’s ship-owning subsidiaries are incorporated, each grants an “equivalent exemption” to United States corporations with respect to each type of shipping income earned by the Company’s ship-owning subsidiaries. Therefore, the ship-owning subsidiaries will be exempt from United States federal income taxation with respect to U.S.-source shipping income if they satisfy the 50% Ownership Test.

The Company believes that it satisfied the Publicly-Traded Test for its 2007 and 2008 Taxable Years and therefore 100% of the stock of its Marshall Islands and Malta ship-owning subsidiaries will be treated as owned by individuals “resident” in the Marshall Islands. As such, each of the Company’s Marshall Islands and Malta ship-owning subsidiaries will be entitled to exemption from U.S. federal income tax in respect of their U.S. source shipping income. The Company’s ship-owning subsidiaries intend to take such position on their U.S. federal income tax returns for the 2007 and 2008 Taxable Years.

Drilling Rig Segment

Ocean Rig ASA, a consolidated subsidiary, is incorporated and domiciled in Norway, and as such, is subject to Norwegian state and federal income tax. At the federal level, qualifying net dividend income and net capital gains on the sale of qualifying investments in subsidiaries are taxed at 3% net rate. Consequently, Ocean Rig expects dividends from its subsidiaries and capital gains from sales of investments in its subsidiaries to be taxed at 3% rate instead of 28% Norwegian federal income tax.

Ocean Rig ASA operates through its various subsidiaries in a number of countries throughout the world. Income taxes have been provided based upon the tax laws and rates in the countries in which operations are conducted and income is earned. The countries in which Ocean Rig ASA operates have taxation regimes with varying nominal rates, deductions, credits and other tax attributes. Consequently, there is no expected relationship between the provision for or benefit from income taxes and income or loss before income taxes.

The components of Ocean Rig ASA’s provision (benefit) for income taxes are as follows:

	Year Ended December 31 2008
Current provisions	$	2,844
Deferred provision (benefit)		—
Income tax provision	$	2,844
Effective tax rate		(16	)%

Reconciliation of total tax cost:

	May 15 to December 31, 2008
28% profit/(loss) before tax	$	(4,961	)
Change in valuation allowance		110,888
Differences in tax rates		3,344
Effect of permanent differences		(145,701	)
Effect of exchange rate differences		39,274
Total	$	2,844

F-57

Ocean Rig ASA is subject to changes in tax laws, treaties and regulations in and between the countries in which its subsidiaries operate. A material change in these tax laws, treaties or regulations could result in a higher or lower effective tax rate on worldwide earnings.

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

22. Income Taxes - (continued):

Deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Company’s assets and liabilities at the applicable tax rates in effect. The significant components of deferred tax assets and liabilities are as follows:

	December 31 2008
Deferred tax assets
Net operation loss carry forwards	$	126,233
Outside basis in subsidiaries		91,447
Accrued payroll expenses not currently		199
Other temporary differences		13,656
Total deferred tax assets	$	231,535
Deferred tax liabilities
Rig contracts		(9,789	)
Other temporary differences		(3,712	)
Total deferred tax liabilities	$	(13,501	)
Net deferred tax asset	$	218,034
Valuation allowance		(218,034	)
Current portion of net deferred tax asset		3,863
Long-term portion of net deferred tax asset	$	214,171
Net change in valuation allowance	$	110,888
Current portion of valuation allowance		(3,863	)
Long term portion of valuation allowance	$	(214,171	)

Deferred taxes have not been provided for in circumstances where the Company does not expect the operations in a jurisdiction to give rise to future tax consequences, due to the structure of operations and applicable law. Should its expectations change regarding the expected future tax consequences, the Company may be required to record additional deferred taxes that could have a material adverse effect on its consolidated statement of financial position, results of operations or cash flows.

The $110,888 increase in Ocean Rig ASA’s net deferred tax asset before valuation allowance is composed primarily of $170,697 related to changes in tax losses carried forward, $190,926 related to accelerated depreciation of assets, $91,447 related to changes in outside basis in subsidiaries, $9,789 related to changes in rig contracts and $9,566 related to changes in accruals and debt amortisation costs.

The Company has not provided for deferred taxes on the unremitted earnings of certain subsidiaries that the Company considers to be permanently reinvested. Should the Company make a distribution of the unremitted earnings of these subsidiaries, we may be required to record additional taxes. Because the Company cannot predict when, if it at all, it will make distribution of these unremitted earnings, it is unable to make a determination of the amount of unrecognized deferred tax liability. Ocean Rig ASA will be liquidated in 2009 and dividends from the liquidation will be distributed to Primelead Inc.

F-58

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

22. Income Taxes - (continued):

A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. The Company provides a valuation allowance to offset deferred tax assets for net operating losses (“NOL”) incurred during the year in certain jurisdictions and for other deferred tax assets where, in the Company’s opinion, it is more likely than not that the financial statement benefit of these losses will not be realized. The Company provides a valuation allowance for foreign tax credit carryforwards to reflect the possible expiration of these benefits prior to their utilization. As of December 31, 2008, the valuation allowance for non-current deferred tax assets decreased from $107,146 to $218,034. The decrease is primarily a result from a reduction of deferred tax asset due to effects of the rig export.

The Company has tax losses which arose in Norway with a tax effect of $117,588 at December 31, 2008 and $286,511 at May 14, 2008 that are available indefinitely for offset against future taxable profits of the companies in which the losses arose. The Company has tax losses which arose in Canada with a tax effect of $8,645 at December 31, 2008 and $10,419 at May 14, 2008 that are available indefinitely for offset against future taxable profits of the company in which the losses arose. The tax loss in Canada may be deducted in the future only against income and proceeds of disposition derived from resource properties owned at the time of the acquisition of control, or the Weymouth well. Thus the possibility for utilization of this tax position is in practice expired for the period after the change of control in Ocean Rig ASA on May 14, 2008.

The Company’s income tax returns are subject to review and examination in the various jurisdictions in which the Company operates. The Company is currently contesting various tax assessments. The Company accrues for income tax contingencies that it believes are more likely than not exposures in accordance with the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 (“FIN 48”). The Company did not have any unrecognized tax benefits at May 14, 2008 or as of December 31, 2008. The Canadian subsidiary, Ocean Rig Inc., is currently subject to a tax audit.

F-59

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

22. Income Taxes - (continued):

It is reasonably possible that the existing liabilities for unrecognized tax benefits may increase or decrease in the next twelve months primarily due to the progression of open audits or the expiration of statutes of limitation. However, the Company cannot reasonably estimate a range of potential changes in the Company’s existing liabilities for unrecognized tax benefits due to various uncertainties, such as the unresolved nature of various audits.

The Company accrues interest and penalties related to its liabilities for unrecognized tax benefits as a component of income tax expense. During the year ended December 31, 2008, the Company did not incur any interest or penalties.

Ocean Rig ASA, or one of its subsidiaries, file federal and local tax returns in several jurisdictions throughout the world. With few exceptions, they are no longer subject to examinations of the Company’s U.S. and non-U.S. tax matters for years prior to 1999. The amount of current tax benefit recognized during the years ended December 31, 2008 and December 31, 2007 from the settlement of disputes with tax authorities and the expiration of statute of limitations was insignificant. There was a change in the taxation of capital gains/dividends from qualifying investments in subsidiaries in 2008. Previously they were not taxed; however in 2008 a 3% capital gains tax was imposed.

23. Subsequent Events:

The accounting impact of the below subsequent events will be recorded in 2009.

a) Ocean Rig ASA, Ocean Rig 1 AS, Ocean Rig 2 AS and Ocean Rig Norway AS filed for liquidation on January 20, 2009 as a part of a restructuring of the Ocean Rig Group.

b) On January 12, 2009 the Company agreed to transfer its interests in the owning companies of three Capesize newbuildings to an entity that is not affiliated with the Company. In connection with this transfer of interest, the sellers will release the Company and its relevant subsidiaries from the purchase agreements for these vessels. The consideration consists of $36,400 in deposits toward the acquisition of the three vessels already made by the Company, $30,000 in cash that has been paid to the purchaser and two additional tranches of $25,000 each payable to the purchaser within 30 and 60 days respectively. The two additional tranches may be paid in cash or equivalent in shares. On March 19, 2009, the Company issued a total of 11,990,405 common shares to the nominees of Central Mare Inc.

F-60

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

23. Subsequent Events - (continued):

c) On January 28, 2009, the Company entered into an ATM Equity Offering Sales Agreement with Merrill Lynch, Pierce Fenner & Smith Incorporated, or Merrill Lynch, for the offer and sale of up to $500 million of its common shares, par value $0.01 per share, offered by the related prospectus supplement, dated January 28, 2009 pursuant to the Company’s Registration statement on Form F-3 ASR. As of March 6, 2009, the Company has issued and sold 71,265,000 common shares pursuant to the at-the-market offering, resulting in net proceeds of $370.5 million.

d) In October 2008 the Company agreed to purchase nine Capesize drybulk carriers for an aggregate purchase price of $1.17 billion from clients of Cardiff Marine Inc. including affiliates of George Economou, the Company’s Chairman and Chief Executive Officer, and third parties consisting of 19.4 million of the Company’s common shares and the assumption of an aggregate of $478,300 in debt and future commitments. In light of the considerable decrease in the asset values of the nine Capesize vessels, the Company has reached an agreement with the sellers to cancel this transaction. The consideration to cancel the transaction will consist of the issuance of 6,500 shares to entities that are unaffiliated with the Company nominated by the third-party sellers, which will be subject to a six month lock-up period. The consideration received by entities controlled by George Economou consists solely of 3.5 million “out of the money” warrants. Each warrant entitles the holder to purchase one share of the Company common stock. These warrants will have a cost of $0.01 and will have strike prices, depending on the relevant tranches, of between $20 and $30 per share. The warrants will vest over an 18 month period and will expire after five years. This transaction has been approved by the independent members of the Board of Directors and is subject to customary documentation provisions. The cancellation fee will be paid in 2009.

e) On July 29, 2008, the Company entered into a memorandum of agreement for the sale of the vessel La Jolla for $66,000. The sale agreement was subsequently cancelled on February 10, 2009 and a cancellation fee of $9,000 was paid to the Company which included the retention of $6,600 on deposit.

f) The Company previously agreed to acquire two Panamax newbuildings, identified as Hulls 1518A and 1519A, for a purchase price in the amount of $33,600 each. These vessels are scheduled for delivery from Hudong Shipbuilding in June 2009. An affiliated client of the Company’s manager, Cardiff, with which it is affiliated, has agreed to purchase Hull 1569A, a sister vessel to Hulls 1518A and 1519A. The Company has agreed to increase the purchase price for Hulls 1518A and 1519A by $5,000 each in consideration of (i) a corresponding $10,000 decrease in the purchase price of Hull 1569A and (ii) an undertaking that on delivery of Hulls 1518A and 1519A, the owner of Hull 1569A will repay the Company by effecting payment of $10,000 to Hudong Shipbuilding. The Company will issue a guarantee to the shipyard for this increase in the purchase price of Hulls 1518A and 1519A. This transaction has been approved by the independent members of the board of directors as an accommodation to the Company’s manager.

g) On January 21, 2009 the Compensation Committee approved a new agreement with Fabiana under which the annual remuneration is Euro 2,000 instead of $2,000.

F-61

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

23. Subsequent Events - (continued):

h) On March 5, 2009, a complaint against the Company’s current board of directors and a former director was filed in the High Court of the Republic of the Marshall Islands for an unspecified amount of damages alleging that such directors had breached their fiduciary duty of good faith in connection with the termination of the acquisition of four Panamax drybulk carriers and nine Capesize drybulk carriers. The Company has just received the complaint and is currently studying it. See notes 6 and 7 for discussion of these related party transactions.

i) On March 6, 2009, the Company received a waiver from the Nordea Bank in connection with the $800,000 facility obtained in for the acquisition of Ocean Rig. The material terms of the covenant waiver and amendment agreement with Nordea Bank are as follows: (1) the Company will pay a restructuring fee of 0.15% on the outstanding loan amount under the facility plus an amount equal to 1.00% per annum on the loan outstanding for the period from January 9, 2009 until February 12, 2009; (2) $75,000 of principal repayment due February 2009 will be postponed until May 2009; (3) the margin on the facility will increase by 1.00% to 3.125% per annum; (4) regular principal payments will resume as of August 2009; (5) the Company and its subsidiaries Primelead Ltd. and Primelead Shareholders, will ensure that Ocean Rig maintains $180,000 in restricted cash in accounts with Nordea Bank and DnB Nor Bank from February 12, 2009 through May 12, 2009; (6) beginning June 12, 2009, the Company will make monthly deposits of $16,700 up to the amount of the next scheduled payment under the facility, and (7) if the Company issues equity, bonds or other unsecured debt after January 1, 2009, then upon completion of such issue, the Company will repay an amount equal to (i) 100% of the net proceeds from the first batch of $100,000 of shares sold, (ii) 50% of the net proceeds from the second batch of $100,000 of shares sold, (iii) 25% of the net proceeds from the third and fourth batch of $100,000 of shares sold, and (iv) 0% of the net proceeds from any additional shares sold above the first $400,000 of shares sold. As per this clause, the company has repaid $195,000 of the Loan from the proceeds of the January 28, 2009 ATM Equity Offering Sales Agreement with Merrill Lynch. In addition, among other things, lender consent will be required for the acquisition of drillship hulls 1837 and 1838, for new cash capital expenditures or commitments and for new acquisitions for cash until the loan has been repaid to below $375,000. The waiver agreement effective date will not exceed August 12, 2009.

j) The vessel Paragon was delivered to her owners on March 3, 2009.

k) In February 2009, the vessel Saldanha, which is owned by the Company’s subsidiary, Team-Up Owning Company Limited, was seized by pirates while transporting coal through the Gulf of Aden. The vessel is covered by insurance for any possible losses which the vessel may incur.

l) On March 12, 2009, Pankaj Khanna was appointed as Chief Operating Officer to the Company.

m) On March 18, 2009, the Company received a letter of award for the Leiv Eiriksson for a three year period with Petróleo Brasiliero S.A. at a day rate of $540,000 plus an 8% incentive bonus based on operational performance.

n) On January 29, 2009, the Company entered into an agreement to cancel the previously announced acquisition of the 2005 built Panamax drybulk carrier Petalidi for a purchase price of $61,000 from an unrelated third party. The Company and the seller have mutually agreed to cancel the Memorandum of Agreement to acquire the vessel in consideration of a payment of $8,000 to the seller and the seller’s retention of the $6,100 deposit that was previously paid. The London arbitration and the New York proceeding between the Seller and the Company are both being discontinued.

F-62

DRYSHIPS INC.

Notes to Consolidated Financial Statements

December 31, 2007 and 2008

(Expressed in thousands of United States Dollars - except for share and per share data, unless otherwise stated)

23. Subsequent Events - (continued):

o) On February 6, 2009, the Company reached an agreement to sell the MV Toro at a reduced sale price. The purchaser of the MV Toro pursuant to this agreement, Samsun, agreed to release its deposit of $6,300 to the Company immediately and make a new deposit of $1,500. It thereafter was reported in the press that Samsun had filed for receivership, and the Company received notice of this receivership action. In addition, while Samsun released the initial deposit of $6,300 to the Company, it failed to make the additional deposit of $1,500. As a result, the Company believes Samsun is in breach of this agreement. Samsun has not stated whether it intends to fulfill its agreement to purchase the MV Toro, and the Company has commenced arbitration proceedings against Samsun claiming compensation for the difference between the current market price and the contract price of $63,400 pursuant to the agreement with Samsun.

F-63

Schedule I- Condensed Financial Information of Dryships Inc. (Parent Company Only)

Balance Sheets

December 31, 2007 and 2008

(Expressed in thousands of U.S. Dollars – except for share and per share data)

	2007		2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	576	$	1,039
Restricted cash		6,791		14,326
Due from subsidiaries*		316,163		—
Due from related parties		9,813		17,480
Other current assets		372		324
Total current assets		333,715		33,169
NON-CURRENT ASSETS:
Investments in subsidiaries*		1,465,660		2,692,706
Restricted cash		5,308		—
Total non-current assets		1,470,968		2,692,706
Total assets	$	1,804,683	$	2,725,875
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	108,047	$	669,834
Due to subsidiaries*		—		637,064
Financial instruments		—		31,921
Other current liabilities		2,442		14,916
Total current liabilities		110,489		1,353,735
NON-CURRENT LIABILITIES
Long term debt, net of current portion		671,560		—
Financial instruments		905		80,568
Total non-current liabilities, net		672,465		80,568
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value; 75,000,000 and 1,000,000,000 shares authorized at December 31, 2007 and 2008; 36,681,097 and 70,600,000 shares issued and outstanding at December 31, 2007 and 2008, respectively		367		706
Accumulated other comprehensive loss		—		(44,847	)
Additional paid-in capital		454,538		1,148,365
Retained earnings		566,824		187,348
Total stockholders’ equity		1,021,729		1,291,572
Total liabilities and stockholders’ equity	$	1,804,683	$	2,725,875

*Eliminated in consolidation

F-64

Schedule I- Condensed Financial Information of Dryships Inc. (Parent Company Only)

Statements of Income

For the years ended December 31, 2006, 2007 and 2008

(Expressed in thousands of U.S. Dollars – except for share and per share data)

	2006			2007			2008
EXPENSES:
Loss on forward freight agreements	$	22,473		$	—		$	—
Management fees – related party		—			—			5,281
General and administrative expenses		2,053			2,608			9,865
General and administrative expenses-related party		3,194			2,461			41,205
Operating loss		27,720			5,069			56,351
OTHER INCOME / (EXPENSES):
Interest and finance costs		(37,473	)		(49,065	)		(31,489	)
Interest income		1,317			2,197			2,556
Gain/(loss) on interest rate swaps		—			(3,638	)		(115,613	)
Other, net		—			1,222			90
Total other (expenses), net		(36,156	)		(49,284	)		(144,456	)
Equity in earnings/(loss) of subsidiaries*		118,188			532,678			(160,475	)
Net income/(loss)	$	54,312		$	478,325		$	(361,282	)
Earnings/(loss) per share, basic and diluted		1.68			13.40			(8.11	)
Weighted average number of shares, basic and diluted		32,348,194			35,700,182			44,598,585

*Eliminated in consolidation

F-65

Schedule I- Condensed Financial Information of Dryships Inc. (Parent Company Only)

Statements of Cash Flows

For the years ended December 31, 2006, 2007 and 2008

(Expressed in thousands of U.S. Dollars)

	2006			2007			2008
Net Cash (Used in)/Provided by Operating Activities	$	(254,233	)	$	128,978		$	934,909
Cash Flows from Investing Activities:
Investments in subsidiaries		(96,307	)		(359,388	)		(1,450,562	)
Restricted cash		—			—			(2,227	)
Net Cash Used in Investing Activities		(96,307	)		(359,388	)		(1,452,789	)
Cash Flows from Financing Activities:
Restricted cash		(16,665	)		4,566			—
Proceeds from long-term debt		706,875			319,697			49,400
Proceeds from short-term credit facility		—			30,076			—
Payment of short term credit facility		—			—			(30,076	)
Principal payments of long-term debt		(362,406	)		(228,278	)		(128,996	)
Net proceeds from common stock issuance		56,490			127,104			662,664
Dividends paid		(22,157	)		(28,392	)		(33,244	)
Payment of financing costs		(3,232	)		(2,640	)		(1,405	)
Net Cash Provided by Financing Activities		358,905			222,133			518,343
Net (decrease) / increase in cash and cash equivalents		8,365			(8,277	)		463
Cash and cash equivalents at beginning of year		488			8,853			576
Cash and cash equivalents at end of year	$	8,853		$	576		$	1,039

F-66

Schedule I- Condensed Financial Information of Dryships Inc. (Parent Company Only)

In the condensed financial information of the Parent Company, the Parent Company’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries. The Parent Company, during the years ended December 31, 2006, 2007 and 2008, received cash dividends from its subsidiaries of $22,157, $28,392 and $33,244, respectively, which are included in equity in earnings/(loss) of subsidiaries in the condensed statements of income.

The Parent Company is a joint and several borrower under the HSH facility and the HSH bridge facility bank loan agreements and guarantor under the remaining loans outstanding at December 31, 2007 and 2008.

The principal payments required to be made after December 31, 2008 for the loans discussed above are as follows:

	Amount
Year ending December 31, 2009	$	673,408
Less-financing fees		(3,574	)
	$	669,834

The Parent Company was in default of certain of its financial covenants for this loan as of December 31, 2008. In accordance with FASB Statement No. 76, “Classification of Obligations that are Callable by the Creditor”, the Parent has classified all of its long-term debt in breach as current at December 31, 2008. As of the date of the filing of the annual report for the year ended December 31, 2008, of which this condensed financial information is a part, negotiations with the Parent Company’s lenders have not been finalized and a final waiver has not yet been obtained. The Parent Company was in compliance with all debt covenants as of December 31, 2007.

See Note 11 “Long-term Debt” to the consolidated financial statements for further information.

The condensed financial information of the Parent Company should be read in conjunction with the Company’s consolidated financial statements.

F-67

EX-2.1

Exhibit 2.1

DRYSHIPS INC. INCORPORATED UNDER THE LAWS OF THE MARSHALL ISLANDS	SHARES
	SEE REVERSE FOR CERTAIN DEFINITIONS
	CUSIP Y2109Q 10 1

THIS IS TO CERTIFY THAT

SPECIMEN

IS THE OWNER OF

FULLY-PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.01 EACH OF THE COMMON STOCK OF

DRYSHIPS INC.

transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed.

This certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated:

[Signature]	[Signature]
SECRETARY	CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRESIDENT

COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
	TRANSFER AGENT AND REGISTRAR
	(New York, N.Y.)
BY:
	AUTHORIZED SIGNATURE

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM	—	as tenants in common	UNIF GIFT MIN ACT	—	Custodian
TEN ENT	—	as tenants by the entireties			(Cust)	(Minor)
JT TEN	—	as joint tenants with right of			under Uniform Gifts to Minors
		survivorship and not as tenants			Act
		in common			(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED,                                          hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
	Shares
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
	Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.

Dated

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. The signature of the person executing this power must be guaranteed by an Eligible Credit Union, or a Savings Association participating in a Medallion program approved by the Securities Transfer Association, Inc.

Signature(s) Guaranteed

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A STOCKHOLDER RIGHTS AGREEMENT BETWEEN DRYSHIPS INC. AND AMERICAN STOCK TRANSFER & TRUST COMPANY, AS THE RIGHTS AGENT, DATED AS OF JANUARY 18, 2008, (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF DRYSHIPS INC. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. DRYSHIPS INC. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

EX-4.5

Exhibit 4.5

SUPPLEMENTAL LETTER

To:	DryShips Inc.
	Trust Company Complex
	Ajeltake Road
	Ajeltake Island
	Majuro
	The Marshall Islands MH 96960
From:	HSH Nordbank AG
	Gerhart-Hauptmann-Platz 50
	D-20095 Hamburg
	Germany

Dear Sirs

15 May 2006

1. Background.

(A) By a loan agreement (the “Senior Loan Agreement”) dated 31 March 2006 and made between (i) DryShips Inc. as borrower (the “Borrower”), (ii) the banks and financial institutions listed therein as lenders (the “Senior Lenders”), (iii) the banks and financial institutions listed therein as swap banks, (iv) ourselves as agent, lead arranger, lead bookrunner and security trustee, (v) ourselves and The Governor and Company of the Bank of Scotland (“BOS”) as joint underwriters and (vi) BOS as joint bookrunner, it was agreed that the Senior Lenders would make available to the Borrower a term loan and short-term credit facilities of up to US$518,750,000 (the “Senior Loan”) in agreement.

(B) By a loan agreement (the “Junior Loan Agreement”) dated 31 March 2006 and made between (i) the Borrower, (ii) the banks and financial institutions listed therein as lenders (the “Junior Lenders” and together with the Senior Lenders, the “Lenders”), (iii) the banks and financial institutions listed therein as swap banks, (iv) ourselves as agent, lead arranger, lead bookrunner and security trustee and (v) BOS as joint bookrunner it was agreed that the Junior Lenders would make available to the borrower a term loan and short-term credit facilities of up to US$110,000,000 (the “Junior Loan”) in aggregate.

(c) The Borrower has requested to drawdown an amount of US$26,512,500 representing 79.38 per cent. of the Market Value of the vessel “ATACAMA” (tbr “MAGANARI”) (the “Ship”) to part-finance the acquisition of the Ship, which is one of the Additional Ships referred to in each of the Senior Loan Agreement and the Junior Loan Agreement (together, the “Loan Agreements” and each a “Loan Agreement”). Under the terms of the Loan Agreements the amount of the Additional Advances which may be made available under the Loan Agreements to finance the acquisition of an Additional Ship may not exceed 75 per cent. of the Market Value of that Additional Ship.

Words and expressions defined in the Loan Agreements shall have the same meanings when used in this Letter unless otherwise defined or unless the context otherwise requires.

2. Agreement and Amendments to the Senior Loan Agreement and the Junior Loan Agreement. Subject to the satisfaction of the conditions of this Letter and your agreement to repay the Additional Advances which shall be used to finance the Additional Ship in the manner referred to in the Schedule to this Letter, we (in our capacity as Agent for the Lenders) agree to give our consent to your request. We also hereby confirm and agree that the terms of Clauses 8.1(a)(ii) and 8.1(b) of each Loan Agreement (dealing with the Repayment Instalments and Balloon Instalments of the Additional Advances), shall not apply to each Additional Advance in respect of the Ship and each such Additional Advance shall be repaid in accordance with the Schedule to this Letter. Clauses 8.l(a)(ii) and 8.l(b) of each Loan Agreement shall, as they relate to the Repayment Instalments and Balloon Instalments and the Balloon lnstalment for each Additional Advance in respect of that Ship, be read and construed accordingly.

3. Representations and Warranties. The Borrower hereby represents and warrants to the Lenders that:

(a) the representations and warranties contained in each Loan Agreement are true and correct on the date of this Letter as if all references therein to “this Agreement” were references to each of the Senior Loan Agreement and the Junior Loan Agreement as supplemented by this Letter; and

(b) this Letter comprises the legal, valid and binding obligations of the Borrower enforceable in accordance with its terms.

4. Conditions. Our agreement contained in paragraph 2 of this Letter shall be expressly subject to the condition that each Additional Advance in respect of the Ship will be repaid in the form set out in the Schedule hereto and that we shall have received in form and substance as may be approved or required by us on or before the signature hereof:

(a) copies of resolutions passed at a meeting of the board of directors of the Borrower evidencing approval of this Letter and authorising appropriate officers or attorneys to execute the same;

(b) the original of any power of attorney issued in favour of any person executing this Letter on behalf of the Borrower; and

(c) copies of all governmental and other consents, licences, approvals and authorisations as may be necessary to authorise the performance by the Borrower of its obligations under this Letter and the execution validity and enforceability of this Letter.

5. Senior Loan Agreement, Junior Loan Agreement and Finance Documents. The Borrower hereby agrees with the Lenders that the provisions of each Loan Agreement and the Finance Documents shall be and are hereby re-affirmed and remain in full force and effect.

6. Notices. Clause 28 (Notices) of each Loan Agreement shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set forth.

7. Governing Law. This Letter shall be governed by and construed in accordance with English law and Clause 30 (Law and Jurisdiction) of each Loan Agreement shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set Forth.

2

Please confirm your acceptance to the foregoing terms and conditions by signing the acceptance at the foot of this letter.

Yours faithfully

George Paleokrassas

for and on behalf of

HSH NORDBANK AG

Accepted and agreed

Eugenia Papapontikou

for and on behalf of

DRYSHIPS INC.

Dated 15 May 2006

3

EX-4.10

Exhibit 4.10

Date 27 February 2008

DRYSHIPS INC.

as Borrower

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Part A of Schedule 1

as Lenders

- and -

HSH NORDBANK AG

as Agent and Security Trustee

- and -

HSH NORDBANK AG

as Lead Arranger and Lead Bookrunner

- and -

BANK OF SCOTLAND PLC

as Joint Bookrunner

- and -

HSH NORDBANK AG

and

BANK OF SCOTLAND PLC

as Joint Underwriters

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed at Part B of Schedule 1

as Swap Banks

SUPPLEMENTAL AGREEMENT

relating to revolving credit and term loan facilities

of (originally) up to US$518,750,000 in aggregate

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

		Page
Clause
1	INTERPRETATION	2
2	AGREEMENT OF THE CREDITOR PARTIES	3
3	CONDITIONS PRECEDENT	3
4	REPRESENTATIONS AND WARRANTIES	4
5	AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS	4
6	FURTHER ASSURANCES	5
7	FEES AND EXPENSES	5
8	COMMUNICATIONS	6
9	SUPPLEMENTAL	6
10	LAW AND JURISDICTION	6
EXECUTION PAGES		8

THIS AGREEMENT is made on 27 February 2008

BETWEEN

(1) DRYSHIPS INC, as Borrower;

(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Part A of Schedule I of the Loan Agreement, as Lenders;

(3) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Agent;

(4) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Security Trustee;

(5) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Lead Arranger;

(6) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Lead Bookrunner;

(7) BANK OF SCOTLAND PLC, acting through its office at Pentland House, 8 Lochside Avenue, Edinburgh EH12 9 DJ, Scotland, as Joint Bookrunner;

(8) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Federal Republic of Germany and BANK OF SCOTLAND PLC, acting through its office at Pentland House, 8 Lochside Avenue, Edinburgh EH12 9 DJ, Scotland, as Joint Underwriters; and

(9) THE BANKS AND FINANCIAL INSTITUTIONS listed at Part B of Schedule I of the Loan Agreement, as Swap Banks.

BACKGROUND

(A) By a loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter dated 15 May 2006 and as further amended and supplemented by a supplemental agreement dated 28 November 2006 and further amended and restated by an amending and restating agreement dated 23 May 2007, the “Loan Agreement”) and made between (i) the Borrower, (ii) the Lenders, (iii) the Agent, (iv) the Security Trustee, (v) the Lead Arranger, (vi) the Lead Bookrunner, (vii) the Joint Bookrunner, (vii) the Joint Underwriters and (ix) the Swap Banks, the Lenders agreed to make available to the Borrower both term loan and short-term credit facilities of (originally) up to US$518,750,000 in aggregate.

(B) The Borrower has made a request to the Agent that the Majority Lenders or, as the case may be, the Lenders give their consent:

(i) to the discharge of the first priority Maltese mortgages and amendment mortgages over m.vs. “WAIKIKI”, “SOLANA”, “TORO”, “LANZAROTE”, “LACERTA”, “MENORCA”, “PARAGON” and “IGUANA” and the release of the Owners of such Ships from their obligations under the Finance Documents to which they are a party (the “Released Ships”);

(ii) to the waiver of the mandatory prepayment required to be made pursuant to clause 8.9 of the Loan Agreement upon the discharge of the mortgage over each of the Ships referred to in paragraph (i) of this Recital (B); and

(iii) the incurrence of further Financial Indebtedness by the Borrower with Nordea Bank Finland plc. in the amount of $243,000,000 and with certain other financial institutions in the amount of $170,000,000.

(C) The Lenders consent to the Borrower’s request referred to in Recital (B) provided that (i) at all times there is available to the Borrower and all the other members of the Group an aggregate amount of not less than $40,000,000 and (ii) the Market Value Adjusted Net Worth for each Financial Year increases from $225,000,000 to $500,000,000.

(D) This Agreement sets out the terms and conditions on which the Creditor Parties agree, with effect on and from the Effective Date, to amend the Loan Agreement.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Defined expressions. Words and expressions defined in the Loan Agreement and the other Finance Documents shall have the same meanings when used in this Agreement unless the context otherwise requires.

1.2 Definitions. In this Agreement, unless the contrary intention appears:

“Effective Date” means the date on which the conditions precedent in Clause 3 are satisfied;

“Loan Agreement” means the loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter dated 15 May 2006 and as further amended and supplemented by a supplemental agreement dated 28 November 2006 and amended and restated by an amending and restating agreement dated 23 May 2007) referred to in Recital (A); and

“Released Ships” means each of:

(a) the 1995-built bulk carrier of 39,385 gross registered tons and 24,519 net registered tons registered in the ownership of Zatac Shipping Company Limited under Maltese flag with the name “WAIKIKI”;

(b) the 1995-built bulk carrier of 39,279 gross registered tons and 24,360 net registered tons registered in the ownership of Felicia Navigation Company Limited under Maltese flag with the name “SOLANA”;

(c) the 1995-built bulk carrier of 38,567 gross registered tons and 24,567 net registered tons registered in the ownership of Farat Shipping Company Limited under Maltese flag with the name “TORO”;

(d) the 1996-built bulk carrier of 40,483 gross registered tons and 24,768 net registered tons registered in the ownership of Maternal Owning Company Limited under Maltese flag with the name “LANZAROTE”;

2

(e) the 1994-built bulk carrier of 37,629 gross registered tons and 23,436 net registered tons registered in the ownership of Annapolis Shipping Company Limited under Maltese flag with the name “LACERTA”;

(f) the 1997-built bulk carrier of 37,808 gross registered tons and 24,147 net registered tons registered in the ownership of Atlas Shipping Company Limited under Maltese flag with the name “MENORCA”;

(g) the 1995-built bulk carrier of 38,205 gross registered tons and 24,113 net registered tons registered in the ownership of Lansat Shipping Company Limited under Maltese flag with the name “PARAGON”; and

(h) the 1996-built bulk carrier 36,559 gross registered tons and 23,279 net registered tons registered in the ownership of Iguana Shipping Company Limited under Maltese flag with the name “IGUANA”.

1.3 Application of construction and interpretation provisions of Loan Agreement. Clauses 1.2 and 1.5 of the Loan Agreement apply, with any necessary modifications, to this Agreement.

2 AGREEMENT OF THE CREDITOR PARTIES

2.1 Agreement of the Lenders. The Lenders agree, subject to and upon the terms and conditions of this Agreement:

(a) to discharge the Mortgages in respect of the Released Ships and the release of the Owners of the Released Ships from their obligations under the Finance Documents to which they are a party;

(b) to waive the mandatory prepayment required pursuant to clause 8.9 of the Loan Agreement upon the discharge of the Mortgages in respect of the Released Ships; and

(c) to approve the incurrence by the Borrowers of Financial Indebtedness (in addition to that incurred by means of the Loan and the Junior Loan) with Nordea Bank Finland plc and with certain other financial institutions in the amounts of $243,000,000 and $170,000,000 respectively.

2.2 Agreement of the Creditor Parties. The Creditor Parties agree, subject to and upon the terms and conditions of this Agreement, to the consequential amendment of the Loan Agreement and the other Finance Documents in connection with the matters referred to in Clause 2.1.

2.3 Effective Date. The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 shall have effect on and from the Effective Date.

3 CONDITIONS PRECEDENT

3.1 General. The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 is subject to the fulfilment of the conditions precedent in Clause 3.2.

3.2 Conditions precedent. The conditions referred to in Clause 3.1 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Agent and its lawyers on or before the Effective Date:

(a) documents of the kind specified in Schedule 5, Part A, paragraphs 3, 4 and 5 of the Loan Agreement in relation to the Borrower, updated with appropriate modifications to refer to this Agreement;

3

(b) an original of this Agreement duly executed by the parties to it and counter-signed by each of the Owners of the Ships listed in Appendix I hereto, being the Ships upon which the Loan and the Junior Loan will be secured following the discharge of the Mortgages in respect of the Relevant Ships; and

(c) the fees referred to in Clause 7 of this Agreement have been received in full by the Agent.

4 REPRESENTATIONS AND WARRANTIES

4.1 Repetition of Loan Agreement representations and warranties. The Borrower represents and warrants to the Creditor Parties that the representations and warranties in clause 10 of the Loan Agreement remain true and not misleading if repeated on the date of this Agreement.

4.2 Repetition of Finance Document representations and warranties. The Borrower and each of the other Security Parties represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Loan Agreement) to which it is a party remain true and not misleading if repeated on the date of this Agreement.

5 AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS

5.1 Specific amendments to Loan Agreement. With effect on and from the Effective Date the Loan Agreement shall be amended as follows:

(a) by deleting clause 12.4(c)(ii) thereof in its entirely:

(b) by replacing the figure “$225,000,000” in clause 12.4(c)(iii) thereof with the figure “$500,000,000 and redesignating this clause as clause 12.4(c)(ii) of the Loan Agreement; and

(c) by replacing the figure “$20,000,000 in clause 12.4(d) thereof with the figure “$40,000,000”.

5.2 Amendments to Finance Documents. With effect on and from the Effective Date each of the Finance Documents other than the Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended as follows:

(a) the definition of, and references throughout each of the Finance Documents to the Loan Agreement and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended and supplemented by this Agreement; and

(b) by construing references throughout each of the Finance Documents to “this Agreement”, “this Deed”, “hereunder and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement.

4

5.3 Finance Documents to remain in full force and effect. The Finance Documents shall remain in full force and effect as amended and supplemented by:

(a) the amendments to the Finance Documents contained or referred to in Clauses 5.1 and 5.2; and

(b) such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement.

6 FURTHER ASSURANCES

6.1 Borrower’s and each Security Party’s obligation to execute further documents etc. The Borrower and each Security Party shall:

(a) execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Security Trustee may, in any particular case, specify;

(b) effect any registration or notarisation, give any notice or take any other step,

which the Agent may, by notice to the Borrower, specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.

6.2 Purposes of further assurances. Those purposes are:

(a) validity and effectively to create any Security Interest or right of any kind which the Security Trustee intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and supplemented by this Agreement, and

(b) implementing the terms and provisions of this Agreement.

6.3 Terms of further assurances. The Security Trustee may specify the terms of any document to be executed by the Borrower or any Security Party under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee considers appropriate to protect its interests.

6.4 Obligation to comply with notice. The Borrower or any Security Party shall comply with a notice under Clause 6.1 by the date specified in the notice.

7 FEES AND EXPENSES

7.1 Fee. On the date of this Agreement, the Borrower shall pay to the Agent certain facility fees set out in the letter addressed to the Agent from the Borrower and dated the same date as this Agreement.

7.2 Expenses. The provisions of clause 20 (fees and expenses) of the Loan Agreement shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

5

8 COMMUNICATIONS

8.1 General. The provisions of clause 28 (notices) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

9 SUPPLEMENTAL

9.1 Counterparts. This Agreement may be executed in any number of counterparts.

9.2 Third Party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

10 LAW AND JURISDICTION

10.1 Governing law. This Agreement shall be governed by and construed in accordance with English law.

10.2 Incorporation of the Loan Agreement provisions. The provisions of clause 30 (law and jurisdiction) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

THIS AGREEMENT has been duly executed as a Deed on the date stated at the beginning of this Agreement.

6

EXECUTION PAGES

THE BORROWERS
SIGNED by for and on behalf of DRYSHIPS INC.	) ) )
THE LENDERS
LENDERS
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BANK OF SCOTLAND PLC	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
ALLIANCE & LEICESTER	)
COMMERCIAL FINANCE PLC	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BAYERISCHE HYPO-UND	)
VEREINSBANK AG	)

8

SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
COMMERZBANK	)
AKTIENGESELLSCHAFT	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
DRESDNER BANK AG IN HAMBURG	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
NATIXIS (formerly known as	)
NATEXIS BANQUES POPULAIRES)	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
SUMITOMO MITSUI BANKING	)
CORPORATION	)
AGENT
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
SECURITY TRUSTEE
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
LEAD ARRANGER/LEAD BOOKRUNNER
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)

9

JOINT BOOKRUNNER
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BANK OF SCOTLAND PLC	)
JOINT UNDERWRITERS
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BANK OF SCOTLAND PLC	)
SWAP BANKS
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BANK OF SCOTLAND PLC	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
COMMERZBANK	)
AKTIENGESELLSCHAFT	)
Witness to all the	)	/s/ Vassiliki Georgopoulos
above signatures	)

Name:	Vassiliki Georgopoulos
Address:	WATSON, FARLEY & WILLIAMS                   SOLICITOR 2 DEFTERAS MERARCHIAS PIRAEUS 185 36–GREECE

10

COUNTERSIGNED this day      of February 2008 for and on behalf of the below companies each of which, by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this supplemental letter, that it agrees in all respects to the same and that the Finance Documents to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Loan Agreement.

for and on behalf of WEALTH MANAGEMENT INC.	for and on behalf of LANCAT SHIPPING COMPANY LIMITED
for and on behalf of TOLAN SHIPPING COMPANY LIMITED	for and on behalf of MALVINA SHIPPING COMPANY LIMITED
for and on behalf of ARLETA NAVIGATION COMPANY LIMITED	for and on behalf of SELMA SHIPPING COMPANY LIMITED
for and on behalf of ROYERTON SHIPPING COMPANY LIMITED	for and on behalf of SAMSARA SHIPPING COMPANY LIMITED
for and on behalf of BORSARI SHIPPING COMPANY LIMITED	for and on behalf of ONIL SHIPPING COMPANY LIMITED
For and on behalf of FABIANA NAVIGATION COMPANY LIMITED	for and on behalf of CELINE SHIPPING COMPANY LIMITED

11

for and on behalf of KARMEN SHIPPING COMPANY LIMITED	for and on behalf of THELMA SHIPPING COMPANY LIMITED
for and on behalf of ARGO OWNING COMPANY LIMITED	for and on behalf of KRONOS OWNING COMPANY LIMITED
for and on behalf of TETHYS OWNING COMPANY LIMITED	for and on behalf of SELENE OWNING COMPANY LIMITED
for and on behalf of GAIA OWNING COMPANY LIMITED	for and on behalf of TROJAN MARITIME CO.
for and on behalf of DIONE OWNING COMPANY LIMITED	for and on behalf of URANUS OWNING COMPANY LIMITED
for and on behalf of TEMPO MARINE CO.	for and on behalf of STAR RECORD OWNING COMPANY LIMITED
for and on behalf of REA OWNING COMPANY LIMITED	for and on behalf of PHOEBE OWNING COMPANY LIMITED

12

EX-4.11

Exhibit 4.11

Date 27 February 2008

DRYSHIPS INC.

as Borrower

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Part A of Schedule 1

as Lenders

- and -

HSH NORDBANK AG

as Agent and Security Trustee

-and -

HSH NORDBANK AG

as Lead Arranger and Lead Bookrunner

- and -

BANK OF SCOTLAND PLC

as Joint Bookrunner

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed at Part B of Schedule 1

as Swap Banks

SUPPLEMENTAL AGREEMENT

relating to revolving credit and term loan facilities

of (originally) up to US$110,000,000 in aggregate

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

Clause		Page
1	INTERPRETATION	2
2	AGREEMENT OF THE CREDITOR PARTIES	3
3	CONDITIONS PRECEDENT	3
4	REPRESENTATIONS AND WARRANTIES	4
5	AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS	4
6	FURTHER ASSURANCES	5
7	FEES AND EXPENSES	5
8	COMMUNICATIONS	5
9	SUPPLEMENTAL	5
10	LAW AND JURISDICTION	6
EXECUTION PAGES		8

THIS AGREEMENT is made on 27 February 2008

BETWEEN

(1) DRYSHIPS INC. as Borrower;

(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Part A of Schedule 1 of the Loan Agreement, as Lenders;

(3) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Agent;

(4) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Security Trustee;

(5) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Lead Arranger;

(6) HSH NORDBANK AG, acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Federal Republic of Germany, as Lead Bookrunner;

(7) BANK OF SCOTLAND PLC, acting through its office at Pentland House, 8 Lochside Avenue, Edinburgh EH12 9 DJ, Scotland, as Joint Bookrunner; and

(8) THE BANKS AND FINANCIAL INSTITUTIONS listed at Part B of Schedule 1 of the Loan Agreement, as Swap Banks.

BACKGROUND

(A) By a loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter dated 15 May 2006 and as further amended and supplemented by a supplemental agreement dated 28 November 2006 and further amended and restated by an amending and restating agreement dated 23 May 2007, the “Loan Agreement”) and made between (i) the Borrower, (ii) the Lenders, (iii) the Agent, (iv) the Security Trustee, (v) the Lead Arranger, (vi) the Lead Bookrunner, (vii) the Joint Bookrunner and (viii) the Swap Banks, the Lenders agreed to make available to the Borrower both term loan and short-term credit facilities of (originally) up to US$110,000,000 in aggregate.

(B) The Borrower has made a request to the Agent that the Majority Lenders or, as the case may be, the Lenders give their consent:

(i) to the discharge of the first priority Maltese mortgages and amendment mortgages over m.vs. “WAIKIKI”, “SOLANA”, “TORO”, “LANZAROTE”, “LACERTA”, “MENORCA”, “PARAGON” and “IGUANA” and the release of the Owners of such Ships from their obligations under the Finance Documents to which they are a party (the “Released Ships”);

(ii) to the waiver of the mandatory prepayment required to be made pursuant to clause 8.9 of the Loan Agreement upon the discharge of the mortgage over each of the Ships referred to in paragraph (i) of this Recital (B); and

(iii) the incurrence of further Financial Indebtedness by the Borrower with Nordea Bank Finland plc. in the amount of $243,110,086.88 and with certain other financial institutions in the amount of $170,000,000.

(C) The Lenders consent to the Borrower’s request referred to in Recital (B) provided that (i) at all times there is available to the Borrower and all the other members of the Group an aggregate amount of not less than $40,000,000 and (ii) the Market Value Adjusted Net Worth for each Financial Year increases from $225,000,000 to $500,000,000.

(D) This Agreement sets out the terms and conditions on which the Creditor Parties agree with effect on and from the Effective Date, to amend the Loan Agreement.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Defined expressions. Words and expressions defined in the Loan Agreement and the other Finance Documents shall have the same meanings when used in this Agreement unless the context otherwise requires.

1.2 Definitions. In this Agreement, unless the contrary intention appears:

“Effective Date” means the date on which the conditions precedent in Clause 3 are satisfied:

“Loan Agreement” means the loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter dated 15 May 2006 and as further amended and supplemented by a supplemental agreement dated 28 November 2006 and amended and restated by an amending and restating agreement dated 23 May 2007) referred to in Recital (A); and

“Released Ships” means each of:

(a) the 1995-built bulk carrier of 39,385 gross registered tons and 24,519 net registered tons registered in the ownership of Zatac Shipping Company Limited under Maltese flag with the name “WAIKIKI”;

(b) the 1995-built bulk carrier of 39,279 gross registered tons and 24,360 net registered tons registered in the ownership of Felicia Navigation Company Limited under Maltese flag with the name “SOLANA”;

(c) the 1995-built bulk carrier of 38,567 gross registered tons and 24,567 net registered tons registered in the ownership of Farat Shipping Company Limited under Maltese flag with the name “TORO”;

(d) the 1996-built bulk carrier of 40,483 gross registered tons and 24,768 net registered tons registered in the ownership of Maternal Owning Company Limited under Maltese flag with the name “LANZAROTE”;

(e) the 1994-built bulk carrier of 37,629 gross registered tons and 23,436 net registered tons registered in the ownership of Annapolis Shipping Company Limited under Maltese flag with the name “LACERTA”;

(f) the 1997-built bulk carrier of 37,808 gross registered tons and 24,147 net registered tons registered in the ownership of Atlas Shipping Company Limited under Maltese flag with the name “MENORCA”;

2

(g) the 1995-built bulk carrier of 38,205 gross registered tons and 24,113 net registered tons registered in the ownership of Lansat Shipping Company Limited under Maltese flag with the name “PARAGON”; and

(h) the 1996-built bulk carrier 36,559 gross registered tons and 23,279 net registered tons registered in the ownership of Iguana Shipping Company Limited under Maltese flag with the name “IGUANA”.

1.3 Application of construction and interpretation provisions of Loan Agreement. Clauses 1.2 and 1.5 of the Loan Agreement apply, with any necessary modifications, to this Agreement.

2 AGREEMENT OF THE CREDITOR PARTIES

2.1 Agreement of the Lenders. The Lenders agree, subject to and upon the terms and conditions of this Agreement:

(a) to discharge the Mortgages in respect of the Released Ships and the release of the Owners of the Released Ships from their obligations under the Finance Documents to which they are a party:

(b) to waive the mandatory prepayment required pursuant to clause 8.9 of the Loan Agreement upon the discharge of the Mortgages in respect of the Released Ships; and

(c) to approve the incurrence by the Borrowers of Financial Indebtedness (in addition to that incurred by means of the Loan and the Senior Loan) with Nordea Bank Finland plc and with certain other financial institutions in the amounts of $243,l00,086.88 and $170,000,000 respectively.

2.2 Agreement of the Creditor Parties. The Creditor Parties agree subject to and upon the terms and conditions of this Agreement, to the consequential amendment of the Loan Agreement and the other Finance Documents in connection with the matters referred to in Clause 2.1.

2.3 Effective Date. The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 shall have effect on and from the Effective Date.

3 CONDITIONS PRECEDENT

3.1 General. The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 is subject to the fulfilment of the conditions precedent in Clause 3.2.

3.2 Conditions precedent. The conditions referred to in Clause 3.1 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory in the Agent and its lawyers on or before the Effective Date:

(a) documents of the kind specified in Schedule 5, Part A, paragraphs 3.4 and 5 of the Loan Agreement in relation to the Borrower, updated with appropriate modifications to refer to this Agreement:

(b) an original of this Agreement duly executed by the parties to it and counter-signed by each of the Owners of the Ships listed in Appendix I hereto, being the Ships upon which the Loan and the Junior Loan will be secured following the discharge of the Mortgages in respect of the Relevant Ships: and

3

(c) the fees referred to in Clause 7 of this Agreement have been received in full by the Agent.

4 REPRESENTATIONS AND WARRANTIES

4.1 Repetition of Loan Agreement representations and warranties. The Borrower represents and warrants to the Creditor Parties that the representations and warranties in clause 10 of the Loan Agreement remain true and not misleading if repeated on the date of this Agreement.

4.2 Repetition or Finance Document representations and warranties. The Borrower and each of the other Security Parties represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Loan Agreement) to which it is a party remain true and not misleading if repeated on the date of this Agreement.

5 AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS

5.1 Specific amendments to Loan Agreement. With effect on and from the Effective Date the Loan Agreement shall be amended as follows:

(a) by deleting clause l2.4(c)(ii) thereof in its entirety;

(b) by replacing the figure “$225,000,000” in clause 12.4(c)(iii) thereof with the figure “$500,000,000” and redesignating this clause as clause 12.4(c)(ii) of the Loan Agreement; and

(c) by replacing the figure “$20,000,000” in clause 12.4(d) thereof with the figure “$40,000,000”.

5.2 Amendments to Finance Documents. With effect on and from the Effective Date each of the Finance Documents other than the Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended as follows:

(a) the definition of, and references throughout each of the Finance Documents to, the Loan Agreement and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended and supplemented by this Agreement; and

(b) by construing references throughout each of the Finance Documents to “this Agreement”, “this Deed”, “hereunder and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement.

5.3 Finance Documents to remain in full force and effect. The Finance Documents shall remain in full force and effect as amended and supplemented by:

(a) the amendments to the Finance Documents contained or referred to in Clauses 5.1 and 5.2; and

(b) such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement.

4

6 FURTHER ASSURANCES

6.1 Borrower’s and each Security Party’s obligation to execute further documents etc. The Borrower and each Security Party shall:

(a) execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Security Trustee may in any particular case specify;

(b) effect any registration or notarisation give any notice or take any other step, which the Agent may, by notice to the Borrower, specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.

6.2 Purposes of further assurances. Those purposes are:

(a) validity and effectively to create any Security Interest or right of any kind which the Security Trustee intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and supplemented by this Agreement, and

(b) implementing the terms and provisions of this Agreement.

6.3 Terms of further assurances. The Security Trustee may specify the terms of any document to be executed by the Borrower or any Security Party under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee considers appropriate to protect its interests.

6.4 Obligation to comply with notice. The Borrower or any Security Party shall comply with a notice under Clause 6.1 by the date specified in the notice.

7 FEES AND EXPENSES

7.1 Fee. On the date of this Agreement, the Borrower shall pay to the Agent certain facility fees set out in the letter addressed to the Agent from the Borrower and dated the same date as this Agreement.

7.2 Expenses. The provisions of clause 20 (fees and expenses) of the Loan Agreement shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

8 COMMUNICATIONS

8.1 General. The provisions of clause 28 (notices) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

9 SUPPLEMENTAL

9.1 Counterparts. This Agreement may be executed in any number of counterparts.

9.2 Third Party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

5

10 LAW AND JURISDICTION

10.1 Governing law. This Agreement shall be governed by and construed in accordance with English law.

10.2 Incorporation of the Loan Agreement provisions. The provisions of clause 30 (law and jurisdiction) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

THIS AGREEMENT has been duly executed as a Deed on the date stated at the beginning of this Agreement.

6

EXECUTION PAGES

THE BORROWERS
SIGNED by EUGENIA PAPAPONTIKOU for and on behalf of DRYSHIPS INC.	) ) )
THE LENDERS
LENDERS
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BANK OF SCOTLAND PLC	)
AGENT
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
SECURITY TRUSTEE
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
LEAD ARRANGER/LEAD BOOKRUNNER
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)

8

JOINT BOOKRUNNNER
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BANK OF SCOTLAND PLC	)
SWAP BANKS
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
HSH NORDBANK AG	)
SIGNED by E. HATZIEFSTRATION	)	/s/    E. Hatziefstration
for and on behalf of	)
BANK OF SCOTLAND PLC	)
Witness to all the	)	/s/ Vassiliki Georgopoulos
above signatures	)

Name:	VASSILIKI GEORGOPOULOS
Address:	WATSON, FARLEY & WILLIAMS 2 DEFTE RAS MERARCHIAS PIRAEUS 185 36–GREECE

9

COUNTERSIGNED this day      of February 2008 for and on behalf of the below companies each of which, by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this supplemental letter, that it agrees in all respects to the same and that the Finance Documents to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Loan Agreement.

for and on behalf of	for and on behalf of
WEALTH MANAGEMENT INC.	LANCAT SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
TOLAN SHIPPING COMPANY LIMITED	MALVINA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
ARLETA NAVIGATION COMPANY LIMITED	SELMA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
ROYERTON SHIPPING COMPANY LIMITED	SAMSARA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
BORSARI SHIPPING COMPANY LIMITED	ONIL SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
FABIANA NAVIGATION COMPANY LIMITED	CELINE SHIPPING COMPANY LIMITED

10

for and on behalf of	for and on behalf of
KARMEN SHIPPING COMPANY LIMITED	THELMA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
ARGO OWNING COMPANY LIMITED	KRONOS OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
TETHYS OWNING COMPANY LIMITED	SELENE OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
GAJA OWNING COMPANY LIMITED	TROJAN MARITIME CO.
for and on behalf of	for and on behalf of
DIONE OWNING COMPANY LIMITED	URANUS OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
TEMPO MARINE CO.	STAR RECORD OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
REA OWNING COMPANY LIMITED	PHOEBE OWNING COMPANY LIMITED

11

EX-4.12

Exhibit 4.12

SUPPLEMENTAL LETTER

To:	DryShips Inc.
	Trust Company Complex
	Ajeltake Road
	Ajeltake Island
	Majuro
	The Marshall Islands MH 96960
From:	HSH Nordbank AG
	Gerhart-Hauptmann-Platz 50
	D-20095 Hamburg
	Germany

Dear Sirs

23 April 2008

1 Background.

(A) By a loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter agreement dated 15 May 2006, a supplemental agreement dated 28 November 2006, a supplemental agreement dated 27 February 2008 and as amended and restated by an amending and restating agreement dated 23 May 2007, the “Senior Loan Agreement”) and made between (i) DryShips Inc. as borrower (the “Borrower”), (ii) the banks and financial institutions listed therein as lenders (the “Senior Lenders”), (iii) the banks and financial institutions listed therein as swap banks, (iv) ourselves as agent, lead arranger, lead bookrunner and security trustee, (v) ourselves and Bank of Scotland plc (“BOS”) as joint underwriters and (vi) BOS as joint bookrunner, it was agreed that the Senior Lenders would make available to the Borrower a term loan and short-term credit facilities of (originally) up to US$518,750,000 (the “Senior Loan”) in aggregate.

(B) The Borrower has requested certain amendments to the general, corporate and financial undertakings and the security cover provisions set out in Clauses 11, 12 and 15 of the Senior Loan Agreement.

2 Agreement and amendments to the Senior Loan Agreement. Subject to the satisfaction of the conditions of this Letter and with effect from the date of this Letter, the Senior Loan Agreement shall be amended as follows:

(a) by adding at the end of Clause 11.2(b) thereof the words:

“Provided that the Borrower may create or permit to arise any Security Interest over any asset (other than any asset over which a Creditor Party maintains a Security Interest pursuant to this Agreement, the Junior Loan Agreement or any of the other Finance Documents) in the normal course of its business”;

(b) by adding a paragraph at the end of Clause 11.3 thereof as follows:

“Provided that the Borrower may make any transfer, lease or other disposal referred to in this Clause 11.3 if following such transfer, lease or other disposal it shall be able to comply with all the financial covenants referred to in Clause 12.4 and no Event of Default or Potential Event of Default shall arise.”;

(c) by adding a new paragraph (d) in Clause 11.4 thereof as follows:

“(d) (in the case of the Borrower), incurred in the normal course of its business Provided that following the incurrence of such further liabilities or obligations the Borrower shall be able to comply with all the financial covenants referred to in Clause 12.4 and no Event of Default or Potential Event of Default shall arise.”;

(d) by deleting Clause 12.3(e) thereof in its entirety and re-designating Clauses 12.3(f) and (g) as Clauses 12.3(e) and (f) respectively;

(e) by deleting the new Clause 12.3(e) (currently Clause 12.3(f)) thereof in its entirety and replacing it with the following:

“(e) (other than through any investments permitted by Clause 12.3(a)), acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks if such acquisitions exceed at any time $10,000,000 (or the equivalent in any other currency) in aggregate; and”;

(f) by deleting Clause 12.4(a) thereof in its entirety and replacing it with the following:

“(a) the Market Adjusted Equity Ratio for the Financial Year ending 31 December 2007 shall be not less than 0.2:l and for the period commencing from the Financial Year ending 31 December 2008 and each subsequent Financial Year it shall not be less than 0.4:l;”

(g) by deleting Clause 12.4(c) thereof in its entirety and replacing it with the following:

“(c) the Market Value Adjusted Net Worth of the Group shall not be less than:

(i) in the Financial Year ending 31 December 2007 $125,000,000 and the Financial Year ending 31 December 2008, $750,000,000;

(ii) in each of the Financial Years ending respectively 31 December 2009 and 31 December 2010, $800,000,000; and

(iii) in each subsequent Financial Year, $1,000,000,000;”;

(h) by deleting Clause 12.4(d) thereof in its entirety and replacing it with the following:

“(d) subject to Clause 12.10, at all times there is available to the Borrower and all the other members of the Group an aggregate amount of not less than $100,000,000 (including, without limitation, any amount standing to the credit of the Debt Service Reserve Account) in immediately freely available and unencumbered bank or cash balances, of which amount not less than the Applicable Amount in aggregate shall be held in the Earnings Accounts and the Wealth Account.

In this Clause 12.4, “Applicable Amount” means:

(i) at all times until (but not including) 30 June 2009, $17,500,000;

(ii) as at 30 June 2009, $45,000,000;

(iii) in the 6-month period ending on 31 December 2009, $50,000,000; and

(iv) in each subsequent Financial Year, $55,000,000”;

2

(i) by adding a new Clause 12.9 as follows:

“12.9 Interpretation of normal course of business. For the purposes of Clauses 11.2(b) and 11.4(d) the term “normal course of its business” shall mean with regard to the Borrower its business of owning shares in companies which are involved in every shipping sector and the oil and gas sector and in making investments in such sectors. The reference in Clause 12.3(a) to any change in the nature of the Borrower’s business shall be construed accordingly.”;

“(j) by adding a new Clause 12.10 as follows:

“12.10 Charter coverage. The Borrower shall ensure that as from 1 January 2009 a Minimum Percentage of its Fleet Vessels (calculated by reference to the deadweight tonnage of the Fleet Vessels) shall be employed on charters for an average period of at least 24 months and at the following average minimum net charter rates:

Minimum average time Charter rates (by Vessel type/category)	2009	2010	2011	2012	2013	2014	2015
Capesize	70,000	40,000	32,000	32,000	32,000	32,000	32,000
Kamsarmax	—	25,000	25,000	25,000	25,000	25,000	25,000
Panamax	40,000	24,000	18,000	20,000	20,000	20,000	20,000
Handymax	33,000	20,000	15,000	16,000	16,000	16,000	16,000

If the provisions of this Clause 12.10 are not complied with at any time, the Borrower and the other members of the Group shall be required to maintain an aggregate amount of not less than $110,000,000 in immediately freely available and unencumbered bank or cash balances and at any time when this Clause 12.10 is not being complied with Clause 12.4(d) shall be construed accordingly.

In this Clause 12.10. “Minimum Percentage” means:

(i) during the Financial Year ending on 31 December 2009, 25 per cent.; and

(ii) at all times thereafter, 35 per cent.”;

(k) by deleting in Clause 15.1 thereof the figure “150 per cent.” and replacing it with “the Relevant Percentage”; and

(l) by adding at the end of Clause 15.1 thereof the following:

““Relevant Percentage” means:

(1) in each of the Financial Years ending respectively 31 December 2008 and 31 December 2009, 200 per cent.;

(2) in each of the Financial Years ending respectively 31 December 2010 and 31 December 2011, 190 per cent.; and

(3) in each subsequent Financial Year, 170 percent.”.

3 Representations and Warranties. The Borrower hereby represents and warrants to the Lenders that:

(a) the representations and warranties contained in the Senior Loan Agreement are true and correct on the date of this Letter as if all references therein to “this Agreement” were references to the Senior Loan Agreement as supplemented by this Letter; and

3

(b) this Letter comprises the legal, valid and binding obligations of the Borrower enforceable in accordance with its terms.

4 Conditions. Our agreement contained in paragraph 2 of this Letter shall be expressly subject to the condition that we shall have received in form and substance as may be approved or required by us on or before the signature hereof:

(a) copies of resolutions passed at a meeting of the board of directors of the Borrower evidencing approval of this Letter and authorising appropriate officers or attorneys to execute the same;

(b) the original of any power of attorney issued in favour of any person executing this Letter on behalf of the Borrower; and

(c) copies of all governmental and other consents, licences, approvals and authorisations as may be necessary to authorise the performance by the Borrower of its obligations under this Letter and the execution, validity and enforceability of this Letter.

5 Senior Loan Agreement and Finance Documents. The Borrower hereby agrees with the Lenders that the provisions of the Senior Loan Agreement and the Finance Documents shall be and are hereby re-affirmed and remain in full force and effect.

6 Notices. Clause 28 (Notices) of the Senior Loan Agreement shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set forth.

7 Fees. On the date of this Letter, the Borrower, shall pay to the Agent certain facility fees set out in the letter addressed to the Agent from the Borrower and dated the same date of this Letter.

8 Governing Law. This Letter shall be governed by and construed in accordance with English law and Clause 30 (Law and Jurisdiction) of the Senior Loan Agreement shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set forth.

Please confirm your acceptance to the foregoing terms and conditions by signing the acceptance at the foot of this letter.

Yours faithfully

for and on behalf of

HSH NORDBANK AG

Accepted and agreed

for and on behalf of

DRYSHIPS INC.

Dated 23 April 2008

4

COUNTERSIGNED this day      of April 2008 for and on behalf of the below companies each of which, by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this supplemental letter, that it agrees in all respects to the same and that the Finance Documents to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Loan Agreement.

for and on behalf of	for and on behalf of
WEALTH MANAGEMENT INC.	LANCAT SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
TOLAN SHIPPING COMPANY LIMITED	MALVINA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
ARLETA NAVIGATION COMPANY LIMITED	SELMA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
ROYERTON SHIPPING COMPANY LIMITED	SAMSARA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
BORSARI SHIPPING COMPANY LIMITED	ONIL SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
FABIANA NAVIGATION COMPANY LIMITED	CELINE SHIPPING COMPANY LIMITED

5

for and on behalf of	for and on behalf of
KARMEN SHIPPING COMPANY LIMITED	THELMA SHIPPING COMPANY LIMITED
for and on behalf of	for and on behalf of
ARGO OWNING COMPANY LIMITED	KRONOS OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
TETHYS OWNING COMPANY LIMITED	SELENE OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
GAIA OWNING COMPANY LIMITED	TROJAN MARITlME CO.
for and on behalf of	for and on behalf of
DIONE OWNING COMPANY LIMITED	URANUS OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
TEMPO MARINE CO.	STAR RECORD OWNING COMPANY LIMITED
for and on behalf of	for and on behalf of
REA OWNING COMPANY LIMITED	PHOEBE OWNING COMPANY LIMITED

6

EX-4.13

Exhibit 4.13

SUPPLEMENTAL LETTER

To:	DryShips Inc.
	Trust Company Complex
	Ajeltake Road
	Ajeltake Island
	Majuro
	The Marshall Islands MH 96960
From:	HSH Nordbank AG
	Gerhart-Hauptmann-Platz 50
	D-20095 Hamburg
	Germany

Dear Sirs

23 April 2008

1 Background.

(A) By a loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter agreement dated 15 May 2006, a supplemental agreement dated 28 November 2006, a supplemental agreement dated 27 February 2008 and as amended and restated by an amending and restating agreement dated 23 May 2007, the “Junior Loan Agreement”) and made between (i) DryShips Inc. as borrower (the “Borrower”), (ii) the banks and financial institutions listed therein as lenders (the “Junior Lenders”), (iii) the banks and financial institutions listed therein as swap banks, (iv) ourselves as agent, lead arranger, lead bookrunner and security trustee and (v) Bank of Scotland plc as joint bookrunner, it was agreed that the Junior Lenders would make available to the Borrower a term loan and short-term credit facilities of (originally) up to US$110,000,000 (the “Junior Loan”) in aggregate.

(B) The Borrower has requested certain amendments to the general, corporate and financial undertakings and the security cover provisions set out in Clauses 11, 12 and 15 of the Junior Loan Agreement.

2 Agreement and amendments to the Junior Loan Agreement. Subject to the satisfaction of the conditions of this Letter and with effect from the date of this Letter, the Junior Loan Agreement shall be amended as follows:

(a) by adding at the end of Clause 11.2(b) thereof the words:

“Provided that the Borrower may create or permit to arise any Security Interest over any asset (other than any asset over which a Creditor Party maintains a Security Interest pursuant to this Agreement, the Junior Loan Agreement or any of the other Finance Documents) in the normal course of its business”;

(b) by adding a paragraph at the end of Clause 11.3 thereof as follows:

“Provided that the Borrower may make any transfer, lease or other disposal referred to in this Clause 11.3 if following such transfer, lease or other disposal it shall be able to comply with all the financial covenants referred to in Clause 12.4 and no Event of Default or Potential Event of Default shall arise.”;

(c) by adding a new paragraph (d) in Clause 11.4 thereof as follows:

“(d) (in the case of the Borrower), incurred in the normal course of its business Provided that following the incurrence of such further liabilities or obligations the Borrower shall be able to comply with all the financial covenants referred to in Clause 12.4 and no Event of Default or Potential Event of Default shall arise.”;

(d) by deleting Clause 12.3(e) thereof in its entirety and re-designating Clauses 12.3(f) and (g) as Clauses 12.3(e) and (f) respectively;

(e) by deleting the new Clause 12.3(e) (currently Clause 12.3(f)) thereof in its entirety and replacing it with the following:

“(e) (other than through any investments permitted by Clause 12.3(a)), acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks if such acquisitions exceed at any time $10,000,000 (or the equivalent in any other currency) in aggregate; and”;

(f) by deleting Clause 12.4(a) thereof in its entirety and replacing it with the following:

“(a) the Market Adjusted Equity Ratio for the Financial Year ending 31 December 2007 shall be not less than 0.2:1 and for the period commencing from the Financial Year ending 31 December 2008 and each subsequent Financial Year it shall not be less than 0.4:1;”

(g) by deleting Clause 12.4(c) thereof in its entirety and replacing it with the following:

“(c) the Market Value Adjusted Net Worth of the Group shall not be less than:

(i) in the Financial Year ending 31 December 2007 $125,000,000 and the Financial Year ending 31 December 2008, $750,000,000;

(ii) in each of the Financial Years ending respectively 31 December 2009 and 31 December 2010, $800,000,000; and

(iii) in each subsequent Financial Year, $1,000,000,000;”;

(h) by deleting Clause 12.4(d) thereof in its entirety and replacing it with the following:

“(d) subject to Clause 12.10, at all times there is available to the Borrower and all the other members of the Group an aggregate amount of not less than $l00,000,000 (including, without limitation, any amount standing to the credit of the Debt Service Reserve Account) in immediately freely available and unencumbered bank or cash balances, of which amount not less than the Applicable Amount in aggregate shall be held in the Earnings Accounts and the Wealth Account.

In this Clause 12.4, “Applicable Amount” means:

(i) at all times until (but not including) 30 June 2009, $17,500,000;

(ii) as at 30 June 2009, $45,000,000;

(iii) in the 6-month period ending on 31 December 2009, $50,000,000; and

(iv) in each subsequent Financial Year, $55,000,000”;

(i) by adding a new Clause 12.9 as follows:

“12.9 Interpretation of normal course of business. For the purposes of Clauses 11.2(b) and 11.4(d) the term “normal course of its business” shall mean with regard to the Borrower its business of owning shares in companies which are involved in every shipping sector and the oil and gas sector and in making investments in such sectors. The reference in Clause 12.3(a) to any change in the nature of the Borrower’s business shall be construed accordingly.”;

2

“(j) by adding a new Clause 12.10 as follows:

“12.10 Charter coverage. The Borrower shall ensure that as from 1 January 2009 a Minimum Percentage of its Fleet Vessels (calculated by reference to the deadweight tonnage of the Fleet Vessels) shall be employed on charters for an average period of at least 24 months and at the following average minimum net charter rates:

Minimum average time Charter rates (by Vessel type/ category)	2009	2010	2011	2012	2013	2014	2015
Capesize	70,000	40,000	32,000	32,000	32,000	32,000	32,000
Kamsarmax	—	25,000	25,000	25,000	25,000	25,000	25,000
Panamax	40,000	24,000	18,000	20,000	20,000	20,000	20,000
Handymax	33,000	20,000	15,000	16,000	16,000	16,000	16,000

If the provisions of this Clause 12.10 are not complied with at any time, the Borrower and the other members of the Group shall be required to maintain an aggregate amount of not less than $110,000,000 in immediately freely available and unencumbered bank or cash balances and at any time when this Clause 12.10 is not being complied with Clause 12.4(d) shall be construed accordingly.

In this Clause 12.10, “Minimum Percentage” means:

(i) during the Financial Year ending on 31 December 2009, 25 per cent.; and

(ii) at all times thereafter, 35 per cent.”;

(k) by deleting in Clause 15.1 thereof the figure “150 per cent.” and replacing it with “the Relevant Percentage”; and

(l) by adding at the end of Clause 15.1 thereof the following:

“Relevant Percentage” means:

(1) in each of the Financial Years ending respectively 31 December 2008 and 31 December 2009, 170 per cent.;

(2) in each of the Financial Years ending respectively 31 December 2010 and 31 December 2011, 160 per cent.; and

(3) in each subsequent Financial Year, 140 per cent.”.

3 Representations and Warranties. The Borrower hereby represents and warrants to the Lenders that:

(a) the representations and warranties contained in the Junior Loan Agreement are true and correct on the date of this Letter as if all references therein to “this Agreement” were references to the Junior Loan Agreement as supplemented by this Letter; and

3

(b) this Letter comprises the legal, valid and binding obligations of the Borrower enforceable in accordance with its terms.

4 Conditions. Our agreement contained in paragraph 2 of this Letter shall be expressly subject to the condition that we shall have received in form and substance as may be approved or required by us on or before the signature hereof:

(a) copies of resolutions passed at a meeting of the board of directors of the Borrower evidencing approval of this Letter and authorising appropriate officers or attorneys to execute the same:

(b) the original of any power of attorney issued in favour of any person executing this Letter on behalf of the Borrower; and

(c) copies of all governmental and other consents, licences, approvals and authorisations as may be necessary to authorise the performance by the Borrower of its obligations under this Letter and the execution, validity and enforceability of this Letter.

5 Junior Loan Agreement and Finance Documents. The Borrower hereby agrees with the Lenders that the provisions of the Junior Loan Agreement and the Finance Documents shall be and are hereby re-affirmed and remain in full force and effect.

6 Notices. Clause 28 (Notices) of the Junior Loan Agreement shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set forth.

7 Fees. On the date of this Letter, the Borrower, shall pay to the Agent certain facility fees set out in the letter addressed to the Agent from the Borrower and dated the same date of this Letter.

8 Governing Law. This Letter shall be governed by and construed in accordance with English law and Clause 30 (Law and Jurisdiction) of the Junior Loan Agreement shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set forth.

Please confirm your acceptance to the foregoing terms and conditions by signing the acceptance at the foot of this letter.

Yours faithfully

for and on behalf of

HSH NORDBANK AG

Accepted and agreed

for and on behalf of

DRYSHIPS INC.

Dated 23 April 2008

4

EX-4.14

Exhibit 4.14

SUBORDINATED TERM NOTE

$33,000,000

5th April 2007

FOR VALUE RECEIVED, the undersigned, KRONOS OWNING COMPANY LIMITED a corporation registered in the Marshall Islands (the “Company”), does hereby promise to pay to the order of ELIOS INVESTMENTS INC. (the “Lender”), a corporation registered in the Marshal Islands at the registered office of the Lender, or at such other place as the Lender may designate, within three months from drawdown (the “Maturity Date”), in immediately available United States Dollars, the principal amount of Thirty Three million United States Dollars ($33,000,000). Furthermore, the Company further promises to pay (i) interest at said office in like money until maturity (whether as stated, by acceleration or otherwise) (“Maturity”) on the unpaid principal amount hereof from time to time outstanding payable monthly on the last day of each calendar month commencing one month after the date of this Note at the rate and in the manner provided for below (ii) a fee of 0.45% of the amount finance.

Prior to Maturity, this Note shall bear interest at a margin of 2.0% over libor payable on the last day of each calendar month. The first interest payment to be paid one calendar month after delivery of m.v. “SEA EPOCH” to the Company under a Memorandum of Agreement dated 15th December 2006 between E.K. Line S.A. (the “Seller”) and the Company.

If any payment on this Note becomes due and payable on a Saturday, Sunday or other day on which commercial banks in the United States are authorized to close under the laws of such jurisdiction, such payment shall instead become due and payable on the immediately following business day and, in the case of any payment of principal, interest thereon shall be payable at the then applicable rate during such extension.

The Company shall immediately reimburse the Lender, upon demand, for all costs and expenses (including all reasonable attorneys’ fees and expenses) incurred by the Lender in connection with the negotiation, establishment, funding and enforcement of this Note and the indebtedness represented hereby.

The subordination provisions set forth in Attachment A to this Note are hereby incorporated herein as if fully stated herein.

In the case of the happening of any of the following events:

(1) The Company shall fail to pay any amount due when and as required hereby;

(2) The Company shall fail to perform any covenant required to be performed by it pursuant hereto;

(3) Any proceeding shall be commenced by or against the Company under any bankruptcy or insolvency laws, or the Company shall take any action to authorize any of the foregoing;

(4) Any judgment or order, or any series of judgments or orders, shall have been entered against the Company which’ would have a material adverse effect upon it;

(5) Any law, rule or regulation of any jurisdiction shall be enacted or promulgated that shall adversely affect the ability of the Company to perform any of its obligations hereunder, including, without limitation, any moratorium or similar laws;

(6) The Note shall cease to be the legal, valid and binding obligation of the Company enforceable in accordance with its terns;

(7) A material adverse change shall occur in the condition, financial or otherwise, of the Company;

then, and in any such event, and at any time thereafter during the continuance of such event, the Lender by written notice to the Company, may declare this Note to be forthwith due and payable, whereupon this Note shall become forthwith due and payable, both as to principal and interest, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived.

This Note may not be amended other than by writing signed by the Company and the Lender.

This Note shall be governed by and construed in accordance with English Law. The courts of England, in London, shall have jurisdiction over any matter arising out of or anyhow relating to this Note.

KRONOS OWNING COMPANY LIMITED
By:	/s/    E. Papapontikou
	E. Papapontikou
	Attorney-in-fact

EX-4.16

Exhibit 4.16

SUBORDINATED TERM NOTE

$30,000,000

23rd May 2007

FOR VALUE RECEIVED, the undersigned, DRYSHIPS INC. a corporation registered in the Marshall Islands (the “Company”), does hereby promise to pay to the order of ELIOS INVESTMENTS INC. (the “Lender”), a corporation registered in the Marshal Islands at the registered office of the Lender, or at such other place as the Lender may designate, within three (3) months (the “Maturity Date”), in immediately available United States Dollars, the principal amount of Thirty million United States Dollars ($30,000,000). Furthermore, the Company further promises to pay (i) interest at said office in like money until maturity (whether as stated, by acceleration or otherwise) (“Maturity”) on the unpaid principal amount hereof from time to time outstanding payable monthly on the last day of each calendar month commencing one month after the date of this Note at the rate and in the manner provided for below (ii) a fee of 0.45% of the amount finance.

Prior to Maturity, this Note shall bear interest at a margin of 2.0% over libor payable on the last day of each calendar month. The first interest payment to be paid one calendar month after the date hereof.

If any payment on this Note becomes due and payable on a Saturday, Sunday or other day on which commercial banks in the United States are authorized to close under the laws of such jurisdiction, such payment shall instead become due and payable on the immediately following business day and, in the case of any payment of principal, interest thereon shall be payable at the then applicable rate during such extension.

The Company shall immediately reimburse the Lender, upon demand, for all costs and expenses (including all reasonable attorneys’ fees and expenses) incurred by the Lender in connection with the negotiation, establishment, funding and enforcement of this Note and the indebtedness represented hereby.

The subordination provisions set forth in Attachment A to this Note are hereby incorporated herein as if fully stated herein.

In the case of the happening of any of the following events:

(1) The Company shall fail to pay any amount due when and as required hereby;

(2) The Company shall fail to perform any covenant required to be performed by it pursuant hereto;

(3) Any proceeding shall be commenced by or against the Company under any bankruptcy or insolvency laws, or the Company shall take any action to authorize any of the foregoing;

(4) Any judgment or order, or any series of judgments or orders, shall have been entered against the Company which’ would have a material adverse effect upon it;

(5) Any law, rule or regulation of any jurisdiction shall be enacted or promulgated that shall adversely affect the ability of the Company to perform any of its obligations hereunder, including, without limitation, any moratorium or similar laws;

(6) The Note shall cease to be the legal, valid and binding obligation of the Company enforceable in accordance with its terns;

(7) A material adverse change shall occur in the condition, financial or otherwise, of the Company;

then, and in any such event, and at any time thereafter during the continuance of such event, the Lender by written notice to the Company, may declare this Note to be forthwith due and payable, whereupon this Note shall become forthwith due and payable, both as to principal and interest, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived.

This Note may not be amended other than by writing signed by the Company and the Lender.

This Note shall be governed by and construed in accordance with English Law. The courts of England, in London, shall have jurisdiction over any matter arising out of or anyhow relating to this Note.

DRYSHIPS INC.
By:	/s/    Olga Lambrianidou
	Olga Lambrianidou
	Corporate Secretary

2

EX-4.17

Exhibit 4.17

Date 30 August 2007

DRYSHIPS INC.

as Borrower

- and -

HSH NORDBANK AG

as Lender

LOAN AGREEMENT

relating to a bridge loan facility of up to US$30,076,250

to part finance the acquisition cost of the vessels

“ATHINA ZAFIRAKIS” (tbr), “NORD MERCURY” (tbr),

“SHINYO BRILLIANCE” (tbr) and

“VOC GALAXY” (tbr)

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

		Page
Clause
1	INTERPRETATION	1
2	FACILITY	16
3	DRAWDOWN	16
4	INTEREST	17
5	INTEREST PERIODS	18
6	DEFAULT INTEREST	19
7	REPAYMENT AND PREPAYMENT	20
8	CONDITIONS PRECEDENT	21
9	REPRESENTATIONS AND WARRANTIES	21
10	GENERAL UNDERTAKINGS	23
11	CORPORATE UNDERTAKINGS	26
12	INSURANCE	27
13	SHIP COVENANTS	32
14	VALUATIONS	37
15	PAYMENTS AND CALCULATIONS	38
16	APPLICATION OF RECEIPTS	38
17	APPLICATION OF EARNINGS	39
18	EVENTS OF DEFAULT	39
19	FEES AND EXPENSES	43
20	INDEMNITIES	44
21	NO SET-OFF OR TAX DEDUCTION	46
22	ILLEGALITY, ETC	46
23	INCREASED COSTS	47
24	SET-OFF	48
25	TRANSFERS AND CHANGES IN LENDING OFFICE	48
26	VARIATIONS AND WAIVERS	49
27	NOTICES	50
28	SUPPLEMENTAL	51
29	LAW AND JURISDICTION	51
SCHEDULE 1 DRAWDOWN NOTICE		53
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS		54
EXECUTION PAGE		53

THIS AGREEMENT is made on 30 August 2007

BETWEEN

(1) DRYSHIPS INC. as Borrower; and

(2) HSH NORDBANK AG as Lender.

BACKGROUND

The Lender has agreed to make available to the Borrower a bridge loan facility of up to $30,076,250 (to be made available in up to four advances) for the purpose of financing or refinancing the deposits payable pursuant to Clause 2 of the MOAs in relation to the vessels “ATHINA ZAFIRAKIS” (tbr), “NORD MERCURY” (tbr) “SHINYO BRILLIANCE” (tbr) and “VOC GALAXY” (tbr) by Athina, Nord, Shinyo and Galaxy respectively.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

“Advance” means:

(a) in relation to Athina, the Athina Advance;

(b) in relation to Nord, the Nord Advance;

(c) in relation to Shinyo, the Shinyo Advance; and

(d) in relation to Galaxy, the Galaxy Advance,

and in the plural means all of them;

“Approved Broker” means each of Braemar Seascope Shipbrokers Ltd., H. Clarkson & Company Limited, Barry Rogliano Salles S.A., R.S. Platou Shipbrokers A.S., P.F. Bassoe AS, Arrow Sale & Purchase (UK) Ltd., Simpson Spence & Young, Fearnley AS and Maersk Shipbrokers;

“Approved Flag” means the Maltese flag or such other flag as the Lender may, in its sole and absolute discretion, approve as the flag on which a New Ship shall be registered;

“Approved Flag State” means any country in which the Lender, may in its sole and absolute discretion, approve that a New Ship be registered;

“Approved Manager” means, in relation to a Ship, Cardiff Marine Inc., a corporation incorporated in the Republic of Liberia and maintaining a ship management office at Omega Building, 80 Kifissias Avenue, Maroussi 151 25, Greece, or any other company which the Lender;

“Assignment of MOA” means, in respect of a New Ship, an assignment of the rights, title and benefit of each Buyer under the relevant MOA, to be entered into by the relevant Buyer in favour of the Lender, in such form as the Lender may approve or require and in the plural mean all of them;

“Athina” means Iason Owning Company Limited a corporation incorporated and organised under the laws of the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Athina Advance” means an amount of up to $10,076,250, to be used for financing in full the deposit payable pursuant to Clause 2 of the Athina MOA;

“Athina MOA” means the memorandum of agreement dated 13 July 2007 made between the Borrower as buyer and the Athina Seller as seller in relation to the sale and purchase of “ATHINA” (as amended and supplemented by addendum No. 1 dated 6 August 2007 made between the Borrower, the Athina Seller and Athina pursuant to which the Borrower nominated Athina to be the buyer of “ATHINA”) and as the same may be further amended and supplemented from time to time.

“ATHINA” means the 2002-built Panamax bulk carrier of 74,204 deadweight metric tons currently named “ATHINA ZAFIRAKIS” and registered in the name of the Athina Seller under the                     flag which is to be purchased by Athina and registered in the ownership of Athina under an Approved flag;

“Athina Seller” means Immortality Shipping Co. Ltd., a corporation incorporated and organised under the laws of the Republic of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

(a) 30 September 2007 (or such later date as the Lender may agree with the Borrower); or

(b) if earlier, the date on which the Commitment is fully borrowed, cancelled or terminated;

“Borrower” means Dryships Inc., a corporation incorporated and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

“Business Day” means a day on which banks are open in London and Hamburg and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Buyers” means together, Athina, Galaxy, Nord and Shinyo and in the singular means any of them;

“Celine” means Celine Shipping Company Limited, a company incorporated and existing under the laws of the Republic of Malta and having its registered office at 5/2 Merchants Street, Valetta, Malta;

2

“CELINE” means the 2002-built bulk carrier of 39,727 gross registered tons and 25,754 net registered tons named “MENDOCINO” registered with IMO No. 92312298 in the ownership of Celine under the Maltese flag with the name “CELINE”;

“Commitment” means $30,076,250, as that amount may be reduced, cancelled or terminated in accordance with this Agreement;

“Contract Price” means:

(a) in relation to “ATHINA”, $67,175,000 being the purchase price payable pursuant to the MOA for that Ship;

(b) in relation to “NORD”, $69,500,000 being the purchase price payable pursuant to the MOA for that Ship;

(c) in relation to “SHINYO”; $75,000,000 being the purchase price payable pursuant to the MOA for that Ship; and

(d) in relation to “GALAXY”, $55,500,000 being the purchase price payable pursuant to the MOA for that Ship;

“Contractual Currency” has the meaning given in Clause 20.4;

“Deed of Covenant” means, in relation to a Ship, the deed of covenant collateral to the Mortgage on such Ship creating a second charge over such Ship, in such form as the Lender may approve or require and, in the plural, means all of them;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to an Advance, the date requested by the Borrower for that Advance to be made, or (as the context requires) the date on which that Advance is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 1 (or in any other form which the Lender approves or reasonably requires);

“Earnings” means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner thereof and which arise out of the use or operation of such Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the relevant Owner in the event of requisition of such Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of such Ship;

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c) if and whenever such Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to such Ship;

3

“Earnings Account” means:

(a) in the case of “CELINE” an account in the name of Celine with the Lender designated “Celine Shipping Company Limited - Earnings Account”; and

(b) in the case of “STAR”, an account in the name of Star with the Lender designated “Star Record Company Limited - Earnings Account”,

or any other account (with that or another office of the Lender) which is designated by the Lender as an Earnings Account for the purpose of this Agreement, and in the plural means both of them;

“Environmental Claim” means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from a Ship; or

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or either Owner and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where either Owner and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Event of Default” means any of the events or circumstances described in Clause 18.1;

4

“Existing Loan Agreements” means together:

(a) a loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter dated 15 May 2006 and a supplemental agreement dated 28 November 2006 and as amended and restated by an amending and restating agreement dated 23 May 2007) made between (inter alios) (i) the Borrower, (ii) certain banks and financial institutions referred to therein as lenders and (iii) the Lender as agent and security trustee in respect of a term loan and short term credit facilities of up to $692,051,350.33 in aggregate (the “Existing Senior Loan Agreement”); and

(b) a loan agreement dated 31 March 2006 (as supplemented and amended by a supplemental letter dated 15 May 2006 and a supplemental agreement dated 28 November 2006 and as amended and restated by an amending and restating agreement dated 23 May 2007) made between (inter alios) (i) the Borrower, (ii) certain banks and financial institutions referred to therein as lenders and (iii) the Lender as agent and security trustee in respect of a term loan and short term credit facilities of up to $138,335,751.40 in aggregate (the “Existing Junior Loan Agreement”);

“Finance Documents” means:

(a) this Agreement;

(b) the Guarantees;

(c) the Assignments of the MOA;

(d) the Mortgages;

(e) the Deeds of Covenant;

(f) the General Assignments;

(g) the Management Agreement Assignments;

(h) the Manager’s Undertakings; and

(i) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

5

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e) under any foreign exchange transaction any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

“Galaxy” means Iokasti Owning Company Limited a corporation incorporated and organised under the laws of the Republic of Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Galaxy Advance” means an amount of up to $5,550,000 to be used for financing in full the deposit payable pursuant to Clause 2 of the Galaxy MOA;

“Galaxy MOA” means the memorandum of agreement dated 13 July 2007 made between Galaxy as buyer and the Galaxy Seller as seller in relation to the sale and purchase of “GALAXY” and as the same may be further amended and supplemented from time to time;

“GALAXY” means the 2002-built Panamax bulk carrier of 51,201 deadweight metric tons currently named “VOC GALAXY” and registered in the ownership of the Galaxy Seller under the flag of Antigua & Barbuda which is to be purchased by Galaxy and registered in the ownership of Galaxy under an Approved Flag;

“Galaxy Seller” means MIT Maritime Investments & Trading GmbH & Co. KG, Haren Ems, a company incorporated and organised under the laws of the Republic of Germany;

“General Assignment” means, in relation to a Ship, a second priority general assignment of the Earnings, the Insurances and any Requisition Compensation of such Ship, in such form as the Lender may approve or require and, in the plural, means both of them;

“Group” means, together, the Borrower, each Buyer, each Owner and all their respective subsidiaries and any other companies in the same beneficial ownership as the Borrower and/or each Buyer and/or each Owner;

“Guarantee” means a guarantee of the Borrower’s obligations under this Agreement and the other Finance Documents executed or to be executed by each Owner in favour of the Lender in such form as the Lender shall approve or require and, in the plural, means both of them;

“IACS” means the International Association of Classification Societies;

“Insurances” means, in relation to a Ship:

(a) all policies and contracts of insurance (including in respect of hull and machinery risks), including entries of such Ship in any protection and indemnity or war risks association, which are effected in respect of such Ship, her Earnings or otherwise in relation to her; and

6

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interest Period” means a period determined in accordance with Clause 5;

“ISM Code” means:

(a) ‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisations pursuant to Resolution A.788(19) adopted on 25 November 1995,

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” includes, in relation to each Ship and each New Ship:

(a) the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to that Ship or that New Ship within the periods specified by the ISM Code; and

(b) all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Agent may require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain the Ship’s or the compliance of its Owner with the ISM Code which the Agent may require;

“ISM SMS” means, in relation to each Ship, the safety management system for that Ship which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”) now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of the IMO on Maritime Security in December 2002 and includes any amendments or extensions to it and any regulation issued pursuant to it but shall only apply insofar as it is applicable law in the relevant Ship’s flag state and any jurisdiction on which such Ship is operated;

“ISPS Code Documentation” includes:

(a) the International Ship Security Certificate issued pursuant to the ISPS Code in relation to each Ship within the period specified in the ISPS Code; and

7

(b) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“Lender” means HSH Nordbank AG acting through its office its Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany (or through another branch notified to the Borrower under Clause 25.6) or its successor or assign;

“LIBOR” means, for an Interest Period, the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00 am (London time) on the second Business Day prior to the commencement of that Interest Period (and, for the purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display designated as “Reuters BBA Page LIBOR 01” on the Reuters Money News Service or such other page as may replace Reuters BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying the British Bankers’ Association Interest Settlement Rates for Dollars);

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means, in relation to a Ship, any casualty to such Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Management Agreement” means, in relation to each Ship, an agreement made or to be made between (i) the Owner of that Ship, (ii) the Borrower and (iii) the Approved Manager in respect of the commercial and technical management of the Ship to be in form and substance in all respects acceptable to the Lender and, in the plural, means both of them;

“Management Agreement Assignment” means, in relation to each Management Agreement, the second priority assignment of the rights and interests of the Borrower and the relevant Owner under that Management Agreement in such form as the Lender may approve or require and, in the plural, means both of them;

“Manager’s Undertaking” means, in relation to a Ship, an undertaking to be issued by the Approved Manager in respect of such Ship in favour of the Lender, in such form as the Lender may approve or require;

“Margin” means 1.50 per cent. per annum;

“Market Value” means the market value of a Ship at any date determined in accordance with Clause 14.1;

“MOA” means:

(a) in relation to Athina, the Athina MOA;

(b) in relation to Galaxy, the Galaxy MOA;

(c) in relation to Nord, the Nord MOA; and

(d) in relation to Shinyo, the Shinyo MOA,

8

and in the plural means all of them;

“Mortgage” means, in relation to a Ship, the second priority Maltese statutory ship mortgage on such Ship, in such form as the Lender may approve or require and, in the plural, means both of them;

“Negotiation Period” has the meaning given in Clause 4.6;

“New Ships” means together, “ATHINA”, “GALAXY”, “NORD” and “SHINYO” and, in the singular means any of them;

“Nord” means Orpheus Owning Company Limited a corporation incorporated and organised under the laws of the Republic of Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Nord Advance” means an amount of up to $6,950,000 to be used for financing in full the deposit payable pursuant to Clause 2 of the Nord MOA;

“Nord MOA” means the memorandum of agreement dated 26 July 2007 made between the Approved Manager as buyer and the Nord Seller as seller in relation to the sale and purchase of “NORD” (as amended and supplemented by addendum No. 1 dated 26 July 2007 made between the Approved Manager, the Nord Seller and Nord pursuant to which the Approved Manager nominated Nord to be the buyer of “NORD” and as the same may be further amended and supplemented from time to time);

“NORD” means the 2004-built Panamax bulk carrier of 76,629 deadweight metric tons currently named “NORD MERCURY” and registered in the ownership of the Nord Seller under the flag of Antigua and Barbuda which is to be purchased by Nord and registered in the ownership of Nord under an Approved Flag;

“Nord Seller” means Dampskibsselskabet Norden A/S a company incorporated and organised under the laws of Denmark with its registered office at 49 Amalegrade, DK-1256 Copenhagen, Denmark;

“Owner” means:

(a) in relation to “CELINE”, Celine; and

(b) in relation to “STAR”, Star,

and, in the plural, means both of them.

“Payment Currency” has the meaning given in Clause 20.4;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) Security Interests created pursuant to, or in connection with, the Existing Loan Agreements;

(c) liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

9

(d) liens for salvage;

(e) liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;

(f) liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the relevant Owner in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 13.13(h);

(g) any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the relevant Owner is actively prosecuting or defending such proceedings or arbitration in good faith; and

(h) Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

“Pertinent Document” means:

(a) any Finance Document;

(b) any policy or contract of insurance contemplated by or referred to in Clause 12 or any other provision of this Agreement or another Finance Document;

(c) any other document contemplated by or referred to in any Finance Document; and

(d) any document which has been or is at any time sent by or to the Lender in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company’s central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above;

10

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Lender and/or the satisfaction of any other condition, would constitute an Event of Default;

“Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

“Relevant Person” has the meaning given in Clause 18.7;

“Repayment Date” means the earlier of (i) the date falling 5 months after the Drawdown Date of the first Advance and (ii) 29 February 2008;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Secured Liabilities” means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b) the security rights of a plaintiff under an action in rem; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means each Owner, each Buyer, the Approved Manager and any other person (except the Lender) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”;

11

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Lender notifies the Borrower and the Security Parties that:

(a) all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither the Borrower nor any Security Party has any future or contingent liability under Clause 19, 20, or 21 or any other provision of this Agreement or another Finance Document; and

(d) the Lender does not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

“Seller” means, in relation to:

(a) “ATHINA”, the Athina Seller;

(b) “GALAXY”, the Galaxy Seller;

(c) “NORD”, the Nord Seller; and

(d) “SHINYO”, the Shinyo Seller,

and in the plural means all of them;

“Shinyo” means Team-up Owning Company Limited, a corporation incorporated and organised under the laws of the Republic of Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

“Shinyo Advance” means an amount of up to $7,500,000 to be used for financing in full the deposit payable pursuant to Clause 2 of the Shinyo MOA;

“Shinyo MOA” means the memorandum of agreement dated 6 August 2007 made between the Approved Manager as buyer and the Shinyo Seller as seller in relation to the sale and purchase of “SHINYO” (as amended and supplemented by addendum No. 1 dated 6 August 2007 made between the Approved Manager, the Shinyo Seller and Shinyo pursuant to which the Approved Manager nominated Shinyo to be the buyer of “SHINYO” and as the same may be further amended and supplemented from time);

“SHINYO” means the 2004-built Panamax bulk carrier of 75,707 deadweight metric tons currently named “SHINYO BRILLIANCE” and registered in the ownership of the Shinyo Seller under the              flag which is to be purchased by Shinyo and registered in the ownership of Shinyo under an Approved Flag;

12

“Shinyo Seller” means Golden Ocean Group Limited a company incorporated and organised under the laws of Bermuda;

“Ship” means each of “CELINE” and “STAR” and, in the plural, means both of them;

“Star” means Star Record Owning Company a corporation incorporated and existing under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960;

“STAR” means the 2004-built bulk carrier of 38,851 gross registered tons and 25,325 net registered tons named “LIGARI” registered with IMO No. 9279513 in the ownership of Star under the Maltese flag;

“Total Loss” means, in relation to a Ship or a New Ship:

(a) actual, constructive, compromised, agreed or arranged total loss of such Ship or such New Ship;

(b) any expropriation, confiscation, requisition or acquisition of such Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the relevant Owner or the relevant Buyer; and

(c) any arrest, capture, seizure or detention of such Ship or such New Ship (including any hijacking or theft) unless it is within 30 days redelivered to the full control of the relevant Owner or the relevant Buyer;

“Total Loss Date” means, in relation to a Ship or a New Ship:

(a) in the case of an actual loss of such Ship or such New Ship, the date on which it occurred or, if that is unknown, the date when such Ship or such New Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of such Ship or such New Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Owner or Buyer owning such Ship or such New Ship with such Ship’s or such New Ship’s insurers in which the insurers agree to treat such Ship or such New Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Lender that the event constituting the total loss occurred;

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 12, approved in writing by the Lender;

13

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, fax or telex;

“excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning the Ship is obliged to effect, under Clause 12 or any other provision of this Agreement or another Finance Document;

“on demand” means:

(a) at any time when an Event of Default has occurred and is continuing, within 3 days of the Lender’s written demand; and

(b) at all other times, within 21 days of the Lender’s written demand;

“parent company” has the meaning given in Clause 0;

“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if

14

any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls)(l/10/83) or clause 8 of the Institute Time Clauses (Hulls)(l/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“subsidiary” has the meaning given in Clause 0;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls)(l/10/83) or clause 24 of the Institute Time Clauses (Hulls)(l/11/1995).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P,

and any company of which S is a subsidiary is a parent company of S.

15

1.5 General Interpretation. In this Agreement:

(a) references in Clause 1.1 to a Finance Document or any other document being in the form of a particular appendix include references to that form with any modifications to that form which the Lender approves or reasonably requires;

(b) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(c) references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lender shall make available to the Borrower a loan facility of up to $30,076,250 (in up to four Advances).

2.2 Purpose of Advances. The Borrower undertakes with the Lender to use each Advance only for the purpose stated in Clause 3.2.

3 DRAWDOWN

3.1 Request for Advance. Subject to the following conditions, the Borrower may request an Advance to be made by ensuring that the Lender receives a completed Drawdown Notice for that Advance not later than 11.00 a.m. (Hamburg time) 2 Business Days prior to the intended Drawdown Date for that Advance.

3.2 Availability. The conditions referred to in Clause 3 are that:

(a) a Drawdown Date has to be a Business Day during the Availability Period;

(b) the Athina Advance shall be in an amount not exceeding the lesser of (i) 15 per cent. of the Contract Price in respect of “ATHINA” and (ii) $10,076,250;

(c) the Galaxy Advance shall be in an amount not exceeding the lesser of (i) 10 per cent. of the Contract Price in respect of “GALAXY” and (ii) $5,550,000;

(d) the Nord Advance shall be in an amount not exceeding the lesser of (i) 10 per cent. of the Contract Price in respect of “NORD” and (ii) $6,950,000;

(e) the Shinyo Advance, shall be in an amount not exceeding the lesser of (i) 10 per cent. of the Contract Price in respect of “SHINYO” and (ii) $7,500,000;

(f) each Advance shall be on-lent by the Borrower to the relevant Buyer and shall be used for the purpose of financing or refinancing in full the deposit payable pursuant to Clause 2 of the relevant MOA; and

16

(g) the aggregate principal amount of the Advances shall not exceed $30,076,250.

3.3 Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender.

3.4 Disbursement of Advance. Subject to the provisions of this Agreement, the Lender shall on each Drawdown Date make the relevant Advance to the Borrower; and payment to the Borrower shall be made to the account of the relevant Seller which the Borrower specifies in the relevant Drawdown Notice.

3.5 Disbursement of Advance to third party. The payment of an Advance by the Lender under Clause 3.4 shall constitute the making of the Advance and the Borrower shall at that time become indebted, as principal and direct obligor, to the Lender in an amount equal to that Advance.

4 INTEREST

4.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on each Advance in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

4.2 Normal rate of interest. Subject to the terms of this Agreement, the rate of interest applicable to each Advance (or any part thereof) for each Interest Period relating thereto shall be:

(a) for an Interest Period in respect of which LIBOR is applicable, the aggregate of the applicable Margin and LIBOR for that Interest Period;

(b) for any other Interest Period, such rate as shall be mutually agreed between the Lender and the Borrower for that Interest Period.

4.3 Payment of accrued interest. In the case of an Interest Period longer than 1 month, accrued interest shall be paid every 1 month during that Interest Period and on the last day of that Interest Period.

4.4 Notification of market disruption. The Lender shall promptly notify the Borrower if no rate is quoted on Reuters BBA Page LIBOR 01 or if for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fund the Loan (or any part of it) during any Interest Period, stating the circumstances which have caused such notice to be given.

4.5 Suspension of drawdown. If the Lender’s notice under Clause 4.4 is served before an Advance is made, the Lender’s obligation to make the Advance shall be suspended while the circumstances referred to in the Lender’s notice continue.

4.6 Negotiation of alternative rate of interest. If the Lender’s notice under Clause 4.4 is served after an Advance is made, the Borrower and the Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Lender serves its notice under Clause 4.4 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lender to fund or continue to fund the Loan during the Interest Period concerned.

17

4.7 Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

4.8 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set an interest period and interest rate representing the cost of funding of the Lender in Dollars or in any available currency of the Loan plus the applicable Margin; and the procedure provided for by this Clause 4.8 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Lender.

4.9 Notice of prepayment. If the Borrower does not agree with an interest rate set by the Lender under Clause 4.8, the Borrower may give the Lender not less than 15 Business Days’ notice of its intention to prepay at the end of the interest period set by the Lender.

4.10 Prepayment. A notice under Clause 4.9 shall be irrevocable; and on the last Business Day of the interest period set by the Lender, the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the applicable Margin.

4.11 Application of prepayment. The provisions of Clause 7 shall apply in relation to the prepayment.

5 INTEREST PERIODS

5.1 Commencement of Interest Periods. The first Interest Period applicable to an Advance shall commence on the Drawdown Date in respect of that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

5.2 Duration of normal Interest Periods. Subject to Clauses 5.3 and 5.4, each Interest Period shall be:

(a) 1 month; or

(b) in the case of the first Interest Period applicable to the second and any subsequent Advance, a period ending on the last day of the then current Interest Period whereupon all of the Advances shall be consolidated and treated as a single Advance; or

(c) such other period as the Lender may agree with the Borrower.

5.3 Duration of Interest Period for repayment instalment. The final Interest Period shall end on the Repayment Date.

5.4 Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lender has agreed an Interest Period longer than 3 months, the Lender notifies the Borrower by 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 1 month.

18

6 DEFAULT INTEREST

6.1 Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrower under any Finance Document which the Lender does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 18.4, the date on which it became immediately due and payable.

6.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Lender to be 2 per cent. above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 6.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 6.3(b).

6.3 Calculation of default rate of interest. The rates referred to in Clause 6.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);

(b) the applicable Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Lender may select from time to time:

(i) LIBOR; or

(ii) if the Lender determines that Dollar deposits for any such period are not being made available to it by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Lender by reference to the cost of funds to it from such other sources as the Lender may from time to time determine.

6.4 Notification of interest periods and default rates. The Lender shall promptly notify the Borrower of each interest rate determined by it under Clause 6.3 and of each period selected by it for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Lender’s notification.

6.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.

6.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

19

7 REPAYMENT AND PREPAYMENT

7.1 Repayment. The Borrower shall repay the Loan in a single instalment on the Repayment Date.

7.2 Repayment Date. On the Repayment Date, the Borrower shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.

7.3 Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan on the last day of an Interest Period.

7.4 Conditions for voluntary prepayment. The conditions referred to in Clause 7.3 are that:

(a) a partial prepayment shall be in an amount of $1,000,000 or an integral multiple thereof;

(b) the Lender has received from the Borrower at least 15 days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

(c) the Borrower has provided evidence satisfactory to the Lender that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

7.5 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

7.6 Mandatory prepayment. The Borrower shall be obliged to prepay the Relevant Advance:

(a) if a New Ship is sold, on or before the date on which the sale is completed by delivery of the New Ship to the buyer;

(b) if a New Ship becomes a Total Loss, by no later than the date falling 120 days after the relevant Total Loss Date; or

(c) if an MOA is cancelled, rescinded or terminated on the date of cancellation, rescission or termination of such MOA.

In this Clause 7.6, “Relevant Advance” means the Advance which was used to finance or refinance the deposit for the Ship which has been sold, become a Total Loss or whose MOA has been cancelled, rescinded or been terminated.

7.7 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 20 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 20.1(b) but without premium or penalty.

7.8 Application of partial prepayment. Each partial prepayment shall be applied in reduction of the Loan.

7.9 No reborrowing. No amount prepaid may be reborrowed.

20

8 CONDITIONS PRECEDENT

8.1 Documents, fees and no default. The Lender’s obligation to make an Advance is subject to the following conditions precedent:

(a) that, on or before the service of the first Drawdown Notice, the Lender receives the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers;

(b) that, on each Drawdown Date but prior to the making of the relevant Advance, the Lender receives the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers;

(c) that both at the date of each Drawdown Notice and at each Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Advance;

(ii) the representations and warranties in Clause 9.1 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) none of the circumstances contemplated by Clause 4.4 has occurred and is continuing;

(d) that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may request by notice to the Borrower prior to the relevant Drawdown Date.

8.2 Waivers of conditions precedent. If the Lender, at its discretion, permits an Advance to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the relevant Drawdown Date (or such longer period as the Lender may specify).

9 REPRESENTATIONS AND WARRANTIES

9.1 General. The Borrower represents and warrants to the Lender as follows.

9.2 Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands.

9.3 Share capital and ownership. The Borrower has an authorised share capital divided into 75,000,000 registered shares of $0.01 each, 35,490,097 of which shares have been issued, each fully paid.

9.4 Corporate power. The Borrower or, as the case may be, each Buyer or each Owner has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to execute the MOA to which it is a party and to purchase and pay for its New Ship under the relevant MOA;

(b) to execute the Finance Documents to which it is a party; and

21

(c) to borrow under this Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which it is a party.

9.5 Consents in force. All the consents referred to in Clause 9.4 remain in force and nothing has occurred which makes any of them liable to revocation.

9.6 Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a) constitute the Borrower’s legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

subject to any relevant insolvency laws affecting creditors’ rights generally.

9.7 No third party Security Interests. Without limiting the generality of Clause 9.6, at the time of the execution and delivery of each Finance Document:

(a) the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

9.8 No conflicts. The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrower; or

(c) any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.

9.9 No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

9.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

9.11 No litigation. No legal or administrative action involving the Borrower has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which can be considered material in the context of this Agreement or any other Finance Document.

9.12 Validity and completeness of MOAs. Each MOA constitutes valid, binding and enforceable obligations of the relevant Seller and the relevant Buyer in accordance with its terms; and:

(a) the copy of each MOA delivered to the Lender before the date of this Agreement is a true and complete copy thereof; and

22

(b) no amendments or additions to any MOA have been agreed (other than as previously advised in writing to the Lender) nor has any Buyer or any Seller waived any of their respective rights under any MOA.

9.13 No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to any Buyer, any Seller or a third party in connection with the purchase by a Buyer of the New Ship to be purchased by it other than as disclosed to the Lender in writing on or prior to the date of this Agreement.

9.14 Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 10.2, 10.4, 10.7 and 10.11.

9.15 Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower or its business.

9.16 ISM Code and ISPS Code compliance. The Borrower will procure that the Owners and the Approved Manager obtain all necessary ISM Code Documentation and ISPS Code Documentation in connection with the Ships and comply with the ISM Code and the ISPS Code.

9.17 No money laundering. Without prejudice to the generality of Clause 2.2, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

10 GENERAL UNDERTAKINGS

10.1 General. The Borrower undertakes with the Lender to comply with the following provisions of this Clause 10 at all times during the Security Period, except as the Lender may otherwise permit.

10.2 Title; negative pledge and pari passu ranking. The Borrower will:

(a) own (directly or indirectly) the entire beneficial interest in each Owner and in each Buyer free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents;

(b) not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and

(c) procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.

23

10.3 No disposal of assets. The Borrower will, and will procure that the Owners and the Buyers will, not transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) its Ship or, as the case may be, its New Ship; or

(c) any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

10.4 Restriction on other liabilities or obligations to be incurred. The Borrower will not incur, and will procure that none of the Owners and/or the Buyers will, incur, any liability or obligation except liabilities and obligations:

(a) under the Finance Documents and the Existing Loan Agreements; and

(b) (in the case of each Owner and each Buyer) incurred in the normal course of its business of operating its Ship.

10.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

10.6 Shareholder and creditor notices. The Borrower will send the Lender, at the same time as they are despatched, copies of all communications which are despatched to the Borrower’s shareholders or creditors or any class of them.

10.7 Consents. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Lender of, all consents required:

(a) for each Buyer to perform its obligations under the relevant MOA;

(b) for each Owner to perform its obligations under the Management Agreement to which it is a party;

(c) for the Borrower to perform its obligations under any Finance Document to which it is a party;

(d) for the validity or enforceability of any Finance Document;

(e) for each Owner to continue to own and operate the Ship owned by it,

and the Borrower will comply with the terms of all such consents.

10.8 Maintenance of Security Interests. The Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in

24

respect of any Finance Document, give any notice or take any other step which may be or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

10.9 Notification of litigation. The Borrower will provide the Lender with details of any legal or administrative action involving the Borrower, any Security Party, the Approved Manager, either Ship, any New Ship or the Earnings or the Insurances of either Ship as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

10.10 No amendment to MOA. The Borrower will procure that no Buyer will agree to any amendment or supplement to, or waive or fail to enforce, the MOA to which that Buyer is a party or any of its provisions.

10.11 Principal place of business. The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 27.2(a); and the Borrower will not establish, or do anything as a result of which it would be deemed to have a place of business in any country other than the Marshall Islands, Malta and Greece.

10.12 Confirmation of no default. The Borrower will, within 2 Business Days after service by the Lender of a written request, serve on the Lender a notice which is signed by 2 directors of the Borrower and which;

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

10.13 Notification of default. The Borrower will notify the Lender as soon as the Borrower becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will keep the Lender fully up-to-date with all developments.

10.14 Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Lender with any additional financial or other information relating:

(a) to the Borrower, either Ship, any New Ship or the Earnings or the Insurances of either Ship; or

(b) to any other matter relevant to, or to any provision of, a Finance Document, which may be requested by the Lender at any time.

10.15 Ownership. The Borrower shall ensure that (a) it shall remain the direct or indirect owner of the whole of the issued share capital of each Buyer and each Owner and (b) there shall be no change in the legal and beneficial ownership of the shares in each Buyer and each Owner.

25

10.16 General and administrative costs. The Borrower shall ensure that the payment of all the general and administrative costs of the Borrower, the Owners and the Buyers in connection with the ownership and operation of the Ships and the New Ships (excluding the payment of the management fees pursuant to the Management Agreements) shall be fully subordinated to the payment obligations of the Borrower, the Owners and the Buyers under this Agreement and the other Finance Documents throughout the Security Period.

11 CORPORATE UNDERTAKINGS

11.1 General. The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit.

11.2 Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands.

11.3 Negative undertakings. The Borrower will not:

(a) change the nature of its business; or

(b) declare or pay any dividend or effect any other form of distribution except as permitted pursuant to clause 12.3(b) of the Existing Senior Loan Agreement or as approved by the Majority Lenders (as that term is defined in the Existing Senior Loan Agreement) pursuant to the Existing Senior Loan Agreement;

(c) effect any form of redemption, purchase or return of share capital; or

(d) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in the Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected;

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length Provided that this shall not prevent or restrict the Borrower from on-lending the Loan to the Buyers or granting credit or financial assistance to its wholly-owned direct or indirect subsidiaries;

(e) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(f) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than Designated Transactions (as defined in the Existing Loan Agreements);

26

(g) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

12 INSURANCE

12.1 General. The Borrower also undertakes with the Lender to procure that each Owner will comply with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may otherwise permit.

12.2 Maintenance of obligatory insurances. The Borrower shall procure that each Owner shall keep the Ship owned by it insured at the expense of that Owner against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

(b) war risks (including protection and indemnity war risks);

(c) in the case of protection and indemnity war risks, in an amount equal to the amount for which the war risks under the hull policies are effected; and

(d) any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for the relevant Owner to insure and which are specified by the Lender by notice to the relevant Owner.

12.3 Terms of obligatory insurances. The Borrower shall procure that each Owner shall effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) an amount, which when aggregated with the insured value of the other Ships at the relevant time subject to a Mortgage, is equal to 120 per cent, of the Loan and (ii) the Market Value of the Ship owned by it; and

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

(d) in relation to protection and indemnity risks, in respect of the full value and tonnage of the Ship owned by it;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

12.4 Further protections for the Lender. In addition to the terms set out in Clause 12.3, the Borrower shall procure that the obligatory insurances shall:

(a) (except in relation to risks referred to in Clauses 12.2(c) and (d)) name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but

27

without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance and shall procure that no other assured shall be additional named without the prior consent of the Lender;

(b) name the Lender as sole loss payee with such directions for payment as the Lender may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Lender in respect of any rights or interests (secured or not) held by or available to the Lender in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the relevant Owner or the Lender) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender;

(f) provide that the Lender may make proof of loss if the relevant Owner fails to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Lender, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Lender for 30 days (or 7 days in the case of war risks) after receipt by the Lender of prior written notice from the insurers of such cancellation, change or lapse.

12.5 Renewal of obligatory insurances. The Borrower shall procure that each Owner shall:

(a) at least 21 days before the expiry of any obligatory insurance:

(i) notify the Lender of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Owner proposes to renew that insurance and of the proposed terms of renewal; and

(ii) in case of any substantial change in insurance cover, obtain the Lender’s approval to the matters referred to in paragraph (i) above;

(b) at least 14 days before the expiry of any obligatory insurance, renew the insurance in accordance with the Lender’s approval pursuant to paragraph (a); and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.

12.6 Copies of policies; letters of undertaking. The Borrower shall procure that each Owner shall ensure that all approved brokers provide the Lender with copies of all policies

28

relating to the obligatory insurances which they effect or renew and of a letter or letters of undertaking in a form required by the Lendersand including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 12.4;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;

(c) they will advise the Lender immediately of any material change to the terms of the obligatory insurances;

(d) they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Owner or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by the relevant Owner under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies (including, without limitation, any fleet lien) or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Lender.

12.7 Copies of certificates of entry. The Borrower shall procure that each Owner shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by that Owner is entered provides the Lender with:

(a) a certified copy of the certificate of entry for that Ship;

(b) a letter or letters of undertaking in such form as may be required by the Lenders; and

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Owner in accordance with the requirements of such protection and indemnity association; and

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority.

12.8 Deposit of original policies. The Borrower shall procure that each Owner shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

12.9 Payment of premiums. The Borrower shall procure that each Owner shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Lender.

29

12.10 Guarantees. The Borrower shall procure that each Owner shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

12.11 Restrictions on employment. The Borrower shall procure that neither Owner employ the Ship owned by it, nor permit her to be employed, outside the cover provided by any obligatory insurances.

12.12 Compliance with terms of insurances. The Borrower shall procure that neither Owner shall do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

(a) each Owner shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 12.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;

(b) neither Owner shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;

(c) each Owner shall make all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) neither Owner shall employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

12.13 Alteration to terms of insurances. The Borrower shall procure that neither Owner shall either make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Lender.

12.14 Settlement of claims. The Borrower shall procure that neither Owner shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

12.15 Provision of copies of communications. The Borrower shall procure that each Owner shall provide the Lender, at the time of each such communication, copies of all written communications between that Owner and:

(a) the approved brokers; and

(b) the approved protection and indemnity and/or war risks associations; and

30

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) that Owner’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between that Owner and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

12.16 Provision of information. In addition, the Borrower shall procure that each Owner shall promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17 below or dealing with or considering any matters relating to any such insurances and the Borrower shall, forthwith upon demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.

12.17 Mortgagee’s interest and additional peril insurances. The Lender shall be entitled from time to time to effect, maintain and renew all or any of the following insurances in such amounts, on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate:

(a) a mortgagee’s interest marine insurance in an amount equal to 120 per cent. of the Loan, providing for the indemnification of the Lender for any losses under or in connection with any Finance Document which directly or indirectly result from loss of or damage to either Ship or a liability of either Ship or of either Owner, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a nonpayment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning:

(i) any act or omission on the part of either Owner, of any operator, charterer, manager or sub-manager of either Ship or of any officer, employee or agent of either Owner or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;

(ii) any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of either Owner, any other person referred to in paragraph (i) above, or of any officer, employee or agent of either Owner or of such a person, including the casting away or damaging of either Ship and/or either Ship being unseaworthy; and/or

(iii) any other matter capable of being insured against under a mortgagee’s interest marine insurance policy whether or not similar to the foregoing;

31

(b) a mortgagee’s interest additional perils policy in an amount not less than 110 per cent. of the Loan, providing for the indemnification of the Lender against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of either Ship, the imposition of any Security Interest over either Ship and/or any other matter capable of being insured against under a mortgagee’s interest additional perils policy whether or not similar to the foregoing

and the Borrower shall upon demand fully indemnify the Lender in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

12.18 Review of insurance requirements. The Lender shall be entitled to review the requirements of this Clause 12 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lender, significant and capable of affecting the Owners or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Owners may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrower.

12.19 Modification of insurance requirements. The Lender shall notify the Borrower of any proposed modification under Clause 12.18 to the requirements of this Clause 13 which the Lender considers appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Borrower accordingly.

12.20 Compliance with mortgagee’s instructions. The Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require either Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Owner of that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 12.19.

13 SHIP COVENANTS

13.1 General. The Borrower also undertakes with the Lender to procure that each Owner shall, and each Buyer shall, following the delivery of the relevant New Ship in accordance with the terms of the relevant MOA to such Buyer, comply with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit.

13.2 Ship’s name and registration. The Borrower shall procure that each Owner shall keep the Ship owned by it registered in its ownership under Maltese flag and shall procure that each Buyer shall, following delivery to it, keep the New Ship owned by it registered in its ownership under the relevant flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of either Ship.

13.3 Repair and classification. The Borrower shall procure that each Owner and each Buyer shall keep the Ship or, as the case may be, its New Ship owned by it in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

32

(b) so as to maintain the highest class at Lloyd’s Register of Ships (or such other first-class classification society which is a member of IACS acceptable to the Lender) free of overdue recommendations and conditions of such classification society; and

(c) so as to comply with all laws and regulations applicable to vessels registered at ports in Malta or, in the case of a New Ship, with the relevant Approved Flag State, or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code, the ISPS Code, the ISM Code Documentation and the ISPS Code Documentation.

13.4 Classification society undertaking. The Borrower shall procure that each Owner or each Buyer shall instruct the classification society referred to in Clause 13.3 (and procure that the classification society undertakes with the Lender):

(a) to send to the Lender, following receipt of a written request from the Lender, certified true copies of all original class records held by the classification society in relation to the Ship owned by that Owner or, as the case may be, the New Ship owned by that Buyer;

(b) to allow the Lender (or its agents), at any time and from time to time, to inspect the original class and related records of that Owner and its Ship or, as the case may be, the Buyer and its New Ship, at the offices of the classification society and to take copies of them;

(c) to notify the Lender immediately in writing if the classification society:

(i) receives notification from that Owner or, as the case may be, that Buyer or any person that the relevant Ship’s or the relevant New Ship’s classification society is to be changed; or

(ii) becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of the relevant Ship’s or, as the case may be, the relevant New Ship’s class under the rules or terms and conditions of that Owner’s or, as the case may be, that Buyer’s or the relevant Ship’s or, as the case may be, the relevant New Ship’s membership of the classification society;

(d) following receipt of a written request from the Lender:

(i) to confirm that Owner or, as the case may be, that Buyer is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or

(ii) if that Owner or, as the case may be, that Buyer is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Lender in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.

13.5 Modification. The Borrower shall procure that neither Owner nor any Buyer shall make any modification or repairs to, or replacement of, the Ship or, as the case may be, the

33

New Ship, owned by it or equipment installed on her which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce her value.

13.6 Removal of parts. The Borrower shall procure that neither Owner nor any Buyer shall remove any material part of the Ship or, as the case may be, the New Ship owned by it, or any item of equipment installed on, the Ship or, as the case may be, the New Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lender and becomes on installation on the Ship or, as the case may be, the New Ship the property of the Owner or, as the case may be, the Buyer and subject to the security constituted by the Mortgage and if applicable, the Deed of Covenant relative to that Ship or, as the case may be, that New Ship Provided that the Owner or, as the case may be, the Buyer may install equipment owned by a third party if the equipment can be removed without any risk of damage to that Ship or, as the case may be, that New Ship.

13.7 Surveys. The Borrower shall procure that each Owner and each Buyer shall submit the Ship or, as the case may be, the New Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender, provide the Lender (at the expense of the Borrower) with copies of all survey reports.

13.8 Inspection. The Borrower shall procure that each Owner and each Buyer shall permit the Lender (by surveyors or other persons appointed by it for that purpose) to board the Ship or, as the case may be, the New Ship owned by it at all reasonable times to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections Provided that so long as no Event of Default has occurred and is continuing at the relevant time and a Ship or, as the case may be, a New Ship is found to be in a satisfactory condition (in the opinion of the Lender) the Borrower shall be obliged to pay the fees and expenses of one inspection of that Ship or, as the case may be, that New Ship in any calendar year.

13.9 Prevention of and release from arrest. The Borrower shall procure that each Owner and each Buyer shall promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship or, as the case may be, the New Ship owned by it, her Earnings or her Insurances;

(b) all taxes, dues and other amounts charged in respect of that Ship or, as the case may be, that New Ship, her Earnings or her Insurances; and

(c) all other outgoings whatsoever in respect of that Ship or, as the case may be, that New Ship , her Earnings or her Insurances and, forthwith upon receiving notice of the arrest of that Ship or, as the case may be, that New Ship, or of her detention in exercise or purported exercise of any lien or claim, the relevant Owner or, as the case may be, the relevant Buyer shall within 10 Business Days procure her release by providing bail or otherwise as the circumstances may require.

13.10 Compliance with laws etc. The Borrower shall procure that each Owner, each Buyer and each Approved Manager shall:

(a) comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by the relevant Owner or, as the case may be, the New Ship owned by the relevant Buyer, its ownership, operation and management or to the business of that Owner or, as the case may be, that Buyer;

34

(b) not employ the Ship or, as the case may be, the New Ship nor allow her employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s or, as the case may be, the New Ship’s war risks insurers unless the prior written consent of the Lender has been given and the Owner has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.

13.11 Provision of information. The Borrower shall procure that each Owner or, as the case may be, each Buyer shall promptly provide the Lender with any information which the Lender requests regarding:

(a) the Ship or, as the case may be, the New Ship owned by it, her employment, position and engagements;

(b) the Earnings and payments and amounts due to the master and crew of the Ship or, as the case may be, the New Ship owned by it;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship or, as the case may be, New Ship and any payments made in respect of that Ship or, as the case may be, New Ship;

(d) any towages and salvages;

(e) its compliance or the compliance of that Ship or, as the case may be, New Ship with the ISM Code and the ISPS Code, and, upon the Lender’s request, provide copies of any current charter relating to that Ship or, as the case may be, New Ship and of any current charter guarantee, and copies of the ISM Code Documentation and the ISPS Code Documentation.

13.12 Notification of certain events. The Borrower shall procure that each Owner and each Buyer, each Buyer shall immediately notify the Lender by letter of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship or, as the case may be, the New Ship, owned by it or has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

35

(d) any arrest or detention of that Ship or, as the case may be, New Ship, any exercise or purported exercise of any lien on that Ship or, as the case may be, New Ship or her Earnings or any requisition of that Ship or, as the case may be, New Ship for hire;

(e) any intended dry docking of that Ship or, as the case may be, New Ship;

(f) any Environmental Claim made against that Owner or in connection with that Ship or, as the case may be, New Ship, or any Environmental Incident;

(g) any claim for breach of the ISM Code or the ISPS Code being made against that Owner or as the case may be, Buyer, the Approved Manager or otherwise in connection with that Ship or, as the case may be, New Ship; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with

and the Borrower shall keep the Lender advised in writing on a regular basis and in such detail as the Lender shall require of the Owner’s or, as the case may be, the Buyer’s, the Approved Manager’s or any other person’s response to any of those events or matters.

13.13 Restrictions on chartering, appointment of managers etc. The Borrower shall procure that neither Owner nor any Buyer shall:

(a) let the Ship or, as the case may be, New Ship owned by it on bareboat or demise charter for any period;

(b) enter into any time or consecutive voyage charter in respect of that Ship or, as the case may be, New Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 11 months;

(c) change the terms on which that Ship or, as the case may be, New Ship is employed or the identity of the person by whom that Ship or, as the case may be, New Ship is employed;

(d) enter into any charter in relation to that Ship or, as the case may be, New Ship under which more than 2 months’ hire (or the equivalent) is payable in advance;

(e) charter that Ship or, as the case may be, New Ship otherwise than on bona fide arm’s length terms at the time when that Ship or, as the case may be, New Ship is fixed;

(f) appoint a manager of that Ship or, as the case may be, New Ship other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment;

(g) de-activate or lay up that Ship or, as the case may be, New Ship; or

(h) put that Ship or, as the case may be, New Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or her Earnings for the cost of such work or otherwise.

13.14 Notice of Mortgage. The Borrower shall procure that each Owner shall keep the Mortgage applicable to the Ship owned by it registered against that Ship as a valid first priority or preferred mortgage, carry on board the Ship a certified copy of the Mortgage

36

and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of the Ship a framed printed notice stating that the Ship is mortgaged by the Owner to the Lender.

13.15 Sharing of Earnings. The Borrower shall procure that neither Owner shall:

(a) enter into any agreement or arrangement for the sharing of any Earnings;

(b) enter into any agreement or arrangement for the postponement of any date on which any Earnings are due; the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of that Owner to any Earnings; or

(c) enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings.

14 VALUATIONS

14.1 Valuation of Ships. The market value of a Ship or, as the case may be, New Ship at any date is that shown by taking the arithmetic mean of two valuations each prepared:

(a) as at a date not more than 14 days previously;

(b) by an Approved Broker appointed by the Lender with the valuations being addressed to the Lender;

(c) with or without physical inspection of the Ship (as the Lender may require);

(d) on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer;

(e) with or without charter or other contract of employment at the option of the Lender; and

(f) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

14.2 Valuations binding. Any valuation under Clause 14.1 shall be binding and conclusive as regards the Borrower.

14.3 Frequency of Valuations. The Borrower acknowledges and agrees that the Lender may commission valuations of each Ship or, as the case may be, New Ship at such times as the Lender shall deem necessary.

14.4 Provision of information. The Borrower shall promptly provide the Lender and any shipbroker or expert acting under Clause 14.1 with any information which the Lender or the shipbroker or expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Lender (or the expert appointed by it) considers prudent.

14.5 Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 19.2, 19.3 and 20.3, the Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any shipbroker or expert instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause.

37

15 PAYMENTS AND CALCULATIONS

15.1 Currency and method of payments. All payments to be made by the Borrower to the Lender under a Finance Document shall be made to the Lender:

(a) by not later than 11.00 a.m. (New York City time) on the due date;

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

(c) to the account of the Lender at JPMorgan Chase Bank, New York City, NY, U.S.A. (Account No 001-1-331808 (Swift Code “CHASUS 33” under reference “Dryships Inc. - -US$30,076,250 bridge facility”), or to such other account with such other bank as the Lender may from time to time notify to the Borrower.

15.2 Payment on non-Business Day. If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

15.3 Basis for calculation of periodic payments. All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

15.4 Lender accounts. The Lender shall maintain an account showing the amounts advanced by the Lender and all other sums owing to the Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

15.5 Accounts prima facie evidence. If the account maintained under Clauses 15.4 shows an amount to be owing by the Borrower or a Security Party to the Lender, that account shall be prima facie evidence that that amount is owing to the Lender.

16 APPLICATION OF RECEIPTS

16.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents (or any of them) in such order of application and/or such proportions as the Lender may specify by notice to the Borrower and the Security Parties;

(b) SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Lender, by notice to the Borrower and the

38

Security Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of this Clause; and

(c) THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

16.2 Variation of order of application. The Lender may, by notice to the Borrower and the Security Parties, provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

16.3 Notice of variation of order of application. The Lender may give notices under Clause 16.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

16.4 Appropriation rights overridden. This Clause 16 and any notice which the Lender gives under Clause 16.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

17 APPLICATION OF EARNINGS

17.1 Payment of Earnings. The Borrower undertakes with the Lender to ensure that throughout the Security Period:

(a) (subject only to provisions of the relevant General Assignment), all the Earnings of each Ship are paid to the Earnings Account for that Ship; and

(b) transfers and withdrawals may only be made from any Earnings Account to pay the operating expenses of the relevant Ship.

17.2 Location of accounts. The Borrower shall promptly comply, and ensure that the Owners comply, with any requirement of the Lender as to the location or re-location of any Earnings Account.

17.3 Debits for expenses etc. The Lender shall be entitled (but not obliged) from time to time to debit any Earnings Account without prior notice in order to discharge any amount due and payable to it under Clause 19 or 20 or payment of which it has become entitled to demand under Clause 19 or 20.

17.4 Borrower’s obligations unaffected. The provisions of this Clause 17 do not affect:

(a) the liability of the Borrower to make payments of principal and interest on the due dates; or

(b) any other liability or obligation of the Borrower or any Security Party under any Finance Document.

18 EVENTS OF DEFAULT

18.1 Events of Default. An Event of Default occurs if:

(a) the Borrower or any Security Party fails to pay when due or if so payable on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

39

(b) any breach occurs of Clause 8.2, 10.2, 10.3, 11.2, 11.3, 17.1 or 17.2; or

(c) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (b) if, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 10 days after written notice from the Lender requesting action to remedy the same; or

(d) (subject to any applicable grace period specified in any Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach caused by paragraph (a), (b) or (c)); or

(e) any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person exceeding $1,000,000 (or the equivalent in any other currency) in aggregate:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Lender, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

40

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv) or (v); or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Lender, is similar to any of the foregoing; or

(h) the Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or

(ii) for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) any consent necessary to enable either Owner to own, operate or charter the Ship owned by it or to enable the Borrower or any Security Party to comply with any provision which the Lender considers material of a Finance Document or any MOA is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(k) it appears to the Lender that, without its prior written consent, a change has occurred or probably has occurred after the date of this Agreement in the ultimate beneficial ownership of any of the shares in either Owner or any Buyer or in the ultimate control of the voting rights attaching to any of those shares; or

41

(l) without the prior written consent of the Lender (such consent not to be unreasonably withheld) George Economou ceases to be the Chief Executive Officer of the Borrower or George Economou (either directly and/or through companies beneficially owned by him and/or trusts or foundations of which he is a beneficiary) owns and controls less than 25 per cent. of the issued share capital of the Borrower;

(m) any provision which the Lender considers material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(n) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(o) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of the Borrower or either Owner or any Buyer; or

(ii) any accident or other event involving either Ship or another vessel owned, chartered or operated by a Relevant Person;

in the light of which the Lender considers that there is a significant risk that the Borrower or any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

18.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default the Lender may:

(a) serve on the Borrower a notice stating that all obligations of the Lender to the Borrower under this Agreement are terminated; and/or

(b) serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(c) take any other action which, as a result of the Event of Default or any notice served under paragraph (a) or (b), the Lender is entitled to take under any Finance Document or any applicable law.

18.3 Termination of Commitment. On the service of a notice under Clause 18.2(a) the Commitment, and all other obligations of the Lender to the Borrower under this Agreement, shall terminate.

18.4 Acceleration of Loan. On the service of a notice under Clause 18.2(b), the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

18.5 Multiple notices; action without notice. The Lender may serve notices Clauses 18.2(a) and (b) simultaneously or on different dates and it may take any action referred to in Clause 18.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

42

18.6 Exclusion of Lender liability. Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrower or a Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been caused directly and mainly by the dishonesty, the gross negligence or the wilful misconduct of the Lender’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

18.7 Relevant Persons. In this Clause 18 a “Relevant Person” means the Borrower, a Security Party and any other member of the Group; but excluding any company which is dormant and the value of whose gross assets is $50,000 or less.

18.8 Interpretation. In Clause 18.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 18.1(g) “petition” includes an application.

19 FEES AND EXPENSES

Arrangement and commitment fee. The Borrower shall pay to the Lender a non-refundable arrangement fee of $180,457.50 on the date of this Agreement.

19.1 Costs of negotiation, preparation etc. The Borrower shall pay to the Lender on its demand the amount of all reasonable expenses incurred by the Lender in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document (including, without limitation, any legal fees or expenses incurred by the Lender with respect to the legal opinions referred to in Schedule 2).

19.2 Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Lender, on the Lender’s demand, the amount of all reasonable expenses incurred by the Lender in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 14 or any other matter relating to such security; or

43

(d) any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

19.3 Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender’s demand, fully indemnify the Lender against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.

19.4 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

20 INDEMNITIES

20.1 Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify made or brought against the Lender on its demand in respect of all claims, expenses, liabilities and losses which are incurred by the Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) an Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c) any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 6);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,

and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under any Finance Document.

20.2 Breakage costs. Without limiting its generality, Clause 20.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by the Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or a number of transactions of which this Agreement is one.

44

20.3 Miscellaneous indemnities. The Borrower shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by the Lender, in any country, as a result of or in connection with:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document;

(b) any other Pertinent Matter,

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty, the gross negligence or wilful misconduct of the officers or employees of the Lender.

Without prejudice to its generality, this Clause 20.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

20.4 Currency indemnity. If any sum due from the Borrower or any Security Party to the Lender under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment,

the Borrower shall indemnify the Lender against the loss arising when the amount of the payment actually received by the Lender is converted at the available rate of exchange into the Contractual Currency.

In this Clause 20.4, the “available rate of exchange” means the rate at which the Lender is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 20.4 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

20.5 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

45

21 NO SET-OFF OR TAX DEDUCTION

21.1 No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

(b) free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

21.2 Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

(a) the Borrower shall notify the Lender as soon as it becomes aware of the requirement;

(b) the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

21.3 Evidence of payment of taxes. Within one month after making any tax deduction, the Borrower shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.

21.4 Exclusion of tax on overall net income. In this Clause 21 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on the Lender’s overall net income.

22 ILLEGALITY, ETC

22.1 Illegality. This Clause 22 applies if the Lender notifies the Borrower that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

22.2 Notification and effect of illegality. On the Lender notifying the Borrower under Clause 22.1, the Commitment shall terminate; and thereupon or, if later, on the date specified in the Lender’s notice under Clause 22.1 as the date on which the notified event would become effective the Borrower shall prepay the Loan in full in accordance with Clause 7.

22.3 Mitigation. If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 22.2, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this

46

Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

23 INCREASED COSTS

23.1 Increased costs. This Clause 23 applies if the Lender notifies the Borrower that it considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

(b) complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement (including, without limitation, any laws or regulations which shall replace, amend and/or supplement those set out in the statement of the Basle Committee on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International Convergence of Capital Management and Capital Structures”)) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

the Lender (or a parent company of it) has incurred or will incur an “increased cost”.

23.2 Meaning of “increased cost”. In this Clause 23, “increased cost” means:

(a) an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining the Commitment or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums; or

(b) a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital;

(c) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan; or

(d) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement;

but not an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 20.1 or by Clause 21.

47

For the purposes of this Clause 23.2 the Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

23.3 Payment of increased costs. The Borrower shall pay to the Lender, on its demand, the amounts which the Lender from time to time notifies the Borrower that it has specified to be necessary to compensate it for the increased cost.

23.4 Notice of prepayment. If the Borrower is not willing to continue to compensate the Lender for the increased cost under Clause 23.3, the Borrower may give the Lender not less than 14 days’ notice of its intention to prepay the Loan at the end of an Interest Period.

23.5 Prepayment. A notice under Clause 23.4 shall be irrevocable; and on the date specified in the Borrower’s notice of intended prepayment, the Commitment shall terminate and the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the applicable Margin.

23.6 Application of prepayment. Clause 7 shall apply in relation to the prepayment.

24 SET-OFF

24.1 Application of credit balances. The Lender may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of the Lender in or towards satisfaction of any sum then due from the Borrower to the Lender under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrower;

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars; and

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

24.2 Existing rights unaffected. The Lender shall not be obliged to exercise any of its rights under Clause 24.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document).

24.3 No Security Interest. This Clause 24 gives the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.

25 TRANSFERS AND CHANGES IN LENDING OFFICE

25.1 Transfer or assignment by Borrower. The Borrower may not, without the consent of the Lender, transfer or assign any of its rights or obligations under any Finance Document.

48

25.2 Assignment by Lender. The Lender may assign or transfer all or any of the rights and interests which it has under or by virtue of the Finance Documents to another bank or financial institution which is experienced in ship financing after prior consultation with the Borrower.

25.3 Rights of assignee. In respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document, or any misrepresentation made in or in connection with a Finance Document, a direct or indirect assignee or transferee of any of the Lender’s rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee or transferee as a result of the breach or misrepresentation irrespective of whether the Lender would have incurred a loss of that kind or amount.

25.4 Sub-participation; subrogation assignment. The Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.

25.5 Disclosure of information. The Lender may disclose to a potential assignee or transferee or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

25.6 Change of lending office. The Lender may change its lending office by giving notice to the Borrower and the change shall become effective on the later of:

(a) the date on which the Borrower receives the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

26 VARIATIONS AND WAIVERS

26.1 Variations, waivers etc. by Lender. A document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or the Lender’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrower and the Lender and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

26.2 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

(b) an Event of Default; or

(c) a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

49

(d) any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

27 NOTICES

27.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

27.2 Addresses for communications. A notice shall be sent:

(a)	to the Borrower:	Omega Building
		80 Kifissias Avenue
		Maroussi 151 25
		Greece
		Fax No: +30 210 809 0275
		Attn: the Chief Financial Officer
(b)	to the Lender:	HSH Nordbank AG
		Gerhart-Hauptmann-Platz 50
		D-20095 Hamburg
		Germany
		Fax No: +(49) 40 33 33 34 118
		Attn: Shipping, Greek Clients

or to such other address as the relevant party may notify the other.

27.3 Effective date of notices. Subject to Clauses 27.4 and 27.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

(b) a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

27.4 Service outside business hours. However, if under Clause 27.3 a notice would be deemed to be served:

(a) on a day which is not a Business Day in the place of receipt; or

(b) on such a Business Day, but after 5 p.m. local time,

the notice shall (subject to Clause 27.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

27.5 Illegible notices. Clauses 27.3 and 27.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

50

27.6 English language. Any notice under or in connection with a Finance Document shall be in English.

27.7 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

27.8 Meaning of “notice”. In this Clause 28 “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

28 SUPPLEMENTAL

28.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to the Lender are:

(a) cumulative;

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

28.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

28.3 Counterparts. A Finance Document may be executed in any number of counterparts.

28.4 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

29 LAW AND JURISDICTION

29.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

29.2 Exclusive English jurisdiction. Subject to Clause 29.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

51

29.3 Choice of forum for the exclusive benefit of the Lender. Clause 29.2 is for the exclusive benefit of the Lender, which reserves the rights:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England. The Borrower shall not commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

29.4 Process agent. The Borrower irrevocably appoints Ince & Co. at its registered office for the time being, presently at International House, 1st Katherine’s Way, London E1W 1UN England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

29.5 Lender’s rights unaffected. Nothing in this Clause 29 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

29.6 Meaning of “proceedings”. In this Clause 29, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

52

EXECUTION PAGE

BORROWER

SIGNED by	)
for and on behalf of	)
DRYSHIPS INC.	)
in the presence of:	)
LENDER
SIGNED by	)
for and on behalf of	)
HSH NORDBANK AG	)
in the presence of:	)

53

EX-4.22

Exhibit 4.22

Date 5 October 2007

BOONE STAR OWNERS INC.

- and -

IOKASTI OWNING COMPANY LIMITED

as Borrowers

- and -

PIRAEUS BANK A.E.

as Lender

LOAN AGREEMENT

relating to a loan facility of up to US$90,000,000

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

Clause	Page
1       INTERPRETATION	1
2       FACILITY	15
3       DRAWDOWN	15
4       INTEREST	16
5       INTEREST PERIODS	17
6       DEFAULT INTEREST	17
7       REPAYMENT AND PREPAYMENT	18
8       CONDITIONS PRECEDENT	20
9       REPRESENTATIONS AND WARRANTIES	21
10     GENERAL UNDERTAKINGS	23
11     CORPORATE UNDERTAKINGS	25
12     INSURANCE	26
13     SHIP COVENANTS	31
14     SECURITY COVER	34
15     PAYMENTS AND CALCULATIONS	35
16     APPLICATION OF RECEIPTS	36
17     APPLICATION OF EARNINGS	36
18     EVENTS OF DEFAULT	37
19     FEES AND EXPENSES	41
20     INDEMNITIES	41
21     NO SET-OFF OR TAX DEDUCTION	43
22     ILLEGALITY, ETC	43
23     INCREASED COSTS	44
24     SET-OFF	45
25     TRANSFERS AND CHANGES IN LENDING OFFICE	45
26     VARIATIONS AND WAIVERS	46

27     NOTICES	47
28     JOINT AND SEVERAL LIABILITY	48
29     SUPPLEMENTAL	49
30     LAW AND JURISDICTION	49
SCHEDULE 1 DRAWDOWN NOTICE	51
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS	52
EXECUTION PAGE	55

THIS AGREEMENT is made on 5 October 2007

BETWEEN

(1) BOONE STAR OWNERS INC. and IOKASTI OWNING COMPANY LIMITED, each a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (together the “Borrowers” and each a “Borrower”); and

(2) PIRAEUS BANK A.E., acting through its branch at 47-49 Akti Miaouli, 185 36 Piraeus, Greece (as “Lender”).

BACKGROUND

The Lender has agreed to make available to the Borrowers, on a joint and several basis, a loan facility up to US$90,000,000 for the purpose of financing part of the acquisition cost of “TRANSATLANTIC” (tbr “SAMATAN”) and “VOC GALAXY” to be acquired by Boone and Iokasti respectively from the relevant Seller pursuant to the relevant MOA.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

“Account” means:

(a) in the case of “TRANSATLANTIC”, an earnings account in the name of Boone with the Lender designated “Boone Star Owners Inc.” - Earnings Account”; and

(b) in the case of “VOC GALAXY”, an earnings account in the name of Iokasti with the Lender designated “Iokasti Owning Company Limited - Earnings Account”

or, in either case, any other account (with that or another office of the Lender or with a bank or financial institution other than the Lender) which is designated by the Lender as the Account for the relevant Ship for the purposes of this Agreement;

“Account Pledge” means, in relation to each Account, the deed of pledge in respect of that Account to be executed by the relevant Borrower in favour of the Lender in such form as the Lender may approve or require and in the plural means all of them;

“Accounting Information” means the annual audited consolidated accounts to be provided by the Borrowers to the Lender in accordance with Clause 10.6(a) of this Agreement or the semi-annual unaudited accounts to be provided by the Borrowers to the Lender in accordance with Clause 10.6(b) of this Agreement;

“Advance” means:

(a) in relation to “TRANSATLANTIC”, the Boone Advance; and

(b) in relation to “VOC GALAXY”, the Iokasti Advance;

and in the plural means both of them;

“Approved Charter” means, in relation to a Ship, any time charter party of that Ship to be entered by the relevant Borrower and a charterer in all respects acceptable to the Lender, exceeding or which, by virtue of any optional extensions is capable of exceeding,

12 months in duration as the same may be amended or supplemented from time to time in favour and substance in all respects acceptable to the Lender;

“Approved Manager” means:

(a) in relation to a Ship, (save for “VOC GALAXY” during the Bareboat Charter Period), Cardiff Marine Inc. a corporation incorporated under the laws of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia and maintaining a ship management office at Omega Building, 80 Kifissias Avenue, 151 25 Maroussi, Greece; and

(b) in relation to “VOC GALAXY” during the Bareboat Charter period, MIT Maritime Investments & Trading GmbH & Co. KG, Haren (Ems), company incorporated under the laws of Germany whose registered office is at Garten Str 2, 49733 Haren/Ems, Germany,

or in each case any other company which the Lender may reasonably require from time to time approve as the commercial, technical and/or operational manager of that Ship and, in the plural, means all of them;

“Approved Manager’s Undertaking” means, in relation to each Ship, a letter of undertaking executed or to be executed by the Approved Manager in favour of the Lender in such form as the Lender may approve or require agreeing certain matters in relation to the management of that Ship and subordinating the rights of the Approved Manager against the Ship and the relevant Borrower thereof to the rights of the Lender under the Finance Documents and, in the plural, means any of them;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

(a) 15 December 2007 (or such later date as the Lender may agree with the Borrowers); or

(b) if earlier, the final Drawdown Date or the date on which the Lender’s obligation to make the Loan is cancelled or terminated;

“Bareboat Charter” means the bareboat charterparty on the “Barecon 89” form in respect of “VOC GALAXY” dated 8 August 2007 made between Iokasti as owner and the Bareboat Charterer as disponent owner and charterer as the same may be amended and supplemented from time to time;

“Bareboat Charterer” means MIT Maritime Investment & Trading GmbH & Co. KG, Haren/EMS, incorporated in the Republic of Germany whose principal office is at Garten Str 2, 49733 Haren/Ems, Germany;

“Bareboat Charter Assignment” means, in relation to “VOC GALAXY”, the specific assignment of the rights of Iokasti under the Bareboat Charter executed or, as the context may require, to be executed by Iokasti in favour of the Lender in such form as the Lender may approve or require;

“Bareboat Charter Period” means the period during which “VOC GALAXY” is operating under the Bareboat Charter;

“Boone” means Boone Star Owners Inc., a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960

2

“Boone Advance” means an amount of up to $50,000,000 to be applied in part-payment of the Contract Price for “TRANSATLANTIC” payable pursuant to the MOA for that Ship;

“Boone Balloon Instalment” has the meaning given in Clause 7.1(a);

“Borrower” means each of Boone and Iokasti and, in the plural, means both of them;

“Business Day” means a day on which banks are open in London, Athens and Piraeus and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Charter” means:

(a) in relation to “TRANSATLANTIC” and “VOC GALAXY” (at any time after the expiry of the Bareboat Charter Period), the Approved Charter relative to that Ship; and

(b) in relation to “VOC GALAXY” during the Bareboat Charter Period, the Bareboat Charter,

and, in the plural, means any of them;

“Charter Assignment” means:

(a) in relation to a Ship, a specific assignment of the rights of the relevant Borrower under an Approved Charter relating to that Ship, pursuant to Clause 10.18 and any guarantee of such charter, to be executed by that Borrower in favour of the Lender in such form as the Lender may approve or require; and

(b) in relation to “VOC GALAXY” during the Bareboat Charter Period, the Bareboat Charter Assignment,

and, in the plural, means any of them;

“Compliance Date” means 30 June and 31 December in each calendar year (or such other dates as of which the Corporate Guarantor prepares its consolidated financial statements which the Borrowers are required to deliver to the Lender pursuant to Clause 10.6);

“Commitment” means $90,000,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement;

“Contractual Currency” has the meaning given in Clause 20.4;

“Contract Price” means:

(a) in relation to “TRANSATLANTIC”, $71,000,000; and

(b) in relation to “VOC GALAXY”, $55,000,000,

being in each case the purchase price for that Ship payable by the relevant Borrower to the relevant Seller pursuant to the MOA for that Ship and in the plural means both of them;

“Corporate Guarantee” means a guarantee to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may approve or require;

3

“Corporate Guarantor” means Dryships Inc., a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Deed of Covenant” means in relation to a Ship, a deed of covenant collateral to the relevant Mortgage in such form as the Lender may approve or require and, in the plural, means both of them;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means the date requested by the Borrowers for the Loan to be advanced or (as the context requires) the date on which the Loan is actually advanced;

“Drawdown Notice” means a notice in the form set out in Schedule 1 (or in any other form which the Lender approves or reasonably requires);

“Earnings” means, in relation to each Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower which is the owner of such Ship and which arise out of the use or operation of such Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the relevant Borrower in the event of requisition of its Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of such Ship;

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c) if and whenever such Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to such Ship;

“Environmental Claim” means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from a Ship; or

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or a Borrower and/or any operator

4

or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where a Borrower and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Event of Default” means any of the events or circumstances described in Clause 18.1;

“Finance Documents” means:

(a) this Agreement;

(b) the Corporate Guarantee;

(c) the General Assignments;

(d) the Mortgages;

(e) the Deeds of Covenants;

(f) the Accounts Pledges;

(g) the Approved Manager’s Undertaking;

(h) the Bareboat Charter Assignment;

(i) the Tripartite Agreement;

(j) any Charter Assignment; and

(k) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrowers (or either of them) or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

5

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e) under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

“Fleet Vessels” means, together, all of the vessels (including, but not limited to, the Ships) owned from time to time owned by members of the Group;

“General Assignment” means, in relation to a Ship, a general assignment of the Earnings, the Insurances and the Requisition Compensation of such Ship to be executed by the relevant Borrower in favour of the Lender in such form as the Lender may approve or require, and, in the plural means both of them;

“Group” means the Corporate Guarantor and its subsidiaries (whether direct or indirect and including, but not limited to, each Borrower) from time to time during the Security Period and “member of the Group” shall be construed accordingly;

“Insurances” means, in relation to each Ship:

(a) all policies and contracts of insurance, including entries of such Ship in any protection and indemnity or war risks association, which are effected in respect of such Ship, its Earnings or otherwise in relation to it; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interest Period” means, in relation to an Advance, a period determined in accordance with Clause 5;

“Iokasti” means Iokasti Owning Company Limited a corporation incorporated under the laws of Republic of Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Iokasti Advance” means an amount of up to $40,000,000 to be applied in part-payment of the Contract Price for “VOC GALAXY” pursuant to the MOA for that Ship;

“Iokasti Balloon Instalment” has the meaning given in Clause 7.1(b);

“ISM Code” means, in relation to its application to the Borrowers, the Ships and their operation:

(a) The International Management Code for the Safe Operation of Ships and for Pollution Prevention, currently known or referred to as the “ISM Code”, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4th November, 1993 and incorporated on 19th May, 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the

6

International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25th November, 1995,

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” includes, in relation to a Ship:

(a) the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to such Ship within the periods specified by the ISM Code;

(b) all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain such Ship’s compliance or the compliance by the Borrower owning such Ship with the ISM Code which the Lender may require;

“ISM SMS” means, in relation to a Ship, the safety management system for such Ship which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”) now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of the MO on Maritime Security in December 2002 and includes any amendments or extensions to it and any regulation issued pursuant to it but shall only apply insofar as it is applicable law in the relevant Ship’s flag state and any jurisdiction on which such Ship is operated;

“ISPS Code Documentation” includes:

(a) the International Ship Security Certificate issued pursuant to the ISPS Code in relation to each Ship within the period specified in the ISPS Code; and

(b) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“Lender” means Piraeus Bank A.E., acting through its branch at 47-49 Akti Miaouli, 185 36 Piraeus;

“Leverage Ratio” means, any relevant time, the ratio (expressed as a percentage) of:

(a) the Total Liabilities; and

(b) the Market Value Adjusted Total Assets (including, without limitation, the Ships);

“LIBOR” means for an Interest Period:

(a) the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period (and, for the purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display designated as “Reuters BBA Page LIBOR 01” on the Reuters Money

7

News Service or such other page as may replace BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollars); or

(b) if no rate is quoted on Reuters BBA Page LIBOR 01, the rate per annum determined by the Lender to be the rate per annum which leading banks in the London Interbank Market offer for deposits in Dollars in the London Interbank Market at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means any casualty to a Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Margin” means at all times when the Leverage Ratio is:

(a) equal to or higher than 50 per cent., 1.05 per cent. per annum; and

(b) lower than 50 per cent., 0.95 per cent. per annum;

“Margin Calculation Date” has the meaning given to it in Clause 4.12;

“Market Value” means, in relation to each Ship and each Fleet Vessel, the market value of that Ship or Fleet Vessel determined in accordance with Clause 14.3;

“Market Value Adjusted Total Assets” means, at any time, Total Assets adjusted to reflect the Market Value of all Fleet Vessels;

“MOA” means:

(a) in relation to “TRANSATLANTIC”, the memorandum of agreement dated 15 August 2007 entered into between Boone as buyer and the relevant Seller as seller; and

(b) in relation to “VOC GALAXY”, the memorandum of Agreement date 8 August 2007 entered into between Iokasti as buyer and the relevant Seller,

as each may be amended and supplemented and, in the plural, means both of them;

“Mortgage” means, in relation to each Ship, the first priority Maltese statutory mortgage on that Ship, in such form as the Lender may approve or require and in the plural means both of them.

“Negotiation Period” has the meaning given in Clause 4.6;

“Net Income” means, in relation to each financial year of the Corporate Guarantor, the aggregate income of the Group appearing in the Accounting Information for that financial year less the aggregate of:

(a) the amounts incurred by the Group during that financial year as expenses of its business;

8

(b) depreciation, amortisation and all interest in respect of all Financial Indebtedness of the Group paid by all members of the Group during that financial year;

(c) Net Interest Expenses;

(d) taxes; and

(e) other items charged to the Corporate Guarantor’s consolidated profit and loss account for the relevant financial year;

“Net Interest Expenses” means, as of any date of determination, the aggregate of all interest, commitment and other fees, commissions, discounts and other costs, charges or expenses accruing due from all the members the Group during that accounting period less interest income received, determined on a consolidated basis in accordance with generally accepted accounting principles and as shown in the consolidated statements of income for the Group in the applicable Accounting Information;

“Payment Currency” has the meaning given in Clause 20.4;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

(c) liens for salvage;

(d) liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;

(e) liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower owning such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 13.12(g);

(f) any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where a Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

“Pertinent Document” means:

(a) any Finance Document;

(b) any policy or contract of insurance contemplated by or referred to in Clause 12 or any other provision of this Agreement or another Finance Document;

(c) any other document contemplated by or referred to in any Finance Document; and

9

(d) any document which has been or is at any time sent by or to the Lender in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company’s central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets (including, without limitation, the Ships) of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Lender and/or the satisfaction of any other condition, would constitute an Event of Default;

“Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period;

“Repayment Date” means a date on which a repayment is required to be made under Clause 7;

“Requisition Compensation” includes, in relation to a Ship, all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Secured Liabilities” means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in

10

connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b) the security rights of a plaintiff under an action in rem; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Corporate Guarantor, the Approved Manager (save for the Approved Manager for “VOC GALAXY” during the Bareboat Charter Period) and any other person (except the Lender and the Bareboat Charterer) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Lender notifies the Borrowers and the Security Parties that:

(a) all amounts which have become due for payment by each of the Borrowers or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither Borrower nor any Security Party has any future or contingent liability under Clause 19, 20 or 21 or any other provision of this Agreement or another Finance Document; and

(d) the Lender does not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of either of the Borrowers or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

“Seller” means:

(a) in relation to “TRANSATLANTIC”, Pierre Shipping S.A., a corporation existing and organised under the laws of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia; and

(b) in relation to “VOC GALAXY”, the Bareboat Charterer in its capacity as seller;

and in the plural means both of them;

“Ship” means each of “TRANSATLANTIC” and “VOC GALAXY” and in the plural means both of them;

11

“Total Assets” means, the total assets of the Group as stated in the most recent Accounting Information;

“Total Liabilities” means, as at the date of calculation, the aggregate Financial Indebtedness of the Group;

“Total Loss” means, in relation to a Ship:

(a) actual, constructive, compromised, agreed or arranged total loss of such Ship;

(b) any expropriation, confiscation, requisition or acquisition of such Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the owner owning such ship;

(c) any arrest, capture, seizure or detention of such Ship (including any hijacking or theft) unless it is within 1 month redelivered to the full control of the owner owning such ship;

“Total Loss Date” means, in relation to a Ship:

(a) in the case of an actual loss of such Ship, the date on which it occurred or, if that is unknown, the date when such Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of such Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning such Ship with such Ship’s insurers in which the insurers agree to treat such Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which the relevant underwriters consider that the event constituting the total loss occurred;

“TRANSANTLANTIC” means the 2001-built bulk carrier vessel of 40,437 registered gross tons and 25,855 net registered tons, having IMO Number 9236171 currently registered in the ownership of the relevant Seller under Liberian flag with the name “TRANS ATLANTIC”, to be purchased by Boone pursuant to the relevant MOA and registered in its ownership under Maltese flag with the new name “SAMATAN”;

“Tripartite Agreement” means an agreement dealing with (inter-alia) the operation of “VOC GALAXY” during the Bareboat Charter Period, made or, as the context may require to be made between (i) the Borrower, (ii) the Bareboat Charter and (iii) the Lender in such form as the Lender may approve or require;

“VOC GALAXY” means the 2002-built bulk carrier vessel of 30,928 gross registered tons and 16,341 net registered tons, having IMO Number 9257060 and currently registered in the ownership of the relevant Seller under the flag of Antigua & Bermuda with the name “VOC GALAXY” to be purchased by lokasti pursuant to the relevant MOA and registered in its ownership under Maltese flag with the same name; and

12

“Underlying Documents” means, together, the MOAs and any Charter.

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 12, approved in writing by the Lender;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, fax or telex;

“excess risks” means, in relation to a Ship the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surely or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning the Ship is obliged to effect, under Clause 12 or any other provision of this Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1.4;

“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls) (1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

13

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“subsidiary” has the meaning given in Clause 1.4;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

and any company of which S is a subsidiary is a parent company of S.

1.5 General Interpretation. In this Agreement:

(a) references in Clause 1.1 to a Finance Document or any other document being in the form of a particular appendix include references to that form with any modifications to that form which the Lender approves or reasonably requires;

(b) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(c) references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

14

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lender shall make available to the Borrowers a loan facility not exceeding $90,000,000 to be drawn in up to two Advances.

2.2 Purpose of Advances. Each Borrower undertakes with the Lender to use each Advance only for the purpose stated in the preamble to this Agreement.

3 DRAWDOWN

3.1 Request for Advance. Subject to the following conditions, the Borrowers may request an Advance to be made by ensuring that the Lender receives a completed Drawdown Notice for that Advance not later than 11.00 a.m. (Athens time) 2 Business Days prior to the intended Drawdown Date for that Advance (which shall be a Business Day during the Availability Period).

3.2 Availability. The conditions referred to in Clause 3.1 are that:

(a) each Drawdown Date has to be a Business Day during the Availability Period;

(b) each Advance shall be made available in a single amount and any amount undrawn under an Advance shall be cancelled and may not be borrowed by the Borrowers at a later date;

(c) each Advance shall not exceed:

(i) in the case of the Boone Advance, an amount equal to the lesser of (a) $50,000,000, (b) 70.5 per cent. of the Market Value of “TRANSATLANTIC” and (c) 70.5 per cent. of the Contract Price of that Ship;

(ii) in the case of the lokasti Advance, an amount of equal to the lesser of (a) $40,000,000 and (b) 72.8 per cent. of the Market Value of “VOC GALAXY” and (c) 72.8 of the Contract Price of that Ship; and

(d) the aggregate principal amount of the Advances shall not exceed the lesser of (i) the Commitment and (ii) 71.2 per cent. of the aggregate Market Value of the Ships.

3.3 Drawdown Notice irrevocable. A Drawdown Notice must be signed by a director, officer or a duly authorised signatory of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender.

3.4 Disbursement of Advance. Subject to the provisions of this Agreement, the Lender shall on each Drawdown Date make the relevant Advance to the Borrowers; and payment to the Borrowers shall be made to the account which the Borrowers specify in the relevant Drawdown Notice.

3.5 Disbursement of Advance to third party. The payment of an Advance by the Lender under Clause 3.4 to the relevant Seller shall constitute the making of that Advance and the Borrowers shall at that time become indebted, as principal and direct obligor, to the Lender in an amount equal to that Advance.

15

4 INTEREST

4.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on each Advance in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.

4.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest applicable to each Advance (or any part thereof) in respect of an Interest Period shall be the aggregate of the Margin and LIBOR for that Interest Period.

4.3 Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

4.4 Notification of market disruption. The Lender shall promptly notify the Borrowers if no rate is quoted on Reuters BBA Page LIBOR01 or if for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fund the Loan (or any part of it) or an Advance during any Interest Period, stating the circumstances which have caused such notice to be given.

4.5 Suspension of drawdown. If the Lender’s notice under Clause 4.4 is served before an Advance is made, the Lender’s obligation to make that Advance shall be suspended while the circumstances referred to in the Lender’s notice continue.

4.6 Negotiation of alternative rate of interest. If the Lender’s notice under Clause 4.4 is served after an Advance is made, the Borrowers and the Lender shall use reasonable endeavours to agree, within the 15 days after the date on which the Lender serves its notice under Clause 4.4 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lender to fund or continue to fund the relevant Advance or Advances during the Interest Period concerned.

4.7 Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

4.8 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set an interest period and interest rate representing the cost of funding of the Lender in Dollars or in any available currency of the relevant Advance or Advances plus the Margin; and the procedure provided for by this Clause 4.8 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Lender.

4.9 Notice of prepayment. If the Borrowers do not agree with an interest rate set by the Lender under Clause 4.8, the Borrowers may give the Lender not less than 15 Business Days’ notice of their intention to prepay the relevant Advance or Advances at the end of the interest period set by the Lender.

4.10 Prepayment. A notice under Clause 4.9 shall be irrevocable; and on the last Business Day of the interest period set by the Lender, the Borrowers shall prepay (without premium or penalty) the relevant Advance or, as the case may be, the Loan, together with accrued interest thereon at the applicable rate plus the Margin.

4.11 Application of prepayment. The provisions of Clause 7 shall apply in relation to the prepayment.

16

4.12 Calculation of Leverage Ratio. The Lender shall calculate the Leverage Ratio on the Drawdown Date and on each Compliance Date thereafter (each a “Margin Calculation Date”) based on the recent Accounting Information for the purposes of calculating the Margin and shall advise the Borrower in writing, within 10 Business Days of each Margin Calculation Date, of the Margin which will apply for the 6 month period commencing on the relevant Margin Calculation Date Provided that in respect of each Margin Calculation Date other than the first Margin Calculation Date, the Lender shall only be obliged to advise the Borrowers of the Margin which will apply for the Interest Period commencing on the relevant Margin Calculation Date if that Margin will be different to the Margin which applies immediately prior to the relevant Margin Calculation Date.

For the purposes of calculating the Leverage Ratio pursuant to this Clause 4.12, the Market Value of the Ships shall be determined no more than 30 days prior to the relevant Margin Calculation Date.

5 INTEREST PERIODS

5.1 Commencement of Interest Periods. The first Interest Period applicable to an Advance shall commence on the Drawdown Date in respect of that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

5.2 Duration of normal Interest Periods. Subject to Clauses 5.3 and 5.4, each Interest Period shall be:

(a) 1, 3, 6, 9 or 12 months as notified by the Borrowers to the Lender not later than 11.00 a.m. (Athens time) 2 Business Days before the commencement of the Interest Period; or

(b) 3 months, if the Borrowers fail to notify the Lender by the time specified in paragraph (a); or

(c) in the case of the first Interest Period applicable to the second Advance, a period ending on the last day of the then current Interest Period for the first Advance whereupon both Advances shall be consolidated and treated as a single Advance; or

(d) such other period as the Lender may agree with the Borrowers.

5.3 Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 7 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

5.4 Non-availability of matching deposits for Interest Period selected. If, after the Borrowers have selected and the Lender has agreed an Interest Period longer than 6 months, the Lender notifies the Borrowers by 11.00 a.m. (Athens time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

6 DEFAULT INTEREST

6.1 Payment of default interest on overdue amounts. The Borrowers shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrowers under any Finance Document which the Lender does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

17

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 18.4, the date on which it became immediately due and payable.

6.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Lender to be 2 per cent. above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 6.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 6.3(b).

6.3 Calculation of default rate of interest. The rates referred to in Clause 6.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

(b) the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Lender may select from time to time:

(i) LIBOR; or

(ii) if the Lender determines that Dollar deposits for any such period are not being made available to it by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Lender by reference to the cost of funds to it from such other sources as the Lender may from time to time determine.

6.4 Notification of interest periods and default rates. The Lender shall promptly notify the Borrowers of each interest rate determined by it under Clause 6.3 and of each period selected by it for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Lender’s notification.

6.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.

6.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

7 REPAYMENT AND PREPAYMENT

7.1 Repayment instalments. The Borrowers shall repay:

(a) the Boone Advance by 32 consecutive three-monthly instalments of (i) in the case of the first to twelfth instalments (inclusive), in the amount of $1,100,000 each, (ii) in the case of the thirteenth to the thirty-second instalments (inclusive), in the amount of $625,000 each and (iii) a balloon payment of $24,300,000 (the “Boone Balloon Instalment”) payable together with the thirty-second instalment; and

(b) the Iokasti Advance by 32 consecutive three-monthly instalments (i) first to twelfth instalments (inclusive) in the amount of $900,000 each, (ii) in the case of the thirteenth to the thirty-second instalments (inclusive) in the amount of $500,000 and (iii) a balloon payment of $19,200,000 (the “Iokasti Balloon Instalment”) payable together with the thirty-second instalment,

18

Provided that if an Advance is drawdown in less than the maximum available amount of such Advance, each repayment instalment applicable to that Advance (including the relevant Balloon Instalment) shall be reduced pro rata by an amount in aggregate equal to such undrawn amount.

7.2 Repayment Dates. The first repayment instalment for each Advance shall be repaid on the date falling 3 months after the Drawdown Date relative to that Advance, each subsequent repayment instalment shall be repaid at 3-monthly intervals thereafter and the last instalment shall be repaid, together with the Balloon Instalment relative to that Advance, on the date falling on the eighth anniversary of the Drawdown Date for the Advance.

7.3 Final Repayment Date. On the final Repayment Date, the Borrowers shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.

7.4 Voluntary prepayment. Subject to the following conditions, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period.

7.5 Conditions for voluntary prepayment. The conditions referred to in Clause 7.4 are that:

(a) a partial prepayment shall be $500,000 or a multiple of $500,000;

(b) the Lender has received from the Borrowers at least 10 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

(c) the Borrowers have provided evidence satisfactory to the Lender that any consent required by the Borrowers or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affect the Borrowers or any Security Party has been complied with.

7.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

7.7 Mandatory prepayment. The Borrowers shall be obliged to prepay the Relevant Fraction of the Loan if a Ship is sold or becomes a Total Loss:

(a) if a Ship is sold, on or before the date on which the sale is completed by delivery of such Ship to the buyer; or

(b) if a Ship becomes a total loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss,

and in this Clause 7.7 “Relevant Fraction” is a fraction whose:

(i) numerator is the Market Value of the Ship being sold or which has become a Total Loss on the date on which such sale is completed or (as the case may be) the date on which the Total Loss occurred; and

19

(ii) denominator is the aggregate Market Value of all the Ships on the date on which the relevant Ship which are subject to a Mortgage is sold or becomes a Total Loss.

7.8 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 20 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clauses 20.1(b) and 20.2 but without premium or penalty.

7.9 Application of partial prepayment. Each partial prepayment made pursuant to:

(a) Clause 7.4 shall be applied pro rata against the repayment instalments specified in Clause 7.1 outstanding at the time of the partial prepayment (including, without limitation, the Balloon Instalments); and

(b) Clause 7.7 shall be applied first against in fully repaying the Advance which used to finance the relevant Ship and any balance shall be applied pro rata against the repayment instalments specified in Clause 7 in respect of the other Advance outstanding at the time of the partial prepayment (including, without limitation, the relevant Balloon Instalment).

7.10 No reborrowing. No amount prepaid may be reborrowed.

8 CONDITIONS PRECEDENT

8.1 Documents, fees and no default. The Lender’s obligation to make the Loan is subject to the following conditions precedent:

(a) that, on or before the service of the Drawdown Notice, the Lender receives the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers;

(b) that, on or before the service of the Drawdown Notice in respect of each Advance, the Lender receives the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers;

(c) that both at the date of each Drawdown Notice and at each Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the relevant Advance; and

(ii) the representations and warranties in Clause 9 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) none of the circumstances contemplated by Clause 4.4 has occurred and is continuing;

(iv) there has been no material adverse change in the financial position, state of affairs or prospects of the Borrowers, the Corporate Guarantor any other Security Party in the light of which the Lender considers that there is a significant risk that the Borrowers, the Corporate Guarantor or any other Security Party will later become unable to discharge its liabilities under the Finance Documents to which it is a party as they fall due;

(d) that, if the ratio set out in Clause 14.1 were applied immediately following the making of the relevant Advance, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

20

(e) that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may reasonably request by notice to the Borrower prior to the relevant Drawdown Date.

8.2 Waivers of conditions precedent. If the Lender, at its discretion, permits an Advance to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 10 Business Days after the relevant Drawdown Date (or such longer period as the Lender may specify).

9 REPRESENTATIONS AND WARRANTIES

9.1 General. Each Borrower represents and warrants to the Lender as follows.

9.2 Status. Each Borrower is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands.

9.3 Share capital and ownership. Each Borrower has an authorised share capital of $10,000 divided into 500 shares of $20 each and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, by the Corporate Guarantor.

9.4 Corporate power. Each Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to execute the MOA, to purchase and pay for its Ship and register it in its name under the Maltese flag;

(b) in the case of Iokasti, to execute the Bareboat Charter;

(c) to execute the Finance Documents to which each Borrower is a party; and

(d) to borrow under this Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which it is a party.

9.5 Consents in force. All the consents referred to in Clause 9.4 remain in force and nothing has occurred which makes any of them liable to revocation.

9.6 Legal validity; effective Security Interests. The Finance Documents to which each Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a) constitute the legal, valid and binding obligations of that Borrower enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate;

subject to any relevant insolvency laws affecting creditors’ rights generally.

9.7 No third party Security Interests. Without limiting the generality of Clause 9.6, at the time of the execution and delivery of each Finance Document:

(a) each Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

21

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

9.8 No conflicts. The execution by each Borrower of each Finance Document to which it is a party, and the borrowing by the Borrowers of the Loan, and their compliance with each Finance Document will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrowers; or

(c) any contractual or other obligation or restriction which is binding on the Borrowers or any of their assets.

9.9 No withholding taxes. All payments which the Borrowers are liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

9.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

9.11 Information. All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to the Lender in connection with any Finance Document satisfied the requirements of Clause 10.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 10.7; and there has been no material adverse change in the financial position or state of affairs of either of the Borrowers from that disclosed in the latest of those accounts.

9.12 No litigation. No legal or administrative action involving either Borrower (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to either Borrowers’ knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on either Borrowers’ financial position or profitability.

9.13 Validity and completeness of the Underlying Documents. The Underlying Documents constitute valid, binding and enforceable obligations of each of the parties thereto in accordance with their terms, and:

(a) the copies of the Underlying Documents delivered to the Lender before the date of this Agreement are a true and complete copies; and

(b) no amendments or additions to any Underlying Document have been agreed nor has any party to an Underlying Document waived its rights under the relevant Underlying Document.

9.14 No rebates, etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to each Borrower, the relevant Seller or any third party in connection with the purchase by a Borrower of its Ship other than as disclosed to the Lender in writing on or prior to the date of this Agreement.

9.15 Compliance with certain undertakings. At the date of this Agreement, each of the Borrowers is in compliance with Clauses 10.2, 10.4, 10.9 and 10.13.

9.16 Taxes paid. Each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or the Ship owned by it.

22

9.17 ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrowers, the Approved Manager, the Bareboat Charterer and the Ships have been complied with.

9.18 No money laundering. Without prejudice to the generality of Clause 2.2, in relation to the borrowing by the Borrowers of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents, each Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

9.19 ISO 9002. Each Borrower will, once it is required to do so by law, obtain ISO 9002 certification.

10 GENERAL UNDERTAKINGS

10.1 General. Each Borrower undertakes with the Lender to comply with the following provisions of this Clause 10 at all times during the Security Period, except as the Lender may otherwise permit.

10.2 Title; negative pledge. Each Borrower will:

(a) hold the legal title to, and own the entire beneficial interest in its Ship, her Insurances and her Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents (and the effect of assignments contained in the Finance Documents) and except for Permitted Security Interests; and

(b) not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future.

10.3 No disposal of assets. Neither Borrower will transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

10.4 No other liabilities or obligations to be incurred. Neither Borrower will incur any Financial Indebtedness except that incurred under the Finance Documents and that reasonably incurred in the ordinary course of operating and chartering its Ship.

10.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrowers under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

10.6 Provision of financial statements. The Borrowers will send or procure there are sent to the Lender:

(a) as soon as possible, but in no event later than 180 days after the end of each financial year of the Borrowers and the Corporate Guarantor (commencing with the financial year ending on 31 December 2007), the audited consolidated financial statements of each of the Borrowers and the Corporate Guarantor for that financial year; and

23

(b) as soon as possible, but in no event later than 60 days after the end of each 6-month period in each financial year of the Borrowers and the Corporate Guarantor ending on 30 June and 31 December (commencing with the 6-month period ending on 31 December 2007); the interim unaudited consolidated financial statements of the Borrowers and the Corporate Guarantor for that 6-month period.

10.7 Form of financial statements. All accounts (audited and unaudited) delivered under Clause 10.6 will:

(a) be prepared in accordance with all applicable laws and generally accepted accounting principles consistently applied;

(b) give a true and fair view of the state of affairs of each Borrower or, as the case may be, the Corporate Guarantor at the date of those accounts and of profit for the period to which those accounts relate; and

(c) fully disclose or provide for all significant liabilities of each Borrower or, as the case may be, the Corporate Guarantor.

10.8 Shareholders and creditor notices. Each Borrower will send the Lender, at the same time as they are despatched, copies of all communications which are despatched to that Borrower’s shareholders or creditors or any class of them.

10.9 Consents. Each Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Lender of, all consents required:

(a) for each Borrower to perform its obligations under any Finance Document;

(b) for the validity or enforceability of any Finance Document;

(c) for each Borrower to continue to own and operate its Ship; and

(d) for lokasti to continue to perform its obligations under the Bareboat Charter,

and the Borrowers will comply with the terms of all such consents.

10.10 Maintenance of Security Interests. Each Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a) above, authorise and hereby authorises the Lender at the cost of the Borrowers to promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

10.11 Notification of litigation. Each Borrower will provide the Lender with details of any legal or administrative action involving either Borrower, any Security Party, the Approved Manager, either Ship, the Earnings or the Insurances as soon as such action is instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

10.12 No amendment to Underlying Documents. Neither Borrower will agree to any amendment or supplement to, or waive or fail to enforce, an Underlying Document or any of their respective provisions.

24

10.13 Principal place of business. Each Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 27.2(a) and neither Borrower will establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.

10.14 Confirmation of no default. Each Borrower will, within 2 Business Days after service by the Lender of a written request, serve on the Lender a notice which is signed by a director of each Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

10.15 Notification of default. Each Borrower will notify the Lender as soon as either Borrower becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will keep the Lender fully up-to-date with all developments.

10.16 Provision of further information. Each Borrower will, as soon as practicable after receiving the request, provide the Lender with:

(a) any additional financial or other information relating to such Borrower, its Ship, the Earnings, the Insurances, the Approved Manager or the Corporate Guarantor; or

(b) any additional financial or other information relating to any other matter relevant to, or to any provision of, a Finance Document; or

(c) any information relating to the Bareboat Charter in the context of the management, employment and operation of the Ship during the Bareboat Charter Period,

which may be requested by the Lender at any time.

10.17 Termination of Bareboat Charter. If the Bareboat Charter terminates or is terminated (otherwise than through the effluxion of time) the Borrowers shall within 60 days of the date of termination of the Bareboat Charter arrange for “VOC GALAXY” to be chartered to a charterer acceptable to the Lender (in its absolute discretion) on such terms and for such duration as are acceptable to the Lender (in its absolute discretion).

10.18 Time Charter Assignment. If either Borrower enters into any bareboat charter (other than the Bareboat Charter) or any Approved Charter in respect of its Ship, such Borrower shall, at the request of the Lender, execute in favour of the Lender a Charterparty Assignment in respect of such bareboat charter or Approved Charter and deliver to the Lender any documents in relation thereto which the Lender may require.

11 CORPORATE UNDERTAKINGS

11.1 General. Each Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit.

11.2 Maintenance of status. Each Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands.

25

11.3 Negative undertakings. Neither Borrower will:

(a) carry on any business other than the ownership, chartering and operation of the Ship owned by it; or

(b) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in such Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected,

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to such Borrower than those which it could obtain in a bargain made at arms’ length;

(c) open or maintain any account with any bank or financial institution except accounts with the Lender for the purposes of the Finance Documents;

(d) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(e) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or

(f) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

12 INSURANCE

12.1 General. Each Borrower also undertakes with the Lender to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may otherwise permit.

12.2 Maintenance of obligatory insurances. Each Borrower shall keep the Ship owned by it insured at the expense of such Borrower against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

(b) war risks;

(c) protection and indemnity risks; and

(d) any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for such Borrower to insure and which are specified by the Lender by notice to such Borrower.

12.3 Terms of obligatory insurances. Each Borrower shall effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) an amount, which when aggregated with the insured value of any other Ship at the relevant time subject to a Mortgage, is equal to 125 per cent. of the amount of the Loan and (ii) the Market Value of such Ship; and

26

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;

(d) in relation to protection and indemnity risks, in respect of the relevant Ship’s full tonnage;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

12.4 Further protections for the Lender. In addition to the terms set out in Clause 12.3, each Borrower shall procure that the obligatory insurances shall:

(a) whenever the Lender requires, name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(b) name the Lender as loss payee with such directions for payment as the Lender may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Lender in respect of any rights or interests (secured or not) held by or available to the Lender in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the relevant Owner or the Lender) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender;

(f) provide that the Lender may make proof of loss if the relevant Borrower fails to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Lender, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Lender for 30 days (or 7 days in the case of war risks) after receipt by the Lender of prior written notice from the insurers of such cancellation, change or lapse.

12.5 Renewal of obligatory insurances. Each Borrower shall:

(a) at least 14 days before the expiry of any obligatory insurance:

(i) notify the Lender of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom such Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and

27

(ii) obtain the Lender’s approval to the matters referred to in paragraph (i) above;

(b) at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Lender’s approval pursuant to paragraph (a) above; and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.

12.6 Copies of policies; letters of undertaking. Each Borrower shall ensure that all approved brokers provide the Lender with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Lender and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 12.4;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;

(c) they will advise the Lender immediately of any material change to the terms of the obligatory insurances;

(d) they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the relevant Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the relevant Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the relevant Ship or otherwise, they waive any lien on the policies (including, without limitation, any fleet lien), or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the relevant Ship forthwith upon being so requested by the Lender.

12.7 Copies of certificates of entry. Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Lender with:

(a) a certified copy of the certificate of entry for such Ship;

(b) a letter or letters of undertaking in such form as may be required by the Lender;

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Owner in accordance with the requirements of such protection and indemnity association; and

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to such Ship.

28

12.8 Deposit of original policies. Each Borrower shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

12.9 Payment of premiums. Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Lender.

12.10 Guarantees. Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

12.11 Restrictions on employment. The Borrower shall procure that neither Owner employ the Ship owned by it, nor permit her to be employed, outside the cover provided by any obligatory insurances.

12.12 Compliance with terms of insurances. Each Borrower shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:

(a) each Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 12.7(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;

(b) neither Borrower shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;

(c) each Borrower shall make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading (if permitted by the Lender) to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) neither of the Borrowers shall employ its Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

12.13 Alteration to terms of insurances. Neither Borrower shall make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

12.14 Settlement of claims. Neither Borrower shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

12.15 Provision of copies of communications. Each Borrower shall provide the Lender, at the time of each such communication, copies of all written communications between the relevant Borrower and:

(a) the approved brokers; and

29

(b) the approved protection and indemnity and/or war risks associations; and

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) that Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

12.16 Provision of information. In addition, each Borrower shall promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17 below or dealing with or considering any matters relating to any such insurances,

and each Borrower shall, forthwith upon written demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.

12.17 Mortgagee’s interest and additional perils insurances. The Lender shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance and a mortgagee’s interest marine insurance on such terms, in such amounts, through such insurers and generally in such manner as the Lender may from time to time consider appropriate and the Borrowers shall upon demand fully indemnify the Lender in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

12.18 Review of insurance requirements. The Lender shall be entitled to review the requirements of this Clause 12 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lender, significant and capable of affecting the Borrowers or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrowers may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrowers.

12.19 Modification of insurance requirements. The Lender shall notify the Borrowers of any proposed modification under Clause 12.18 to the requirements of this Clause 12 which the Lender considers appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 12 and shall bind the Borrowers accordingly.

12.20 Compliance with mortgagee’s instructions. The Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require either Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Borrower which is the owner of that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 12.19.

30

13 SHIP COVENANTS

13.1 General. Each Borrower also undertakes with the Lender to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit.

13.2 Ship’s name and registration. Each Borrower shall keep the Ship owned by it registered in its ownership as a Maltese ship at the port of Valletta; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of a Ship.

13.3 Repair and classification. Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the highest classification available for vessels of the same age, type and specification as such Ship with an approved classification society which is a member of IACS (or such other first class classification society as may be approved by the Lender), free of overdue recommendations and requirements affecting such Ship’s class; and

(c) so as to comply with all laws and regulations applicable to vessels registered at ports in Malta or to vessels trading to any jurisdiction to which such Ship may trade from time to time, including but not limited to the ISM Code, the ISM Code Documentation and the ISPS Code Documentation.

13.4 Modification. Neither Borrower shall make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on such Ship which would or might materially alter the structure, type or performance characteristics of such Ship or materially reduce its value.

13.5 Removal of parts. Neither Borrower shall remove any material part of the Ship owned by it, or any item of equipment installed on such Ship, unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lender and becomes on installation on such Ship the property of the relevant Borrower and subject to the security constituted by the Mortgage and if applicable, the Deed of Covenant relative to that Ship Provided that a Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to its Ship.

13.6 Surveys. Each Borrower shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender, provide the Lenders at the expense of the Borrower, with copies of all survey reports.

13.7 Inspection. Each Borrower shall permit the Lender (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

13.8 Prevention of and release from arrest. Each Borrower shall promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, her Earnings or her Insurances;

(b) all taxes, dues and other amounts charged in respect of the Ship owned by it, her Earnings or her Insurances; and

31

(c) all other outgoings whatsoever in respect of the Ship owned by it, the Earnings or the Insurances;

and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, the relevant Borrower shall procure its release by providing bail or otherwise as the circumstances may require.

13.9 Compliance with laws etc. Each of the Borrowers shall:

(a) comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of the relevant Borrowers;

(b) not employ the Ship owned by it, nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit it to enter or trade to any zone which is declared a war zone by any government or by such Ship’s war risks insurers unless the prior written consent of the Lender has been given and the relevant Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.

13.10 Provision of information. Each Borrower shall promptly provide the Lender with any information which it requests regarding:

(a) the Ship owned by it, its employment, position and engagements;

(b) the Earnings and payments and amounts due to such Ship’s master and crew;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of such Ship and any payments made in respect of such Ship;

(d) any towages and salvages; and

(e) the relevant Borrower’s, the Approved Manager’s, the Bareboat Charterer’s or such Ship’s compliance with the ISM Code and the ISPS Code,

and, upon the Lender’s request, provide copies of any current charter save for the Bareboat Charter and any charter guarantee in relation thereto relating to such Ship, of any current charter guarantee and of the ISM Code Documentation and ISPS Code Documentation.

13.11 Notification of certain events. Each Borrower shall immediately notify the Lender by fax, confirmed forthwith by letter, of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d) any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on such Ship or its Earnings or any requisition of such Ship for hire;

(e) any intended dry docking of the Ship owned by it;

32

(f) any Environmental Claim made against the relevant Borrower or in connection with the Ship owned by it, or any Environmental Incident;

(g) any claim for breach of the ISM Code or the ISPS Code being made against the relevant Borrower, the Approved Manager or, as the case may be, the Bareboat Charterer or otherwise in connection with the Ship owned by it; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and each Borrower shall keep the Lender advised in writing on a regular basis and in such detail as the Lender shall require of each Borrower’s, the Approved Manager’s, the Bareboat Charterer’s or any other person’s response to any of those events or matters.

13.12 Restrictions on chartering, appointment of managers etc. Neither Borrower shall:

(a) (save under the Bareboat Charter) let the Ship owned by it on demise charter for any period;

(b) enter into any time or consecutive voyage charter in respect of the Ship owned by it for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

(c) enter into any charter in relation to the Ship owned by it under which more than 2 months’ hire (or the equivalent) is payable in advance;

(d) charter the Ship owned by it otherwise than on bona fide arm’s length terms at the time when such Ship is fixed;

(e) appoint a manager of the Ship owned by it other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment;

(f) de-activate or lay up the Ship owned by it; or

(g) put the Ship owned by it into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on such Ship or her Earnings for the cost of such work or for any other reason.

13.13 Notice of Mortgage. Each Borrower shall keep the Mortgage registered against the Ship owned by it as a valid first priority mortgage, carry on board such Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of such Ship a framed printed notice stating that such Ship is mortgaged by the relevant Borrower to the Lender.

13.14 Sharing of Earnings. Neither Borrower shall enter into any agreement or arrangement for the sharing of any Earnings.

13.15 Compliance with Insurance and Ship covenants. Iokasti shall procure the performance by the Bareboat Charterer of all the covenants and undertakings to be observed, performed and complied with, by or on behalf of the Bareboat Charterer under Clause 12 (other than Clause 13.15) and Clause 13 and, to the extent that the Bareboat Charterer duly performs and discharges its obligations set out in this Clause 13.15 or to the further extent that the Bareboat Charterer, by its performance of the Bareboat Charter, performs and discharges further obligations of Iokasti contained in the Finance Documents, then such performance and discharge shall, to that extent, be deemed due performance and discharge of Iokasti’s obligations under the Finance Documents.

33

14 SECURITY COVER

14.1 Minimum required security cover. Clause 14.2 applies if the Lender notifies the Borrowers that:

(a) the Market Value of the Ships; plus

(b) the net realisable value of any additional security previously provided under this Clause 14,

is below 125 per cent. of the amount of the Loan.

14.2 Provision of additional security; prepayment. If the Lender serves a notice on the Borrowers under Clause 14.1, the Borrowers shall, within 1 month after the date on which the Lender’s notice is served, either:

(a) provide, or ensure that a third party provides, additional security which, in the opinion of the Lender, has a net realisable value at least equal to the shortfall and is documented in such terms as the Lender may approve or require; or

(b) prepay such part (at least) of the Loan as will eliminate the shortfall.

14.3 Valuation of Ships. The market value of a Ship at any date is that shown by the average of two valuations prepared:

(a) as at a date not more than 14 days previously;

(b) by 2 Approved Brokers appointed by the Lender;

(c) with or without physical inspection of the relevant Ship (as the Lender may require);

(d) on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer;

(e) free of any existing charter or other contract of employment; and

(f) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale

Provided that if one such valuation is more than 115 per cent. of the other valuation, then the Lender shall select a third Approved Broker to provide a valuation of the relevant Ship in accordance with this Clause 14.4 and the Market Value of that Ship shall be the arithmetic average of all three such valuations.

14.4 Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 14.2 and which consists of a Security Interest over a vessel shall be that shown either by way of a valuation complying with the requirements of Clause 14.3 or by a valuation from an independent sale and purchase shipbroker appointed by the Borrowers and approved by the Lender (and on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and willing buyer, free of charter or other contract of employment).

14.5 Valuations binding. Any valuation under Clause 14.2, 14.3 or 14.4 shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Lender makes of any additional security which does not consist of or include a Security Interest.

34

14.6 Frequency of valuation. The Borrowers acknowledge and agree that the Lender may commission valuations of each Ship at such times as the Lender shall deem necessary and, in any event, not less than twice during each 12-month period of the Security Period.

14.7 Provision of information. Each Borrower shall promptly provide the Lender and any Approved Broker or expert acting under Clause 14.4 with any information which the Lender or the Approved Broker or expert may request for the purposes of the valuation; and, if a Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Lender (or the expert appointed by it) considers prudent.

14.8 Payment of valuation expenses. Without prejudice to the generality of the Borrowers’ obligations under Clauses 19.2, 19.3 and 20.3, each Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any shipbroker or expert instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause.

14.9 Application of prepayment. Clause 7 shall apply in relation to any prepayment pursuant to Clause 14.2(b).

15 PAYMENTS AND CALCULATIONS

15.1 Currency and method of payments. All payments to be made by the Borrowers to the Lender under a Finance Document shall be made to the Lender:

(a) by not later than 11.00 a.m. (Athens time) on the due date;

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

(c) to the account of the Lender at Bank of New York of New York, USA for credit to the account of the Lender (Account No. 8033138548), or to such other account with such other bank as the Lender may from time to time notify to the Borrowers.

15.2 Payment on non-Business Day. If any payment by the Borrowers under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

15.3 Basis for calculation of periodic payments. All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

15.4 Lender accounts. The Lender shall maintain an account showing the amounts advanced by the Lender and all other sums owing to the Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

35

15.5 Accounts prima facie evidence. If the account maintained under Clause 15.4 shows an amount to be owing by the Borrowers or a Security Party to the Lender, that account shall be prima facie evidence, save in the case of manifest error, that amount is owing to the Lender.

16 APPLICATION OF RECEIPTS

16.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrowers under Clauses 19, 20 and 21 of this Agreement or by the Borrowers or any Security Party under any corresponding or similar provision in any other Finance Document);

(ii) secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Lender under the Finance Document but shall have failed to pay or deliver to the Lender at the time of application or distribution under this Clause 16); and

(iii) thirdly, in or towards satisfaction of the Loan;

(b) SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Lender, by notice to the Borrowers and the Security Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of this Clause 16.1; and

(c) THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

16.2 Variation of order of application. The Lender may, by notice to the Borrowers and the Security Parties, provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

16.3 Notice of variation of order of application. The Lender may give notices under Clause 16.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

16.4 Appropriation rights overridden. This Clause 16 and any notice which the Lender gives under Clause 16.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any other Security Party.

17 APPLICATION OF EARNINGS

17.1 Payment of Earnings. Each Borrower undertakes with the Lender to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignments), all the Earnings in relation to each Ship are paid to the Account in respect of that Ship.

36

17.2 Application of Earnings. Until an Event of Default or a Potential Event of Default occurs, the Lender shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply (and the Borrowers hereby irrevocably authorise the Lender to apply) so much of the balance on the Accounts as equals:

(a) the repayment instalment due on that Repayment Date; or

(b) the amount of interest payable on that interest payment date,

in each case in discharge of the Borrowers’ liability for that repayment instalment or that interest.

17.3 Interest accrued on Accounts. Any credit balance on the Accounts shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Lender likely to remain on that Account.

17.4 Release of accrued interest. Interest accruing under Clause 17.3 shall be freely available to the Borrowers.

17.5 Location of accounts. Each Borrower shall promptly:

(a) comply with any requirement of the Lender as to the location or re-location of the Accounts or either of them;

(b) execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts.

17.6 Debits for expenses etc. The Lender shall be entitled (but not obliged) from time to time to debit the Accounts (or either of them) with prior notice in order to discharge any amount due and payable (which remains unpaid) to it under Clauses 19 or 20 or payment of which it has become entitled to demand under Clauses 19 or 20.

17.7 Borrowers’ obligations unaffected. The provisions of this Clause 17 (as distinct from a distribution effected under Clause 17.2) do not affect:

(a) the liability of the Borrowers to make payments of principal and interest on the due dates; or

(b) any other liability or obligation of the Borrowers or any Security Party under any Finance Document.

18 EVENTS OF DEFAULT

18.1 Events of Default. An Event of Default occurs if:

(a) either Borrower or the Corporate Guarantor fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs of Clauses 8.2, 10.2, 10.3, 10.17,11.2,11.3, 14.2 or 17.1; or

(c) any breach by either Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (a) above) if, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 14 days after written notice from the Lender requesting action to remedy the same; or

37

(d) (subject to any applicable grace period specified in any Finance Document) any breach by either Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a), (b) or (c) above); or

(e) any representation, warranty or statement made by, or by an officer of, either Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person exceeding (in the case of the Corporate Guarantor) $1,000,000 (or the equivalent in any other currency) in aggregate:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Lender, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Security Party, or the members or directors of either Borrower or the Corporate Guarantor pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or the Corporate Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person

38

unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Lender, is similar to any of the foregoing; or

(h) either Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for either Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or

(ii) for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) any consent necessary to enable either Borrower or the Bareboat Charterer to own, operate or charter the Ship owned by it or to enable either Borrower or any Security Party to comply with any provision which the Lender considers material of a Finance Document or any Underlying Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(k) it appears to the Lender that, without its prior consent, a change has occurred after the date of this Agreement in the legal ownership of any of the shares in, either Borrower or in the ultimate control of the voting rights attaching to any of those shares; or

(1) any provision which the Lender considers material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(m) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(n) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of either Borrower or the Corporate Guarantor; or

(ii) any accident or other event involving either of the Ships or another vessel, owned, chartered or operated by a Relevant Person,

39

in the light of which the Lender considers that there is a significant risk that either Borrower or any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

18.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default the Lender may:

(a) serve on the Borrowers a notice stating that all obligations of the Lender to the Borrowers under this Agreement are terminated; and/or

(b) serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(c) take any other action which, as a result of the Event of Default or any notice served under paragraph (a) or (b) above, the Lender is entitled to take under any Finance Document or any applicable law.

18.3 Termination of Commitment. On the service of a notice under Clause 18.2(a) the Commitment, and, all other obligations of the Lender to the Borrowers under this Agreement shall terminate.

18.4 Acceleration of Loan. On the service of a notice under Clause 18.2(b), the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers (or either of them) or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

18.5 Multiple notices; action without notice. The Lender may serve notices under Clauses 18.2(a) and (b) simultaneously or on different dates and it may take any action referred to in Clause 18.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

18.6 Exclusion of Lender liability. Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrowers (or either of them) or any other Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been caused directly and mainly by the dishonesty, the gross negligence or the wilful misconduct of the Lender’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

18.7 Relevant Persons. In this Clause 18 a “Relevant Person” means each Borrower, a Security Party and any other member of the Group; but excluding any company which is dormant and the value of whose gross assets is $50,000 or less.

18.8 Interpretation. In Clause 18.l(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 18.1(g) “petition” includes an application.

40

19 FEES AND EXPENSES

19.1 Arrangement and management fees. The Borrowers shall pay to the Lender on a non-refundable arrangement fee of $310,000 on the date of this Agreement.

19.2 Costs of negotiation, preparation etc. The Borrowers shall pay to the Lender on its demand the amount of all reasonable expenses incurred by the Lender in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

19.3 Costs of variation, amendments, enforcement etc. The Borrowers shall pay to the Lender, within 5 Business Days of the Lender’s demand, the amount of all reasonable expenses incurred by the Lender in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 14 or any other matter relating to such security; or

(d) any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

19.4 Documentary taxes. The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender’s demand, fully indemnify the Lender against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrowers (or either of them) to pay such a tax.

19.5 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence, save in the case of manifest error, that the amount, or aggregate amount, is due.

20 INDEMNITIES

20.1 Indemnities regarding borrowing and repayment of Loan. The Borrowers shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) an Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c) any failure (for whatever reason) by the Borrowers (or either of them) to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 6);

41

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,

and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under any Finance Document.

20.2 Breakage costs. Without limiting its generality, Clause 20.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by the Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or a number of transactions of which this Agreement is one.

20.3 Miscellaneous indemnities. The Borrowers shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by the Lender, in any country, as a result of or in connection with:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document;

(b) any other Pertinent Matter,

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty or wilful misconduct of the officers or employees of the Lender.

Without prejudice to its generality, this Clause 20.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

20.4 Currency indemnity. If any sum due from the Borrowers or any Security Party to the Lender under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrowers (or either of them) or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment,

the Borrowers shall indemnify the Lender against the loss arising when the amount of the payment actually received by the Lender is converted at the available rate of exchange into the Contractual Currency.

42

In this Clause 20.4, the “available rate of exchange” means the rate at which the Lender is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 20.4 creates a separate liability of the Borrowers which is distinct from their other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

20.5 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence, save in the case of manifest error, that the amount, or aggregate amount, is due.

21 NO SET-OFF OR TAX DEDUCTION

21.1 No deductions. All amounts due from the Borrowers under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

(b) free and clear of any tax deduction except a tax deduction which the Borrowers are required by law to make.

21.2 Grossing-up for taxes. If the Borrowers are required by law to make a tax deduction from any payment:

(a) the Borrowers shall notify the Lender as soon as it becomes aware of the requirement;

(b) the Borrowers shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

21.3 Evidence of payment of taxes. Within one month after making any tax deduction, the Borrowers shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.

21.4 Exclusion of tax on overall net income. In this Clause 21 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on the Lender’s overall net income.

22 ILLEGALITY, ETC

22.1 Illegality. This Clause 22 applies if the Lender notifies the Borrowers that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

43

22.2 Notification and effect of illegality. On the Lender notifying the Borrowers under Clause 22.1, the Commitment shall terminate; and thereupon or, if later, on the date specified in the Lender’s notice under Clause 22.1 as the date on which the notified event would become effective the Borrowers shall prepay the Loan in full in accordance with Clause 7.

22.3 Mitigation. If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 22.2 the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

23 INCREASED COSTS

23.1 Increased costs. This Clause 23 applies if the Lender notifies the Borrowers that it considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law, or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

(b) complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) (including, without limitation, any laws or regulations which shall replace, amend and/or supplement those set out in the statement of the Basle Committee on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International Convergence of Capital Management and Capital Structures”)) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

the Lender (or a parent company of it) has incurred or will incur an “increased cost”.

23.2 Meaning of “increased costs”. In this Clause 23, “increased costs” means:

(a) an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining the Commitment or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums; or

(b) a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital;

(c) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan; or

(d) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement;

44

but not an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 20.1 or by Clause 21.

For the purposes of this Clause 23.2 the Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

23.3 Payment of increased costs. The Borrowers shall pay to the Lender, on its demand, the amounts which the Lender from time to time notifies the Borrowers that it has specified to be necessary to compensate it for the increased cost.

23.4 Notice of prepayment. If the Borrowers are not willing to continue to compensate the Lender for the increased cost under Clause 23.3, the Borrowers may give the Lender not less than 14 days’ notice of their intention to prepay the Loan at the end of an Interest Period.

23.5 Prepayment. A notice under Clause 23.4 shall be irrevocable; and on the date specified in its notice of intended prepayment, the Commitment shall terminate and the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin.

23.6 Application of prepayment. Clause 7 shall apply in relation to the prepayment.

24 SET-OFF

24.1 Application of credit balances. The Lender may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrowers (or either of them) at any office in any country of the Lender in or towards satisfaction of any sum then due from the Borrowers (or either of them) to the Lender under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrowers (or either of them);

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

24.2 Existing rights unaffected. The Lender shall not be obliged to exercise any of its rights under Clause 24.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document).

24.3 No Security Interest. This Clause 24 gives the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrowers (or either of them).

25 TRANSFERS AND CHANGES IN LENDING OFFICE

25.1 Transfer by Borrowers. Neither of the Borrowers may, without the consent of the Lender, transfer, novate or assign any of its rights, liabilities or obligations under any Finance Document.

45

25.2 Assignment by Lender. The Lender may assign or transfer all or any of the rights and interests which it has under or by virtue of the Finance Documents without the consent of, but with notice to, the Borrowers.

25.3 Rights of assignee. In respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document, or any misrepresentation made in or in connection with a Finance Document, a direct or indirect assignee or transferee of any of the Lender’s rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee or transferee as a result of the breach or misrepresentation irrespective of whether the Lender would have incurred a loss of that kind or amount.

25.4 Sub-participation; subrogation assignment. The Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.

25.5 Disclosure of information. The Lender may disclose to a potential assignee or transferee or sub-participant any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

25.6 Change of lending office. The Lender may change its lending office by giving notice to the Borrowers and the change shall become effective on the later of:

(a) the date on which the Borrowers receive the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

26 VARIATIONS AND WAIVERS

26.1 Variations, waivers etc. by Lender. A document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or the Lender’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax by the Borrowers and the Lender and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

26.2 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

(b) an Event of Default; or

(c) a breach by the Borrowers (or either of them) or any other Security Party of an obligation under a Finance Document or the general law; or

(d) any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

46

27 NOTICES

27.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

27.2 Addresses for communications. A notice shall be sent:

(a)	to the Borrowers:	Omega Building 80 Kifissias Avenue 151 25 Maroussi Greece
		Fax No: (+30) 210 8090 275 Attn: Mr. Aristidis Ioannidis
(b)	to the Lender:	Piraeus Bank A.E. 47-49 Akti Miaouli Piraeus 185 36 Greece
		Fax No: +30 210 429 2601

or to such other address as the relevant party may notify the other.

27.3 Effective date of notices. Subject to Clauses 27.4 and 27.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

(b) a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

27.4 Service outside business hours. However, if under Clause 27.3 a notice would be deemed to be served:

(a) on a day which is not a Business Day in the place of receipt; or

(b) on such a Business Day, but after 5 p.m. local time,

the notice shall (subject to Clause 27.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

27.5 Illegible notices. Clauses 27.3 and 27.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

27.6 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

47

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

27.7 Meaning of “notice”. In this Clause 27 “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

28 JOINT AND SEVERAL LIABILITY

28.1 General. All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be several and, if and to the extent consistent with Clause 28.2, joint.

28.2 No impairment of Borrower’s obligations. The liabilities and obligations of each Borrower shall not be impaired by:

(a) this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;

(b) the Lender entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;

(c) the Lender releasing the other Borrower or any Security Interest created by a Finance Document; or

(d) any combination of the foregoing.

28.3 Principal debtors. Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and neither Borrower shall in any circumstances be construed to be a surety for the obligations of the other Borrower under this Agreement.

28.4 Subordination. Subject to Clause 28.5, during the Security Period, neither Borrower shall:

(a) claim any amount which may be due to it from any other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or

(b) take or enforce any form of security from the other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of any other Borrower; or

(c) set off such an amount against any sum due from it to the other Borrower; or

(d) prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower or other Security Party; or

(e) exercise or assert any combination of the foregoing.

28.5 Borrower’s required action. If during the Security Period, the Lender, by notice to a Borrower, requires it to take any action referred to in paragraphs ((a)) to ((d)) of Clause 28.4, in relation to any other Borrower, that Borrower shall take that action as soon as practicable after receiving the Lender’s notice.

48

29 SUPPLEMENTAL

29.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to the Lender are:

(a) cumulative;

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3 Counterparts. A Finance Document may be executed in any number of counterparts.

29.4 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

30 LAW AND JURISDICTION

30.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

30.2 Exclusive English jurisdiction. Subject to Clause 29.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

30.3 Choice of forum for the exclusive benefit of the Lender. Clause 30.2 is for the exclusive benefit of the Lender, which reserves the rights:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

Neither Borrower shall commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

30.4 Process agent. Each Borrower irrevocably appoints Ince & Co. for the time being presently of International House, 1 St. Katherine’s Way, London E1W 1UN, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

30.5 Lender’s rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

49

30.6 Meaning of “proceedings”. In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

50

EXECUTION PAGE

BORROWERS
SIGNED by	)
	)
for and on behalf of	)
BOONE STAR OWNERS INC.	)
in the presence of:	)
SIGNED by	)
	)
for and on behalf of	)
IOKASTI OWNING COMPANY LIMITED	)
in the presence of:	)
LENDER
SIGNED by	)
	)
for and on behalf of	)
PIRAEUS BANK A.E.	)
in the presence of:	)

55

EX-4.29

Exhibit 4.29

AGREEMENT (HN.1865)

THIS AGREEMENT (the “Agreement”) is entered into this 24^th day of January 2008.

BETWEEN

DRILLSHIP KITHIRA OWNERS INC., a corporation incorporated and existing under the laws of Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter referred to as “Buyer”); and

SAMSUNG HEAVY INDUSTRIES CO., LTD, a corporation incorporated and existing under the laws of the Republic of Korea and having its registered office at 34^th Floor, Samsung Life Insurance Seocho Tower 1321-15, Seocho-Dong, Seocho-Gu, Seoul, Korea 137-857 (hereinafter referred to as “Builder”)

Collectively referred to as “Parties”, and individually as “Party”

WHEREAS:

(a) The Parties have entered into a contract for construction and sale of drillship (Hull no. 1865) (the “Drillship”) dated 24^th January 2008 (the “Contract”);

(b) The Builder will enter into a supply contracts with National Oilwell Varco (NOV) for the supply of a drilling package (the “Supply Contract”) for HN.1865 of which 55% of USD 265,147,792 for the drilling package to be delivered under the supply contract is subject to an exchange rate between United States Dollars (USD) and Norwegian Kroner (NOK) of 5.4;

(c) Although not a party to the Supply Contract the Buyer has expressed its willingness to take the risk for increase or decrease in the contract price due to a certain change in the exchange rate between USD and NOK;

NOW THEREFORE, it is hereby further agreed as follows;

1. Any increase or decrease of the contract price under the Supply Contract due to the exchange rate between USD and NOK being above or below USD 5.4 on the date of signing the Contract (the “Signing Date”) shall be for the Buyer account and risk and the contract price under the Contract shall be adjusted accordingly.

2. The actual exchange rate to be applied between USD and NOK on the Signing Date shall be the exchange rate quoted by Norges Bank for this date. For the avoidance of doubt, any changes in the exchange rate after the Signing Date shall not be for the Buyer account and risk.

3. Any increase or decrease of the contract price under the Contract due to the above shall be settled by the Parties together with the second instalment to be paid under the Contract.

1

4. In case of discrepancy between this Agreement and the Contract, this Agreement shall take precedence.

5. This Agreement shall be governed by and construed in accordance with the laws of England. Any claim, dispute or difference shall be settled in accordance with the provisions in Article XII of the Contract.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written.

BUYER:		BUILDER:
For and on behalf of the BUYER: DRILLSHIP KITHIRA OWNERS INC.		For and on behalf of the BUILDER: SAMSUNG HEAVY INDUSTRIES CO., LTD
By:	Mr. George Economou	By:	Mr. Harris Lee
Title:	Authorized Signatory	Title:	Vice President

2

EX-4.30

Exhibit 4.30

AGREEMENT (HN. 1866)

THIS AGREEMENT (the “Agreement”) is entered into this 24^th day of January 2008.

BETWEEN

DRILLSHIP SKOPELOS OWNERS INC., a corporation incorporated and existing under the laws of Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter referred to as “Buyer”); and

SAMSUNG HEAVY INDUSTRIES CO., LTD, a corporation incorporated and existing under the laws of the Republic of Korea and having its registered office at 34^th Floor, Samsung Life Insurance Seocho Tower 1321-15, Seocho-Dong, Seocho-Gu, Seoul, Korea 137-857 (hereinafter referred to as “Builder”)

Collectively referred to as “Parties”, and individually as “Party”

WHEREAS:

(a) The Parties have entered into a contract for construction and sale of drillship (Hull no. 1866) (the “Drillship”) dated 24^th January 2008 (the “Contract”);

(b) The Builder will enter into a supply contracts with National Oilwell Varco (NOV) for the supply of a drilling package (the “Supply Contract”) for HN.1866 of which 55% of USD 265,147,792 for the drilling package to be delivered under the supply contract is subject to an exchange rate between United States Dollars (USD) and Norwegian Kroner (NOK) of 5.4;

(c) Although not a party to the Supply Contract the Buyer has expressed its willingness to take the risk for increase or decrease in the contract price due to a certain change in the exchange rate between USD and NOK;

NOW THEREFORE, it is hereby further agreed as follows;

1. Any increase or decrease of the contract price under the Supply Contract due to the exchange rate between USD and NOK being above or below USD 5.4 on the date of signing the Contract (the “Signing Date”) shall be for the Buyer account and risk and the contract price under the Contract shall be adjusted accordingly.

2. The actual exchange rate to be applied between USD and NOK on the Signing Date shall be the exchange rate quoted by Norges Bank for this date. For the avoidance of doubt, any changes in the exchange rate after the Signing Date shall not be for the Buyer account and risk.

3. Any increase or decrease of the contract price under the Contract due to the above shall be settled by the Parties together with the second instalment to be paid under the Contract.

1

4. In case of discrepancy between this Agreement and the Contract, this Agreement shall take precedence.

5. This Agreement shall be governed by and construed in accordance with the laws of England. Any claim, dispute or difference shall be settled in accordance with the provisions in Article XII of the Contract.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written.

BUYER:		BUILDER:
For and on behalf of the BUYER: DRILLSHIP SKOPELOS OWNERS INC.		For and on behalf of the BUILDER: SAMSUNG HEAVY INDUSTRIES CO., LTD
By:	Mr. George Economou	By:	Mr. Harris Lee
Title:	Authorized Signatory	Title:	Vice President

2

EX-4.31

Exhibit 4.31

ADDENDUM Nr. 1 to a

CONTRACT dated 24^th January 2008 made between

DRILLSHIP SKOPELOS OWNERS INC. (1)

and

SAMSUNG HEAVY INDUSTRIES CO., LTD (2)

relating to the construction and sale

of

DRILLSHIP HULL NO. 1866

WHEREAS:

(A) pursuant to Clause 4(a)(ii) of Article II of the contract dated 24^th January 2008 (the “Contract”) and made between (1) Drillship Skopelos Owners Inc. of The Marshall Islands (the “Buyer”) and (2) Samsung Heavy Industries Co., Ltd of Korea (the “Builder”), it was agreed that Thirty Nine Million Five Hundred Seventy Five Thousand United States Dollars (US$39,575,000) (the “Second Part of the First Installment”) would be payable by the Buyer to the Builder on 24^th March 2008; and

(B) the parties to the Contract have agreed to enter into this Addendum Nr. 1 in order to amend both Clause 4(a)(ii) and the last paragraph of Article II of the Contract.

NOW IT IS HEREBY AGREED as follows:

Words and expressions defined in the Contract shall, unless the context otherwise requires or unless otherwise defined herein, have the same meaning when used in this Addendum Nr. 1.

In consideration of the Buyer paying to the Builder the sum of Ten Million United States Dollars (US$10,000,000), being part only of the Second Part of the First Instalment, no later than 26^th March 2008, the Builder hereby agrees that the remaining balance of the Second Part of the First Instalment, being the sum of Twenty Nine Million Five Hundred Seventy Five Thousand United States Dollars (US$29,575,000) shall be paid by the Buyer to the Builder on 24 April 2008.

It is further agreed by the parties that, if the Contract is terminated by the Buyer on or before 24 April 2008, the payment of US$20,000,000 shall be forfeited by the Buyer and the Buyer shall indemnify the Builder on production of invoices or other documentary evidence by the Builder for any damages or expenses whatsoever in excess of US$20,000,000 incurred by the Builder up to the date of termination.

Save as amended and restated by this Addendum Nr. 1, the provisions of the Contract shall continue in full force and effect and the Contract and this Addendum Nr. 1 shall be read and construed as one instrument.

This 21st day of March 2008.

Signed for and behalf of		Signed for and behalf of
DRILLSHIP SKOPELOS OWNERS INC.		SAMSUNG HEAVY INDUSTRIES CO., LTD
By:		By:	Harris Lee
Title:	Attorney-In-Fact	Title:	Vice President

In the presence of:	In the presence of:
VICTORIA LIAOU	Tony T. N. Kim
	Branch Manager

EX-4.32

EXHIBIT 4.32

ADDENDUM Nr. 1 to an

CONTRACT dated 24^th January 2008 made between

DRILLSHIP KITHIRA OWNERS INC. (1)

and

SAMSUNG HEAVY INDUSTRIES CO., LTD (2)

relating to the construction and sale

of

DRILLSHIP HULL NO. 1865

WHEREAS:

(A) pursuant to Clause 4(a)(ii) of Article II of the Contract dated 24^th January 2008 (the “Contract”) and made between (1) Drillship Kithira Owners Inc. of The Marshall Islands (the “Buyer”) and (2) Samsung Heavy Industries Co., Ltd of Korea (the “Builder”), it was agreed that Thirty Nine Million Five Hundred Seventy Five Thousand United States Dollars (US$39,575,000) (the “Second Part of the First Installment”) would be payable by the Buyer to the Builder on 24^th March 2008; and

(B) the parties to the Contract have agreed to enter into this Addendum Nr. 1 in order to amend both Clause 4(a)(ii) and the last paragraph of Article II of the Contract.

NOW IT IS HEREBY AGREED as follows:

Words and expressions defined in the Contract shall, unless the context otherwise requires or unless otherwise defined herein, have the same meaning when used in this Addendum Nr. 1.

In consideration of the Buyer paying to the Builder the sum of Ten Million United States Dollars (US$10,000,000), being part only of the Second Part of the First Instalment, no later than 26^th March 2008, the Builder hereby agrees that the remaining balance of the Second Part of the First Instalment, being the sum of Twenty Nine Million Five Hundred Seventy Five Thousand United States Dollars (US$29,575,000) shall be paid by the Buyer to the Builder on 24 April 2008.

It is further agreed by the parties that, if the Contract is terminated by the Buyer on or before 24 April 2008, the payment of US$20,000,000 shall be forfeited by the Buyer and the Buyer shall indemnify the Builder on production of invoices or other documentary evidence by the Builder for any damages or expenses whatsoever in excess of US$20,000,000 incurred by the Builder up to the date of termination.

Save as amended and restated by this Addendum Nr. 1, the provisions of the Contract shall continue in full force and effect and the Contract and this Addendum Nr. 1 shall be read and construed as one instrument.

This 21st day of March 2008.

Signed for and behalf of		Signed for and behalf of
DRILLSHIP KITHIRA OWNERS INC.		SAMSUNG HEAVY INDUSTRIES CO., LTD
By:		By:	Harris Lee
Title:	Attorney-In-Fact	Title:	Vice President

In the presence of:	In the presence of:
VICTORIA LIAOU	Tony T.N. Kim
	Branch Manager

EX-4.33

EXHIBIT 4.33

Date 13 March 2008

ANNAPOLIS SHIPPING COMPANY LIMITED

ATLAS OWNING COMPANY LIMITED

FARAT SHIPPING COMPANY LIMITED and

LANSAT SHIPPING COMPANY LIMITED

as Borrowers

- and -

PIRAEUS BANK A.E.

as Lender

LOAN AGREEMENT

relating to a loan facility of up to US$130,000,000

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

Clause		Page
1	INTERPRETATION	1
2	FACILITY	14
3	DRAWDOWN	14
4	INTEREST	14
5	INTEREST PERIODS	15
6	DEFAULT INTEREST	16
7	REPAYMENT AND PREPAYMENT	17
8	CONDITIONS PRECEDENT	18
9	REPRESENTATIONS AND WARRANTIES	19
10	GENERAL UNDERTAKINGS	21
11	CORPORATE UNDERTAKINGS	23
12	INSURANCE	24
13	SHIP COVENANTS	28
14	SECURITY COVER	31
15	PAYMENTS AND CALCULATIONS	32
16	APPLICATION OF RECEIPTS	33
17	APPLICATION OF EARNINGS	34
18	EVENTS OF DEFAULT	35
19	FEES AND EXPENSES	39
20	INDEMNITIES	39
21	NO SET-OFF OR TAX DEDUCTION	41
22	ILLEGALITY, ETC	42
23	INCREASED COSTS	42
24	SET-OFF	43
25	TRANSFERS AND CHANGES IN LENDING OFFICE	44
26	VARIATIONS AND WAIVERS	44

27	NOTICES	45
28	JOINT AND SEVERAL LIABILITY	46
29	SUPPLEMENTAL	47
30	LAW AND JURISDICTION	47
SCHEDULE 1 DRAWDOWN NOTICE		49
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS		50
EXECUTION PAGE		52

THIS AGREEMENT is made on 13 March 2008

BETWEEN

(1) ANNAPOLIS SHIPPING COMPANY LIMITED, FARAT SHIPPING COMPANY LIMITED and LANSAT SHIPPING COMPANY LIMITED, each a company incorporated in Malta whose registered office is at 5/2, Merchants Street, Valletta, Malta and ATLAS OWNING COMPANY LIMITED, a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (together the “Borrowers” and each a “Borrower”); and

(2) PIRAEUS BANK A.E., acting through its branch at 47-49 Akti Miaouli, 185 36 Piraeus, Greece (as “Lender”).

BACKGROUND

The Lender has agreed to make available to the Borrowers, on a joint and several basis, a loan facility up to US$130,000,000 for the purpose of providing liquidity to the Borrowers and their parent company Dryships Inc., for their general corporate purposes.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

“Account” means:

(a) in the case of “LACERTA”, an earnings account in the name of Annapolis with the Lender designated “Annapolis Shipping Company Limited - Earnings Account”;

(b) in the case of “MENORCA”, an earnings account in the name of Atlas with the Lender designated “Atlas Owning Company Limited - Earnings Account”;

(c) in the case of “FARAT”, an earnings account in the name of Farat with the Lender designated “Farat Shipping Company Limited - Earnings Account”; and

(d) in the case of “LANSAT”, an earnings account in the name of Lansat with the Lender designated “Lansat Shipping Company Limited - Earnings Account”,

or, in any case, any other account (with that or another office of the Lender or with a bank or financial institution other than the Lender) which is designated by the Lender as the Account for the relevant Ship for the purposes of this Agreement;

“Account Pledge” means, in relation to each Account, the deed of pledge in respect of that Account to be executed by the relevant Borrower in favour of the Lender in such form as the Lender may approve or require and in the plural means all of them;

“Accounting Information” means the annual audited consolidated accounts to be provided by the Borrowers to the Lender in accordance with Clause 10.6(a) of this Agreement or the semi-annual unaudited accounts to be provided by the Borrowers to the Lender in accordance with Clause 10.6(b) of this Agreement;

“Annapolis” means Annapolis Shipping Company Limited, a company incorporated in Malta, whose registered office is at 5/2 Merchants Street, Valletta, Malta;

“Approved Charter” means, in relation to a Ship, any time charter party of that Ship to be entered by the relevant Borrower and a charterer in all respects acceptable to the Lender, exceeding or which, by virtue of any optional extensions is capable of exceeding, 12 months in duration as the same may be amended or supplemented from time to time in favour and substance in all respects acceptable to the Lender;

“Approved Manager” means in relation to each Ship, Cardiff Marine Inc. a corporation incorporated under the laws of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia and maintaining a ship management office at Omega Building, 80 Kifissias Avenue, 151 25 Maroussi, Greece or any other company which the Lender may reasonably approve as the commercial, technical and/or operational manager of that Ship;

“Approved Manager’s Undertaking” means, in relation to each Ship, a letter of undertaking executed or to be executed by the Approved Manager in favour of the Lender in such form as the Lender may approve or require agreeing certain matters in relation to the management of that Ship and subordinating the rights of the Approved Manager against the Ship and the relevant Borrower thereof to the rights of the Lender under the Finance Documents and, in the plural, means any of them;

“Atlas” means Atlas Owning Company Limited a corporation incorporated under the laws of the Republic of Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

(a) 30 April 2008 (or such later date as the Lender may agree with the Borrowers); or

(b) if earlier, the final Drawdown Date or the date on which the Lender’s obligation to make the Loan is cancelled or terminated;

“Balloon Instalment” has the meaning given to it in clause 7.1;

“Borrower” means each of Annapolis, Atlas, Farat and Lansat and, in the plural, means all of them;

“Business Day” means a day on which banks are open in London, Athens and Piraeus and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Charter Assignment” means in relation to a Ship, a specific assignment of the rights of the relevant Borrower under an Approved Charter relating to that Ship, pursuant to Clause 10.16 and any guarantee of such charter, to be executed by that Borrower in favour of the Lender in such form as the Lender may approve or require and, in the plural, means all of them;

“Compliance Date” means 30 June and 31 December in each calendar year (or such other dates as of which the Corporate Guarantor prepares its consolidated financial statements which the Borrowers are required to deliver to the Lender pursuant to Clause 10.6);

“Commitment” means $130,000,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement,

“Confirmation” and “Early Termination Date” in relation to any continuing Transaction, have the meanings given in the Master Agreement;

“Contractual Currency” has the meaning given in Clause 20.4;

2

“Corporate Guarantee” means a guarantee to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may approve or require;

“Corporate Guarantor” means Dryships Inc., a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Deed of Covenant” means in relation to a Ship, a deed of covenant collateral to the relevant Mortgage in such form as the Lender may approve or require and, in the plural, means both of them;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means the date requested by the Borrowers for the Loan to be advanced or (as the context requires) the date on which the Loan is actually advanced;

“Drawdown Notice” means a notice in the form set out in Schedule 1 (or in any other form which the Lender approves or reasonably requires);

“Earnings” means, in relation to each Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower which is the owner of such Ship and which arise out of the use or operation of such Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the relevant Borrower in the event of requisition of its Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for beach (or payments for variation or termination) of any charterparty or other contract for the employment of such Ship;

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c) if and whenever such Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to such Ship;

“Environmental Claim” means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from a Ship; or

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other

3

vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or a Borrower and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where a Borrower and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Event of Default” means any of the events or circumstances described in Clause 18.1;

“Farat” means Farat Shipping Company Limited, a company incorporated in Malta, whose registered office is at 5/2 Merchants Street, Valletta, Malta;

“Finance Documents” means:

(a) this Agreement;

(b) the Master Agreement;

(c) the Master Agreement Assignment,

(d) the Corporate Guarantee;

(e) the General Assignments;

(f) the Mortgages;

(g) the Deeds of Covenants;

(h) the Accounts Pledges;

(i) the Approved Manager’s Undertaking;

(j) any Charter Assignment; and

(k) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrowers (or any of them) or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

4

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e) under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

“Fleet Vessels” means, together, all of the vessels (including, but not limited to, the Ships) owned from time to time by members of the Group;

“General Assignment” means, in relation to a Ship, a general assignment of the Earnings, the Insurances and the Requisition Compensation of such Ship to be executed by the relevant Borrower in favour of the Lender in such form as the Lender may approve or require, and, in the plural means both of them;

“Group” means the Corporate Guarantor and its subsidiaries (whether direct or indirect and including, but not limited to, each Borrower) from time to time during the Security Period and “member of the Group” shall be construed accordingly;

“Insurances” means, in relation to each Ship:

(a) all policies and contracts of insurance, including entries of such Ship in any protection and indemnity or war risks association, which are effected in respect of such Ship, its Earnings or otherwise in relation to it; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interest Period” means, in relation to the Loan, a period determined in accordance with Clause 5;

“ISM Code” means, in relation to its application to the Borrowers, the Ships and their operation:

(a) The International Management Code for the Safe Operation of Ships and for Pollution Prevention, currently known or referred to as the “ISM Code”, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4th November, 1993 and incorporated on 19th May, 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25th November, 1995,

5

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” includes, in relation to a Ship:

(a) the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to such Ship within the periods specified by the ISM Code;

(b) all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain such Ship’s compliance or the compliance by the Borrower owning such Ship with the ISM Code which the Lender may require;

“ISM SMS” means, in relation to a Ship, the safety management system for such Ship which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”) now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of the IMO on Maritime Security in December 2002 and includes any amendments or extensions to it and any regulation issued pursuant to it but shall only apply insofar as it is applicable law in the relevant Ship’s flag state and any jurisdiction on which such Ship is operated;

“ISPS Code Documentation” includes:

(a) the International Ship Security Certificate issued pursuant to the ISPS Code in relation to each Ship within the period specified in the ISPS Code; and

(b) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“LACERTA” means the 1994-built bulk carrier vessel of 71,860 metric tons deadweight, having IMO Number 9071600 and registered in the ownership of Annapolis under the Maltese flag with the name “LACERTA”;

“Lansat” means Lansat Shipping Company Limited, a company incorporated in Malta, whose registered office is at 5/2 Merchants Street, Valletta, Malta;

“Lender” means Piraeus Bank A.E., acting through its branch at 47-49 Akti Miaouli, 185 36 Piraeus;

“Leverage Ratio” means, any relevant time, the ratio (expressed as a percentage) of:

(a) the Total Liabilities; and

(b) the Market Value Adjusted Total Assets (including, without limitation, the Ships);

“LIBOR” means for an Interest Period:

(a) the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which

6

appears on Reuters BBA Page LIBOR 01 at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period (and, for the purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display designated as “Reuters BBA Page LIBOR 01” on the Reuters Money News Service or such other page as may replace BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollars); or

(b) if no rate is quoted on Reuters BBA Page LIBOR 01, the rate per annum determined by the Lender to be the rate per annum which leading banks in the London Interbank Market offer for deposits in Dollars in the London Interbank Market at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means any casualty to a Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Margin” means, subject to Clause 4.12, at all times when the Leverage Ratio is:

(a) equal to or higher than 50 per cent., 1.20 per cent. per annum; and

(b) lower than 50 per cent, 1.10 per cent., per annum;

“Margin Calculation Date” has the meaning given to it in Clause 4.12;

“Market Value” means, in relation to each Ship and each Fleet Vessel, the market value of that Ship or Fleet Vessel determined in accordance with Clause 14.3;

“Market Value Adjusted Total Assets” means, at any time, Total Assets adjusted to reflect the Market Value of all Fleet Vessels;

“Master Agreement” means the master agreement (on the 1992 ISDA (Multicurrency-Crossborder) form) made or to be between the Borrowers and the Lender and includes all Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement;

“Master Agreement Assignment” means the assignment of the Master Agreement executed or to be executed by the Borrowers in favour of the Lender in such form as the Lender may approve or require;

“MENORCA” means the 1997-built bulk carrier vessel of 71,662 metric tons deadweight having IMO Number 9122851 and registered in the ownership of Atlas under the Maltese flag with the name “MENORCA”;

“Mortgage” means, in relation to each Ship, the first priority Maltese statutory mortgage on that Ship, in such form as the Lender may approve or require and in the plural means all of them;

“Negotiation Period” has the meaning given in Clause 4.6;

7

“Net Income” means, in relation to each financial year of the Corporate Guarantor, the aggregate income of the Group appearing in the Accounting Information for that financial year less the aggregate of:

(a) the amounts incurred by the Group during that financial year as expenses of its business;

(b) depreciation, amortisation and all interest in respect of all Financial Indebtedness of the Group paid by all members of the Group during that financial year;

(c) Net Interest Expenses;

(d) taxes; and

(e) other items charged to the Corporate Guarantor’s consolidated profit and loss account for the relevant financial year;

“Net Interest Expenses” means, as of any date of determination, the aggregate of all interest, commitment and other fees, commissions, discounts and other costs, charges or expenses accruing due from all the members the Group during that accounting period less interest income received, determined on a consolidated basis in accordance with generally accepted accounting principles and as shown in the consolidated statements of income for the Group in the applicable Accounting Information;

“PARAGON” means the 1994-built bulk carrier of 71,259 metric tons deadweight, having IMO number 9086978 and registered in the ownership of Lansat under the Maltese flag with the name “PARAGON”;

“Payment Currency” has the meaning given in Clause 20.4;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

(c) liens for salvage;

(d) liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement

(e) liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower owning such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 13.12(g);

(f) any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where a Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

8

“Pertinent Document” means:

(a) any Finance Document;

(b) any policy or contract of insurance contemplated by or referred to in Clause 12 or any other provision of this Agreement or another Finance Document;

(c) any other document contemplated by or referred to in any Finance Document; and

(d) any document which has been or is at any time sent by or to the Lender in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company’s central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets (including, without limitation, the Ships) of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Lender and/or the satisfaction of any other condition, would constitute an Event of Default;

“Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period;

9

“Repayment Date” means a date on which a repayment is required to be made under Clause 7;

“Requisition Compensation” includes, in relation to a Ship, all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Secured Liabilities” means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b) the security rights of a plaintiff under an action in rem; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Corporate Guarantor, the Approved Manager and any other person (except the Lender) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Lender notifies the Borrowers and the Security Parties that:

(a) all amounts which have become due for payment by each of the Borrowers or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) no Borrower nor any Security Party has any future or contingent liability under Clause 19, 20 or 21 or any other provision of this Agreement or another Finance Document and

(d) the Lender does not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of any of the Borrowers or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

“Ship” means each of “LACERTA” “MENORCA” “TORO” and “PARAGON” and in the plural means all of them;

“Swap Exposure” means, as at any relevant date, the amount certified by the Lender to be the aggregate net amount in Dollars which would be payable by the Borrowers to the

10

Lender under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Transactions entered into between the Borrowers and the Lender;

“TORO” means the 1995-built bulk carrier of 73,034 metric tons deadweight, having IMO number 9075735 and registered in the ownership of Farat under the Maltese flag with the name “TORO”;

“Total Assets” means, the total assets of the Group as stated in the most recent Accounting Information;

“Total Liabilities” means, as at the date of calculation, the aggregate Financial Indebtedness of the Group;

“Total Loss” means, in relation to a Ship:

(a) actual, constructive, compromised, agreed or arranged total loss of such Ship;

(b) any expropriation, confiscation, requisition or acquisition of such Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the owner owning such Ship;

(c) any arrest, capture, seizure or detention of such Ship (including any hijacking or theft) unless it is within 1 month redelivered to the full control of the owner owning such Ship;

“Total Loss Date” means, in relation to a Ship:

(a) in the case of an actual loss of such Ship, the date on which it occurred or, if that is unknown, the date when such Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of such Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning such Ship with such Ship’s insurers in which the insurers agree to treat such Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which the relevant underwriters consider that the event constituting the total loss occurred; and

“Transaction” has the meaning given in the Master Agreement.

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 12, approved in writing by the Lender;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

11

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, fax or telex;

“excess risks” means, in relation to a Ship the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning the Ship is obliged to effect, under Clause 12 or any other provision of this Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1.4;

“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls) (1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“subsidiary” has the meaning given in Clause 1.4;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

12

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

and any company of which S is a subsidiary is a parent company of S.

1.5 General Interpretation. In this Agreement

(a) references in Clause 1.1 to a Finance Document or any other document being in the form of a particular appendix include references to that form with any modifications to that form which the Lender approves or reasonably requires;

(b) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(c) references to, or to a provision of, any law include any amendment, extension, reenactment or replacement, whether made before the date of this Agreement or otherwise;

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

13

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lender shall make available to the Borrowers a loan facility not exceeding $130,000,000 to be drawn in a single advance.

2.2 Purpose of the Loan. Each Borrower undertakes with the Lender to use the Loan only for the purpose stated in the preamble to this Agreement.

3 DRAWDOWN

3.1 Request for the Loan. Subject to the following conditions, the Borrowers may request the Loan to be made by ensuring that the Lender receives a completed Drawdown Notice not later than 11:00 am. (Athens time) 2 Business Days prior to the intended Drawdown Date.

3.2 Availability. The conditions referred to in Clause 3.1 are that:

(a) the Drawdown Date has to be a Business Day during the Availability Period;

(b) the Loan shall be made available in a single advance and any amount undrawn shall be cancelled and may not be borrowed by the Borrowers at a later date; and

(c) the Loan shall not exceed the Commitment.

3.3 Drawdown Notice Irrevocable. A Drawdown Notice must be signed by a director, officer or a duly authorised signatory of each Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender.

3.4 Disbursement of Loan. Subject to the provisions of this Agreement, the Lender shall on the Drawdown Date advance the Loan to the Borrowers; and payment to the Borrowers shall be made to the account which the Borrowers specify in the Drawdown Notice.

3.5 Disbursement of Loan to third party. The payment by the Lender under Clause 3.4 shall constitute the making of the Loan and the Borrowers shall at that time become indebted, as principal and direct obligor, to the Lender in an amount equal to the Loan.

4 INTEREST

4.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.

4.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest applicable to the Loan (or any part thereof) in respect of an Interest Period shall be the aggregate of the applicable Margin and LIBOR for that Interest Period.

4.3 Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

4.4 Notification of market disruption. The Lender shall promptly notify the Borrowers if no rate is quoted on Reuters BBA Page LIBOR01 or if for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fluid the Loan (or any part of it) during any Interest Period, stating the circumstances which have caused such notice to be given.

14

4.5 Suspension of drawdown. If the Lender’s notice under Clause 4.4 is served before the Loan is made, the Lender’s obligation to make the Loan than be suspended while the circumstances referred to in the Lender’s notice continue.

4.6 Negotiation of alternative rate of interest. If the Lender’s notice under Clause 4.4 is served after the Loan is drawndown, the Borrowers and the Lender shall use reasonable endeavours to agree, within the 15 days after the date on which the Lender serves its notice under Clause 4.4 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lender to fund or continue to fund the Loan during the Interest Period concerned.

4.7 Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

4.8 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set an interest period and interest rate representing the cost of funding of the Lender in Dollars or in any available currency of the Loan plus the applicable Margin; and the procedure provided for by this Clause 4.8 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Lender.

4.9 Notice of prepayment. If the Borrowers do not agree with an interest rate set by the Lender under Clause 4.8, the Borrowers may give the Lender not less than 15 Business Days’ notice of their intention to prepay the Loan or any part thereof at the end of the interest period set by the Lender.

4.10 Prepayment. A notice under Clause 4.9 shall be irrevocable; and on the last Business Day of the interest period set by the Lender, the Borrowers shall prepay (without premium or penalty) the Loan or any part thereof, together with accrued interest thereon at the applicable rate plus the applicable Margin.

4.11 Application of prepayment. The provisions of Clause 7 shall apply in relation to the prepayment.

4.12 Calculation of Leverage Ratio. The Lender shall calculate the Leverage Ratio on the Drawdown Date and on each Compliance Date thereafter (each a “Margin Calculation Date”) based on the recent Accounting Information for the purposes of calculating the applicable Margin and shall advise the Borrowers in writing, within 10 Business Days of each applicable Margin Calculation Date, of the applicable Margin which will apply for the 6 month period commencing on the relevant applicable Margin Calculation Date Provided that in respect of each applicable Margin Calculation Date other than the first applicable Margin Calculation Date, the Lender shall only be obliged to advise the Borrowers of the applicable Margin which will apply for the Interest Period commencing on the relevant applicable Margin Calculation Date if that applicable Margin will be different to the applicable Margin which applies immediately prior to the relevant applicable Margin Calculation Date.

For the purposes of calculating the Leverage Ratio pursuant to this Clause 4.12, the Market Value of the Ships shall be determined no more than 30 days prior to the relevant applicable Margin Calculation Date.

5 INTEREST PERIODS

5.1 Commencement of Interest Periods. The first Interest Period applicable to the Loan shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

15

5.2 Duration of normal Interest Periods. Subject to Clauses 5.3 and 5.4, each Interest Period shall be:

(a) 1, 3, 6 or 9 months as notified by the Borrowers to the Lender not later than 11.00 am. (Athens time) 2 Business Days before the commencement of the Interest Period; or

(b) 3 months, if the Borrowers fail to notify the Lender by the time specified in paragraph (a); or

(c) such other period as the Lender may agree with the Borrowers.

5.3 Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 7 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

5.4 Non-availability of matching deposits for Interest Period selected. If after the Borrowers have selected and the Lender has agreed an Interest Period longer than 6 months, the Lender notifies the Borrowers by 11.00 a.m. (Athens time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

6 DEFAULT INTEREST

6.1 Payment of default interest on overdue amounts. The Borrowers shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrowers under any Finance Document which the Lender does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 18.4, the date on which it became immediately due and payable.

6.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Lender to be 2 per cent. above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 6.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 6.3(b).

6.3 Calculation of default rate of interest. The rates referred to in Clause 6.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

(b) the applicable Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Lender may select from time to time:

(i) LIBOR; or

16

(ii) if the Lender determines that Dollar deposits for any such period are not being made available to it by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Lender by reference to the cost of funds to it from such other sources as the Lender may from time to time determine.

6.4 Notification of interest periods and default rates. The Lender shall promptly notify’ the Borrowers of each interest rate determined by it under Clause 6.3 and of each period selected by it for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Lender’s notification.

6.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.

6.6 Compounding of default Interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

6.7 Application to Master Agreement. For the avoidance of doubt, this Clause 6 does not apply to any amount payable under the Master Agreement in respect of any continuing Transaction as to which section 2(e) (Default Interest; Other Amounts) of the Master Agreement shall apply.

7 REPAYMENT AND PREPAYMENT

7.1 Repayment instalments. The Borrowers shall repay the Loan by 28 consecutive three-monthly instalments of (i) in the case of the first to fourth instalments (inclusive), in the amount of $5,250,000 each, (ii) in the case of the fifth to the twenty eighth instalments (inclusive), in the amount of $2,750,000 each and (iii) a balloon payment of $43,000,000 (the “Balloon Instalment”) Provided that if the Loan is drawdown in less than the maximum available amount thereof, each repayment instalment (including the Balloon Instalment) shall be reduced pro rata by an amount in aggregate equal to such undrawn amount.

7.2 Repayment Dates. The first repayment instalment for the Loan shall be repaid on the date falling 3 months after the Drawdown Date, each subsequent repayment instalment shall be repaid at 3-monthly intervals thereafter and the last instalment shall be repaid, together with the Balloon Instalment, on the date falling on the seventh anniversary of the Drawdown Date.

7.3 Final Repayment Date. On the final Repayment Date, the Borrowers shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.

7.4 Voluntary prepayment. Subject to the following conditions, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period.

7.5 Conditions for voluntary prepayment. The conditions referred to in Clause 7.4 are that:

(a) a partial prepayment shall be $500,000 or a multiple of $500,000;

(b) the Lender has received from the Borrowers at least 10 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

(c) the Borrowers have provided evidence satisfactory to the Lender that any consent required by the Borrowers or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affect the Borrowers or any Security Party has been complied with.

17

7.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

7.7 Mandatory prepayment. The Borrowers shall be obliged to prepay the Relevant Fraction of the Loan if a Ship is sold or becomes a Total Loss:

(a) if a Ship is sold, on or before the date on which the sale is completed by delivery of such Ship to the buyer; or

(b) if a Ship becomes a total loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss,

and in this Clause 7.7 “Relevant Fraction” is a fraction whose:

(i) numerator is the Market Value of the Ship being sold or which has become a Total Loss on the date on which such sale is completed or (as the case may be) the date on which the Total Loss occurred; and

(ii) denominator is the aggregate Market Value of all the Ships on the date on which the relevant Ship which is subject to a Mortgage is sold or becomes a Total Loss.

7.8 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 20 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clauses 20.1(b) and 20.2 but without premium or penalty.

7.9 Application of partial prepayment. Each partial prepayment made pursuant to Clauses 7.4 or 7.7 shall be applied pro rata against the repayment instalments specified in Clause 7.1 outstanding at the time of the partial prepayment (including, without limitation, the Balloon Instalment).

7.10 No reborrowing. No amount prepaid may be reborrowed.

8 CONDITIONS PRECEDENT

8.1 Documents, fees and no default. The Lender’s obligation to make the Loan is subject to the following conditions precedent:

(a) that, on or before the service of the Drawdown Notice, the Lender receives the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers;

(b) that, on or before the Drawdown Date, the Lender receives the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers;

(c) that both at the date of the Drawdown Notice and at the Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan;

(ii) the representations and warranties in Clause 9 and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing;

18

(iii) none of the circumstances contemplated by Clause 4.4 has occurred and is continuing; and

(iv) there has been no material adverse change in the financial position, state of affairs or prospects of the Borrowers, the Corporate Guarantor, the Group any other Security Party in the light of which the Lender considers that there is a significant risk that the Borrowers, the Corporate Guarantor, the Group or any other Security Party will later become unable to discharge its liabilities under the Finance Documents to which it is a party as they fall due;

(d) that, if the ratio set out in Clause 14.1 were applied immediately following the making of the Loan, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

(e) that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may reasonably request by notice to the Borrowers prior to the Drawdown Date.

8.2 Waivers of conditions precedent. If the Lender, at its discretion, permits the Loan to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 10 Business Days after the Drawdown Date (or such longer period as the Lender may specify).

9 REPRESENTATIONS AND WARRANTIES

9.1 General. Each Borrower represents and warrants to the Lender as follows.

9.2 Status. Each of Annapolis, Farat and Lansat is duly incorporated and validly existing and in good standing under the laws of Malta and Atlas is duly incorporated, validly existing and in Goodstanding under the laws of the Marshall Islands.

9.3 Share capital and ownership. Atlas, has an authorised share capital of $10,000 divided into 500 shares of $20 each, each of Annapolis, Farat and Lansat have authorised, share capital of LM 500 divided into 500 ordinary shares of LM 1 each and the legal title and beneficial ownership of all the Borrowers’ shares is held, free of any Security Interest or other claim, by the Corporate Guarantor.

9.4 Corporate power. Each Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to own its Ship and register it in its name under the Maltese flag;

(b) to execute the Finance Documents and any Approved Charter to which it is a party; and

(c) to borrow under this Agreement, to enter into Transactions under the Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents including, without limitation, the Master Agreement

9.5 Consents in force. All the consents referred to in Clause 9.4 remain in force and nothing has occurred which makes any of them liable to revocation.

9.6 Legal validity; effective Security Interests. The Finance Documents to which each Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

19

(a) constitute the legal, valid and binding obligations of that Borrower enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate;

subject to any relevant insolvency laws affecting creditors’ rights generally.

9.7 No third party Security Interests. Without limiting the generality of Clause 9.6, at the time of the execution and delivery of each Finance Document:

(a) each Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

9.8 No conflicts. The execution by each Borrower of each Finance Document to which it is a party, and the borrowing by the Borrowers of the Loan, and their compliance with each Finance Document will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrowers; or

(c) any contractual or other obligation or restriction which is binding on the Borrowers or any of their assets.

9.9 No withholding taxes. All payments which the Borrowers are liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

9.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

9.11 Information. All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to the Lender in connection with any Finance Document satisfied the requirements of Clause 10.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 10.7; and there has been no material adverse change in the financial position or state of affairs of any of the Borrowers from that disclosed in the latest of those accounts.

9.12 No litigation. No legal or administrative action involving any Borrower (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to any Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on any Borrower’s financial position or profitability.

9.13 Compliance with certain undertakings. At the date of this Agreement, each of the Borrowers is in compliance with Clauses 10.2, 10.4, 10.9 and 10.13.

9.14 Taxes paid. Each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or the Ship owned by it.

9.15 ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrowers, the Approved Manager and the Ships have been complied with.

20

9.16 No money laundering. Without prejudice to the generality of Clause 2.2, in relation to the borrowing by the Borrowers of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents, each Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

9.17 ISO 9002. Each Borrower will, once it is required to do so by law, obtain ISO 9002 certification.

10 GENERAL UNDERTAKINGS

10.1 General. Each Borrower undertakes with the Lender to comply with the following provisions of this Clause 10 at all times during the Security Period, except as the Lender may otherwise permit.

10.2 Title; negative pledge. Each Borrower will:

(a) hold the legal title to, and own the entire beneficial interest in its Ship, her Insurances and her Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents (and the effect of assignments contained in the Finance Documents) and except for Permitted Security Interests; and

(b) not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future.

10.3 No disposal of assets. No Borrower will transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) any debt payable to it or any other right (present future or contingent right) to receive a payment, including any right to damages or compensation.

10.4 No other liabilities or obligations to be incurred. No Borrower will incur any Financial Indebtedness except that incurred under the Finance Documents and that reasonably incurred in the ordinary course of operating and chartering its Ship.

10.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrowers under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

10.6 Provision of financial statements. The Borrowers will send or procure there are sent to the Lender:

(a) as soon as possible, but in no event later than 180 days after the end of each financial year of the Borrowers and the Corporate Guarantor (commencing with the financial year ending on 31 December 2007), the audited consolidated financial statements of each of the Borrowers and the Corporate Guarantor for that financial year; and

(b) as soon as possible, but in no event later than 60 days after the end of each 6-month period in each financial year of the Borrowers and the Corporate Guarantor ending on 30 June and 31 December (commencing with the 6-month period ending on 31 December 2007), the interim unaudited consolidated financial statements of the Borrowers and the Corporate Guarantor for that 6-month period.

21

10.7 Form of financial statements. All accounts (audited and unaudited) delivered under Clause 10.6 will:

(a) be prepared in accordance with all applicable laws and generally accepted accounting principles consistently applied;

(b) give a true and fair view of the state of affairs of each Borrower or, as the case may be, the Corporate Guarantor at the date of those accounts and of profit for the period to which those accounts relate; and

(c) fully disclose or provide for all significant liabilities of each Borrower or, as the case may be, the Corporate Guarantor.

10.8 Shareholders and creditor notices. Each Borrower will send the Lender, at the same time as they are despatched, copies of all communications which are despatched to that Borrower’s shareholders or creditors or any class of them.

10.9 Consents. Each Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Lender of, all consents required:

(a) for each Borrower to perform its obligations under any Finance Document;

(b) for the validity or enforceability of any Finance Document; and

(c) for each Borrower to continue to own and operate its Ship,

and the Borrowers will comply with the terms of all such consents.

10.10 Maintenance of Security Interests. Each Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a) above, authorise and hereby authorises the Lender at the cost of the Borrowers to promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

10.11 Notification of litigation. Each Borrower will provide the Lender with details of any legal or administrative action involving any Borrower, any Security Party, the Approved Manager, any Ship, the Earnings or the Insurances as soon as such action is instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

10.12 Principal place of business. Each Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 27.2(a) and no Borrower will establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.

10.13 Confirmation of no default. Each Borrower will, within 2 Business Days after service by the Lender of a written request, serve on the Lender a notice which is signed by a director of each Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

22

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

10.14 Notification of default. Each Borrower will notify the Lender as soon as any Borrower becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default, or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will keep the Lender fully up-to-date with all developments.

10.15 Provision of further information. Each Borrower will, as soon as practicable after receiving the request, provide the Lender with:

(a) any additional financial or other information relating to such Borrower, its Ship, the Earnings, the Insurances, the Approved Manager, the Group or the Corporate Guarantor; or

(b) any additional financial or other information relating to any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by the Lender at any time.

10.16 Time Charter Assignment. If any Borrower enters into any bareboat charter or any Approved Charter in respect of its Ship, such Borrower shall, at the request of the Lender, execute in favour of the Lender a Charterparty Assignment in respect of such bareboat charter or Approved Charter and deliver to the Lender any documents in relation thereto which the Lender may require.

11 CORPORATE UNDERTAKINGS

11.1 General. Each Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit.

11.2 Maintenance of status. Each of Annapolis, Farat and Lansat will maintain their separate corporate existence and remain in good standing under the laws of Malta and Atlas will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands.

11.3 Negative undertakings. No Borrower will:

(a) carry on any business other than the ownership, chartering and operation of the Ship owned by it; or

(b) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in such Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected,

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to such Borrower than those which it could obtain in a bargain made at arms’ length;

23

(c) open or maintain any account with any bank or financial institution except accounts with the Lender for the purposes of the Finance Documents;

(d) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(e) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative (other than a Transaction under the Master Agreement); or

(f) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

12 INSURANCE

12.1 General. Each Borrower also undertakes with the Lender to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may otherwise permit.

12.2 Maintenance of obligatory insurances. Each Borrower shall keep the Ship owned by it insured at the expense of such Borrower against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

(b) war risks;

(c) protection and indemnity risks; and

(d) any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for such Borrower to insure and which are specified by the Lender by notice to such Borrower.

12.3 Terms of obligatory insurances. Each Borrower shall effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) an amount, which when aggregated with the insured value of any other Ship at the relevant time subject to a Mortgage, is equal to 125 per cent. of the amount of the Loan and (ii) the Market Value of such Ship; and

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;

(d) in relation to protection and indemnity risks, in respect of the relevant Ship’s full tonnage;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

12.4 Further protections for the Lender. In addition to the terms set out in Clause 12.3, each Borrower shall procure that the obligatory insurances shall:

(a) whenever the Lender requires, name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

24

(b) name the Lender as loss payee with such directions for payment as the Lender may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Lender in respect of any rights or interests (secured or not) held by or available to the Lender in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the relevant Borrower or the Lender) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender;

(f) provide that the Lender may make proof of loss if the relevant Borrower fails to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Lender, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Lender for 30 days (or 7 days in the case of war risks) after receipt by the Lender of prior written notice from the insurers of such cancellation, change or lapse.

12.5 Renewal of obligatory insurances. Each Borrower shall:

(a) at least 14 days before the expiry of any obligatory insurance:

(i) notify the Lender of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom such Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and

(ii) obtain the Lender’s approval to the matters referred to in paragraph (i) above;

(b) at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Lender’s approval pursuant to paragraph (a) above; and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.

12.6 Copies of policies; letters of undertaking. Each Borrower shall ensure that all approved brokers provide the Lender with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Lender and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 12.4;

25

(b) they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;

(c) they will advise the Lender immediately of any material change to the terms of the obligatory insurances;

(d) they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the relevant Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the relevant Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the relevant Ship or otherwise, they waive any lien on the policies (including, without limitation, any fleet lien), or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the relevant Ship forthwith upon being so requested by the Lender.

12.7 Copies of certificates of entry. Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Lender with:

(a) a certified copy of the certificate of entry for such Ship;

(b) a letter or letters of undertaking in such form as may be required by the Lender;

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Owner in accordance with the requirements of such protection and indemnity association; and

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to such Ship.

12.8 Deposit of original policies. Each Borrower shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

12.9 Payment of premiums. Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Lender.

12.10 Guarantees. Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

12.11 Restrictions on employment. No Borrower shall employ the Ship owned by it, nor permit her to be employed, outside the cover provided by any obligatory insurances.

12.12 Compliance with terms of insurances. Each Borrower shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:

(a) each Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 12.7(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;

26

(b) no Borrower shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;

(c) each Borrower shall make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading (if permitted by the Lender) to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) no Borrower shall employ its Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

12.13 Alteration to terms of insurances. No Borrower shall make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

12.14 Settlement of claims. No Borrower shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

12.15 Provision of copies of communications. Each Borrower shall provide the Lender, at the time of each such communication, copies of all written communications between the relevant Borrower and:

(a) the approved brokers; and

(b) the approved protection and indemnity and/or war risks associations; and

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) that Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

12.16 Provision of information. In addition, each Borrower shall promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

27

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17 below or dealing with or considering any matters relating to any such insurances,

and each Borrower shall, forthwith upon written demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.

12.17 Mortgagee’s interest and additional perils insurances. The Lender shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance and a mortgagee’s interest marine insurance on such terms, in such amounts, through such insurers and generally in such manner as the Lender may from time to time consider appropriate and the Borrowers shall upon demand fully indemnify the Lender in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

12.18 Review of insurance requirements. The Lender shall be entitled to review the requirements of this Clause 12 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lender, significant and capable of affecting the Borrowers or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrowers may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrowers.

12.19 Modification of insurance requirements. The Lender shall notify the Borrowers of any proposed modification under Clause 12.18 to the requirements of this Clause 12 which the Lender considers appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 12 and shall bind the Borrowers accordingly.

12.20 Compliance with mortgagee’s instructions. The Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require any Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Borrower which is the owner of that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 12.19.

13 SHIP COVENANTS

13.1 General. Each Borrower also undertakes with the Lender to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit.

13.2 Ship’s name and registration. Each Borrower shall keep the Ship owned by it registered in its ownership as a Maltese ship at the port of Valletta; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of a Ship.

13.3 Repair and classification. Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the highest classification available for vessels of the same age, type and specification as such Ship with an approved classification society which is a member of IACS (or such other first class classification society as may be approved by the Lender), free of overdue recommendations and requirements affecting such Ship’s class; and

28

(c) so as to comply with all laws and regulations applicable to vessels registered at ports in Malta or to vessels trading to any jurisdiction to which such Ship may trade from time to time, including but not limited to the ISM Code, the ISM Code Documentation and the ISPS Code Documentation.

13.4 Modification. No Borrower shall make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on such Ship which would or might materially alter the structure, type or performance characteristics of such Ship or materially reduce its value.

13.5 Removal of parts. No Borrower shall remove any material part of the Ship owned by it, or any item of equipment installed on such Ship, unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lender and becomes on installation on such Ship the property of the relevant Borrower and subject to the security constituted by the Mortgage and if applicable, the Deed of Covenant relative to that Ship Provided that a Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to its Ship.

13.6 Surveys. Each Borrower shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender, provide the Lender at the expense of the Borrowers, with copies of all survey reports.

13.7 Inspection. Each Borrower shall permit the Lender (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

13.8 Prevention of and release from arrest. Each Borrower shall promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, her Earnings or her Insurances;

(b) all taxes, dues and other amounts charged in respect of the Ship owned by it, her Earnings or her Insurances; and

(c) all other outgoings whatsoever in respect of the Ship owned by it, the Earnings or the Insurances,

and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, the relevant Borrower shall procure its release by providing bail or otherwise as the circumstances may require.

13.9 Compliance with laws etc. Each of the Borrowers shall:

(a) comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of the relevant Borrowers;

(b) not employ the Ship owned by it, nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

29

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit it to enter or trade to any zone which is declared a war zone by any government or by such Ship’s war risks insurers unless the prior written consent of the Lender has been given and the relevant Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.

13.10 Provision of information. Each Borrower shall promptly provide the Lender with any information which it requests regarding:

(a) the Ship owned by it, its employment, position and engagements;

(b) the Earnings and payments and amounts due to such Ship’s master and crew;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of such Ship and any payments made in respect of such Ship;

(d) any towages and salvages; and

(e) the relevant Borrower’s, the Approved Manager’s or such Ship’s compliance with the ISM Code and the ISPS Code,

and, upon the Lender’s request, provide copies of any current charter and any charter guarantee in relation thereto relating to such Ship, of any current charter guarantee and of the ISM Code Documentation and ISPS Code Documentation.

13.11 Notification of certain events. Each Borrower shall immediately notify the Lender by fax, confirmed forthwith by letter, of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d) any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on such Ship or its Earnings or any requisition of such Ship for hire;

(e) any intended dry docking of the Ship owned by it;

(f) any Environmental Claim made against the relevant Borrower or in connection with the Ship owned by it, or any Environmental Incident;

(g) any claim for breach of the ISM Code or the ISPS Code being made against the relevant Borrower, the Approved Manager or otherwise in connection with the Ship owned by it; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and each Borrower shall keep the Lender advised in writing on a regular basis and in such detail as the Lender shall require of each Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.

13.12 Restrictions on chartering, appointment of managers etc. No Borrower shall:

(a) let the Ship owned by it on demise charter for any period;

30

(b) enter into any time or consecutive voyage charter in respect of the Ship owned by it for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

(c) enter into any charter in relation to the Ship owned by it under which more than 2 months’ hire (or the equivalent) is payable in advance;

(d) charter the Ship owned by it otherwise than on bona fide arm’s length terms at the time when such Ship is fixed;

(e) appoint a manager of the Ship owned by it other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment;

(f) de-activate or lay up the Ship owned by it; or

(g) put the Ship owned by it into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on such Ship or her Earnings for the cost of such work or for any other reason.

13.13 Notice of Mortgage. Each Borrower shall keep the Mortgage registered against the Ship owned by it as a valid first priority mortgage, carry on board such Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of such Ship a framed printed notice stating that such Ship is mortgaged by the relevant Borrower to the Lender.

13.14 Sharing of Earnings. No Borrower shall enter into any agreement or arrangement for the sharing of any Earnings.

14 SECURITY COVER

14.1 Minimum required security cover. Clause 14.2 applies if the Lender notifies the Borrowers that:

(a) the aggregate Market Value of the Ships; plus

(b) the net realisable value of any additional security previously provided under this Clause 14,

is below 125 per cent. of the amount of the Loan and the Swap Exposure.

14.2 Provision of additional security; prepayment. If the Lender serves a notice on the Borrowers under Clause 14.1, the Borrowers shall, within 1 month after the date on which the Lender’s notice is served, either:

(a) provide, or ensure that a third party provides, additional security which, in the opinion of the Lender, has a net realisable value at least equal to the shortfall and is documented in such terms as the Lender may approve or require; or

(b) prepay such part (at least) of the Loan as will eliminate the shortfall.

14.3 Valuation of Ships. The Market Value of a Ship at any date is that shown by the average of two valuations prepared:

(a) as at a date not more than 14 days previously;

31

(b) by 2 independent sale and purchase shipbrokers which the Lender has appointed or approved for the purpose;

(c) with or without physical inspection of the relevant Ship (as the Lender may require);

(d) on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer;

(e) free of any existing charter or other contract of employment (other than in the case of any Approved Charter which has an unexpired duration of at least 12 months, in which such Approved Charter shall be taken into account in determining the Market Value of the relevant Ship); and

(f) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale,

Provided that if one such valuation is more than 115 per cent. of the other valuation, then the Lender shall select a third independent sale and purchase broker to provide a valuation of the relevant Ship in accordance with this Clause 14.3 and the Market Value of that Ship shall be the arithmetic average of all three such valuations.

14.4 Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 14.2 and which consists of a Security Interest over a vessel shall be that shown either by way of a valuation complying with the requirements of Clause 14.3 or by a valuation from an independent sale and purchase shipbroker appointed by the Borrowers and approved by the Lender (and on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and willing buyer, free of charter or other contract of employment).

14.5 Valuations binding. Any valuation under Clause 14.2, 14.3 or 14.4 shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Lender makes of any additional security which does not consist of or include a Security Interest.

14.6 Frequency of valuation. The Borrowers acknowledge and agree that the Lender may commission valuations of each Ship to be furnished together with the delivery of the audited financial statements and the semi-annual unaudited financial statements respectively not more than twice during each 12-month period of the Security Period.

14.7 Provision of information. Each Borrower shall promptly provide the Lender and any ship broker or expert acting under Clause 14.3 with any information which the Lender or any independent ship broker or expert may request for the purposes of the valuation; and, if a Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which that ship broker or the Lender (or the expert appointed by it) considers prudent.

14.8 Payment of valuation expenses. Without prejudice to the generality of the Borrowers’ obligations under Clauses 19.2, 19.3 and 20.3, each Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any shipbroker or expert instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause.

14.9 Application of prepayment. Clause 7 shall apply in relation to any prepayment pursuant to Clause 14.2(b).

15 PAYMENTS AND CALCULATIONS

15.1 Currency and method of payments. All payments to be made by the Borrowers to the Lender under a Finance Document shall be made to the Lender:

(a) by not later than 11.00 a.m. (Athens time) on the due date;

32

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

(c) to the account of the Lender at Bank of New York of New York, USA for credit to the account of the Lender (Account No. 8033138548), or to such other account with such other bank as the Lender may from time to time notify to the Borrowers.

15.2 Payment on non-Business Day. If any payment by the Borrowers under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

15.3 Basis for calculation of periodic payments. All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

15.4 Lender accounts. The Lender shall maintain an account showing the amounts advanced by the Lender and all other sums owing to the Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

15.5 Accounts prima facie evidence. If the account maintained under Clause 15.4 shows an amount to be owing by the Borrowers or a Security Party to the Lender, that account shall be prima facie evidence, save in the case of manifest error, that amount is owing to the Lender.

16 APPLICATION OF RECEIPTS

16.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents (other than under the Master Agreement) in the following order and proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents and the Master Agreement other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrowers under Clauses 19, 20 and 21 of this Agreement or by the Borrowers or any Security Party under any corresponding or similar provision in any other Finance Document or in the Master Agreement;

(ii) secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Lender under the Finance Documents and the Master Agreement (and, for this purpose, the expression “interest” shall include any net amount which the Borrowers shall have become liable to pay or deliver

33

under section 2(e) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Lender at the time of application or distribution under this Clause 16); and

(iii) thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure calculated as at the actual Early Termination Date applying to each particular Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document or the Master Agreement but which the Lender, by notice to the Borrowers and the Security Parties states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of this Clause;

THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

16.2 Variation of order of application. The Lender may, by notice to the Borrowers and the Security Parties, provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

16.3 Notice of variation of order of application. The Lender may give notices under Clause 16.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

16.4 Appropriation rights overridden. This Clause 16 and any notice which the Lender gives under Clause 16.3 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any other Security Party.

17 APPLICATION OF EARNINGS

17.1 Payment of Earnings. Each Borrower undertakes with the Lender to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignments), all the Earnings in relation to each Ship are paid to the Account in respect of that Ship.

17.2 Application of Earnings. Until an Event of Default or a Potential Event of Default occurs, the Lender shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply (and the Borrowers hereby irrevocably authorise the Lender to apply) so much of the balance on the Accounts as equals:

(a) the repayment instalment due on that Repayment Date; or

(b) the amount of interest payable on that interest payment date,

in each case in discharge of the Borrowers’ liability for that repayment instalment or that interest.

17.3 Interest accrued on Accounts. Any credit balance on the Accounts shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Lender likely to remain on that Account.

34

17.4 Release of accrued interest. Interest accruing under Clause 17.3 shall be freely available to the Borrowers.

17.5 Location of accounts. Each Borrower shall promptly:

(a) comply with any requirement of the Lender as to the location or re-location of the Accounts or either of them;

(b) execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts.

17.6 Debits for expenses etc. The Lender shall be entitled (but not obliged) from time to time to debit the Accounts (or either of them) with prior notice in order to discharge any amount due and payable (which remains unpaid) to it under Clauses 19 or 20 or payment of which it has become entitled to demand under Clauses 19 or 20.

17.7 Borrowers’ obligations unaffected. The provisions of this Clause 17 (as distinct from a distribution effected under Clause 17.2) do not affect:

(a) the liability of the Borrowers to make payments of principal and interest on the due dates; or

(b) any other liability or obligation of the Borrowers or any Security Party under any Finance Document.

18 EVENTS OF DEFAULT

18.1 Events of Default. An Event of Default occurs if:

(a) any Borrower or the Corporate Guarantor fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs of Clauses 8.2, 10.2, 10.3, 10.16, 11.2, 11.3, 14.2 or 17.1; or

(c) any breach by any Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (a) above) if, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 14 days after written notice from the Lender requesting action to remedy the same; or

(d) (subject to any applicable grace period specified in any Finance Document) any breach by any Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a), (b) or (c) above); or

(e) any representation, warranty or statement made by, or by an officer of, any Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person exceeding (in the case of the Corporate Guarantor) $1,000,000 (or the equivalent in any other currency) in aggregate:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

35

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Lender, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Security Party, or the members or directors of any Borrower or the Corporate Guarantor pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrowers or the Corporate Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 60 days of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non judicial suspension or deferral of payments, reorganisation of its debt (or substantial part of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them (save for, in the case of the Corporate Guarantor, non judicial suspension or deferral of payments, reorganisation of its debt (or substantial part of its debt) or arrangement which occurs in its ordinary course of its business and not as a result of the Corporate Guarantor’s inability to meet its obligations and/or liabilities) or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

36

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Lender, is similar to any of the foregoing; or

(h) any Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible;

(i) for any Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or

(ii) for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) any consent necessary to enable any Borrower to own, operate or charter the Ship owned by it or to enable any Borrower or any Security Party to comply with any provision which the Lender considers material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(k) it appears to the Lender that, without its prior consent, a change has occurred after the date of this Agreement in the legal ownership of any of the shares in, any Borrower or in the ultimate control of the voting rights attaching to any of those shares; or

(l) any provision which the Lender considers material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(m) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(n) an Event of Default (as defined in section 14 of the Master Agreement) occurs; or

(o) the Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason except with the consent of the Lender; or

(p) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of any Borrower, the Group, the Corporate Guarantor or any other Security Party; or

(ii) any accident or other event involving either of the Ships or another vessel, owned, chartered or operated by a Relevant Person,

in the light of which the Lender considers that there is a significant risk that any Borrower or any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

37

18.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default the Lender may:

(a) serve on the Borrowers a notice stating that all obligations of the Lender to the Borrowers under this Agreement are terminated; and/or

(b) serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(c) take any other action which, as a result of the Event of Default or any notice served under paragraph (a) or (b) above, the Lender is entitled to take under any Finance Document or any applicable law.

18.3 Termination of Commitment. On the service of a notice under Clause 18.2(a) the Commitment, and, all other obligations of the Lender to the Borrowers under this Agreement shall terminate.

18.4 Acceleration of Loan. On the service of a notice under Clause 18.2(b), the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers (or either of them) or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

18.5 Multiple notices; action without notice. The Lender may serve notices under Clauses 18.2(a) and (b) simultaneously or on different dates and it may take any action referred to in Clause 18.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

18.6 Exclusion of Lender liability. Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrowers (or any of them) or any other Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been caused directly and mainly by the dishonesty, the gross negligence or the willful misconduct of the Lender’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

18.7 Relevant Persons. In this Clause 18 a “Relevant Person” means each Borrower, the Corporate Guarantor, any other Security Party and any other member of the Group; but excluding any company which is dormant and the value of whose gross assets is $50,000 or less.

18.8 Interpretation. In Clause 18.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 18.1(g) “petition” includes an application.

38

19 FEES AND EXPENSES

19.1 Arrangement and management fees. The Borrowers shall pay to the Lender on a nonrefundable arrangement fee of $450,000 on the earlier of (1) the Drawdown Date and (ii) the last day of the Availability Period.

19.2 Costs of negotiation, preparation etc. The Borrowers shall pay to the Lender on its demand the amount of all reasonable expenses incurred by the Lender in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

19.3 Costs of variation, amendments, enforcement etc. The Borrowers shall pay to the Lender, within 5 Business Days of the Lender’s demand, the amount of all reasonable expenses incurred by the Lender in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lender concerned under or in connection with a Finance Document or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 14 or any other matter relating to such security; or

(d) any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

19.4 Documentary taxes. The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender’s demand, fully indemnify the Lender against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrowers (or either of them) to pay such a tax.

19.5 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence, save in the case of manifest error, that the amount, or aggregate amount, is due.

20 INDEMNITIES

20.1 Indemnities regarding borrowing and repayment of Loan. The Borrowers shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

39

(c) any failure (for whatever reason) by the Borrowers (or any of them) to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 6);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,

and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under any Finance Document.

20.2 Breakage costs. Without limiting its generality, Clause 20.1 covers any claim, expense, liability or loss, including a loss of a prospective profit incurred by the Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or a number of transactions of which this Agreement is one.

20.3 Miscellaneous indemnities. The Borrowers shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by the Lender, in any country, as a result of or in connection with:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document;

(b) any other Pertinent Matter,

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty or wilful misconduct of the officers or employees of the Lender.

Without prejudice to its generality, this Clause 20.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

20.4 Currency indemnity. If any sum due from the Borrowers or any Security Party to the Lender under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrowers (or either of them) or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment,

40

the Borrowers shall indemnify the Lender against the loss arising when the amount of the payment actually received by the Lender is converted at the available rate of exchange into the Contractual Currency.

In this Clause 20,4, the “available rate of exchange” means the rate at which the Lender is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 20.4 creates a separate liability of the Borrowers which is distinct from their other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

20.5 Application to Master Agreement. For the avoidance of doubt, Clause 20.4 does not apply in respect of sums due from the Borrowers to the Lender under or in connection with the Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of the Master Agreement shall apply.

20.6 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence, save in the case of manifest error, that the amount, or aggregate amount, is due.

21 NO SET-OFF OR TAX DEDUCTION

21.1 No deductions. All amounts due from the Borrowers under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

(b) free and clear of any tax deduction except a tax deduction which the Borrowers are required by law to make.

21.2 Grossing-up for taxes. If the Borrowers are required by law to make a tax deduction from any payment:

(a) the Borrowers shall notify the Lender as soon as it becomes aware of the requirement;

(b) the Borrowers shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any tine or penalty arises;

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

21.3 Evidence of payment of taxes. Within one month after making any tax deduction, the Borrowers shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.

21.4 Exclusion of tax on overall net Income. In this Clause 21 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on the Lender’s overall net income.

21.5 Application to Master Agreement. For the avoidance of doubt, Clause 21 does not apply in respect of sums due from the Borrowers under or in connection with the Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement shall apply.

41

22 ILLEGALITY, ETC

22.1 Illegality. This Clause 22 applies if the Lender notifies the Borrowers that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

22.2 Notification and effect of illegality. On the Lender notifying the Borrowers under Clause 22.1, the Commitment shall terminate; and thereupon or, if later, on the date specified in the Lender’s notice under Clause 22.1 as the date on which the notified event would become effective the Borrowers shall prepay the Loan in full in accordance with Clause 7.

22.3 Mitigation. If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 22.2 the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

23 INCREASED COSTS

23.1 Increased costs. This Clause 23 applies if the Lender notifies the Borrowers that it considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law, or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

(b) complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) (including, without limitation, any laws or regulations which shall replace, amend and/or supplement those set out in the statement of the Basic Committee on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International Convergence of Capital Management and Capital Structures”)) which is introduce or altered, or the interpretation or application of which is altered, after the date of this Agreement,

the Lender (or a parent company of it) has incurred or will incur an “increased cost”.

23.2 Meaning of “increased costs”. In this Clause 23, “increased costs” means:

(a) an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining the Commitment or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums; or

42

(b) a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital;

(c) an additional or increased cost of finding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan; or

(d) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement;

but not an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 20.1 or by Clause 21.

For the purposes of this Clause 23.2 the Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

23.3 Payment of increased costs. The Borrowers shall pay to the Lender, on its demand, the amounts which the Lender from time to time notifies the Borrowers that it has specified to be necessary to compensate it for the increased cost

23.4 Notice of prepayment. If the Borrowers are not willing to continue to compensate the Lender for the increased cost under Clause 23.3, the Borrowers may give the Lender not less than 14 days’ notice of their intention to prepay the Loan at the end of an Interest Period.

23.5 Prepayment. A notice under Clause 23.4 shall be irrevocable; and on the date specified in its notice of intended prepayment, the Commitment shall terminate and the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the applicable Margin.

23.6 Application of prepayment. Clause 7 shall apply in relation to the prepayment.

24 SET-OFF

24.1 Application of credit balances. The Lender may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrowers (or either of them) at any office in any country of the Lender in or towards satisfaction of any sum then due from the Borrowers (or any of them) to the Lender under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrowers (or either of them);

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

43

24.2 Existing rights unaffected. The Lender shall not be obliged to exercise any of its rights under Clause 24.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document).

24.3 No Security Interest. This Clause 24 gives the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrowers (or any of them).

25 TRANSFERS AND CHANGES IN LENDING OFFICE

25.1 Transfer by Borrowers. No Borrower may, without the consent of the Lender, transfer, novate or assign any of its rights, liabilities or obligations under any Finance Document.

25.2 Assignment by Lender. The Lender may assign or transfer all or any of the rights and interests which it has under or by virtue of the Finance Documents without the consent of; but with notice to, the Borrowers.

25.3 Rights of assignee. In respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document, or any misrepresentation made in or in connection with a Finance Document, a direct or indirect assignee or transferee of any of the Lender’s rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee or transferee as a result of the breach or misrepresentation irrespective of whether the Lender would have incurred a loss of that kind or amount.

25.4 Sub-participation; subrogation assignment. The Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrowers; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.

25.5 Disclosure of information. The Lender may disclose to a potential assignee or transferee or sub-participant any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

25.6 Change of lending office. The Lender may change its lending office by giving notice to the Borrowers and the change shall become effective on the later of:

(a) the date on which the Borrowers receive the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

26 VARIATIONS AND WAIVERS

26.1 Variations, waivers etc. by Lender. A document shall be effective to vary, waive, suspend or limit any provision of a Finance Document or the Lender’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax by the Borrowers and the Lender and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

26.2 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

44

(b) an Event of Default; or

(c) a breach by the Borrowers (or either of them) or any other Security Party of an obligation under a Finance Document or the general law; or

(d) any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

27 NOTICES

27.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

27.2 Addresses for communications. A notice shall be sent:

(a)       to the Borrowers:	Omega Building
	80 Kifissias Avenue
	151 25 Maroussi
	Greece
	Fax No: (+30) 210 8090 275
	Attn: Mr. Aristidis Ioannidis
(b)      to the Lender:	Piraeus Bank A.E.
	47-49 Akti Miaouli
	Piraeus 185 36
	Greece
	Fax No: +30 210 429 2601

or to such other address as the relevant party may notify the other.

27.3 Effective date of notices. Subject to Clauses 27.4 and 27.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

(b) a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

27.4 Service outside business hours. However, if under Clause 27.3 a notice would be deemed to be served:

(a) on a day which is not a Business Day in the place of receipt; or

(b) on such a Business Day, but after 5 p.m. local time,

45

the notice shall (subject to Clause 27.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

27.5 Illegible notices. Clauses 27.3 and 27.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

27.6 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

27.7 Meaning of “notice”. In this Clause 27 “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

28 JOINT AND SEVERAL LIABILITY

28.1 General. All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be several and, if and to the extent consistent with Clause 28.2, joint.

28.2 No impairment of Borrower’s obligations. The liabilities and obligations of each Borrower shall not be impaired by:

(a) this Agreement being or later becoming void, unenforceable or illegal as regards any other Borrower;

(b) the Lender entering into any rescheduling, refinancing or other arrangement of any kind with any other Borrower;

(c) the Lender releasing any other Borrower or any Security Interest created by a Finance Document; or

(d) any combination of the foregoing.

28.3 Principal debtors. Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and no Borrower shall in any circumstances be construed to be a surety for the obligations of any other Borrower under this Agreement.

28.4 Subordination. Subject to Clause 28.5, during the Security Period, no Borrower shall:

(a) claim any amount which may be due to it from any other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document or any matter unconnected with this Agreement or any Finance Document; or

(b) take or enforce any form of security from any other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of any other Borrower; or

46

(c) set off such an amount against any sum due from it to any other Borrower; or

(d) prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving any other Borrower or other Security Party; or

(e) exercise or assert any combination of the foregoing.

28.5 Borrower’s required action. If during the Security Period, the Lender, by notice to a Borrower, requires it to take any action referred to in paragraphs ((a)) to ((d)) of Clause 28.4, in relation to any other Borrower, that Borrower shall take that action as soon as practicable after receiving the Lender’s notice.

29 SUPPLEMENTAL

29.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to the Lender are:

(a) cumulative;

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3 Counterparts. A Finance Document may be executed in any number of counterparts.

29.4 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

30 LAW AND JURISDICTION

30.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

30.2 Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

30.3 Choice of forum for the exclusive benefit of the Lender. Clause 30.2 is for the exclusive benefit of the Lender, which reserves the rights:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

No Borrower shall commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

47

30.4 Process agent. Each Borrower irrevocably appoints Ince Process Agents Ltd. for the time being presently of 5th Floor, International House, 1 St. Katharine’s Way, London E1W 1AY, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

30.5 Lender’s rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

30.6 Meaning of “proceedings”. In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

48

EXECUTION PAGE

BORROWERS
SIGNED by	)
	)
for and on behalf of	)
ANNAPOLIS SHIPPING COMPANY LIMITED	)
in the presence of:	)
SIGNED by	)
	)
for and on behalf of	)
ATLAS OWNING COMPANY LIMITED	)
in the presence of:	)
SIGNED by	)
	)
for and on behalf of	)
FARAT SHIPPING COMPANY LIMITED	)
in the presence of:	)
SIGNED by	)
	)
for and on behalf of	)
LANSAT SHIPPING COMPANY LIMITED	)
in the presence of:	)
LENDER
SIGNED by	)
	)
for and on behalf of	)
PIRAEUS BANK A.E.	)
in the presence of:	)

49

EX-4.34

Exhibit 4.34

Date 5 May 2008

DALIAN STAR OWNERS INC.

as Borrower

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

- and -

DRESDNER BANK AG in HAMBURG

as Agent and Security Trustee

- and -

DRESDNER BANK AG in HAMBURG and WESTLB AG

as Swap Banks and Joint Arrangers

LOAN AGREEMENT

relating to a term loan facility of up to US$90,000,000

to finance the acquisition of one 170,500 dwt bulk carrier with Hull No. 1001

currently under construction at Daehan Shipbuilding Co., Ltd, South Korea

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

Clause		Page
1	INTERPRETATION	1
2	FACILITY	14
3	POSITION OF THE LENDERS, SWAP BANKS AND MAJORITY LENDERS	14
4	DRAWDOWN	15
5	INTEREST	16
6	INTEREST PERIODS	18
7	DEFAULT INTEREST	19
8	REPAYMENT AND PREPAYMENT	20
9	CONDITIONS PRECEDENT	21
10	REPRESENTATIONS AND WARRANTIES	22
11	GENERAL UNDERTAKINGS	24
12	CORPORATE UNDERTAKINGS	27
13	INSURANCE	28
14	SHIP COVENANTS	32
15	SECURITY COVER	36
16	PAYMENTS AND CALCULATIONS	37
17	APPLICATION OF RECEIPTS	39
18	APPLICATION OF EARNINGS	40
19	EVENTS OF DEFAULT	40
20	FEES AND EXPENSES	44
21	INDEMNITIES	45
22	NO SET-OFF OR TAX DEDUCTION	47
23	ILLEGALITY, ETC	48
24	INCREASED COSTS	48
25	SET-OFF	50
26	TRANSFERS AND CHANGES IN LENDING OFFICES	50

27	VARIATIONS AND WAIVERS	53
28	NOTICES	54
29	SUPPLEMENTAL	55
30	LAW AND JURISDICTION	56
SCHEDULE 1 LENDERS AND COMMITMENTS		57
SCHEDULE 2 DRAWDOWN NOTICE		58
SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS		59
SCHEDULE 4 TRANSFER CERTIFICATE		62
SCHEDULE 5 MANDATORY COST FORMULA		66
EXECUTION PAGES		68

THIS AGREEMENT is made on 5 May 2008

BETWEEN

(1) DALIAN STAR OWNERS INC. as Borrower;

(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders;

(3) DRESDNER BANK AG in HAMBURG, as Agent;

(4) DRESDNER BANK AG in HAMBURG, as Security Trustee;

(5) WESTLB AG and DRESDNER BANK AG in HAMBURG as Swap Banks; and

(6) WESTLB AG and DRESDNER BANK AG in HAMBURG, as Joint Arrangers.

BACKGROUND

(A) The Lenders have agreed to make available to the Borrower a facility of up to the lesser of (i) US$90,000,000 (Ninety million United States Dollars) and (ii) 65 per cent, of the Market Value of the Ship as determined in accordance with paragraph 5 of Part B of Schedule 3, Part B, for the purpose of financing the acquisition cost of the Ship (as such cost is determined by reference to the purchase price payable pursuant to the MO A).

(B) The Borrower may, if it wishes, from time to time hedge its exposure under this Agreement to interest rate fluctuations by entering into interest rate swap transactions with the Swap Banks.

(C) The Lenders and the Swap Banks have agreed to share pari passu in security to be granted to the Security Trustee pursuant to this Agreement.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

“Account Pledge” means the pledge creating security in respect of the Earnings Account in such form as the Agent may approve or require;

“Affected Lender” has the meaning given in Clause 5.6;

“Agency and Trust Deed” means the agency and trust deed executed or to be executed between the Borrower, the Lenders, the Swap Banks, the Agent and the Security Trustee in such form as the Agent may approve or require;

“Agent” means Dresdner Bank AG in Hamburg, acting in such capacity through its office at Jungfernstieg 22, 20354 Hamburg, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Approved Broker” means each of Clarksons of St. Magnus House, 3 Lower Thames Street, London EC3R 6HE, England, or Fearnley AS, PO Box 1158, Sentrum, N-0107, Oslo, Norway and Ingenieubuero Weselmann of Steinhoeft 11,20459, Hamburg, Germany or any other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as an Approved Broker under this Agreement;

1

“Approved Flag” means the Greek flag, the Maltese flag, the Cyprus flag, the Bahamas flag, the Panamanian flag, the Liberian flag, the Marshall Islands flag or such other flag as the Agent may, acting upon the instructions of all the Lenders, approve as the flag on which the Ship shall be registered;

“Approved Flag State” means Greece, Malta, Cyprus, Bahamas, Panama, Liberia, the Marshall Islands or any other country in which the Agent may, acting upon the instructions of all the Lenders, approve that the Ship be registered;

“Approved Manager” means Cardiff Marine Inc., a corporation incorporated in the Republic of Liberia and maintaining a ship management office at Omega Building, 80 Kifissias Avenue, Maroussi 151 25, Greece, or any other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the manager of the Ship;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

(a) the earlier to occur of (i) 31 July 2008 and (ii) the date falling 6 months from the date of this Agreement (or such later date as the Agent may, with the authorisation of the Lenders, agree with the Borrower); or

(b) if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

“Borrower” means Dalian Star Owners Inc., being a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

“Business Day” means a day on which banks are open in Athens, London and Hamburg and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Confirmation” and “Early Termination Date”, in relation to any continuing Designated Transaction, have the meanings given in each Master Agreement;

“Contractual Currency” has the meaning given in Clause 21.4;

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

“Creditor Party” means the Agent, the Security Trustee, either Swap Bank or any Lender, whether as at the date of this Agreement or at any later time;

“Designated Transaction” means a Transaction which fulfils the following requirements:

(a) it is entered into by the Borrower pursuant to a Master Agreement with a Swap Bank which, at the time the Transaction is entered into, is also a Lender;

2

(b) its purpose is the hedging of the Borrower’s exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the final Repayment Date; and

(c) it is designated by the Borrower, by delivery by the Borrower to the Agent of a notice of designation, as a Designated Transaction for the purposes of the Finance Documents;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means the date requested by the Borrower for the Loan to be made, or (as the context requires) the date on which the Loan is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Security Trustee and which arise out of the use, operation or sale of the Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the Borrower or the Security Trustee in the event of requisition of the Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c) if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

“Earnings Account” means an account in the name of the Borrower with the Agent in Hamburg designated “Dalian Star Owners Inc. - Earnings Account” and any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which is designated by the Agent as the Earnings Account for the purposes of this Agreement;

“Environmental Claim” means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

3

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from the Ship; or

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship and/or the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Event of Default” means any of the events or circumstances described in Clause 19.1;

“Finance Documents” means:

(a) this Agreement;

(b) the Master Agreements;

(c) the Agency and Trust Deed;

(d) the Guarantee;

(e) the Master Agreement Assignments;

(f) the Deed of Covenant;

(g) the General Assignment; (h) the Mortgage;

(i) the Account Pledge; and

(j) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

4

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility or dematerialised equivalent made available to the debtor;

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e) under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within paragraphs (a) to (e) if the references to the debtor referred to the other person;

“Financial Year” means, in relation to the Group, each period of 1 year commencing on 1 January in respect of which its consolidated accounts are or ought to be prepared;

“GAAP” means generally accepted accounting principles as from time to time in effect in the United States of America;

“General Assignment” means a deed containing a general assignment of the Earnings, the Insurances, any Requisition Compensation of the Ship and an assignment by the Borrower of its rights under any charter and the charterer’s assignment of insurances in respect of the Ship in such form as the Agent may approve or require;

“Group” means the Guarantor and its subsidiaries (whether direct or indirect and including, but not limited to, the Borrower) from time to time during the Security Period and “member of the Group” shall be construed accordingly;

“Guarantee” means a guarantee issued by the Guarantor in such form as the Agent may approve or require;

“Guarantor” means Dryships Inc., a corporation incorporated in the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH 96960;

“IACS” means the International Association of Classification Societies;

“Insurances” means:

(a) all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to it; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interest Period” means a period determined in accordance with Clause 6;

“ISM Code” means:

(a) ‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.74I(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

5

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisations pursuant to Resolution A.788(I9) adopted on 25 November 1995,

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” includes:

(a) the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to the Ship within the periods specified by the ISM Code; and

(b) all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Agent may require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain the Ship’s or the compliance of the Borrower with the ISM Code which the Agent may require;

“ISM SMS” means the safety management system for the Ship which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”) now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of the IMO on Maritime Security in December 2002 and includes any amendments or extensions to it and any regulation issued pursuant to it but shall only apply insofar as it is applicable law in the Approved Flag State and any jurisdiction on which the Ship is operated;

“ISPS Code Documentation” includes:

(a) the International Ship Security Certificate issued pursuant to the ISPS Code in relation to the Ship within the period specified in the ISPS Code; and

(b) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“Joint Arrangers” means, together, WestLB AG having its registered office at Herzogstrasse 15 in 40217 Duesseldorf, Germany and acting through its London branch at

6

Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA, England and Dresdner Bank AG in Hamburg, acting in such capacity through its office at Jungfernstieg 22, 20354 Hamburg, Germany;

“Lender” means, subject to Clause 26.6:

(a) a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrower under Clause 26.14) unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and

(b) the holder for the time being of a Transfer Certificate;

“LIBOR” means, for an Interest Period:

(a) the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00 am (London time) on the second Business Day prior to the commencement of that Interest Period (and, for the purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display designated as “Reuters BBA Page LIBOR 01” on the Reuters Money News Service or such other page as may replace Reuters BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying the British Bankers’ Association Interest Settlement Rates for Dollars); or

(b) if no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum determined by the Agent to be the arithmetic mean of the rates per annum notified to the Agent by each Reference Bank to be the rate per annum at which deposits in Dollars are offered to that Reference Bank by leading banks in the London Interbank Market at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Majority Lenders” means:

(a) before the Loan has been made, Lenders whose commitments total 50.01 per cent, of the Total Commitments; and

(b) after the Loan has been made Lenders whose contributions total 50,01 per cent, of the Loan;

“Mandatory Cost” means the percentage rate per annum calculated by the Lender in accordance with Schedule 5;

“Margin” means 1.20 per cent, per annum;

“Master Agreement” means each master agreement (on the 1992 ISDA (Multicurrency—Crossborder) form and including the Schedule thereto) made or to be made between the Borrower and a Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged thereunder;

7

“Master Agreement Assignment” means in relation to each Master Agreement, the assignment of the Master Agreement in favour of the Security Trustee executed or to be executed by the Borrower, in such form as the Agent may approve or require;

“Market Value” means the market value of the Ship determined from time to time in accordance with Clause 15.3;

“MOA” means the memorandum of agreement dated 1 October 2007 made between the Seller and the Borrower pursuant to which the Seller has agreed to sell, and the Borrower has agreed to purchase, the Ship;

“Mortgage” means the first priority or, as the case may be, preferred ship mortgage on the Ship under the Approved Flag and deed of covenant collateral thereto (if applicable) in such form as the Agent may approve or require;

“Negotiation Period” has the meaning given in Clause 5.9;

“Payment Currency” has the meaning given in Clause 21.4;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

(c) liens for salvage;

(d) liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to the Ship not prohibited by this Agreement;

(e) liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(g);

(f) any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

“Pertinent Document” means:

(a) any Finance Document;

(b) any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;

(c) any other document contemplated by or referred to in any Finance Document; and

8

(d) any document which has been or is at any time sent by or to the Agent or the Security Trustee in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company has the centre of its main interests or in which the company’s central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a);

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

“Reference Banks” means, subject to Clause 26.16, the London branch of WestLB AG and Dresdner Bank AG in Hamburg;

“Relevant Person” has the meaning given in Clause 19.9;

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Secured Liabilities” means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in

9

connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b) the security rights of a plaintiff under an action in rem; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Guarantor, the Approved Manager and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the Lenders that:

(a) all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither the Borrower nor any Security Party has any future or contingent liability under Clause 20, 21 or 22 or any other provision of this Agreement or another Finance Document; and

(d) the Agent, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

“Security Trustee” Dresdner Bank AG in Hamburg, acting in such capacity through its office at Jungfernstieg 22, 20354 Hamburg, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Seller” means Golden Nassim Inc., a corporation incorporated in Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia;

“Ship” means the Capesize bulk carrier newbuilding of approximately 170,500 metric tons deadweight with Hull No. 1001 currently under construction by Daehan Shipbuilding Co., Ltd, South Korea and which is to be purchased by the Borrower pursuant to the MOA and registered in the name of the Borrower under an Approved Flag with the name “MYSTIC”;

10

“Swap Bank” means each of WestLB AG having its registered office at Herzogstrasse 15 in 40217 Duesseldorf, Germany and acting through its London branch at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA, England and Dresdner Bank AG in Hamburg, acting in such capacity through its office at Jungfernstieg 22, 20354 Hamburg, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Swap Exposure” means, as at any relevant date, the amount certified by the Swap Banks to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrower to the Swap Banks under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of each Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrower and the Swap Banks;

“Total Loss” means:

(a) actual, constructive, compromised, agreed or arranged total loss of the Ship;

(b) any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the Borrower; and

(c) any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless it is within 1 month redelivered to the full control of the Borrower;

“Total Loss Date” means:

(a) in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Borrower with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

“Transfer Certificate” has the meaning given in Clause 26.2;

“Transaction” has the meaning given in each Master Agreement; and

“Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Deed.

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 13, approved in writing by the Agent;

11

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, fax or telex;

“excess risks” means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means all insurances effected, or which the Borrower is obliged to effect, under Clause 13 or any other provision of mis Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1,4;

“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls)(l/10/83) or clause 8 of the Institute Time Clauses (Hulls)(l/l1/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

12

“subsidiary” has the meaning given in Clause 1.4;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls)(l/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”, A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

and any company of which S is a subsidiary is a parent company of S,

1.5 General Interpretation. In this Agreement:

(a) references in Clause 1.1 to a Finance Document or any other document being in a particular form include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires;

(b) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(c) references to, or to a provision of, any law include any amendment, extension, re- enactment or replacement, whether made before the date of this Agreement or otherwise;

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.

13

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower a loan facility in a single advance of up to the lesser of (i) US$90,000,000 (Ninety million United States Dollars) and (ii) 65 per cent, of the Market Value of the Ship as determined in accordance with paragraph 5 of Schedule 3, Part B for the purpose of part-financing the acquisition cost of the Ship under the MOA.

2.2 Lenders’ participations in the Loan. Subject to the other provisions of this Agreement, each Lender shall participate in the Loan in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.

2.3 Purpose of Loan. The Borrower undertakes with each Creditor Party to use the Loan only for the purpose stated in the preamble to this Agreement.

3 POSITION OF THE LENDERS, SWAP BANKS AND MAJORITY LENDERS

3.1 Interests of Lenders and Swap Banks several. The rights of the Lenders and the Swap Banks under this Agreement and each Master Agreement are several; accordingly:

(a) each Lender shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement; and

(b) each Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under the Master Agreement to which that Swap Bank is a party,

without joining the Agent, the Security Trustee, any other Lender or the other Swap Bank as additional parties in the proceedings.

3.2 Proceedings by individual Lender or Swap Bank. However, without the prior consent of the Majority Lenders, no Lender and neither Swap Bank may bring proceedings in respect of:

(a) any other liability or obligation of the Borrower or a Security Party under or connected with a Finance Document or a Master Agreement; or

(b) any misrepresentation or breach of warranty by the Borrower or a Security Party in or connected with a Finance Document or a Master Agreement.

3.3 Obligations several. The obligations of the Lenders under this Agreement and of the Swap Banks under the Master Agreements are several; and a failure of a Lender to perform its obligations under this Agreement or of a Swap Bank to perform its obligations under the Master Agreement to which it is a party shall not result in:

(a) the obligations of the other Lenders being increased; nor

(b) the Borrower, any Security Party or any other Creditor Party being discharged (in whole or in part) from its obligations under any Finance Document;

14

and in no circumstances shall a Lender or a Swap Bank have any responsibility for a failure of another Lender or Swap Bank to perform its obligations under this Agreement or any Master Agreement.

3.4 Parties bound by certain actions of Majority Lenders. Every Lender, each Swap Bank, the Borrower and each Security Party shall be bound by:

(a) any determination made, or action taken, by the Majority Lenders under any provision of a Finance Document;

(b) any instruction or authorisation given by the Majority Lenders to the Agent or the Security Trustee under or in connection with any Finance Document; and

(c) any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation.

3.5 Reliance on action of Agent. However, the Borrower and each Security Party:

(a) shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take; and

(b) shall not be entitled to require any evidence that such an instruction or authorisation has been given.

3.6 Construction. In Clauses 3.4 and 3.5 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.

4 DRAWDOWN

4.1 Request for Loan. Subject to the following conditions, the Borrower may request the Loan to be made by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg time) 2 Business Days prior to the intended Drawdown Date.

4.2 Availability. The conditions referred to in Clause 4.1 are that:

(a) the Drawdown Date has to be a Business Day during the Availability Period;

(b) the Loan shall be made available in a single amount and any amount undrawn in respect of the Loan shall be cancelled and may not be borrowed by the Borrower at a later date; and

(c) the aggregate amount of the Loan shall not exceed the Total Commitments;

4.3 Notification to Lenders of receipt of the Drawdown Notice. The Agent shall promptly notify the Lenders that it has received the Drawdown Notice and shall inform each Lender of:

(a) the amount of the Loan and the Drawdown Date;

(b) the amount of that Lender’s participation in the Loan; and

(c) the duration of the first Interest Period.

15

4.4 Drawdown Notice irrevocable. The Drawdown Notice must be signed by a director, an officer or an authorised attorney in fact of the Borrower; and once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

4.5 Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent the amount due from that Lender on the Drawdown Date under Clause 2.2.

4.6 Disbursement of Loan. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrower shall be made:

(a) to the account which the Borrower specifies in the Drawdown Notice; and

(b) in the like funds as the Agent received the payments from the Lenders.

4.7 Disbursement of Loan to third party. The payment by the Agent under Clause 4.6 to a third party specified in the Drawdown Notice shall constitute the making of the Loan and the Borrower shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender’s Contribution.

5 INTEREST

5.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

5.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of (i) the Margin, (ii) the Mandatory Cost (if any) and (iii) LIBOR for that Interest Period,

5.3 Payment of accrued interest. In the case of an Interest Period longer than 6 months, accrued interest shall be paid every 6 months during that Interest Period and on the last day of that Interest Period.

5.4 Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:

(a) each rate of interest; and

(b) the duration of each Interest Period;

as soon as reasonably practicable after each is determined.

5.5 Obligation of Reference Banks to quote. A Reference Bank which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement.

5.6 Market disruption. The following provisions of this Clause 5 apply if:

(a) no rate is quoted on Reuters BBA Page LIBOR 01 and neither Reference Bank, before 1.00 p.m. (Hamburg time) on the second Business Day before the commencement of an Interest Period, provides a quotation to the Agent in order to fix LIBOR;

(b) at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent, of the Loan (or, if the Loan has not been made, Commitments amounting to more than 50 per cent, of the Total

16

Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period; or

(c) at least 1 Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

5.7 Notification of market disruption. The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.6 which have caused its notice to be given.

5.8 Suspension of drawdown. If the Agent’s notice under Clause 5.7 is served before the Loan is made:

(a) in a case falling within Clauses 5.6(a) or (b), the Lenders’ obligations to make the Loan;

(b) in a case falling within Clause 5.6(c), the Affected Lender’s obligation to participate in the Loan;

shall be suspended while the circumstances referred to in the Agent’s notice continue,

5.9 Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.7 is served after the Loan is made, the Borrower, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.7 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

5.10 Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

5.11 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin and the Mandatory Cost (if any); and the procedure provided for by this Clause 5.11 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

5.12 Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.11, the Borrower may give the Agent not less than 10 Business Days* notice of its intention to prepay at the end of the interest period set by the Agent.

5.13 Prepayment; termination of Commitments. A notice under Clause 5.12 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

17

(b) on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

5.14 Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.

5.15 Designated Transactions under the Master Agreements. The Borrower and each Swap Bank agree that:

(a) the Borrower shall provide one or the other Swap Bank with a right of first refusal at any time to conclude Designated Transactions for the purpose of hedging the Borrower’s interest payment obligations under this Agreement. The Borrower agrees that signature of a Master Agreement does not commit either Swap Bank to conclude Designated Transactions, or even to offer terms for doing so, but does provide a contractual framework within which Designated Transactions may be concluded and secured, assuming that, in relation to each proposed Designated Transaction, mutually acceptable terms can then be agreed at the relevant time;

(b) Designated Transactions shall be concluded only for the purpose of hedging the Borrower’s interest payment obligations under this Clause 5 from LIBOR-based funding to longer-term fixed rate funding;

(c) the Borrower shall pay amounts required to meet its obligations under the maturing Designated Transactions and use the sums derived from such Designated Transactions to meet its interest payment obligations under this Clause 5; and

(d) no Designated Transaction shall be concluded which would result, at any time during the Security Period, in the notional principal amount of all Designated Transactions then current exceeding the amount of the Loan.

6 INTEREST PERIODS

6.1 Commencement of Interest Periods. The first Interest Period applicable to the Loan shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

6.2 Duration of normal Interest Periods. Subject to Clauses 6,3 and 6.4, each Interest Period shall be:

(a) 1, 3, 6 or 12 months as notified by the Borrower to the Agent not later than 11.00 a.m. (Hamburg time) 2 Business Days before the commencement of the Interest Period; or

(b) 3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or

(c) such other period as the Agent may, with the authorisation of all the Lenders, agree with the Borrower.

6.3 Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

6.4 Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than 6 months, any Lender notifies the Agent by 11.00 a.m. (Hamburg time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that

18

deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

7 DEFAULT INTEREST

7.1 Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

7.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent, above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 7.3(b).

7.3 Calculation of default rate of interest. The rates referred to in Clause 7.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);

(b) the aggregate of the Mandatory Cost (if any) and the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

(i) LIBOR; or

(ii) if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine.

7.4 Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent’s notification.

7.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

19

7.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

7.7 Application to Master Agreements. For the avoidance of doubt this Clause 7 does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transaction as to which section 2(e) (Default Interest, Other Amounts) of each Master Agreement shall apply.

8 REPAYMENT AND PREPAYMENT

8.1 Amount of repayment instalments. The Borrower shall repay the Loan by 15 consecutive six-monthly repayment instalments:

(i) in the case of the first to the third repayment instalments (inclusive), in the amount of $10,000,000 each;

(ii) in the case of the fourth to the fourteenth repayment instalments (inclusive), in the amount of $3,000,000 each; and

(iii) in the case of the fifteenth repayment instalment, in the amount of $27,000,000

Provided that if the principal amount of the Loan drawdown by the Borrower is less than $90,000,000 each repayment instalment shall be reduced pro rata by an amount in aggregate equal to such undrawn amount.

8.2 Repayment Dates. The first instalment shall be repaid on the date falling 6 months after the Drawdown Date and the last instalment on the date falling 90 months after the Drawdown Date.

8.3 Final Repayment Date. On the final Repayment Date, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.

8.4 Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan on the last day of an Interest Period,

8.5 Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

(a) a partial prepayment shall be $500,000 or a multiple of $500,000;

(b) the Agent has received from the Borrower at least 5 days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and

(c) the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any official regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

8.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

8.7 Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).

20

8.8 Mandatory prepayment. The Borrower shall be obliged to prepay the Loan in full if the Ship is sold or becomes a Total Loss:

(a) in the case of a sale, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or

(b) in the case of a Total Loss, on the earlier of the date falling 120 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

8.9 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.1(b) but without premium or penalty.

8.10 Application of partial prepayment. Each partial prepayment made pursuant to Clause 8,4 shall be applied pro rata against the then outstanding repayment instalments.

8.11 No reborrowing. No amount prepaid in respect of the Loan may be reborrowed.

8.12 Unwinding of Designated Transactions. On or prior to any repayment or prepayment of the Loan under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions to the extent necessary to ensure that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time thereafter pursuant to Clause 8.1.

9 CONDITIONS PRECEDENT

9.1 Documents, fees and no default. Each Lender’s obligation to contribute to the Loan is subject to the following conditions precedent:

(a) that, at least 2 Business Days before the service of the Drawdown Notice, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

(b) that, on the Drawdown Date but prior to the making of the Loan, the Agent receives the documents described in Part B of Schedule 3 in form and substance satisfactory to it and its lawyers;

(c) that, on or before the service of the Drawdown Notice, the Agent receives the arrangement fee referred to in Clause 20.1 (a), (if any) accrued commitment fee payable pursuant to Clause 20.1(b) and has received payment of the expenses referred to in Clause 20.2;

(d) that both at the date of the Drawdown Notice and at the Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan;

(ii) the representations and warranties in Clause 10 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

21

(iii) none of the circumstances contemplated by Clause 5.6 has occurred and is continuing;

(e) that, if the ratio set out in Clause 15.1 were applied immediately following the making of the Loan, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

(i) that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrower prior to the Drawdown Date.

9.2 Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit the Loan to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business days after the Drawdown Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify).

10 REPRESENTATIONS AND WARRANTIES

10.1 General. The Borrower represents and warrants to each Creditor Party as follows.

10.2 Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands.

10.3 Share capital and ownership. The aggregate number of shares of stock that the Borrower is authorised to issue is 500 registered shares with a par value of twenty Dollars ($20) per share, all of which have been issued fully paid up and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, by Dalian Star Shareholdings Inc.

10.4 Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to execute the MOA, to purchase and pay for the Ship under the MOA and register the Ship in its name under the Approved Flag;

(b) to execute the Finance Documents to which the Borrower is a party; and

(c) to borrow under this Agreement, to enter into Designated Transactions under each Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents and each Master Agreement.

10.5 Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

10.6 Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a) constitute the Borrower’s legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate;

subject to any relevant insolvency laws affecting creditors’ rights generally.

22

10.7 No third party Security Interests. Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document:

(a) the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

10.8 No conflicts. The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

(a) any law or regulation; or .

(b) the constitutional documents of the Borrower; or

(c) any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.

10.9 No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

10.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

10.11 Information. All information which has been provided in writing by or on behalf of the Borrower or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts.

10.12 No litigation. No legal or administrative action involving the Borrower (including action relating to any alleged or actual breach of the ISM Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower’s financial position or profitability.

10.13 Validity and completeness of MOA. The MOA constitutes valid, binding and enforceable obligations of the parties thereto in accordance with its terms and:

(a) the copy of the MOA delivered to the Agent before the date of this Agreement is a true and complete copy; and

(b) no amendments or additions to the MOA have been agreed nor has any party thereto waived any of their respective rights under the MOA.

10.14 No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrower, the Seller or any third party in connection with the purchase by the Borrower of the Ship, other than as disclosed to the Lenders in writing on or prior to the date of this Agreement.

10.15 Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.4,11.9 and 11.14.

23

10.16 Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower, its business or the Ship.

10.17 ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Ship have been complied with.

10.18 No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

10.19 Provision of “know your customer” information. The Borrower will, as soon as practicable after receiving a request from the Agent, provide the Agent with any information required by it in relation to its “know your customer” regulations.

11 GENERAL UNDERTAKINGS

11.1 General. The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

11.2 Title; negative pledge. The Borrower will:

(a) hold the legal title to, and own the entire beneficial interest in the Ship, its Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents and except for Permitted Security Interests; and

(b) not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future including, but not limited to, the Borrower’s rights against a Swap Bank under a Master Agreement or all or any part of the Borrower’s interest in any amount payable to the Borrower by a Swap Bank under a Master Agreement; and

(c) procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.

11.3 No disposal of assets. The Borrower will not transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation,

11.4 No other liabilities or obligations to be incurred. The Borrower will not incur any liability or obligation except liabilities and obligations under the MOA and the Finance Documents to which it is a party and liabilities or obligations reasonably incurred in the ordinary course of operating and chartering the Ship.

24

11.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

11.6 Provision of financial statements. The Borrower will send to the Agent or procure that there is sent to the Agent:

(a) as soon as possible, but in no event later than 180 days after the end of each Financial Year of the Borrower (commencing with the Financial Year ended 31 December 2007), the audited consolidated accounts of the Group for that Financial Year and the unaudited management accounts of the Borrower (for the year ending in December 2008) and annually thereafter; and

(b) promptly after each reasonable request by the Agent, such further financial information about the Group, the Borrower, the Guarantor and/or the Ship including, but not limited to, charter arrangements, Financial Indebtedness, operating expenses and loan repayments profiles, as the Agent may require, to be prepared by a director or officer of the Borrower in a form acceptable to the Agent.

11.7 Form of financial statements. AH accounts (audited and unaudited) delivered under Clause 11.6 will:

(a) be prepared in accordance with all applicable laws and GAAP consistently applied;

(b) give a true and fair view of the state of affairs of the Group at the date of those accounts and of their profit for the period to which those accounts relate; and

(c) fully disclose or provide for all significant liabilities of the Group,

11.8 Shareholder and creditor notices. The Borrower will send the Agent, at the same time as they are despatched, copies of all communications which are despatched to the Borrower’s shareholders or creditors or any class of them.

11.9 Consents. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

(a) for the Borrower to perform its obligations under any Finance Document to which it is a party;

(b) for the validity or enforceability of any Finance Document to which it is a party;

(c) for the Borrower to continue to own and operate the Ship, and the Borrower will comply with the terms of all such consents.

11.10 Maintenance of Security Interests. The Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

25

11.11 Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any Security Party, the Approved Manager or the Ship, the Earnings or the Insurances as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

11.12 No amendment to MOA. The Borrower will not agree to any amendment or supplement to, or waive or fail to enforce, the MOA or any of its provisions.

11.13 No amendment to Master Agreements; Transactions. The Borrower will not:

(a) agree to any amendment or supplement to, or waive or fail to enforce, either Master Agreement or any of its provisions; or

(b) enter into any Transaction pursuant to a Master Agreement except Designated Transactions.

11.14 Principal place of business. The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated at the commencement of this Agreement; and the Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in any country other than the Marshall Islands.

11.15 Confirmation of no default. The Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an authorised signatory of the Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

The Agent may serve requests under this Clause 11.15 from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent, of the Loan or (if the Loan has not been made) Commitments exceeding 10 per cent of the Total Commitments; and this Clause 11.15 does not affect the Borrower’s obligations under Clause 11.16.

11.16 Notification of default. The Borrower will notify the Agent as soon as it becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will keep the Agent fully up-to-date with all developments.

11.17 Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:

(a) to it, any Security Party, the Ship, the Earnings or the Insurances; or

26

(b) to any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by the Agent, the Security Trustee or any Lender at any time.

11.18 Provision of copies and translation of documents. The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Borrower will provide a certified English translation prepared by a translator approved by the Agent.

11.19 General and administrative costs. The Borrower shall ensure that the payment of all the general and administrative costs of the Borrower in connection with the ownership and operation of the Ship (including, without limitation, the payment of the management fees) shall be fully subordinated to the payment obligations of the Borrower under this Agreement and the other Finance Documents throughout the Security Period.

12 CORPORATE UNDERTAKINGS

12.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

12.2 Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands.

12.3 Negative undertakings. The Borrower will not:

(a) carry on any business other than the ownership, chartering and operation of the Ship; or

(b) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in the Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected;

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length;

(c) open or maintain any account with any bank or financial institution except accounts with the Agent and the Security Trustee for the purposes of the Finance Documents;

(d) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(e) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than Designated Transactions; and

(f) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

27

13 INSURANCE

13.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

13.2 Maintenance of obligatory insurances. The Borrower shall keep the Ship insured at its own expense against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

(b) war risks (including protection and indemnity war risks);;

(c) protection and indemnity risks; and

(d) any other risks against which the Majority Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Majority Lenders be reasonable for the Borrower to insure and which are specified by the Security Trustee by notice to the Borrower.

13.3 Terms of obligatory insurances. The Borrower shall effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) the Market Value of the Ship and (ii) an amount which is equal to 120 per cent, of the Loan;

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

(d) in relation to protection and indemnity risks in respect of the full value and the full tonnage of the Ship ;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

13.4 Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, the Borrower shall procure that the obligatory insurances shall:

(a) whenever the Security Trustee requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(b) name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

28

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the Borrower or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party;

(f) provide that the Security Trustee may make proof of loss if the Borrower fails to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Security Trustee for 30 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

13.5 Renewal of obligatory insurances. The Borrower shall:

(a) at least 14 days before the expiry of any obligatory insurance effected by it:

(i) notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and

(ii) obtain the Security Trustee’s approval to the matters referred to in paragraph (i);

(b) at least 14 days before the expiry of any obligatory insurance effected by it, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

13.6 Copies of policies; letters of undertaking. The Borrower shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

(c) they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

29

(d) they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Security Trustee.

13.7 Copies of certificates of entry. The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provides the Security Trustee with:

(a) a certified copy of the certificate of entry for the Ship;

(b) a letter or letters of undertaking in such form as may be required by the Security Trustee;

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by the Borrower in relation to the Ship in accordance with the requirements of such protection and indemnity association; and

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.

13.8 Deposit of original policies. The Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.

13.9 Payment of premiums. The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Security Trustee.

13.10 Guarantees. The Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

13.11 Compliance with terms of insurances. The Borrower shall not do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:

(a) the Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

(b) the Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Ship approved by the underwriters of the obligatory insurances;

30

(c) the Borrower shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) the Borrower shall not employ the Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

13.12 Alteration to terms of insurances. The Borrower shall neither make nor agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

13.13 Settlement of claims. The Borrower shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

13.14 Provision of copies of communications. The Borrower shall provide the Security Trustee, at the time of each such communication, copies of all written communications between it and:

(a) the approved brokers; and

(b) the approved protection and indemnity and/or war risks associations; and

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) the Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

13.15 Provision of information. In addition, the Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such insurances;

and the Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).

13.16 Mortgagee’s interest and additional perils (pollution) insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s marine insurance in respect of the Ship and a mortgagee’s interest additional perils (pollution) insurance in respect of the Ship, each in such amounts, on such terms, through

31

such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the Borrower shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

13.17 Review of insurance requirements. The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Majority Lenders, significant and capable of affecting the Borrower or the Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrower.

13.18 Modification of insurance requirements. The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.17 to the requirements of this Clause 13 which the Majority Lenders consider appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Borrower accordingly.

13.19 Compliance with mortgagee’s instructions. The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require the Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.18.

14 SHIP COVENANTS

14.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit.

14.2 Ship’s name and registration. The Borrower shall keep the Ship registered in its name under the Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of the Ship.

14.3 Repair and classification. The Borrower shall keep the Ship in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the highest class applicable to vessels of the same age, type and specification as such Ship at (or such other first-class classification society which is a member of IACS acceptable to the Agent) free of recommendations and conditions; and

(c) so as to comply with all laws and regulations applicable to vessels registered at ports where the Ship is registered or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code, the ISPS Code, the ISM Code Documentation and the ISPS Code Documentation.

32

14.4 Classification society undertaking. The Borrower shall instruct the classification society referred to in Clause 14.3(a) (and procure that the classification society undertakes with the Security Trustee):

(a) to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the classification society in relation to the Ship;

(b) to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of the Borrower and the Ship at the offices of the classification society and to take copies of them;

(c) to notify the Security Trustee immediately in writing if the classification society:

(i) receives notification from the Borrower or any person that the Ship’s classification society is to be changed; or

(ii) becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of the Ship’s class under the rules or terms and conditions of the Borrower’s or the Ship’s membership of the classification society;

(d) following receipt of a written request from the Security Trustee:

(i) to confirm that the Borrower is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or

(ii) if the Borrower is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.

14.5 Modification. The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce its value.

14.6 Removal of parts. The Borrower shall not remove any material part of the Ship, or any item of equipment installed on, the Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the Ship the property of the Borrower and subject to the security constituted by the Mortgage Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship.

14.7 Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports and shall allow the Security Trustee’s representatives to conduct a comprehensive inspection of the Ship’s records when and if required by the Security Trustee.

33

14.8 Inspection. The Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections and all costs and expenses in relation thereto shall be for the account of the Borrower Provided that so long as no Event of Default has occurred and is continuing at the relevant time and the Ship is found to be in a satisfactory condition (in the opinion of the Security Trustee) the Borrower shall be obliged to pay the fees and expenses of one inspection of the Ship in any calendar year.

14.9 Prevention of and release from arrest. The Borrower shall promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship, the Earnings or the Insurances;

(b) all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and

(c) all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances;

and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall within 10 Business Days procure its release by providing bail or otherwise as the circumstances may require.

14.10 Compliance with laws etc. The Borrower shall:

(a) comply, or procure compliance with the ISM Code, all Environmental Laws, the ISPS Code and all other laws or regulations relating to the Ship, its ownership, operation and management or to the business of the Borrower;

(b) not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers unless the prior written consent of the Security Trustee has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.

14.11 Provision of information. The Borrower shall promptly provide the Security Trustee with any information which it requests regarding:

(a) the Ship, its employment, position and engagements;

(b) the Earnings and payments and amounts due to the master and crew of the Ship;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made in respect of the Ship;

(d) any towages and salvages;

(e) its compliance, the Approved Manager’s compliance and the compliance of the Ship with the ISM Code and the ISPS Code,

34

and, upon the Security Trustee’s request, provide copies of any current charter relating to the Ship, of any current charter guarantee and copies of the ISM Code Documentation and the ISPS Code Documentation,

14.12 Notification of certain events. The Borrower shall immediately notify the Security Trustee by fax, confirmed forthwith by letter, of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d) any arrest or detention of the Ship, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of the Ship for hire;

(e) any intended dry docking of the Ship;

(f) any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident;

(g) any claim for breach of the ISM Code or of the ISPS Code being made against the Borrower, the Approved Manager or otherwise in connection with the Ship; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and the Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.

14.13 Restrictions on chartering, appointment of managers etc. The Borrower shall not:

(a) let the Ship on demise charter for any period;

(b) enter into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

(c) enter into any charter in relation to the Ship under which more than 2 months’ hire (or the equivalent) is payable in advance;

(d) charter the Ship otherwise than on bona fide arm’s length terms at the time when the Ship is fixed;

(e) appoint a manager of the Ship other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment;

(f) de-activate or lay up the Ship; or

(g) put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or its Earnings for the cost of such work or for any other reason.

35

14.14 Notice of Mortgage. The Borrower shall keep the Mortgage registered against the Ship as a valid first priority mortgage, carry on board the Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Security Trustee.

14.15 Sharing of Earnings. The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings.

15 SECURITY COVER

15.1 Minimum required security cover. Clause 15,2 applies if the Agent notifies the Borrower that:

(a) the Market Value of the Ship; plus

(b) the net realisable value of any additional security previously provided under this Clause 15;

is below 125 per cent, of the aggregate of the Loan and the Swap Exposure.

15.2 Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 15.1, the Borrower shall, within 1 month after the date on which the Agent’s notice is served, either:

(a) provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require; or

(b) prepay such part (at least) of the Loan as will eliminate the shortfall.

15.3 Valuation of Ship. The Market Value of the Ship at any date is that shown by the average of two valuations prepared:

(a) as at a date not more than 14 days previously;

(b) by an Approved Broker;

(c) with or without physical inspection of the Ship (as the Agent may require);

(d) on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer;

(e) with or without charter or other contract of employment at the reasonable option of the Agent; and

(f) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

15.4 Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15,3.

15.5 Valuations binding. Any valuation under Clause 15.2, 15.3 or 15.4 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Security Interest.

36

15.6 Provision of information. The Borrower shall promptly provide the Agent and any Approved Broker acting under Clause 15.3 or 15.4 with any information which the Agent or the Approved Broker may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

15.7 Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause Provided that prior to an Event of Default or Potential Event of Default the Borrower shall not be obliged to reimburse the Agent for more than one set of valuations of the Ship per calendar year and Provided further that such valuations show that the Borrower complies with the terms of Clause 15.1.

15.8 Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.2(b).

16 PAYMENTS AND CALCULATIONS

16.1 Currency and method of payments. All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(a) by not later than 11.00 a.m. (New York City time) on the due date;

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

(c) in the case of an amount payable by a Lender to the Agent or by the Borrower to the Agent or any Lender, to the account of the Agent at Dresdner Bank AG in Frankfurt for Dresdner Bank AG in Hamburg (swift code DRES DE FF 200, reference: Dalian Star Owners Inc.), or to such other account with such other bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

(d) in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

16.2 Payment on non-Business Day. If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

16.3 Basis for calculation of periodic payments. All interest and the commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

37

16.4 Distribution of payments to Creditor Parties. Subject to Clauses 16.5,16.6 and 16.7:

(a) any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, a Swap Bank or the Security Trustee shall be made available by the Agent to that Lender, that Swap Bank or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the relevant Lender, the relevant Swap Bank or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

(b) amounts to be applied in satisfying amounts of a particular category which are due to the Lenders or a Swap Bank generally shall be distributed by the Agent to each Lender or each Swap Bank pro rata to the amount in that category which is due to it.

16.5 Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender or a Swap Bank, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or that Swap Bank under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or that Swap Bank to pay on demand.

16.6 Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender or any Swap Bank any sum which the Agent is expecting to receive for remittance or distribution to the Borrower, that Lender or that Swap Bank until the Agent has satisfied itself that it has received that sum.

16.7 Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower, a Lender or a swap Bank, without first having received that sum, the Borrower or (as the case may be) the Lender or Swap Bank concerned shall, on the Agent’s written demand:

(a) refund the sum in full to the Agent; and

(b) pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

16.8 Agent may assume receipt. Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

16.9 Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

16.10 Agent’s memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

16.11 Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall be prima facie evidence that amount is owing to that Creditor Party.

38

17 APPLICATION OF RECEIPTS

17.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:-

.(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);

(ii) secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of either Master Agreement but shall have failed to pay or deliver to the relevant Swap Bank at the time of application or distribution under this Clause 17); and

(iii) thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure of each Swap Bank (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

(b) SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1 (a); and

(c) THIRDLY: any surplus shall be paid to the Borrower.

17.2 Variation of order of application. The Agent may, with the authorisation of the Majority Lenders, by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

17.3 Notice of variation of order of application. The Agent may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

17.4 Appropriation rights overridden. This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

39

18 APPLICATION OF EARNINGS

18.1 Payment of Earnings. The Borrower undertakes with each Creditor Party to ensure that throughout the Security Period:

(a) (subject only to provisions of the General Assignment), all the Earnings of the Ship are paid to the Earnings Account; and

(b) all payments by a Swap Bank to the Borrower under a Designated Transaction are paid to the Earnings Account.

18.2 Interest accrued on Earnings Account. Any credit balance on the Earnings Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on the Earnings Account.

18.3 Location of accounts. The Borrower shall promptly:

(a) comply with any reasonable requirement of the Agent as to the location or re-location of the Earnings Account

(b) execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account.

18.4 Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Account with prior notice to the Borower in order to discharge any amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 or 21.

19 EVENTS OF DEFAULT

19.1 Events of Default. An Event of Default occurs if:

(a) the Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs of Clause 9.2, 11.2, 11.3, 12.2, 12.3 or 15.1 or clauses 11.16 or 11.17 of the Guarantee; or

(c) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 10 days after written notice from the Agent requesting action to remedy the same; or

(d) (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c)); or

(e) any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

40

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or the Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days (or such longer period as the Agent may, in its sole and absolute discretion, agree or specify) of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or substantial part of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them (save for in the case of the Corporate Guarantor non judicial suspension or deferral of payments, reorganisation of its debt (or substantial part of its debt) or arrangement which occurs in its ordinary course of its business and not as a result

41

of the Corporate Guarantor’s inability to meet its obligations and/or liabilities and having been indicated a priori to the Lenders) or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi); or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Majority Lenders, is similar to any of the foregoing; or

(h) the Borrower or any Security Party ceases or suspends carrying on its business or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

(ii) for the Agent, the Security Trustee, the Lenders or the Swap Banks to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) any consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document or the MOA is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(k) it appears to the Majority Lenders that, without their prior consent, a change has occurred or probably has occurred after the date of this Agreement in the ultimate beneficial ownership of any of the shares in the Borrower or in the ultimate control of the voting rights attaching to any of those shares; or

(l) any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(m) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(n) the Ship ceases to be managed by the Approved Manager unless prior to such cessation the Borrower has appointed a substitute manager acceptable to the Lenders in all respects;

(o) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of the Borrower or the Guarantor; or

42

(ii) any accident or other event involving the Ship or another vessel owned, chartered or operated by a Relevant Person;

in the light of which the Majority Lenders consider that there is a significant risk that the Borrower or the Guarantor are, or will later become, unable to discharge its or his liabilities under the Finance Documents as they fall due; or

(p) an Event of Default (as defined in Section 14 of each Master Agreement) occurs; or

(q) either Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in the full force and effect for any reason except with the consent of the Majority Lenders.

19.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:

(a) the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i) serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or

(ii) serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(iii) take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b) the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or the Lenders and/or the Swap Banks are entitled to take under any Finance Document or any applicable law.

19.3 Termination of Commitments. On the service of a notice under Clause 19.2(a)(i), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate.

19.4 Acceleration of Loan. On the service of a notice under Clause 19.2(a)(ii), the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

19.5 Multiple notices; action without notice. The Agent may serve notices under Clauses 19.2(a)(i) or (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

19.6 Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee, each Swap Bank and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

43

19.7 Lender’s rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or each Swap Bank under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

19.8 Exclusion of Creditor Party liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset;

except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been directly and mainly caused by the dishonesty or the wilful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

19.9 Relevant Persons. In this Clause 19 a “Relevant Person” means the Borrower or any other Security Party.

19.10 Interpretation. In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “petition” includes an application.

20 FEES AND EXPENSES

20.1 Arrangement, commitment, agency fees. The Borrower shall pay to the Agent:

(a) on the date of this Agreement, an arrangement fee of an amount previously agreed in writing between the Agent and the Borrower, for distribution among the Lenders in the proportions agreed by the Agent and the Lenders; and

(b) in relation to the Loan, quarterly in arrears during the period from (and including) the date falling one month after the date of the Agreement to the earlier of (i) the Drawdown Date and (ii) the last day of the Availability Period and on the last day of that period for the account of the Lenders, a commitment fee at the rate of zero point two five per cent. (0.25%) per annum on the undrawn amount of the Loan, for distribution among the Lenders pro rata to their Commitments.

20.2 Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

20.3 Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent on the Agent’s demand, for the account of the Creditor Party concerned the amount of all expenses incurred by a Creditor Party in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

44

(b) any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 15 or any other matter relating to such security;

(d) the opinion of the independent insurance consultant referred to in paragraph 7 of Part B of Schedule3; or

(e) any step taken by the Creditor Party concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (e) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

20.4 Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.

20.5 Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

21 INDEMNITIES

21.1 Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c) any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19;

and in respect of any tax (other than tax on its overall net income) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

21.2 Breakage costs. Without limiting its generality, Clause 21.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by a Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

45

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.

21.3 Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, the relevant Creditor Party, in any country, in relation to:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

(b) any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document;

other than liability items which are shown to have been caused by the gross negligence or the wilful misconduct of the relevant Creditor Party’s own officers or employees.

Without prejudice to its generality, this Clause 21.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

21.4 Currency indemnity. If any sum due from the Borrower or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment;

the Borrower shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

In this Clause 21.4 the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

46

This Clause 21.4 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

21.5 Application of Master Agreements. For the avoidance of doubt, Clause 21.4 does not apply in respect of sums due from the Borrower to a Swap Bank under or in connection with a Master Agreement as to which sums the provisions of Section 8 (Contractual Currency) of each Master Agreement shall apply.

21.6 Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

21.7 Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

22 NO SET-OFF OR TAX DEDUCTION

22.1 No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

(b) free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

22.2 Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

(a) the Borrower shall notify the Agent as soon as it becomes aware of the requirement;

(b) the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

22.3 Evidence of payment of taxes. Within 1 month after making any tax deduction, the Borrower concerned shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

22.4 Exclusion of tax on overall net income. In this Clause 22 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party’s overall net income.

22.5 Application of Master Agreements. For the avoidance of doubt, Clause 22 does not apply in respect of sums due from the Borrower to a Swap Bank under or in connection with a Master Agreement as to which sums the provisions of Section 2(d) (Deduction or Withholding for Tax) of each Master Agreement shall apply.

47

23 ILLEGALITY, ETC

23.1 Illegality. This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

23.2 Notification of illegality. The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

23.3 Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 23.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 23.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution in accordance with Clause 8.

23.4 Mitigation. If circumstances arise which would result in a notification under Clause 23.1 then, without in any way limiting the rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

24 INCREASED COSTS

24.1 Increased costs. This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

(b) complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”.

24.2 Meaning of “increase cost”. In this Clause 24, “increased cost” means, in relation to a Notifying Lender:

(a) an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;

48

(b) a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

(c) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

(d) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement;

but not an item attributable to a change in the rate of tax on the overall net Income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22 or an item arising directly out of the Implementation by the applicable authorities having jurisdiction over the Notifying Lender of the matters set out in the statement of the Basle Committee on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International Convergence of Capital Measurement and Capital Standards”, to the extent and according to the timetable provided for in the statement.

For the purposes of this Clause 24.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

24.3 Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

24.4 Payment of increased costs. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

24.5 Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4, the Borrower may give the Agent not less than 14 days’ notice of its intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.

24.6 Prepayment; termination of Commitment. A notice under Clause 24.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

(b) on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

24.7 Application of prepayment. Clause 8 shall apply in relation to the prepayment.

49

25 SET-OFF

25.1 Application of credit balances. Each Creditor Party may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Parry under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrower;

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

25.2 Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

25.3 Sums deemed due to a Lender. For the purposes of this Clause 25, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

25.4 No Security Interest. This Clause 25 gives the Creditor Parties a contractual right of set-off only, and does not create any equitable change or other Security Interest over any credit balance of the Borrower.

26 TRANSFERS AND CHANGES IN LENDING OFFICES

26.1 Transfer by Borrower. The Borrower may not, without the consent of the Agent, given on the instructions of all the Lenders transfer any of its rights, liabilities or obligations under any Finance Document.

26.2 Transfer by a Lender. Subject to Clause 26.4, a Lender (the “Transferor Lender”) may at any time after consultation with the Borrower, cause:

(a) its rights in respect of all or part of its Contribution; or

(b) its obligations in respect of all or part of its Commitment; or

(c) a combination of (a) and (b);

to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.

50

26.3 Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

(a) sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee and each of the other Lenders and each Swap Bank;

(b) on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;

(c) send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.

26.4 Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date, Provided that it is signed by the Agent under Clause 26.3 on or before that date.

26.5 No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate,

26.6 Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

26.7 Effect of Transfer Certificate. A Transfer Certificate takes effect in accordance with English law as follows:

(a) to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

(b) the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

(c) the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

(d) the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

(e) any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

51

(f) the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.6 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

(g) in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim,

26.8 Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days prior notice.

26.9 Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

26.10 Authorisation of Agent to sign Transfer Certificates. The Borrower, the Security Trustee, each Lender and each Swap Bank irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

26.11 Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,000 from the Transferor Lender or (at the Agent’s option) the Transferee Lender.

26.12 Sub-participation; subrogation assignment. A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

26.13 Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature,

26.14 Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

(a) the date on which the Agent receives the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

52

26.15 Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

26.16 Replacement of Reference Bank. If any Reference Bank ceases to be a Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 then, unless the Borrower, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting the Borrower, shall appoint another bank (whether or not a Lender) to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank’s appointment shall cease to be effective.

27 VARIATIONS AND WAIVERS

27.1 Variations, waivers etc. by Majority Lenders. Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax or telex, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

27.2 Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender and every Swap Bank”:

(a) a change in the Margin or in the definition of LIBOR;

(b) a change to the date for, the amount of, any payment of principal, interest, fees, or other sum payable under this Agreement;

(c) a change to any Lender’s Commitment;

(d) an extension of the Availability Period;

(e) a change to the definition of “Majority Lenders” or “Finance Documents”;

(f) a change to the preamble or to Clause 2, 3, 4, 5.1,17,18 or 30;

(g) a change to this Clause 27;

(h) any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

(i) any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.

27.3 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

53

(b) an Event of Default; or

(c) a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

(d) any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

28 NOTICES

28.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, fax or telex; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly,

28.2 Addresses for communications. A notice shall be sent:

(a)	to the Borrower:	c/o Cardiff Marine Inc. Omega Building 80 Kifissias Avenue 151 25 Maroussi Athens
		Fax No: +30 210809 0575 Attn: the Chief Financial Officer
(b)	to a Lender:	At the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate,
(c)	to the Agent and Security Trustee:	Dresdner Bank AG in Hamburg Jungfernstieg 22 20354 Hamburg Germany
		Fax No: +49 (0)3501 4007 Attn: Anke Grahn
(d)	to the Swap Banks:	Dresdner Bank AG in Hamburg Jungfernstieg 22 20354 Hamburg Germany
		Fax No: +49 (0)3501 4007 Attn: Anke Grahn
		and
		WestLB AG, London Branch Woolgate Exchange 25 Basinghall Street London EC 2V 5HA
		United Kingdom Fax No:+44 207 020 2002 Attn: Shipping Transportation

54

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrower, the Lenders, the Swap Banks and the Security Parties,

28.3 Effective date of notices. Subject to Clauses 28.4 and 28.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;

(b) a notice which is sent by telex or fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

28.4 Service outside business hours. However, if under Clause 28.3 a notice would be deemed to be served:

(a) on a day which is not a business day in the place of receipt; or

(b) on such a business day, but after 5 p.m. local time;

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

28.5 Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

28.6 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

28.7 English language. Any notice under or in connection with a Finance Document shall be in English.

28.8 Meaning of “notice”. In this Clause 28, “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

29 SUPPLEMENTAL

29.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:

(a) cumulative;

55

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3 Counterparts. A Finance Document may be executed in any number of counterparts.

29.4 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

30 LAW AND JURISDICTION

30.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

30.2 Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

30.3 Choice of forum for the exclusive benefit of the Creditor Parties. Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

The Borrower shall not commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

30.4 Process agent. The Borrower irrevocably appoints Ince Process Agents Ltd. at its registered office for the time being, presently at International House, 1 St Katherine’s Way, London E1N 1UN, London, United Kingdom, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

30.5 Creditor Party rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

30.6 Meaning of “proceedings”. In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

56

EXECUTION PAGES

BORROWER
SIGNED by  for and on behalf of DALIAN STAR OWNERS INC.	) ) )
LENDERS
SIGNED by  for and on behalf of DRESDNER BANK AG in HAMBURG	) ) ) )
SIGNED by  for and on behalf of WESTLB AG	) ) )
SWAP BANKS
SIGNED by  for and on behalf of DRESDNER BANK AG in HAMBURG	) ) ) )
SIGNED by  for and on behalf of WESTLB AG	) ) )
AGENT
SIGNED by  for and on behalf of DRESDNER BANK AG in HAMBURG	) ) ) )
SECURITY TRUSTEE
SIGNED by  for and on behalf of DRESDNER BANK AG in HAMBURG	) ) ) )

68

JOINT ARRANGERS
SIGNED by  for and on behalf of DRESDNER BANK AG in HAMBURG	) ) ) )
SIGNED by  for and on behalf of WESTLB AG	) ) )
Witness to all the above signatures	) )

Name: JOANNA DAVEY

Address:

69

EX-4.35

Exhibit 4.35

(Multicurrency-Cross Border)

MASTER AGREEMENT

dated as of 7^th May, 2008

EFG EUROBANK ERGASIAS SA (Party A)

and

DRYSHIPS INC. (Party B)

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this Master Agreement, which includes the schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties confirming those Transactions.

Accordingly, the parties agree as follows:-

1. Interpretation

(a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement.

(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction.

(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions.

2. Obligations

(a) General Conditions.

(i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.

(ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.

(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement.

Copyright © 1992 by International Swap Dealers Association, Inc.

1

(b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.

(c) Netting. If on any date amounts would otherwise be payable:-

(i) in the same currency; and

(ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.

(d) Deduction or Withholding for Tax.

(i) Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party (“X”) will:-

(1) promptly notify the other party (“Y”) of such requirement;

(2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;

(3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and

(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:-

(A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or

(B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.

2

(ii) Liability. If:-

(1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);

(2) X does not so deduct or withhold; and

(3) a liability resulting from such Tax is assessed directly against X,

then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

(e) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.

3. Representations

Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:-

(a) Basic Representations.

(i) Status. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing;

(ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance;

(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;

(iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and

3

(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party.

(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document.

(d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect.

(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true.

(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true.

4. Agreements

Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:-

(a) Furnish Specified Information. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:-

(i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation;

(ii) any other documents specified in the Schedule or any Confirmation; and

(iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification,

in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable.

(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.

4

(c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party.

(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure.

(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.

5. Events of Default and Termination Events

(a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an “Event of Default”) with respect to such party:-

(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party;

(ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party;

(iii) Credit Support Default.

(1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed;

(2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party, or

(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document;

(iv) Misrepresentation. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated;

5

(v) Default under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);

(vi) Cross Default. If “Cross Default” is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period);

(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:-

(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or

(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:-

(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or

6

(2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement.

(b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:-

(i) Illegality. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party):-

(1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or

(2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction;

(ii) Tax Event. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));

(iii) Tax Event Upon Merger. The party (the “Burdened Party”) on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii);

(iv) Credit Event Upon Merger. If “Credit Event Upon Merger” is specified in the Schedule as applying to the party, such party (“X”), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or

7

(v) Additional Termination Event. If any “Additional Termination Event” is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation).

(c) Event of Default and Illegality. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default.

6. Early Termination

(a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b) Right to Terminate Following Termination Event.

(i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require.

(ii) Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(i)(l) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist.

If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i).

Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party’s policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed.

(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(l) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event.

8

(iv) Right to Terminate. If:-

(1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i), or

(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party,

either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions.

(c) Effect of Designation.

(i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing.

(ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e).

(d) Calculations.

(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation.

(ii) Payment Date. An amount calculated as being due in respect of any Early Termination Date under section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed.

(e) Payments on Early Termination. If an Early Termination Date occurs, the following provisions shall apply based on the parties’ election in the Schedule of a payment measure, either “Market Quotation” or “Loss”, and a payment method, either the “First Method” or the “Second Method”. If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that “Market Quotation” or the “Second Method”, as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off.

(i) Events of Default. If the Early Termination Date results from an Event of Default:-

(1) First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.

9

(2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party’s Loss in respect of this Agreement.

(3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.

(4) Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party’s Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.

(ii) Termination Events. If the Early Termination Date results from a Termination Event:-

(1) One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions.

(2) Two Affected Parties. If there are two Affected Parties:-

(A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount (“X”) and the Settlement Amount of the party with the lower Settlement Amount (“Y”) and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and

(B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss (“X”) and the Loss of the party with the lower Loss (“Y”).

If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y.

(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because “Automatic Early Termination” applies in respect of a party, the amount

10

determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).

(iv) Pre-Estimate. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses.

7. Transfer

Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:-

(a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and

(b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8. Contractual Currency

(a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.

(b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party. The term “rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency.

11

(c) Separate Indemnities. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.

(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made.

9. Miscellaneous

(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto.

(b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system.

(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction.

(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law.

(e) Counterparts and Confirmations.

(i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original.

(ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation.

(f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.

(g) Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.

10. Offices; Multibranch Parties

(a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into.

12

(b) Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party.

(c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation.

11. Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection.

12. Notices

(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:-

(i) if in writing and delivered in person or by courier, on the date it is delivered;

(ii) if sent by telex, on the date the recipient’s answerback is received;

(iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine);

(iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or

(v) if sent by electronic messaging system, on the date that electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day.

(b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it.

13. Governing Law and Jurisdiction

(a) Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule.

(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement (“Proceedings”), each party irrevocably:-

(i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and

13

(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party.

Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

(c) Service of Process. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days, appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law.

(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.

14. Definitions

As used in this Agreement:-

“Additional Termination Event” has the meaning specified in Section 5(b).

“Affected Party” has the meaning specified in Section 5(b).

“Affected Transactions” means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions.

“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person.

“Applicable Rate” means:-

(a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate;

14

(c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and

(d) in all other cases, the Termination Rate.

“Burdened Party” has the meaning specified in Section 5(b).

“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into.

“consent” includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent.

“Credit Event Upon Merger” has the meaning specified in Section 5(b).

“Credit Support Document” means any agreement or instrument that is specified as such in this Agreement.

“Credit Support Provider” has the meaning specified in the Schedule.

“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum.

“Defaulting Party” has the meaning specified in Section 6(a).

“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).

“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule.

“Illegality” has the meaning specified in Section 5(b).

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document).

“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and “lawful” and “unlawful” will be construed accordingly.

“Local Business Day” means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction.

15

“Loss” means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party’s legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.

“Market Quotation” means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined.

“Non-default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount.

“Non-defaulting Party” has the meaning specified in Section 6(a).

“Office” means a branch or office of a party, which may be such party’s head or home office.

“Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

“Reference Market-makers” means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable from among such dealers having an office in the same city.

16

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made.

“Scheduled Payment Date” means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction.

“Set-off” means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer.

“Settlement Amount” means, with respect to a party and any Early Termination Date, the sum of:-

(a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and

(b) such party’s Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result.

“Specified Entity” has the meaning specified in the Schedule.

“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.

“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.

“Stamp Tax” means any stamp, registration, documentation or similar tax.

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.

“Tax Event” has the meaning, specified in Section 5(b).

“Tax Event Upon Merger” has the meaning specified in Section 5(b).

“Terminated Transactions” means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if “Automatic Early Termination” applies, immediately before that Early Termination Date).

17

“Termination Currency” has the meaning specified in the Schedule.

“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties.

“Termination Event” means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event.

“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts.

“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.

EFG EUROBANK ERGASIAS SA (“Party A”)		DRYSHIPS INC. (“Party B”)
By		By:
Name:	Marina Tzoutzouraki	Name:
Title:	Authorised Officer	Title:	Attorney-in-fact
Date:	7th May, 2008	Date:	7th May, 2008

18

By
Name:	Stavroula-Sotiria Ydreou
Title:	Authorised Officer
Date:	7th May, 2008

19

EFG EUROBANK ERGASIAS S.A.

AND

DRYSHIPS INC

SCHEDULE TO THE 1992 ISDA MASTER AGREEMENT

(ENGLISH LAW)

THIS IS AN IMPORTANT DOCUMENT: YOU SHOULD TAKE

INDEPENDENT LEGAL ADVICE BEFORE SIGNING AND SIGN ONLY IF

YOU WANT TO BE LEGALLY BOUND BY THE TERMS OF THE

DOCUMENT

ENGLISH LAW ISDA SCHEDULE

SCHEDULE

TO THE ISDA MASTER AGREEMENT (THE “AGREEMENT”)

dated as of 7^th May, 2008 BETWEEN:

(1) EFG EUROBANK ERGASIAS S.A., whose registered office is at 8 Othonos Street, Athens 105 57 Greece (“PARTY A”)

AND

(2) DRYSHIPS INC. whose registered office is at 80 Broad Street, Monrovia, Liberia (“PARTY B”).

PART 1 - TERMINATION PROVISIONS

(a) “Specified Entity” means:

(i) in relation to Party A for the purpose of the following Sections of this Agreement:

Section 5(a)(v)	Not applicable
Section 5(a)(vi)	Not applicable
Section 5(a)(vii)	Not applicable
Section 5(b)(iv)	Not applicable

(ii) in relation to Party B for the purpose of the following Sections of this Agreement:

Section 5(a)(v)	Any Affiliate
Section 5(a)(vi)	Any Affiliate
Section 5(a)(vii)	Any Affiliate
Section 5(b)(iv)	Any Affiliate

(b) “Specified Transaction” will have the meaning specified in Section 14 of this Agreement.

(c) The “Cross Default” provisions of Section 5(a)(vi) of this Agreement will not apply to Party A and will apply to Party B.

If such provisions apply:

“Specified Indebtedness” will have the meaning specified in Section 14 of the Agreement.

“Threshold Amount” means, in relation to Party B, zero (0).

(d) The “Credit Event upon Merger” provisions of Section 5(b)(iv) will not apply to Party A and will apply to Party B.

(e) The “Automatic Early Termination” provisions of Section 6(a) will not apply to Party A but will apply to Party B.

(f) “Payments on Early Termination”. For the purpose of Section 6(e) of this Agreement:

(i) Market Quotation will apply.

(ii) The Second Method will apply.

(g) “Termination Currency” means the currency selected by the Non-Defaulting Party or, as the case may be, the Non-Affected Party or, in circumstances where there are two Affected Parties, as agreed by both Party A and Party B, provided, however, that the Termination Currency shall be one of the currencies in which payments in respect of the Transactions are required to be made by the Confirmations. If such currency is not freely available or, in circumstances where there are two Affected Parties, if both Party A and Party B cannot agree on a Termination Currency, the Termination Currency shall be Euros and/or United Stated Dollars.

(h) Additional Termination Event. The following events shall constitute Additional Termination Events in relation to Party B only:-

(a) Any circumstances arise which, in the opinion of Party A acting in good faith, give reasonable grounds for belief that Party B or any Credit Support Provider of Party B may not, or may be unable to, perform its respective obligations under this Agreement or the relevant Credit Support Document and this opinion has not been cured within 30 (thirty) days after party A has given notice thereof to Party B.

(b) Party B or any Credit Support Provider of Party B fails to give adequate assurances of its ability to perform its respective obligations under this Agreement or any Credit Support Document on or before the third Business Day after a written request to do so has been given to Party B by Party A and this failure has not been cured within 30 (thirty) days after party A has given notice thereof to Party B.

For the purpose of the foregoing Additional Termination Events, Party B shall be the Affected Party.

-2-

PART 2 - TAX REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

a) Payer Tax Representations.

For the purposes of Section 3(e), Party A will make the following representation and Party B will make the following representation:

It is not required by any applicable law as modified by the practice of any relevant governmental revenue authority, of any Relevant jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement. In making representation, it may rely on:

(i) the accuracy of any representation made by the other party pursuant to Section 3(f) of this Agreement;

(ii) the satisfaction of the agreement of the other party contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or (a)(iii) of this Agreement; and

(iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement,

provided that it shall not be a breach of this representation where reliance is placed on Clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.

b) Payee Tax Representations. For the purpose of Section 3(f) of this Agreement:

Party A and Party B make no representation.

-3-

PART 3 - AGREEMENT TO DELIVER DOCUMENTS

For the purpose of Sections 4(a)(i) and (ii) of the Agreement, each party agrees to deliver the following documents, as applicable:

Party required to Deliver document	Form/Document/ Certificate	Date by which to be delivered	Covered by Section 3(d) Representation
Party A and Party B	Such evidence of the due authorisation of the person(s) signing this Agreement and each Confirmation on its behalf as either Party may reasonably request	Date of execution of this Agreement	No
Party B	A copy of the Memorandum and Articles of Association and Certificate of Incorporation (or other constitutive documents) of Party B	Date of execution of this Agreement	Yes
Party B	A copy of the resolution of the board of directors of Party B approving this Agreement and the Transactions contemplated hereby and authorising a specified person or persons to execute this Agreement and any Confirmation on behalf of Party B	Date of execution of this Agreement	Yes
Party B	Copies of such statutory and/or regulatory consents, approvals and authorisations as may be necessary for Party B to enter into this Agreement and the Transactions contemplated hereby	Upon execution of this Agreement	Yes
Party B	Legal opinion(s) in form and substance satisfactory to Party A from solicitor(s)/ law firm(s) approved by Party A	Date of execution of this Agreement	Yes
Party B	A copy of the written acceptance by Party B’s Process Agent (as defined in Part 4(b) of the Schedule to this Agreement) of its appointment to receive for Party B and on its behalf service of process in any Proceedings under this Agreement	Date of execution of this Agreement	Yes

-4-

Party required to Deliver document	Form/Document/ Certificate	Date by which to be delivered	Covered by Section 3(d) Representation
Party B	The annual financial statements of Party B	Upon demand in respect of those which became publicly available prior to the date of this Agreement and, in respect of those statements, which are not publicly available as at the date hereof, within 30 days of becoming publicly available	Yes

Any copy documents required to be delivered by Party B and/or its Credit Support Provider shall be certified by a competent senior official of Party B or the respective Credit Support Provider of Party B, as the case may be, as being correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

-5-

PART 4 - MISCELLANEOUS

(a) “Addresses for Notices”. For the purposes of Section 12(a) of this Agreement:

Address for notices or communications to Party A:

Address: EFG Eurobank Ergasias S.A. 8, Othonos Street, Athens 105 57, Greece Attention: Ms. Sofia Tatsi/ Ms. Elli Hudaverdi Telephone no.: 210-3337957 Fax no.: 210-3337281

Address for notices or communications to Party B:

Address: Dryships Inc. Omega House 80 Kifissias Avenue Amaroussion, Athens, Greece, Facsimile No: (+30)210 8090205

(b) “Process Agent”. For the purpose of Section 13(c) of this Agreement:

Party A appoints as its Process Agent: Party A’s London Branch of 24 Grafton Street, London W1S 4EZ, England.

Party B appoints as its Process Agent:

Messrs. Ince & Co., (Attention: Mr. Michael Volikas) currently located at International House, 1, St. Katharine’s Way, London E1W lUN, England

(c) “Offices”. The provisions of Section 10(a) will apply to this Agreement.

(d) “Multibranch Party”. For the purpose of Section 10(c) of this Agreement:

(i) Party A is a Multibranch Party and may act through the following offices: (a) its Head Office at 8 Othonos Street, Athens 105 57, Greece and (b) its London Branch at 24 Grafton Street, London W1S 4EZ, England;

(ii) Party B is not a Multibranch Party

(e) “Calculation Agent”. The Calculation Agent is Party A, unless otherwise specified in a Confirmation in relation to the relevant Transaction.

(f) “Credit Support Document”. Details of any Credit Support Document(s): None

(g) “Credit Support Provider”. Credit Support Provider does not apply in relation to Party A and in relation to Party B.

-6-

(h) “Governing Law”. This Agreement will be governed by and construed in accordance with English law.

(i) “Netting of Payments”. The limitation set forth in Section 2(c)(ii) of this Agreement will apply.

(j) “Affiliate” will have the meaning specified in Section 14 of this Agreement.

PART 5 - OTHER PROVISIONS

Set Off

(1) Section 6 of this Agreement is hereby amended by the addition of the following as a new Section 6(f):

“(f) Set-off. Upon the designation of any Early Termination Date, the party that is not the Defaulting Party or Affected Party (“X”) may, without prior notice to the Defaulting or Affected Party (“Y”), set off any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed by Y to X or any Affiliate of X (the “X Set Off Amount”) against any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed by X or any Affiliate of X to Y (the “Y Set Off Amount”). X will give notice to the other party of any set off effected under this Section 6(f).

For this purpose, either the X Set Off Amount or the Y Set Off Amount (or the relevant portion of such set off amounts) may be converted by X into the currency in which the other set off amount is denominated at the rate of exchange at which X would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency.

If a sum or obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.

Nothing in this Section 6(f) shall be effective to create a charge or other security interest. This Section 6(f) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other rights to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).”

-7-

Incorporation and Interpretation of Definitions

(2) Any definitions published by the International and Swaps Derivatives Association Inc., and amended from time to time which shall apply to this Agreement will be referred to in the relevant Confirmation. In the event and to the extent that the relevant Confirmation does not refer to any definitions, the following applies:

Reference is made to the following definitions:

(i) the 2000 ISDA Definitions (the “Definitions”);

(ii) the 1998 FX and Currency Option Definitions and its Annex A in its current version (the “FX Definitions”);

(iii) the 1997 Government Bond Option Definitions; and

(iv) the 2002 Equity Derivatives Definitions.

Any terms used and not otherwise defined in the Confirmation shall have the meaning set forth therein.

In the case of any conflict between the Definitions and the FX Definitions, the FX Definitions shall prevail with respect to any FX Transaction or any Currency Option. In the case of any conflict between the Definitions and the 1997 Government Bond Option Definitions, the 1997 Government Bond Options definitions shall prevail with respect to any Bond Option Transaction. In the case of any conflict between the Definitions and the 2002 Equity Derivatives Definitions, the latter shall prevail with respect to any Equity Derivatives Transaction.

Confirmations

(3) With reference to the introductory paragraph of this Agreement, the parties expect that Transactions will usually be entered into through binding oral agreements concluded over the telephone by their authorised representatives.

Party A shall promptly send to Party B a Confirmation of each Transaction between them, and Party B shall promptly confirm the accuracy of that Confirmation by fax or any other means agreed to by the parties. Failure to confirm the accuracy within 5 Local Business Days of being sent the relevant Confirmation will be deemed to be a confirmation of accuracy by Party B. Confirmations shall be substantially in the form of Exhibit I to the 2000 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc.) (the “Definitions”) with the relevant additional provisions of Exhibits II-A through II-G to the Definitions or such other form as may be acceptable to the parties.

Change of Account

(4) Section 2(b) of this Agreement is hereby amended by the addition of the following at the end thereof:

“; provided that, following a change occurring, if any new account of one party is not in the same jurisdiction as the original account, the other party shall not be obliged to pay any greater amount and shall not receive any lesser amount as a result of such change than would have been the case if such change had not taken place”.

-8-

Relationship Between Parties

(5) The following provision shall be added as a new Section 15 to this Agreement:

“Relationship Between Parties

Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):

(a) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgement and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction, it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction.

(b) Assessment and Understanding. It is capable of assessing the merits of an understanding (on its own behalf or through independent professional advice) and understands and accepts the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction.

(c) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction.”

Consent to Recordings

(6) Each party (i) consents to the recording of the telephone conversations of trading, marketing and operations personnel of the parties and their Affiliates in connection with this Agreement or any potential Transaction and (ii) agrees to obtain any necessary consent of, and give further notice of such recording to, such personnel of it and its Affiliates.

Severability

(7) If any term, provision, covenant or condition of the Agreement, or the application thereof to any party or circumstance, shall be held to be illegal, invalid or unenforceable (in whole or in part) for any reason, the remaining terms, provisions, covenants and conditions hereof shall continue in full force and effect as if the Agreement had been executed with the illegal, invalid or unenforceable portion eliminated, so long as the Agreement so modified continues to express, without material change, the original intentions of the Parties as to the subject matter of this Agreement and the deletion of such portion of this Agreement will not substantially impair the respective benefits or

-9-

expectations of the Parties of this Agreement. It shall in particular be understood that this severability clause shall not affect the single agreement concept of Section 1(c) of this Agreement.

Contracts (Rights of Third Parties) Act 1999

(8) Nothing in this Agreement is intended to confer on any person any right to enforce any provision of this Agreement, which that person would not have had, but for the Contracts (Rights of Third Parties) Act 1999.

IN WITNESS WHEREOF the parties have executed this document with effect from the date specified on the first page of this document.

EFG EUROBANK ERGASIAS S.A.

By:		By:
Name:	Marina Tzoutzouraki	Name:	Stavroula-Sotiria Ydreou
Title:	Authorised Officer	Title:	Authorised Officer
Dated as of: 7th May 2008		Dated as of: 7th May 2008
DRYSHIPS INC.
By:
Name:	Eugenia Papapontikou
Title:	Attorney-in-fact
Dated as of: 7th May 2008

-10-

EX-4.36

Exhibit 4.36

Dated 9 May 2008

PRIMELEAD LIMITED

as Borrower

– and –

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

– and –

NORDEA BANK FINLAND PLC, LONDON BRANCH

DnB NOR BANK ASA, LONDON BRANCH

as Lead Arrangers and Bookrunners

– and –

NORDEA BANK FINLAND PLC, LONDON BRANCH

as Guarantee Issuer, Agent

and Security Trustee

LOAN AND GUARANTEE FACILITY AGREEMENT

relating to a credit

facility of up to US$800,000,000

and a guarantee facility of up to NOK 5,000,000,000

Watson, Farley &Williams

London

INDEX

Clause		Page
1	INTERPRETATION	1
2	LOAN FACILITY	15
3	POSITION OF THE FINANCE PARTIES AND THE MAJORITY LENDERS	16
4	DRAWDOWN	17
5	INTEREST	18
6	INTEREST PERIODS	20
7	DEFAULT INTEREST	21
8	REPAYMENT AND PREPAYMENT	22
9	GUARANTEE FACILITY	24
10	REDUCTION OF GUARANTEE	24
11	SETTLEMENT OF BANK GUARANTEE	25
12	INDEMNITY OF THE BORROWER	25
13	CONDITIONS PRECEDENT	28
14	REPRESENTATIONS AND WARRANTIES	29
15	GENERAL UNDERTAKINGS	31
16	CORPORATE UNDERTAKINGS	34
17	SECURITY COVER	36
18	PAYMENTS AND CALCULATIONS	36
19	APPLICATION OF RECEIPTS	38
20	EARNINGS AND COLLATERAL ACCOUNTS	39
21	EVENTS OF DEFAULT	40
22	FEES AND EXPENSES	45
23	INDEMNITIES	47
24	NO SET-OFF OR TAX DEDUCTION	48
25	ILLEGALITY, ETC	49
26	INCREASED COSTS	50
27	SET-OFF	51

28	TRANSFERS AND CHANGES IN LENDING OFFICES	52
29	VARIATIONS AND WAIVERS	55
30	NOTICES	57
31	SUPPLEMENTAL	58
32	LAW AND JURISDICTION	59

SCHEDULE I	LENDERS AND COMMITMENTS	60
SCHEDULE 2A	GUARANTEE ISSUE REQUEST	61
SCHEDULE 2B	DRAWDOWN NOTICE	62
SCHEDULE 3	CONDITION PRECEDENT DOCUMENTS	63
SCHEDULE 4	TRANSFER CERTIFICATE	65
SCHEDULE 5	FORM OF COMPLIANCE CERTIFICATE	69
SCHEDULE 6	MANDATORY COST FORMULA	70
EXECUTION PAGE		60

THIS LOAN AND GUARANTEE FACILITY AGREEMENT is made on 9 May 2008

BETWEEN:

(1) PRIMELEAD LIMITED, as Borrower;

(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders;

(3) NORDEA BANK FINLAND PLC, LONDON BRANCH and DnB NOR BANK ASA, LONDON BRANCH, as Lead Arrangers and Bookrunners;

(4) NORDEA BANK FINLAND PLC, LONDON BRANCH, as Guarantee Issuer; and

(5) NORDEA BANK FINLAND PLC, LONDON BRANCH, as Agent and Security Trustee.

WHEREAS:

(A) The Lenders have agreed, subject to the terms of this Agreement, to make available to the Borrower a term loan facility of up to US$800,000,000 to finance its acquisition of shares in the common stock of Ocean Rig ASA, listed on the Oslo BØrs for a price of up to NOK45 per share; to refinance an existing loan facility of up to US$260,000,000 with Nordea Bank Finland Plc, London Branch and to pay fees and expenses incurred in connection with such term loan facility and the guarantee facility referred to in Recital (B).

(B) The Guarantee Issuer has agreed, subject to the term of this Agreement, to make available a guarantee facility of up to NOK5,000,000,000 to be issued as required by the Oslo BØrs in connection with a mandatory offer to purchase the remaining outstanding shares in Ocean Rig ASA.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement (including the Recitals):

“Account Security Deed” means a deed creating security in respect of the Earnings Account, the Dividend Account, the Cash Collateral Account and the Retention Account, executed or to be executed by the Borrower in favour of the Security Trustee in such form as the Lenders and the Guarantee Issuer may agree or require;

“Acquired Target Shares” means, on the relevant date, the aggregate of all Target Shares which have been purchased by the Borrower on or prior to such date;

“Adjusted Equity” means, as of any Compliance Date, the value of the stockholders’ equity of the Group determined on a consolidated basis in accordance with GAAP and as shown in the consolidated balance sheets for the Group in the Applicable Accounts, adjusted by adding or subtracting (depending on whether the same is positive or negative) any difference between:

(a) the value of Total Assets determined on a consolidated basis in accordance with GAAP and as shown in such consolidated balance sheets; and

(b) the Market Value Adjusted Total Assets;

“Affected Lender” has the meaning given in Clause 5.7;

“Agency and Trust Deed” means the agency and trust deed dated the same date as this Agreement and made between the Borrower, the Lenders, the Guarantee Issuer, the Agent and the Security Trustee;

“Agent” means Nordea Bank Finland Plc, London Branch, in its capacity as agent for the Lenders under this Agreement and the other Finance Documents, acting through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB, or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Applicable Accounts” means, in relation to a Compliance Date or an accounting period, the consolidated balance sheets and related consolidated statements of stockholders’ equity, income and cash flows of the Group set out in the annual financial statements or interim financial statements of the Group prepared as of the Compliance Date or, as the case may be, the last day of the accounting period in question (and which the Borrower is obliged to deliver to the Agent pursuant to Clause 15.6);

“Approved Broker” means each of Braemar Seascope Shipbrokers Ltd., H. Clarkson & Company Limited, Barry Rogliano Salles S.A., R.S. Platou Shipbrokers A.S., P.F. Bassoe AS, Arrow Sale & Purchase (UK) Ltd., Simpson Spence & Young, Fearnley AS and Maersk Shipbrokers;

“Availability Period” means, subject to the provisions of Clause 13.1, the period commencing on the date of this Agreement and:

(a) in respect of Loans under the Loan Facility, ending on 31 August 2008 (or such later date as the Agent, with the authorisation of the Lenders, may agree with the Borrower); or

(b) in respect of the issuing of the Bank Guarantee, ending on 30 June 2008 (or such later date as the Agent, with the authorisation of the Issuing Bank may agree with the Borrower); or

(c) if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

“Bank Guarantee” means the guarantee to be issued by the Guarantee Issuer in favour of the Beneficiaries in such form as the Guarantee Issuer shall agree or require;

“Beneficiaries” means all shareholders in Ocean Rig ASA accepting the mandatory offer in accordance with the terms and conditions of the Offer Document:

“Borrower” means PRIMELEAD LIMITED, a company incorporated in Cyprus whose registered office is at 10 Skopa Street, Nicosia, Cyprus (and any successor);

2

“Bulk Vessel” means a Fleet Vessel being a dry bulk Panamax, Handymax or Capesize vessel;

“Bulk Vessel Acquisition” means the purchase by a member of the Group, on arms-length commercial terms during the Security Period, of a Bulk Vessel;

“Bulk Vessel Disposal” means the sale by a member of the Group, on arms-length commercial terms during the Security Period, of a Bulk Vessel;

“Bulk Vessel Ledger Account” means the amount calculated on a rolling basis, commencing on the date of this Agreement, equal to the aggregate Purchase Equity in all Bulk Vessel Acquisitions less the aggregate Net Sales Proceeds in all Bulk Vessel Disposals;

“Business Day” means a day on which banks are open in London, Oslo and Athens and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Cash Collateral Account” means the US Dollar cash collateral account in the name of the Borrower with the Agent in London designated “PRIMELEAD LIMITED - Cash Collateral Account” (or any other account which is designated by the Agent as the Cash Collateral Account for the purposes of this Agreement) and which is the Cash Collateral Account referred to in the Account Security Deed;

“Commitment” means, in relation to a Lender and to the Guarantee Issuer, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders and the Guarantee Issuer);

“Compliance Date” means 31 March, 30 June, 30 September and 31 December in each calendar year (or such other dates as of which the Group prepares the consolidated financial statements which it is required to deliver pursuant to Clause 15.6);

“Contractual Currency” has the meaning given in Clause 23.5;

“Contribution” means, in relation to a Lender, the part of the Loans which is owing to that Lender;

“Corporate Guarantee” means the guarantee to be issued jointly and severally by DryShips and the Shareholders in favour of the Security Trustee in such form as the Lenders and the Guarantee Issuer shall agree or require;

“Corporate Guarantors” means, jointly and severally: (i) DryShips, and (ii) the Shareholders;

“Creditor Party” means the Agent, the Security Trustee, the Guarantee Issuer or any Lender whether as at the date of this Agreement or at any later time;

“Dividend Account” means the NOK dividend account in the name of the Borrower with the Agent in London, designated “PRIMELEAD LIMITED - Dividend Account” (or any other account which is designated by the Security Trustee as the Dividend Account for the purposes of this Agreement) and which is the Dividend Account referred to in the Account Security Deed;

3

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to a Loan, the date requested by the Borrower for such Loan to be made, or (as the context may require) the date on which such Loan is actually made being not later than 31 August 2008 and “Initial Drawdown Date” means the first such date:

“Drawdown Notice” means a notice in the form set out in Schedule 2B (or in any other form which the Agent approves or reasonably requires);

“DryShips” means DryShips Inc., a corporation incorporated under the laws of the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960. and listed on the NASDAQ exchange in the United States of America,

“Earnings” means all dividends, interest and other moneys paid or payable after the date of this Agreement on all or any of the Ocean Rig Shares and all rights accruing at any time to or in respect of all or any of the Ocean Rig Shares (including, without limitation, put and call options, pre-emption rights and any proceeds of sale or other realisation of all or any part of the Ocean Rig Shares);

“Earnings Account” means the US Dollar account in the name of the Borrower with the Agent in London, designated “PRIMELEAD LIMITED - Earnings Account” (or any other account which is designated by the Agent as the Earnings Account for the purposes of this Agreement) and which is the Earnings Account referred to in the Account Security Deed;

“EBITDA” means, for any accounting period, the consolidated net income of the Group for that accounting period:

(a) plus, to the extent deducted in computing consolidated net income of the Group for that accounting period, the sum, without duplication, of:

(i) all federal, state, local and foreign taxes and tax distributions;

(ii) Net Interest Expenses; and

(iii) depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortisation of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;

(b) minus, to the extent added in computing consolidated net income of the Group for that accounting period, any non-cash income or non-cash gains and any extraordinary gains not incurred in the ordinary course of business;

all determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the Applicable Accounts;

4

“Event of Default” means any of the events or circumstances described in Clause 21.l;

“Existing Debt” means all amounts payable by the Borrower to fully discharge its liabilities and obligations under the Existing Loan Agreement and the Finance Documents (as therein defined) being, at the date of this Agreement, a principal amount of US$227,907,269 plus interest and all other amounts due thereunder;

“Existing Loan Agreement” means the loan agreement dated 17 December 2007, between Nordea Bank Finland Plc, London Branch as agent, lender and security trustee and the Borrower, under which a credit facility was made available to the Borrower of up to US$260,000,000 to finance the purchase of the Initial Shares in Ocean Rig ASA.

“Fair Market Value” means, the fair value of the Ocean Rig Shares, as determined in accordance with Clause 17.3;

“Finance Documents” means:

(a) this Agreement;

(b) the Agency and Trust Deed;

(c) the Corporate Guarantee;

(d) the Ocean Rig Shares Pledge;

(e) the Account Security Deed;

(f) the VPS Account Pledges;

(g) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders or the Guarantee Issuer under this Agreement or any of the other documents referred to in this definition;

“Finance Party” means each of the Lenders and the Guarantee Issuer;

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility (or any dematerialised equivalent) made available to the debtor;

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

5

(e) under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity for loss or otherwise or similar obligation entered into by the debtor in respect of a liability of another person which would fall within paragraphs (a) to (e) if the references to the debtor referred to the other person;

“Financial Year” means in relation to the Group, each period of 1 year commencing on 1 January in respect of which its consolidated accounts are or ought to be prepared;

“Fleet Vessels” means together all of the vessels from time to time owned by members of the Group;

“GAAP” means generally accepted accounting principles as from time to time in effect in the United States of America;

“Group” means DryShips and its subsidiaries (whether direct or indirect and including, but not limited to, the Borrower) from time to time during the Security Period and “member of the Group” shall be construed accordingly;

“Guarantee Expiry Date” means the date upon which all of the Guarantee Issuer’s liabilities and obligations under the Bank Guarantee are fully and irrevocably discharged;

“Guarantee Facility” means the guarantee facility of up to NOK5,000,000,000 referred to in Clause 9 under which the Guarantee Issuer will issue the Bank Guarantee in favour of the Beneficiaries;

“Guarantee Issue Date” means the date requested by the Borrower for the Bank Guarantee to be issued or (as the context requires) the date on which the Bank Guarantee is actually issued;

“Guarantee Issue Period” means the period commencing with the Guarantee Issue Date and ending on the Guarantee Expiry Date;

“Guarantee Issue Request” means a notice in the form of Schedule 2A (or in any other form which the Agent approves or reasonably requires);

“Guaranteed Obligations” means the actual and contingent, certain and future payment obligations owed by the Borrower to the Beneficiaries under the Offer Document and secured by the Bank Guarantee;

“Guarantee Price” means the US Dollar equivalent of the amount required by the Borrower to purchase the Mandatory Offer Shares;

“Initial Shares” means 51,778,647 shares in the common stock of Ocean Rig ASA purchased by the Borrower in December 2007;

6

“Interest Coverage Ratio” means, in relation to a Compliance Date or an accounting period, the ratio of (a) EBITDA for the most recent financial period of the Group ending on the Compliance Date to (b) the Net Interest Expenses for that financial period (calculated on a trailing 12-months basis);

“Interest Period” means, in relation to a Loan, a period determined in accordance with Clause 6;

“Lender” means a bank or financial institution listed in the Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrower under Clause 28.15) or its transferee, successor or assign;

“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 LIBOR01 (British Bankers’ Association Interest Settlement Rates) (or such other page as may replace such page being designed 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 am (London time) on the Quotation Date for such period; or

(b) if on such date no such rate is displayed, the arithmetic mean of the rate quoted to the Agent by the Reference Banks at the request of the Agent as the Reference Banks’ offered rate for deposits of Dollars in an amount equal or approximately equal to the amount in respect of 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 am (London time) on the Quotation Date for such period;

“Liquid Funds” means, the aggregate of the Group’s consolidated (i) cash in hand; (ii) deposits in banks or financial institutions; (iii) debt securities rated AA/Aa2 or better by either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc; or (iv) any other instrument approved by the Lenders, all of which shall be free of any Security Interest;

“Loan” means each of the advances drawn down by the Borrower under Clause 4 subject to consolidation or division under Clause 5.6;

“Loans” means the principal amount for the time being outstanding under the Loan Facility;

“Loan Facility” means the term loan facility of up to $800,000,000 referred to in Clause 2 under which the Lenders will severally make available the Loans to the Borrower;

“Majority Lenders” means Lenders, the aggregate of whose Commitments and Outstandings at any relevant time exceeds total 66.66 per cent. of the aggregate of the Total Commitments and the Total Outstandings provided however that during the Guarantee Issue Period the definition “Majority Lenders” shall be deemed to include the Guarantee Issuer and Outstandings shall include the Guarantee Obligations;

7

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 6;

“Mandatory Offer Shares” means all of the shares in the common stock of Ocean Rig ASA that are not held by the Borrower at the date the mandatory offer period commences under the Offer Document;

“Mandatory Offer Settlement Date” means the final date upon which the Borrower is required to settle payment for Mandatory Offer Shares purchased in accordance with the terms of the Offer Document.

“Margin” means, two and one eighth per cent (2.125%) per annum;

“Market Adjusted Equity Ratio” means, the ratio of the Adjusted Equity to the Market Value Adjusted Total Assets for the most recent financial period of the Group ending on the relevant Compliance Date;

“Market Value” means, in relation to each Fleet Vessel, the market value thereof calculated at any date by taking the arithmetic mean of two valuations each prepared: as at a date not more than 15 days previously; by an Approved Broker appointed by the Agent with the valuations being addressed to the Agent; with or without physical inspection of Fleet Vessel (as the Agent may require); on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer; free of any existing charter or other contract of employment; and after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale Provided that the Agent may obtain additional valuations from any Approved Broker to be prepared in accordance with this paragraph if, in the opinion of the Agent, circumstances require an additional valuation and the Market Value will be the arithmetic mean of all such valuations:

“Market Value Adjusted Total Assets” means, at any time, Total Assets adjusted to reflect the Market Value of all Fleet Vessels and the Fair Market Value of the Ocean Rig Shares;

“Minimum Holding of Target Shares” means the minimum holding by the Borrower in the Target Shares referred to in Clause 13.l(e);

“Minimum Holding Purchase Price” means the US Dollar equivalent, at the relevant date, of the NOK amount paid by the Borrower to purchase the Minimum Holding of Target Shares;

“Negotiation Period” has the meaning given in Clause 5.10;

“Net Debt” means, Total Interest Bearing Liabilities less Liquid Funds;

“Net lnterest Expenses” means, as of any Compliance Date, the aggregate of all interest, commitment and other fees, commissions, discounts and other costs, charges or expenses accruing due from all the members the Group during that accounting period less interest income received, determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the Applicable Accounts;

8

“Net Sales Proceeds” means the sales proceeds arising from each Bulk Vessel Disposal, net of any mandatory prepayment obligation to any financing bank or financial institution secured against the relevant vessel, together with sale commissions, costs and expenses, and in relation to the Fleet Vessels “Waikiki, Solana, Lacerta and Lanzarote, means forty per cent (40%) of the gross sales proceeds net of commissions;

“NOK” means the lawful currency for the time being of the Kingdom of Norway:

“Notifying Lender” has the meaning given in Clause 25.1 or Clause 26.1 as the context requires;

“Ocean Rig Shares” means the aggregate of the Initial Shares and all other shares in the common stock of Ocean Rig ASA, held by the Borrower in the VPS Account at any time and from time to time;

“Ocean Rig Shares Pledge” means the first priority pledge of all of the Ocean Rig Shares and any proceeds deriving therefrom including any dividends, bonus shares or other distributions (with the attached VPS Account Pledges) executed or to be executed by the Borrower in favour of the Security Trustee in such form as the Lenders and the Guarantee Issuer shall agree or require;

“Offer Document” means the mandatory offer document to be submitted by the Borrower to the Oslo BØrs by not later than 21 May 2008, in respect of a mandatory offer by the Borrower for the Mandatory Offer Shares;

“Outstanding Guarantee Amount” means the maximum amount for which the Bank Guarantee was issued less the aggregate amount of all reductions to the guaranteed amount which have been made in accordance with the provisions of Clause 10.1;

“Outstandings” means, in relation to a Lender and to the Guarantee Issuer at any time, the aggregate of the following amounts:

(a) its liability (if any) for the Outstanding Guarantee Amount; and

(b) its Contributions;

(and “Total Outstandings” means the aggregate of the Outstandings of all the Lenders and the Guarantee Issuer);

“Payment Currency” has the meaning given in Clause 23.5;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

“Pertinent Document” means

(a) any Finance Document; and

9

(b) any other document contemplated by or referred to in any Finance Document; and

any document which has been or is at any time sent by or to the Agent or the Security Trustee in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company has the centre of its main interests or in which the company’s central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company, whether as main or territorial ancillary proceedings or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a);

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice and/or the lapse of time and/or the satisfaction of any condition and/or a determination of the Majority Lenders would constitute an Event of Default;

“Purchase Equity” means the equity invested by the Group in each Bulk Vessel Acquisition, being the purchase price net of any loans drawn down from banks or financial institutions at the time of and in relation to such acquisition and secured against the relevant Bulk Vessel;

10

“Purchase Price” means the US Dollar equivalent, at the relevant date, of the NOK amount paid by the Borrower to purchase Target Shares at a price per share not exceeding NOK45;

“Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

“Reference Banks” means, subject to Clause 28.16, the London branch of Nordea Bank Finland Plc, and the London branch of DnB NOR Bank ASA and any other bank which the Majority Lenders may from time to time approve to act in such capacity;

“Relevant Person” has the meaning given in Clause 21.10;

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

“Repayment Instalment” means a repayment which is required to be made under Clause 8(a);

“Retained Equity” shall have the meaning referred to in Clause 16.6(a);

“Retention Account” means the US Dollar retention account in the name of the Borrower with the Agent in London designated “PRIMELEAD LIMITED - Retention Account” (or any other account which is designated by the Agent as the Retention Account for the purposes of this Agreement) and which is the Retention Account referred to in the Account Security Deed;

“Secured Liabilities” means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or any judgment relating to the Finance Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, charge (whether fixed or floating) or pledge or any other lien; and

(b) any other arrangement of any kind having the effect of conferring security;

“Security Party” means the Corporate Guarantors, and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the Lenders that:

(a) all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid and the Total Commitments have been reduced to zero;

11

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither the Borrower nor any Security Party has any future or contingent liability under Clause 22, 23 or 24 below or any other provision of this Agreement or another Finance Document; and

(d) the Agent, the Security Trustee, the Guarantee Issuer and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document; and

(e) the Bank Guarantee has been returned to the Guarantee Issuer by or on behalf of the Beneficiaries endorsed to the effect that it is cancelled;

“Security Trustee” means Nordea Bank Finland Plc, London Branch in its capacity as trustee for the Lenders under this Agreement and the other Finance Documents, acting through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Settlement Amount” means, in relation to each demand made under the Bank Guarantee, the amount payable by the Guarantee Issuer to each of the Beneficiaries in respect of the Bank Guarantee;

“Settlement Date” means ,in relation to each demand made under the Bank Guarantee, the date on which payment of the Settlement Amount is due to each of the Beneficiaries in respect of the Bank Guarantee;

“Shareholders” means, Primelead Shareholders Inc., a corporation incorporated in the Marshall Islands which its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Target Shares” means the 118,596,333 of shares in the common stock of Ocean Rig ASA;

“Total Assets” means, as of any Compliance Date, the aggregate value of the total assets of the Group less intangible assets of the Group by reference to the latest financial statement of the Group in accordance with the Applicable Accounts;

“Total Interest Bearing Liabilities” means, as of any Compliance Date, the consolidated total amount of the interest bearing Financial Indebtedness of the Group;

“Transfer Certificate” has the meaning given in Clause 28.2;

12

“Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Deed;

“Unutilised Funds” has the meaning referred to in Clause 16.6(b);

“VPS Account” means the account opened by the Borrower with the Norwegian Central Securities Depository in Norway (account number 06001.2096503) including, without limitation, all securities from time to time registered on that account);

VPS Account Pledges means the pledges (covering US$ and NOK liabilities respectively) to be entered into by the Borrower in favour of the Security Trustee in such form as the Lenders and the Guarantee Issuer shall agree or require and under which the Borrower shall pledge all of the Borrower’s rights title and interest in and to the VPS Account and all securities from time to time registered on that account.

1.2 Construction of certain terms. In this Agreement:

“administration notice” means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;

“approved” means, for the purposes of Clause 17, approved in writing by the Agent;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained:

“document” includes a deed; also a letter or fax;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

13

“parent company” has the meaning given in Clause 1.4;

“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“subsidiary” has the meaning given in Clause 1.4;

“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

14

and any company of which S is a subsidiary is a parent company of S.

1.5 General Interpretation.

In this Agreement:

(a) references in Clause 1. I to a Finance Document or any other document being in agreed form are to a document in the form attached to a certificate dated the same date as or after this Agreement, which states that that form is the agreed form of the relevant document for the purposes of this Agreement, and which is signed by the Borrower and the Agent on behalf of the Security Parties and include references to that form with such modifications as the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires;

(b) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(c) references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.4 apply unless the contrary intention appears.

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

2. LOAN FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lenders agree to make available to the Borrower, during the Availability Period, a credit facility in an amount:

(a) In respect of the Loan to be applied in repayment of the Existing Debt, the principal amount of the Existing Debt on the Initial Drawdown Date;

(b) In respect of any Loan applied in relation to the purchase of any Target Shares (subject to the provisions of Clause 17.1(Minimum required security cover)), an amount (when aggregated with any Loans already advanced to purchase Target Shares) not exceeding the lesser of:

(i) $572,092,731; or

(ii) in respect of any Loan made prior to the Mandatory Offer Settlement Date, the Purchase Price paid for the Acquired Target Shares, less the Minimum Holding Purchase Price; or

(iii) in respect of any Loan made on or after the Mandatory Offer Settlement Date, sixty per cent (60%) of the Purchase Price paid for the Acquired Target Shares.

15

2.2 Lenders’ participations in Loans. Subject to the other provisions of this Agreement, each Lender shall participate in each Loan in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.

2.3 Purpose of Loans. The Borrower undertakes with each Creditor Party to use the Loans only for the purpose stated in the preamble to this Agreement.

3 POSITION OF THE FINANCE PARTIES AND THE MAJORITY LENDERS

3.1 Interests of Finance Parties several. The rights of the Finance Parties under this Agreement are several.

3.2 Individual Finance Party’s right of action. Each Finance Party shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement without joining the Agent, the Security Trustee, any other Lender or the Guarantee Issuer as additional parties in the proceedings.

3.3 Proceedings requiring Majority Lenders’ consent. Except as provided in clause 3.2, no Finance Party may commence proceedings against the Borrower or any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.

3.4 Obligations Several. The obligations of the Finance Parties under this Agreement are several; and a failure of a Finance Party to perform its obligations under this Agreement shall not result in:

(a) the obligations of the other Finance Parties being increased; or

(b) the Borrower, any Security Party, any other Lender or the Guarantee Issuer being discharged (in whole or in part) from its obligations under any Finance Document;

and in no circumstances shall a Finance Party have any responsibility for a failure of another Finance Party to perform its obligations under this Agreement.

3.5 Security Trustee as joint and several creditor.

(a) The Borrower and each of the Creditor Parties agrees that the Security Trustee shall be the joint creditor together with each other Creditor Party of each liability and obligation of the Borrower towards any Creditor Party under any Finance Document, and that accordingly the Security Trustee will have its own independent right to demand performance by the Borrower of those liabilities and obligations. However, any discharge of any liability or obligation of the Borrower to one of the Security Trustee or another Creditor Party shall, to the same extent, discharge the corresponding liability or obligation owing to the other.

(b) Without limiting or affecting the Security Trustee’s rights against the Borrower (whether under this paragraph or under any other provision of the Finance Documents), the Security Trustee agrees with each other Creditor Party (on a several and separate basis) that, subject as set out in the next sentence, it will not exercise its rights as a joint creditor with a Creditor Party except with the consent of the relevant Creditor Party. However, for the avoidance of doubt, nothing in the previous sentence shall in any way limit the Security Trustee’s right to act in the protection or preservation of rights under or to enforce any Finance Document (or to do any act reasonably incidental to any of the foregoing).

16

(c) Subject to the provisions of this Clause 3.5, the Security Trustee holds any security created by a Finance Document in its name and the Security Trustee shall have full and unrestricted title to and authority in respect of that security, subject always to the terms of the Finance Documents.

4 DRAWDOWN

4.1 Request for Loan. Subject to the following conditions and the provisions of Clause 13.1, the Borrower may request a Loan to be made by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (London time) three (3) Business Days’ prior to the intended Drawdown Date.

4.2 Availability. The conditions referred to in Clause 4.1 are that:

(a) a Drawdown Date has to be a Business Day during the Availability Period;

(b) the amount of the Loan or Loans shall not exceed the Total Commitments at any relevant time;

(c) only five Loans shall be outstanding at any one time.

4.3 Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

(a) the amount of the Loan or Loans and the Drawdown Date;

(b) the amount of that Lender’s participation in the Loan or Loans; and

(c) the duration of the first Interest Period for each Loan; and

(d) the purpose of each Loan.

4.4 Drawdown Notice irrevocable. The Drawdown Notice must be signed by an authorised signatory of the Borrower and, once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting with the authorisation of the Majority Lenders.

4.5 Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall make available to the Agent, on and with value on each Drawdown Date, the amount due from that Lender on that Drawdown Date under Clause 2.2.

4.6 Disbursement of Loans. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrower shall be made:

(a) to the account which the Borrower specifies in the Drawdown Notice; and

(b) in the like funds as the Agent received the payments from the Lenders.

17

A payment by the Agent under this Clause shall constitute the making of a Loan, and the Borrower shall thereupon become indebted, as principal and direct obligor, to each Lender in amount equal to that Lender’s Contribution.

5 INTEREST

5.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on each Loan in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

5.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on a Loan in respect of an Interest Period shall be the aggregate of the Margin, the Mandatory Cost (if any) and LIBOR for that Interest Period and the Agent shall calculate and confirm to the Borrower the Margin on the first day of each Interest Period, and such Margin shall apply until the next Interest Period, and in the absence of any such certification, the Borrower may request the Agent to provide the same and the Agent’s failure to notify the Borrower hereunder shall not affect the Borrower’s obligation to pay the appropriate interest at any time.

5.3 Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

5.4 Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:

(a) the rate of interest for each Loan; and

(b) the duration of each Interest Period;

as soon as reasonably practicable after each is determined.

5.5 Changes to Interest Periods

(a) Before determining the interest rate for a Loan, the Agent may shorten an Interest Period for any Loan to ensure there are sufficient Loans (with an aggregate amount equal to, or greater than, the Repayment Instalment) which have an Interest Period ending on a Repayment Date for the Borrower to make the Repayment Instalment due on that date.

(b) If the Agent makes any change to an Interest Period referred to in this Clause 5.5, it shall promptly notify the Borrower and the Lenders.

5.6 Consolidation and division of Loans

(a) Subject to paragraph (b) below, if two or more Interest Periods:

(i) relate to Loans; and

(ii) end on the same date,

those Loans will, unless the Borrower specifies to the contrary in its notification for the next Interest Period, be consolidated into, and treated as, a single Loan on the last day of that Interest Period.

18

(b) Subject to Clause 4.2(c) if the Borrower requests in its notification for the next Interest Period that a Loan be divided into two or more Loans, that Loan will, on the last day of its Interest Period, be so divided into the amounts so specified (being an aggregate amount equal to the amount of the Loan immediately before its division) and each amount shall constitute a separate Loan and shall have separate Interest Periods.

5.7 Market disruption. The following provisions of this Clause 5 apply if:

(a) no rate is quoted on Reuters Page LIBOR01 and the Agent is unable, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, to fix LIBOR; or

(b) at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent. of the Loans (or, if the Loans have not been advanced, Commitments amounting to more than 50 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during that Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for that Interest Period; or

(c) at least 1 Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during that Interest Period.

5.8 Notification of market disruption. The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.7 which have caused its notice to be given.

5.9 Suspension of drawdown. If the Agent’s notice under Clause 5.8 is served before a Loan is made:

(a) in a case falling within paragraphs (a) or (b) of Clause 5.7, the Lenders’ obligations to make available the Loan; and

(b) in a case falling within paragraph (c) of Clause 5.7, the Affected Lender’s obligation to participate in the Loan;

shall be suspended while the circumstances referred to in the Agent’s notice continue.

5.10 Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.8 is served after a Loan is made, the Borrower, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 15 days after the date on which the Agent serves its notice under Clause 5.8 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution to such Loan during the Interest Period concerned.

5.11 Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

5.12 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant

19

circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Mandatory Cost (if any) and the Margin; and the procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

5.13 Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12, the Borrower may give the Agent not less than 15 Business Days’ notice of its intention to prepay the Loans and/or the relevant Loan or the Contribution of the Affected Lender at the end of the interest period set by the Agent.

5.14 Prepayment; termination of Commitments. A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

(b) on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loans and/or the relevant Loan, or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

5.15 Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.

6 INTEREST PERIODS

6.1 Commencement of Interest Periods. The first Interest Period for each Loan shall commence on the Drawdown Date in respect thereof and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

6.2 Duration of normal Interest Periods. Subject to Clause 6.3 each Interest Period shall be:

(a) 1, (but subject to a maximum of 3 such 1 month Interest Periods in each year) 2, 3 or 6 months as notified by the Borrower to the Agent not later than 11.00 a.m. (London time) 3 Business Days before the commencement of that Interest Period; or

(b) 3 months if the Borrower fails to notify the Agent by the time specified in paragraph (a); or

(c) such longer period as the Agent may, with the authorisation of the Lenders, agree with the Borrower.

6.3 Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 8 on a Repayment Date, an Interest Period shall end on that Repayment Date.

20

7 DEFAULT INTEREST

7.1 Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 21.4, the date on which it became immediately due and payable.

7.2 Rate of default interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent, above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 7.3(b).

7.3 Calculation of default rate of interest. The rates referred to in Clause 7.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

(b) the aggregate of the Margin and the Mandatory Cost (if any) plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time;

(i) LIBOR; or

(ii) if the Agent determines that Dollar deposits for any such period are not being made available to any Lender by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Lenders from such other sources as the Agent (after consultation with the Lenders) may from time to time determine.

7.4 Notification of interest periods and rates of default interest. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent’s notification.

7.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

21

7.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

8 REPAYMENT AND PREPAYMENT

8.1 Repayment of Facility. The Loans shall be repaid in accordance with the following provisions of this Clause 8.1 so that:

(a) the Loans shall be repaid by up to eight (8) instalments beginning on the date falling three months after the Initial Drawdown Date and every three (3) months thereafter, with the first four (4) instalments being in the amount equal to the lesser of: (i) $75,000,000; and (ii) the principal outstanding balance of the Loans, the next three (3) instalments being in the amount equal to the lesser of: (i) $50,000,000; and (ii) the principal outstanding balance of the Loans and with one final “bullet” instalment (if any) being in an amount equal to the principal outstanding balance of the Loans.

(b) in addition the amount for the time being of the Loans shall be reduced by the amount of any prepayment(s) and/or repayments required to be made under or pursuant to:

(i) Clause 5.14 (Prepayment; termination of Commitments); or

(ii) Clause 8.7 (Mandatory Prepayment of the Loans); or

(iii) Clause 21.3 (Termination of Commitments); or

(iv) Clause 25.3 (Illegality etc); or

(v) Clause 26.6 (Increased Costs).

8.2 Repayment. The Borrower shall, on the final Repayment Date (being the date upon which an instalment is paid under Clause 8.l(a) which reduces the principal outstanding balance of the Loans to zero) additionally pay to the Agent for the account of the Creditor Parties all further amounts outstanding or payable under this Agreement and the other Finance Documents.

8.3 Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or any part of the Loans at any time.

8.4 Conditions for voluntary prepayment. The conditions referred to in Clause 8.3 are that:

(a) a partial prepayment shall be at least $5,000,000 or a higher integral multiple of $5,000,000;

(b) any prepayment shall be applied pro rata against each outstanding instalment.

(c) the Agent has received from the Borrower at least 5 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

22

(d) the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

8.5 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

8.6 Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy thereof;

8.7 Mandatory prepayments. The Borrower shall make mandatory prepayments of the Loans to the Agent in the event that:

(a) the Borrower shall seek to sell or otherwise dispose of any of the Ocean Rig Shares in whole or in part (subject to the prior written consent of the Agent which shall not to be unreasonably withheld or delayed) then such sale or other disposal shall be on terms reasonably satisfactory to the Agent and, upon completion of such sale or other disposal, the Borrower shall prepay the Loans in an amount equal to the proceeds of such disposal, together with all costs and expenses; or

(b) the Borrower shall have any Unutilised Funds standing to the credit of the Retention Account;

(c) any Security Party issues equity, bonds or other unsecured debt then, upon completion of such issue, the Borrower shall prepay the Loans in an amount equal to the fifty per cent (50%) of the net proceeds of such issue; or

(d) any dividend is declared by Ocean Rig ASA in respect of the Ocean Rig Shares, upon payment of such dividend, the Borrower shall prepay the Loans in an amount equal to such dividend, provided that, at the Borrower’s option, the Borrower may retain in the Dividend Account in NOK, or pay into the Retention Account in US Dollars, up to 50% of such dividend for application against regular repayments of principal or interest under the Loan Facility.

8.8 Amounts payable on prepayment. A prepayment shall be made together with:

(a) accrued interest (and any other amount payable under Clause 23 below or otherwise) in respect of the amount prepaid; and

(b) if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clause 23.l(b);

but without premium or penalty.

8.9 Application of partial prepayment. No partial prepayment shall be made during the Availability Period unless the Loan Facility is fully drawn or the remaining Commitment cancelled and partial prepayment shall be applied against the repayment instalments specified in Clause 8.1 on a pro-rata basis.

23

8.10 No reborrowing. No amount repaid or prepaid may be reborrowed.

9 GUARANTEE FACILITY

(a) Availability of Guarantee Facility. Subject to the other provisions of this Agreement, the Guarantee Issuer agrees to make available to the Borrower, during the Availability Period, a guarantee facility in an amount not exceeding, at the Guarantee Issue Date, the lesser of:

(i) NOK 5,000,000,000; or

(ii) the aggregate of (A) One hundred per cent (100%) of the Guarantee Price and, (B) interest on the Guarantee Price for the Guarantee Issue Period at a rate of 12.25% p.a.(or the prevailing rate for late payment as stipulated in the Norwegian Act on Interest on Late Payments of 17 December 1976 No. 100);

9.2 Request for issue of Guarantee. Subject to the following conditions, the Borrower may make a request for the Bank Guarantee to be issued by ensuring that the Agent receives a completed Guarantee Issue Request not later than 11 a.m. (London time) two (2) Business Days prior to the intended Guarantee Issue Date.

9.3 Conditions. The conditions referred to in Clause 9.2 are that:

(a) the Guarantee Issue Date has to be a Business Day during the Availability Period; and

(b) the conditions precedent set out in Clause 13.1 have been satisfied;

(c) the Agent must receive, together with the Guarantee Issue Request, a final draft of the form of the Bank Guarantee which the Guarantee Issuer is being requested to issue on the intended Guarantee Issue Date; and

(d) the form of the Bank Guarantee has to be approved in writing by the Guarantee Issuer at least 2 Business Days prior to the intended Guarantee Issue Date and it must, without limitation to the generality of the foregoing, contain express provisions:

(i) limiting the total amount payable by the Guarantee Issuer under it to a stated maximum amount in NOK; and

(ii) stating that it shall expire or be reduced to zero not later than 6 August 2008 (or such later date as the Guarantee Issuer shall, in its discretion, agree) subject to any valid claims received under the Bank Guarantee prior to such date.

9.4 Notification to the Guarantee Issuer. Upon receipt of the Guarantee Issue Request, the Agent shall notify the Guarantee Issuer thereof and of the date on which the Bank Guarantee is to be issued.

10 REDUCTION OF GUARANTEE

10.1 Reduction of Outstanding Guarantee Amount. The Outstanding Guarantee Amount shall not be treated as reduced for the purposes of this Agreement unless and until:

(a) the Agent has received, on behalf of the Guarantee Issuer, a written confirmation from or on behalf of the Beneficiaries of the amount of such reduction and the written consent of the Oslo Stock Exchange; or

24

(b) the Guarantee Issuer has notified the Agent in writing that (notwithstanding the absence of a written confirmation from the Beneficiaries) it is satisfied that its liability under the Bank Guarantee has been irrevocably reduced or discharged; or

(c) the amount of the Bank Guarantee irrevocably and unconditionally reduces in accordance with its terms: or

(d) the expiry date of the Bank Guarantee elapses and the Agent, acting on the instructions of the Guarantee Issuer, has notified the Borrower in writing that it is satisfied that no claim or demand has been made, or may thereafter be made, under the Bank Guarantee.

11 SETTLEMENT OF BANK GUARANTEE

11.1 Notification of Settlement Amount. The Guarantee Issuer shall, immediately after receiving a demand from, or after being notified by, a Beneficiary that it is required to make payment under the Bank Guarantee, notify the Agent that such payment is due and of the Settlement Amount and the Settlement Date in respect thereof, and the Agent shall notify the Borrower.

11.2 Borrower’s settlement. The Borrower shall:

(a) immediately after notification from the Agent under Clause 11.1, acknowledge to the Agent that it will reimburse the Settlement Amount; and

(b) pay to the Agent, for the account of the Guarantee Issuer, the Settlement Amount in NOK on the Settlement Date.

11.3 Borrower’s failure to reimburse. If the Borrower fails to reimburse the Settlement Amount to the Agent, for the account of the Guarantee Issuer, on the Settlement Date pursuant to Clause 11.2, it shall pay to the Agent, for the account of the Guarantee Issuer, interest on the Settlement Amount from the Settlement Date to the date the Guarantee Issuer is reimbursed by the Borrower at the rate described in Clause 7 such interest to be compounded in accordance with Clause 7.6 and payable on demand.

12 INDEMNITY OF THE BORROWER

12.1 Borrower’s undertaking to indemnify. The Borrower agrees that it shall:

(a) pay to the Agent, for the account of the Guarantee Issuer, upon demand by the Agent, an amount equal to each amount:

(i) demanded from or paid by the Guarantee Issuer under the Bank Guarantee; and

(ii) paid by the Guarantee Issuer to the Beneficiaries under Clause 12.8;

and which is not otherwise fully reimbursed, paid or repaid by the Borrower under this Agreement; and

25

(b) indemnify, as a principal and independent debtor, the Guarantee Issuer on demand against all actions, claims, demands, liabilities, costs, losses, damages and expenses incurred, suffered or sustained or any penalty or other expenditure which may result or which the Guarantee Issuer may incur, suffer or sustain in connection with or arising out of or in relation to the Guaranteed Obligations and/or the payment under or other performance of the Bank Guarantee.

12.2 Bank Guarantee payments. The Borrower:

(a) irrevocably authorises the Guarantee Issuer to make any payment demanded from it pursuant to the Bank Guarantee if that demand is made in accordance with its terms;

(b) accepts that any demand for payment made by a Beneficiary pursuant to the Bank Guarantee and which is made in accordance with its terms shall be conclusive evidence that the Guarantee Issuer was liable to make payment under the Bank Guarantee and any payment which the Guarantee Issuer makes pursuant to any such demand shall be accepted by the Borrower as binding upon the Borrower; and

(c) acknowledges and agrees that the Guarantee Issuer shall not, in any circumstances whatsoever, be liable to the Borrower in respect of any loss or damage suffered by the Borrower by reason of the Guarantee Issuer making a payment to a Beneficiary in connection with any payment demanded under the Bank Guarantee.

12.3 Continuing indemnities. The liabilities and obligations of the Borrower under the indemnities set out in Clause 12.1 shall remain in force as a continuing security until:

(a) the full, prompt and complete performance of all the terms of such indemnities including the proper and valid payment of all amounts that may become due to the Guarantee Issuer under this Clause 12.3; and

(b) subject to Clause 12.4, an absolute discharge or release of the Borrower signed by the Agent, acting on the instructions of the Guarantee Issuer;

and accordingly the Borrower shall not have, as regards those indemnities, any of the rights or defences of a surety.

12.4 Discharges. Any such discharge or release referred to in Clause 12.3, and any composition or arrangement which the Borrower may effect with the Guarantee Issuer, shall be deemed to be made subject to the condition that it will be void if any payment or security which any Creditor Party may previously have received or may thereafter receive is set aside under any applicable law or proves to have been for any reason invalid.

12.5 No impairment. Without limiting the generality of Clauses 12.3 and 12.4, the Borrower shall neither be discharged from any of its liabilities or obligations under Clause 12.1 by, nor have any claim against any Creditor Party in respect of:

(a) any misrepresentation or non-disclosure respecting the affairs or condition of the Guarantee Issuer made to the Borrower by any person; or

(b) a Beneficiary and/or any Lender and/or the Agent and/or the Security Trustee and or the Guarantee Issuer releasing or granting any time or any indulgence whatsoever or making any settlement, composition or arrangement with the Borrower, any Beneficiary or any other person; or

26

(c) a Beneficiary and/or any Lender and/or the Agent and/or the Security Trustee and/or the Guarantee Issuer asserting or pursuing, failing or neglecting to assert or pursue, or delaying in asserting or pursuing, or waiving, any of their rights or remedies against the Borrower, any Beneficiary or any other person; or

(d) a Beneficiary and/or any Lender and/or the Agent and/or the Security Trustee and/or the Guarantee Issuer (with or without the consent of the Borrower) making, whether expressly or by conduct, any variation to any Guaranteed Obligations or the Bank Guarantee; or

(e) a Beneficiary and/or any Lender and/or the Agent and/or the Security Trustee and/or the Guarantee Issuer and/or the Borrower:

(i) taking, accepting, varying, dealing with, enforcing, abstaining from enforcing, surrendering or releasing any security in relation to a Beneficiary or the Guarantee Issuer or the Borrower or any other person in such manner as it or they think fit; or

(ii) claiming, proving for, accepting or transferring any payment in respect of the obligations and liabilities of the Borrower and/or a Beneficiary relative to the Guaranteed Obligations or under this Agreement in any composition by, or winding up of, the Borrower and/or any third party or abstaining from so claiming, proving, accepting or transferring; or

(f) any assignment or transfer by a Beneficiary of, or any succession to, any of its rights relative to the Guaranteed Obligations or the Bank Guarantee.

12.6 Provision of cash collateral security. Forthwith upon, or at any time following:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) the service of a notice under Clause 21.2(a)(ii); or

(c) the service of a notice of prepayment under Clause 5.14, Clause 25.2 or Clause 26.5;

then in any such circumstances the Agent on behalf of the Guarantee Issuer shall be entitled (but not obliged) to demand payment by the Borrower of, and the Borrower forthwith upon such demand shall pay to the Agent on behalf of the Guarantee Issuer for credit to the Cash Collateral Account, such amount as shall he the aggregate of:

(i) any Settlement Amount then due from the Borrower to the Guarantee Issuer pursuant to Clause 11.2 and not reimbursed; and

(ii) the Outstanding Guarantee Amount.

12.7 Application of cash collateral security. Subject always to the overriding provisions of Clause 19, moneys received by the Agent for the account of the Guarantee Issuer pursuant to Clause 12.6 shall be applied (as between the Borrower on the one hand and the Guarantee Issuer on the other) in the following manner:

(a) firstly, in or towards payment of any Settlement Amount then due from the Borrower to the Guarantee Issuer pursuant to Clause 11.2 and not reimbursed;

27

(b) secondly, in payment to an account or accounts of the Agent for application from time to time by the Agent (and the Borrower hereby irrevocably authorises the Agent so to apply any such moneys) in or towards payment of, or reimbursement to the Guarantee Issuer for, any amount which the Guarantee Issuer shall or may at any time and from time to time thereafter pay or be or become liable to pay to a Beneficiary under or pursuant to or in connection with the Bank Guarantee (including any amount payable under Clause 12.8); and

(c) thirdly, in or towards payment of all other sums which may be owing to the Guarantee Issuer under or in connection with the Bank Guarantee.

12.8 Negotiation with Beneficiary. The Borrower:

(a) irrevocably authorises the Agent (acting on the instructions of the Guarantee Issuer) to negotiate with any Beneficiary at any time after the occurrence of any Event of Default or Potential Event of Default with a view to arranging for the prepayment by the Guarantee Issuer, for the account of the Borrower, of any Guaranteed Obligations; and

(b) agrees that at any time after the occurrence of any Event of Default or Potential Event of Default the Guarantee Issuer shall be entitled (but not, so far as the Borrower is concerned, bound) to pay to the Beneficiaries, in such manner and upon such terms as the Guarantee Issuer and the Beneficiary shall agree, any Guaranteed Obligations.

13 CONDITIONS PRECEDENT

13.1 Documents, fees and no default. Each Lender’s obligation to contribute to a Loan and the Guarantee Issuer’s obligation to issue the Bank Guarantee, is subject to the following conditions precedent:

(a) that, on or before the service of the Drawdown Notice, or the Guarantee Issue Request, the Agent receives the documents described in Schedule 3 Part A in form and substance satisfactory to the Agent and its lawyers;

(b) that, on the Guarantee Issue Date but prior to the issuance of the Bank Guarantee, and on the Drawdown Date but prior to the making available of the Loans, the Agent receives the documents described in Schedule 3 Part B in form and substance satisfactory to the Agent and its lawyers;

(c) that, on the Guarantee Issue Date the Existing Debt has been repaid;

(d) that, on or prior to the Guarantee Issue Date and the Initial Drawdown Date, the Agent receives payment of all fees then due as referred to in Clause 22.1, it being understood that the guarantee fee referred to in Clause 22.1(a) is payable as a condition precedent to the advance of the Loans on the Initial Drawdown Date whether or not the Bank Guarantee has been or is to be issued;

(e) that, prior to the earlier of the Initial Drawdown Date and the Guarantee Issue Date, the Borrower shall have deposited in the VPS Account not less than 47,438,533 shares in Ocean Rig ASA, representing forty percent (40%) of the Target Shares, free of any Security Interest other than Permitted Security Interests;

(f) that at the date of the service of the Guarantee Issue Request or a Drawdown Notice and at the Guarantee Issue Date and any Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the issuance of the Bank Guarantee or the borrowing of the relevant Loan;

28

(ii) the representations and warranties in Clause 14 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) none of the circumstances contemplated by Clause 5.7 has occurred and is continuing;

(g) that, if the minimum security test set out in Clause 17.1 were applied immediately following the making of a Loan, the Borrower would not be obliged to provide additional security under Clause 17.2 or to prepay part of the Loans under Clause 17;

(h) that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent, with the authorisation of the Majority Lenders, may request by notice to the Borrower prior to the relevant Drawdown Date; and

(i) that, if the Loan relates to the purchase of any of the Target Shares, such Target Shares are deposited (or shall be transferred and deposited in a manner satisfactory to the Security Trustee) in the VPS Account free of any Security Interest other than Permitted Security Interests.

13.2 Waiver of conditions precedent - Loans. If the Majority Lenders, at their discretion, permit a Loan to be borrowed before certain of the conditions referred to in Clause 13.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Agent, with the authorisation of the Majority Lenders, specifies).

13.3 Waiver of conditions precedent - Bank Guarantee. If the Guarantee Issuer, at its discretion, agrees to issue the Bank Guarantee before certain of the conditions referred to in Clause 13.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Guarantee Issue Date (or such longer period as the Agent, with the authorisation of the Guarantee Issuer, specifies)

14 REPRESENTATIONS AND WARRANTIES

14.1 General. The Borrower represents and warrants to each Creditor Party as follows.

14.2 Status. The Borrower is duly incorporated and validly existing and is in goodstanding under the laws of Cyprus.

14.3 Share capital and ownership. The legal title and beneficial ownership of all of the issued share capital of the Borrower (10,000 registered shares of €1) is held by the Shareholders free of any Security Interest except Permitted Security Interests.

14.4 The legal title and beneficial ownership of all of the issued share capital of the Shareholders (500 registered shares of US20 par value) is held by Dryships free of any Security Interest.

29

14.5 Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to purchase and own the Ocean Rig Shares;

(b) to execute the Finance Documents to which it is a party; and

(c) to borrow and grant any indemnities under this Agreement, and to make all the payments contemplated by, and to comply with, the Finance Documents to which the Borrower is a party.

14.6 Consents in force. All the consents referred to in Clause 14.5 remain in force and nothing has occurred which makes any of them liable to revocation.

14.7 Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in those Finance Documents):

(a) constitute the Borrower’s legal, valid and binding obligations, enforceable against it in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate;

subject to any relevant insolvency laws affecting creditors’ rights generally.

14.8 No third party Security Interests. Without limiting the generality of Clause 14.7, at the time of the execution and delivery of each Finance Document to which the Borrower is a party:

(a) the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

14.9 No conflicts. The purchase and ownership of the Ocean Rig Shares, the execution by the Borrower of each Finance Document to which it is a party, the request for the issue of the Bank Guarantee, the borrowing by the Borrower of the Loans and its compliance with each Finance Document to which it is a party, will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrower; or

(c) any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.

14.10 No withholding taxes. All payments which the Borrower is liable to make under this Agreement or any of the other Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

30

14.11 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

14.12 Information. All information which has been provided in writing to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 15.5 (Information provided to be accurate).

14.13 No litigation. No legal or administrative action involving the Borrower has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower’s financial position or profitability.

14.14 Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clause 15.2 (Negative pledge).

14.15 Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to, it and its business.

14.16 No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrower of the Loans, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party the Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

15 GENERAL UNDERTAKINGS

15.1 General. The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 15 at all times during the Security Period except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit.

15.2 Negative Pledge. The Borrower will hold the legal title to, and the entire beneficial interest in, the Ocean Rig Shares and the Earnings free from all Security Interests other than Permitted Security Interests.

15.3 Disposal of Assets. The Borrower will not dispose of:

(a) Any interest in the Ocean Rig Shares or the Earnings; or

(b) all or any part of its other assets, except for full value.

15.4 Further capital investments. The Borrower will not make any material capital investments except for the purchase of the Target Shares.

15.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

31

15.6 Provision of financial statements and compliance certificates. The Borrower will send to the Agent:

(a) as soon as possible, but in no event later than 180 days after the end of each financial year of the Group audited accounts of the Group prepared by a firm of accountants acceptable to the Agent;

(b) as soon as possible, but in no event later than 90 days after the end of (i) each financial year of the Group and (ii) each financial quarter of each financial year of the Group, unaudited accounts of the Group certified as to their correctness by the chief financial officer of the Group as appropriate;

(c) together with each set of financial statements referred to in paragraph (b), a compliance certificate signed by the chief financial officer or a director of the Group in the form set out in Schedule 5, duly completed and supported by calculations setting out in reasonable detail the materials underlying the statements made in such compliance certificate.

15.7 Form of financial statements. All accounts delivered under Clause 15.6 will:

(a) be prepared in accordance with all applicable laws and GAAP;

(b) give a true and fair view of the state of affairs of the Group at the date of those accounts and of its profit for the period to which those accounts relate; and

(c) fully disclose or provide for all significant liabilities of the Group.

15.8 Shareholder notices. The Borrower will send to the Agent, at the same time as they are dispatched, copies of all communications which are dispatched to its shareholders.

15.9 Consents. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

(a) for the Borrower to purchase and own the Ocean Rig Shares;

(b) for the Borrower to perform its obligations under any Finance Document to which the Borrower is a party; and

(c) for the validity or enforceability of any Finance Document to which it is a party;

and the Borrower will comply with the terms of all such consents.

15.10 Maintenance of Security Interests. The Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document to which it is a party validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document to which it is a party with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to which it is a party to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

32

15.11 Notification of litigation. The Borrower shall procure that the Agent is provided with details of any legal or administrative action involving the Borrower, any Security Party, or the Earnings as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

15.12 Principal place of business. The Borrower will notify the Agent if it has a place of business in any jurisdiction which would require a Finance Document to which it is a party to be registered, filed or recorded with any court authority in that jurisdiction or if the centre of its main interests changes.

15.13 Confirmation of no default. The Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by the director of the Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

This Clause 15.13 does not affect the Borrower’s obligations under Clause 15.14.

15.14 Notification of default. The Borrower will notify the Agent as soon as the Borrower becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred;

and will thereafter keep the Agent fully up-to-date with all developments.

15.15 Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

(a) the Borrower, the Ocean Rig Shares or the Earnings; and

(b) any other matter relevant to, or to any provision of, a Finance Document;

which may be requested by the Agent, the Security Trustee the Guarantee Issuer or any Lender at any time.

15.16 Tax filings. The Borrower will file or cause to be filed all tax returns required to be filed by the Borrower in all Pertinent Jurisdictions and shall procure all taxes shown to be due and payable on such returns or any assessments made against it are paid (other than those contested in good faith where such payments may be lawfully withheld) and where adequate reserves have been made for such payment should such tax be found to be payable.

33

15.17 “Know your customer” checks. If:

(a) the introduction of or any change in (or in the interpretation, administration or application of) any Law or regulation made after the date of this Agreement;

(b) any change in the status of the Borrower or any Security Party after the date of this Agreement; or

(c) a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer, obliges the Agent or any Lender (or, in the case of paragraph (iii), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (iii), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (iii), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

16 CORPORATE UNDERTAKINGS

16.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 16 at all times during the Security Period except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit.

16.2 Maintenance of status. The Borrower will maintain its separate corporate existence under the laws of Cyprus.

16.3 Negative undertakings. The Borrower will not:

(a) carry on any business other than the ownership of the Ocean Rig Shares or incur any liabilities or obligations other than as incurred in the cause of owning the Ocean Rig Shares; or

(b) without the prior written consent of the Agent (which the Agent shall have the right to withhold at its entire discretion), pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital; or

(c) grant any Security Interest over the Ocean Rig Shares or the Earnings other than the Ocean Rig Shares Pledge;

(d) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in the Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected

34

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length;

(e) incur any Financial Indebtedness other than under the Loan Facility or the Guarantee Facility; or

(f) open or maintain any account with any bank or financial institution except accounts with the Agent;

(g) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(h) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or

(i) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

16.4 Ocean Rig listing. The Borrower shall ensure that Ocean Rig ASA shall maintain its listing status on the Oslo Børs or if it is de-listed the Borrower shall ensure that Ocean Rig ASA is at all times a wholly owned subsidiary of the Borrower.

16.5 Financial Covenants. The Borrower shall ensure that, at all times throughout the Security Period:

(a) the Market Adjusted Equity Ratio shall not be less than 30%

(b) the Interest Coverage Ratio shall not be less than 3:1;

(c) the Net Debt-to-EBITDA Ratio shall not exceed 5.00:1.00;

(d) the Liquid Funds of the Group are not less than $50,000,000.

16.6 Bulk Vessel Purchases and Disposals. Commencing with the date of this Agreement and for the duration of the Security Period, the Borrower shall supply the Agent promptly with all the information necessary for the Agent to maintain the Bulk Vessel Ledger Account for the following purposes:

(a) In the event that the Bulk Vessel Ledger Account is in deficit on the completion of the sale of a Bulk Vessel by a member of the Group, then the Borrower shall procure that an amount equal to such deficit (the “Retained Equity”) shall be paid on delivery into the Retention Account; and

(b) subject to any other provisions of the Finance Documents, any Retained Equity may, at the request of the Borrower, he utilised by any member of the Group towards the Purchase Equity in any Bulk Vessel for a period of up to one hundred and eighty (180) days from the date upon which the Retained Equity was deposited in the Retention Account, after which date any such amount shall be designated as Unutilised Funds (“Unutilised Funds”); and

35

(c) all amounts of Retained Equity credited to the Retention Account shall be applied by the Agent as set out in this Clause 16.6, or (if designated as Unutilised Funds) Clause 8.7(b) but shall not be available for application towards repayments of principal, interest or any other sums falling due from the Borrower to the Agent under this Agreement nor against monthly retentions under Clause 20.3.

17 SECURITY COVER

17.1 Minimum required security cover. Clause 17.2 applies if the Agent notifies the Borrower that:

(a) the aggregate Fair Market Value of the Ocean Rig Shares; plus

(b) the net realisable value of any additional security previously provided under this Clause 17;

is below 150 per cent. of the Loans.

17.2 Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 17.1, the Borrower shall, within five Business Days after the date on which the Agent’s notice is served, either:

(a) provide, or ensure that a third party provides, additional security in the form of additional shares in Ocean Rig ASA or any other security which, in the opinion of the Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Lenders, approve or require; or

(b) prepay such part (at least) of the Loans as is equal to the shortfall.

17.3 Valuation of Ocean Rig Shares. The market value of the Ocean Rig Shares at any date is that shown by the quoted price (after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with a sale of such Ocean Rig Shares) at close of business on the previous Business Day on the Oslo Børs or in the event of such quotation being unavailable or if Ocean Rig ASA is de-listed then such valuation as the Agent shall reasonably determine by reference to the net asset value of the Ocean Rig Shares on the relevant date adjusted to take account of the current market value of any vessels or drilling rigs owned by Ocean Rig ASA.

17.4 Valuations binding. Any valuation of additional security under Clause 17.2 shall be binding and conclusive as regards the Borrower.

17.5 Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 17.2(b).

18 PAYMENTS AND CALCULATIONS

18.1 Currency and method of payments. All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(a) in respect of Dollar payments, by not later than 11.00 a.m. (New York City time) on the due date;

36

(b) in respect of Dollar payments, in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

(c) in respect of Norwegian Kronor payments, by not later than 11.00 a.m. (Oslo time) on the due date;

(d) in respect of Norwegian Kronor payments, in same day NOK funds settled through the [Oslo Clearing House Interbank Payments System] (or in such other NOK funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

(e) in the case of an amount payable by a Lender to the Agent or by the Borrower to the Agent, any Lender or the Guarantee Issuer, to such account with such bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

(f) in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

18.2 Payment on non-Business Day. If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

18.3 Basis for calculation of periodic payments. All interest and commitment fees and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

18.4 Distribution of payments to Creditor Parties. Subject to Clauses 18.5, 18.6 and 18.7:

(a) any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, the Guarantee Issuer or the Security Trustee shall be made available by the Agent to that Lender, the Guarantee Issuer or the Security Trustee (as the case may be) by payment, with funds having the same value as the funds received, to such account as the Lender, the Guarantee Issuer or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

(b) amounts to be applied in satisfying amounts which are due to the Lenders or the Guarantee Issuer generally shall be distributed by the Agent to each Lender and the Guarantee Issuer pro rata to the amount which is due to it and with all Secured Liabilities ranking pari passu.

18.5 Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender or to the Guarantee Issuer, deduct and withhold from that amount

37

any sum which is then due and payable to the Agent from that Lender or the Guarantee Issuer under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or the Guarantee Issuer to pay on demand.

18.6 Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender or the Guarantee Issuer any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender or the Guarantee Issuer until the Agent has satisfied itself that it has received that sum.

18.7 Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower, a Lender, or the Guarantee Issuer without first having received that sum, the Borrower or (as the case may be) the Lender or the Guarantee Issuer concerned shall, on demand:

(a) refund the sum in full to the Agent; and

(b) pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

18.8 Agent may assume receipt. Clause 18.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

18.9 Creditor Party accounts. Each Creditor Party shall maintain an account or accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

18.10 Agent’s memorandum account. The Agent shall maintain a memorandum account or accounts showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee each Lender and the Guarantee Issuer from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

18.11 Accounts prima facie evidence. If any of the accounts maintained under Clauses 18.9 and 18.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party under this Agreement and the other Finance Documents.

19 APPLICATION OF RECEIPTS

19.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents (or any of them) in such order of application and/or such proportions as the Agent, acting with the authorisation of the Majority Lenders, may specify by notice to the Borrower, the Security Parties and the other Creditor Parties;

38

(b) SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 19.l(a);

(c) THIRDLY: in or towards satisfaction of any amount then due and payable by the Borrower to any Lender which has provided swap facilities to the Borrower in relation to the Loan Facility; and

(d) FOURTHLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

19.2 Variation of order of application. The Agent may, with the authorisation of the Majority Lenders, by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 19.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

19.3 Notice of variation of order of application. The Agent may give notices under Clause 19.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

19.4 Appropriation rights overridden. This Clause 19 and any notice which the Agent gives under Clause 19.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

20 EARNINGS AND COLLATERAL ACCOUNTS

20.1 Payment of Earnings. The Borrower undertakes with the Lenders and the Guarantee Issuer to ensure that, throughout the Security Period, the Earnings are paid to the Dividend Account and not less than fifty per cent (50%) of such Earnings are forthwith transferred, at the current rate of exchange determined by the Agent for NOK into US$, to the Earnings Account or the Retention Account and applied in accordance with the provisions of Clause 8.7(d).

20.2 Release of Earnings. Until the occurrence of an Event of Default or a Potential Event of Default the Borrower shall be entitled to transfer amounts standing to the credit of the Earnings Account to the Retention Account for application against payment of principal, interest or any other any sums falling due from the Borrower to the Agent under this Agreement.

20.3 Monthly retentions. The Borrower undertakes with each Creditor Party to ensure that, one month after the Initial Drawdown Date on the same day of each following month during the Security Period, there is transferred to the Retention Account by either the Borrower, the Shareholders or Dryships:

(a) not less than one-third of the amount of the repayment instalment falling due under Clause 8 on the next Repayment Date; and

39

(b) the relevant fraction of the aggregate amount of interest on the Loans which is payable on the next due date for payment of interest under this Agreement; and

the “relevant fraction” is a fraction of which the numerator is 1 and the denominator the number of months comprised in each then current Interest Period (or, if the period is shorter, the number of months from the later of the commencement of each current Interest Period or the last due date for payment of interest to the next due date for payment of interest under this Agreement).

20.4 Cash Collateral Account. The Borrower undertakes with the Agent and the Guarantee Issuer to open and maintain during the Guarantee Issue Period, the Cash Collateral Account and to maintain a credit balance in the Cash Collateral Account in an amount equal, on the relevant date, to not less than to forty per cent (40%) of the Guarantee Price less an amount equal to sixty per cent (60%) of the Minimum Holding Purchase Price;

20.5 Release from the Cash Collateral Account. In the event of the credit balance exceeding the amount required to satisfy the requirements of Clause 20.4, the Borrower shall, provided no Event of Default or Potential Event of Default has occurred and is continuing, be entitled to request consent from the Agent that such surplus be applied towards the purchase of the Target Shares or towards settlement of the purchase of any of the Mandatory Offer Shares.

20.6 Location of account. The Borrower shall promptly:

(a) comply with any requirement of the Agent as to the location or re-location of the Dividend Account, the Earnings Account, the Cash Collateral Account and the Retention Account;

(b) execute any documents which the Security Trustee specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) any or all of the Dividend Account, the Earnings Account, the Cash Collateral Account and the Retention Account.

20.7 Debits for expenses etc. The Security Trustee shall be entitled (but not obliged) from time to time to debit the Dividend Account, the Earnings Account, the Cash Collateral Account or the Retention Account, upon giving prior notice to the Borrower, in order to discharge any amount due and payable to any Creditor Party under Clause 22 or 23 or payment of which any Creditor Party has become entitled to demand under Clause 22 or 23.

21 EVENTS OF DEFAULT

21.1 Events of Default. An Event of Default occurs if:

(a) the Borrower or any Security Party fails to pay when due or, if payable on demand, within 14 days of such demand, any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs by the Borrower or any Security Party of Clauses 13.2 (Waiver of conditions precedent), 15.2 (Negative pledge), 15.3 (No disposal of assets), 16.2 (Maintenance of Status), 16.3 (Negative undertakings), 16.4 (Ocean Rig listing), 16.5 (Financial Covenants) or 17.2 (Provision of additional security; prepayment) of this

40

Agreement, or any breach occurs by either of the Corporate Guarantors of Clauses 11.10 (Maintenance of status), 11.11 (No change of business, name or fiscal year end date), 11.12 (No merger etc.), 11.13 (Maintenance of ownership), 11.15 (Financial Covenants) and 11.16 (Covenants) of the Corporate Guarantee; or

(c) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 30 days after written notice from the Agent requesting action to remedy the same; or

(d) (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c)); or

(e) any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in a Guarantee Issue Request or a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading in any material respect when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person in respect of $1,000,000 or more or, as regards Financial Indebtedness arising under different documents or transactions, an aggregate amount of $1,000,000 or more (or the equivalent in another currency):

(i) any such Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii) any such Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any such Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any such Financial Indebtedness ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any such Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

41

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress, or any form of freezing order in respect of a sum of, or sums aggregating, $1,000,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or

(v) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or an administration notice is given or filed in relation to a Relevant Person, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or one of the Corporate Guarantors which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

(vi) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

(vii) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(viii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v), (vi) or (vii); or

(ix) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Majority Lenders, is similar to any of the foregoing; or

(h) the Borrower or either of the Corporate Guarantors ceases or suspends carrying on its business or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for the Borrower or any Security Party to discharge any liability under a Finance Document to which it is a party or to comply with any other obligation which the Majority Lenders consider material under a Finance Document to which it is a party;

42

(ii) for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) the Borrower ceases to be wholly and beneficially owned directly by the Shareholders or there is any change to the ultimate control of the voting rights attaching to the shares in the Borrower;

(k) the Shareholders cease to be wholly and beneficially owned directly by DryShips or there is any change to the ultimate control of the voting rights attaching to the shares in the Shareholders;

(l) the Borrower ceases to wholly and beneficially own directly the majority of the shares and majority control of voting rights in Ocean Rig ASA;

(m) it appears to the Lenders that, without their prior written consent, a change has occurred after the date of this Agreement in the ultimate beneficial ownership of the shares of DryShips or in the ultimate control of the voting rights attaching to any of those shares as a consequence of which:

(i) either the beneficial ownership in the shares or the voting rights in DryShips held by Entrepreneurial Spirit Foundation, of Heiligkreuz No.6, Postfach 484, FL-9490,Vaduz, Liechtenstein, controlled by Mr. George Economou beneficially (or by any other entity controlled by Mr. George Economou beneficially) has or have fallen or will fall to less than a twenty-five per cent (25%); or

(ii) any shareholder, including any associated party or any party acting in concert with such shareholder, shall hold a greater beneficial ownership in the shares or voting rights in DryShips than that or those held by Entrepreneurial Spirit Foundation (or any other entity controlled by Mr. George Economou beneficially).

(n) any consent necessary to enable the Borrower to own the Ocean Rig Shares or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(o) any provision, which either the Majority Lenders or the Guarantee Issuer consider material, of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(p) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(q) any other event occurs or any other circumstances arise or develop including, without limitation a change in the financial position, state of affairs or prospects of the Borrower or the Corporate Guarantors in the light of which the Majority Lenders consider that there

43

is a significant risk that the Borrower or one of the Corporate Guarantors is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due; or

21.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:

(a) the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i) serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender and the Guarantee Issuer to the Borrower under this Agreement are terminated; and/or

(ii) serve on the Borrower a notice stating that the Loans, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(iii) serve on the Borrower a notice that the provisions of Clause 12.6 (Provision of cash collateral security) have come into effect; and/or

(iv) take any other action which, as a result of the Event of Default or any notice served under paragraphs (i), (ii) or (iii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b) the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law.

21.3 Termination of Commitments. On the service of a notice under Clause 21.2, the Commitments and all other obligations of each Lender and the Guarantee Issuer to the Borrower under this Agreement shall terminate.

21.4 Acceleration of Loans. On the service of a notice under Clause 21.2, the Loans, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

21.5 Demand for payment into the Cash Collateral Account. On the service of a notice under Clause 21.2, the sums payable by the Borrower under Clause 12.6 shall become immediately due and payable or, as the case may be, payable on demand.

21.6 Multiple notices; action without notice. The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 21.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

21.7 Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee, the Guarantee Issuer and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 21.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

44

21.8 Lenders’ rights unimpaired. Nothing in this Clause 21 shall be taken to impair or restrict the exercise of any right given to individual Lenders or the Guarantee Issuer under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

21.9 Exclusion of Creditor Party Liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset;

except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been directly and mainly caused by the dishonesty or the wilful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

21.10 Relevant Persons. In this Clause 21 a “Relevant Person” means the Borrower and/or any Security Party.

21.11 Interpretation. In Clause 21.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 21.l(g) “petition” includes an application.

22 FEES AND EXPENSES

22.1 Guarantee, arrangement, commitment, agency fees. The Borrower shall pay to the Agent:

(a) a guarantee fee to the Agent for distribution to the Guarantee Issuer and an agency fee, as separately agreed between the Borrower, the Guarantee Issuer and the Agent;

(b) on each of the date of this Agreement and the Drawdown Dates, the arrangement and other fees separately agreed between the Lead Arrangers and the Borrower to be payable to the Agent for distribution as agreed therein or at the discretion of the Lead Arrangers;

(c) on the last day of each of March, June, September and December of each year, in respect of the period from (and including) the date of this Agreement until the earlier of (i) the date on which the Total Commitments shall have been drawn down and (ii) the expiry of the Availability Period, for the account of the Lenders, a commitment fee at a rate equal to thirty five per cent (35%) of the Margin per annum on the undrawn amount of the Total Commitments from time to time, for distribution among the Lenders as agreed by them; and

45

22.2 Costs of negotiation, preparation etc. The Borrower shall pay to the Agent within ten days of its demand the amount of all reasonable expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

22.3 Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Creditor Party concerned, the amount of all expenses incurred by a Creditor Party in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 15 or any other matter relating to such security; or

(d) any step taken by the Lenders concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

22.4 Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any claims, expenses and liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.

22.5 Financial Services Authority fees. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Lender concerned the amounts which the Agent from time to time notifies the Borrower that a Lender has notified the Agent to be necessary to compensate it for the cost attributable to its Contribution resulting from the imposition from time to time under or pursuant to the Bank of England Act 1998 and/or by the Bank of England and/or by the Financial Services Authority (or other United Kingdom governmental authorities or agencies) of a requirement to pay fees to the Financial Services Authority calculated by reference to liabilities used to fund its Contribution.

22.6 Certification of amounts. A notice which is signed by a duly authorised person on behalf of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 22 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

46

23 INDEMNITIES

23.1 Indemnities regarding borrowing and repayment of Loans. The Borrower shall fully indemnify the Agent and each Lender and the Guarantee Issuer on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) a Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

(b) the receipt or recovery of all or any part of the Loans or an overdue sum otherwise than on the last day of an Interest Period applicable to it or other relevant period;

(c) any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loans under Clause 21;

and in respect of any tax (other than tax on its overall net income) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

23.2 Breakage costs. Without limiting its generality, Clause 23.1 covers any claim, liability, expense or loss, including loss of a prospective profit, incurred by a Lender or the Guarantee Issuer:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender or the Guarantee Issuer concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.

23.3 Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, a Creditor Party, in any country, as a result of or in relation to:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

(b) any other Pertinent Matter;

47

other than liability items which are shown to have been caused by the dishonesty or wilful misconduct of the officers or employees of the Creditor Party concerned.

23.4 Extension of indemnities; Without prejudice to its generality, Clause 23.3 covers any matter which would be covered by Clause 23.3 if any of the references in that Clause to a Creditor Party were a reference to the Agent or (as the case may be) to the Security Trustee.

23.5 Currency indemnity. If any sum due from the Borrower or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment;

the Borrower shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

In this Clause 23.5, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 23.5 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

23.6 Certification of amounts. A notice which is duly signed by an authorised signatory on behalf of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 23 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

23.7 Sums deemed due to a Lender or the Guarantee Issuer. For the purposes of this Clause 23, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender or the Guarantee Issuer shall be treated as a sum due to that Lender.

24 NO SET-OFF OR TAX DEDUCTION

24.1 No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

48

(b) free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

24.2 Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

(a) the Borrower shall notify the Agent as soon as it becomes aware of the requirement;

(b) the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

24.3 Evidence of payment of taxes. Within 1 month after making any tax deduction, the Borrower shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

24.4 Tax credits. A Creditor Party which receives for its own account a repayment or credit in respect of tax on account of which the Borrower has made an increased payment under Clause 24.2 shall pay to the Borrower a sum equal to the proportion of the repayment or credit which that Creditor Party allocates to the amount due from the Borrower in respect of which the Borrower made the increased payment, but:

(a) the Creditor Party shall not be obliged to allocate to this transaction any part of a tax repayment or credit which is referable to a class or number of transactions;

(b) nothing in this Clause 24.4 shall oblige a Creditor Party to arrange its tax affairs in any particular manner, to claim any type of relief, credit, allowance or deduction instead of, or in priority to, another or to make any such claim within any particular time;

(c) nothing in this Clause 24.4 shall oblige a Creditor Party to make a payment which would leave it in a worse position than it would have been in if the Borrower had not been required to make a tax deduction from a payment; and

(d) any allocation or determination made by a Creditor Party under or in connection with this Clause 24.4 shall be conclusive and binding on the Borrower and the other Creditor Parties in the absence of manifest error.

24.5 Exclusion of tax on overall net income. In this Clause 24 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party’s overall net income.

25 ILLEGALITY, ETC

25.1 Illegality. This Clause 25 applies if a Lender or the Guarantee Issuer (each a “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

49

(b) contrary to, or inconsistent with, any regulation,

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

25.2 Notification of illegality. The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 25.1 which the Agent receives from the Notifying Lender.

25.3 Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 25.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 25.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution in accordance with Clause 8 and procure the release of the Guarantee Obligations.

26 INCREASED COSTS

26.1 Increased costs. This Clause 26 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

(b) complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”.

26.2 Meaning of “increased costs”. In this Clause 26, “increased costs” means, in relation to a Notifying Lender:

(a) an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;

(b) a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

50

(c) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

(d) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement;

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 25.1 or by Clause 26.

For the purposes of this Clause 26.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

26.3 Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 26.1.

26.4 Payment of increased costs. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

26.5 Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 26.4, the Borrower may give the Agent not less than 14 days’ notice of its intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.

26.6 Prepayment; termination of Commitment. A notice under Clause 26.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

(b) on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate (including the Mandatory Cost, if any) plus the Margin and/or procure release of the Guarantee Obligations.

26.7 Application of prepayment. Clause 8 shall apply in relation to the prepayment.

27 SET-OFF

27.1 Application of credit balances. Each Creditor Party may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and

51

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrower;

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

27.2 Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 27.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

27.3 Sums deemed due to a Lender. For the purposes of this Clause 27, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

27.4 No Security Interest. This Clause 27 gives the Creditor Parties a contractual right of set off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.

28 TRANSFERS AND CHANGES IN LENDING OFFICES

28.1 Transfer by Borrower. The Borrower may not without the consent of the Agent, given on the instructions of all the Lenders transfer any of its rights or obligations under any Finance Document.

28.2 Transfer by a Lender. Subject to Clause 28.4, a Lender (the “Transferor Lender”) may at any time after the Drawdown Date, at its own cost and with the prior consent of the Borrower (not to be unreasonably withheld or delayed), cause:

(a) its rights in respect of all or part of its Contribution; or

(b) its obligations in respect of all or part of its Commitment; or

(c) a combination of (a) and (b);

to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender. Notwithstanding the foregoing, no consent of the Borrower will be required for any such transfer to another Lender or to an affiliate of a Lender.

Any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will be dealt with separately in accordance with the Agency and Trust Deed.

52

28.3 Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

(a) sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee and each of the other Lenders;

(b) on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;

(c) send to the Transferee Lender copies of the letters or faxes sent under paragraph (b).

28.4 Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 28.3 on or before that date.

28.5 No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, any other Lender, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

28.6 Lender re-organisation; waiver of Transfer Certificate. If a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in a successor, the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

28.7 Effect of Transfer Certificate. A Transfer Certificate takes effect in accordance with English law as follows:

(a) to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

(b) the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

(c) the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

(d) the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

53

(e) any part of the Loans which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

(f) the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.5 and Clause 23, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

(g) in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

28.8 Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 28.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days’ prior notice.

28.9 Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

28.10 Authorisation of Agent to sign Transfer Certificates. The Borrower, the Security Trustee and, each Lender irrevocably authorises the Agent to sign Transfer Certificates on its behalf.

28.11 Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $1,500 from the Transferor Lender or (at the Agent’s option) the Transferee Lender plus any legal expenses incurred by the Agent in connection with a transfer pursuant to this Clause 28.

28.12 Sub-participation; subrogation assignment. A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent, or notice to, the Borrower, any Security Party, any other Lender, the Agent or the Security Trustee and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

54

28.13 Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

28.14 Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

(a) the date on which the Agent receives the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

28.15 Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

28.16 Replacement of Reference Bank. If any Reference Bank ceases to be a Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 then, unless the Borrower, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting the Borrower, shall appoint another bank (whether or not a Lender) to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank’s appointment shall cease to be effective.

28.17 Tax indemnity, tax gross-up and increased costs on assignment, transfer and change of lending office. If:

(a) a Lender assigns or transfers any rights or obligations under the Finance Documents or changes its lending office; and

(b) as a result of circumstances existing at the date the assignment, transfer or change occurs the Borrower would be obliged to make a payment to the Transferee Lender or Lender acting through its new lending office under Clause 23.1 in respect of any tax, Clause 24 or Clause 26,

then the Transferee Lender or the Lender acting through its new lending office is only entitled to receive payment under those Clauses to the same extent as the Transferor Lender or the Lender acting through its previous lending office would have been if the assignment, transfer or change had not occurred.

29 VARIATIONS AND WAIVERS

29.1 Variations, waivers etc. by Majority Lenders. Subject to Clause 29.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrower, by the Agent acting with the consent and on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

55

29.2 Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 29.1 applies as if the words “by the Agent acting with the consent and on behalf of the Majority Lenders” were replaced by the words “by the Agent acting with the consent and on behalf of, every Lender and the Guarantee Issuer”:

(a) a change in the Margin or in the definition of LIBOR;

(b) a change to the date for, or the amount of, any payment of principal, interest, fees, or other sum payable under this Agreement;

(c) a change to any Lender’s Commitment (but, for the avoidance of doubt, this change does not apply to a transfer by a Lender of part or all of its Commitment, to which only Clause 24 applies);

(d) an extension of Availability Period;

(e) a change to the definition of “Majority Lenders” or “Finance Documents”;

(f) a change to the preamble or to Clause 2, 3,4, 5.1, 19, 21 or 32;

(g) a change to this Clause 29;

(h) any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

(i) any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s or the Guarantee Issuer’s consent is required.

29.3 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 29.1 and 29.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

(b) an Event of Default; or

(c) a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

(d) any right or remedy conferred by any Finance Document or by the general law;

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

56

30 NOTICES

30.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

30.2 Addresses for communications. A notice shall be sent:

(a)	to the Borrower:	10 Skopa Street Nicosia Cyprus
		Fax No. +357 227 61542
		Att: Ms Yiannoula Georghiades
		Copied to: DryShips Inc., Omega Building 80 Kifissias Avenue GR - 151 25 Amaroussion Athens Greece
		Fax No. +30 210 8090575
		Att: Mr Aristeidis Ioannidis
(b)	to a Lender:	At the address opposite its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate.
(c)	to the Agent and/or the Security Trustee and/or the Guarantee Issuer	8th Floor, City Place House, 55 Basinghall Street London EC2V 5NB
		Fax No.: + 44 20 7726 9102
		Attn: Nordea Loan Administration
		with a copy to:
		Fax No. + 44 20 7726 9188
		Att: Nordea Shipping London

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrower, the Lenders and the Security Parties.

30.3 Effective date of notices. Subject to Clauses 30.4 and 30.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;

57

(b) a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

30.4 Service outside business hours. However, if under Clause 30.3 a notice would be deemed to be served:

(a) on a day which is not a business day in the place of receipt; or

(b) on such a business day, but after 5 p.m. local time;

the notice shall (subject to Clause 30.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

30.5 Illegible notices. Clauses 30.3 and 30.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

30.6 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

30.7 English language. Any notice under or in connection with a Finance Document shall be in English.

30.8 Meaning of “notice”. In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

31 SUPPLEMENTAL

31.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party:

(a) are cumulative;

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

31.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

58

31.3 Counterparts. A Finance Document may be executed in any number of counterparts.

31.4 Third party rights. No person who is not a party to this Agreement has any right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

32 LAW AND JURISDICTION

32.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

32.2 Exclusive English jurisdiction. Subject to Clause 32.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

32.3 Choice of forum for the exclusive benefit of Creditor Parties. Clause 32.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the rights:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

The Borrower shall not commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

32.4 Process agent. The Borrower irrevocably appoints Ince Process Agents Ltd. (att: Mr. Michael Volikas, Partner) at their office for the time being, presently at 1 St. Katherine’s Way, London E1W lAY, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

32.5 Creditor Party rights unaffected. Nothing in this Clause 32 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

32.6 Meaning of “proceedings”. In this Clause 32, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

59

EXECUTION PAGE

BORROWER
SIGNED by for and on behalf of PRIMELEAD LIMITED in the presence of: Joanna Davey	) ) ) )
LENDERS, LEAD ARRANGERS AND BOOKRUNNERS
SIGNED by for and on behalf of NORDEA BANK FINLAND PLC, LONDON BRANCH in the presence of: Joanna Davey	) ) ) ) )
SIGNED by for and on behalf of DnB NOR BANK ASA, LONDON BRANCH in the presence of: Joanna Davey	) ) ) ) )
GUARANTEE ISSUER SIGNED by for and on behalf of NORDEA BANK FINLAND PLC, LONDON BRANCH in the presence of: Joanna Davey	) ) ) ) )

73

AGENT
SIGNED by	)
for and on behalf of	)
NORDEA BANK FINLAND PLC,	)
LONDON BRANCH	)
in the presence of: Joanna Davey	)
SECURITY TRUSTEE
SIGNED by	)
for and on behalf of	)
NORDEA BANK FINLAND PLC,	)
LONDON BRANCH	)
in the presence of: Joanna Davey	)

74

EX-4.37

Exhibit 4.37

From:	Primelead Limited Primelead Shareholders Inc. Dryships Inc.
To:	Nordea Bank Finland Plc (London Branch) as Agent and as Security Trustee
and:	Nordea Bank Finland Plc (London Branch) DnB NOR Band ASA (London Branch) HSH Nordbank AG as Lenders

12 February 2009

Dear Sirs

Primelead Limited/Dryships Inc.

Credit Facility of up to US$800,000,000 and a Guarantee Facility of up to

NOK5,000,000,000

1 We refer to the loan and guarantee facility agreement dated 9 May 2008 (as amended and/or supplemented from time to time, the “LGFA”) and made between (1) Primelead Limited as Borrower, (2) certain banks and financial institutions, as Lenders, (3) Nordea Bank Finland Plc, London Branch and DnB NOR Bank ASA, London Branch as Lead Arrangers and Bookrunners, and (4) Nordea Bank Finland Plc, London Branch., as Agent and Security Trustee. Words and expressions defined in the LGFA, unless otherwise defined herein, shall have the same meanings where used in this Letter. References in this Letter to any document are to be construed as references to such document as amended and/or supplemented from time to time. This Letter is a Finance Document.

2 The Borrower and the Guarantors acknowledge that the Borrower and the Guarantors have failed to comply with certain provisions of the LGFA and the Corporate Guarantee as detailed below.

3 In consideration of the Lenders’ consent to waive such non-compliance, in accordance with the terms and conditions of this Letter and with effect from the date of this Letter, the LGFA shall be amended for the Waiver Period as set out in Part 2 below.

Part 1

SUMMARY OF EXISTING MAIN TERMS AND CONDITIONS

Borrower:	Primelead Limited.
Guarantors:	DryShips Inc. and Primelead Shareholders Inc on a joint and several basis.
Group:	DryShips and its direct and indirect subsidiaries.

-1-

Lead Arrangers & Bookrunners	Nordea Bank Finland PLC, London Branch and DnB NOR Bank ASA, London Branch.
Agent & Security Trustee:	Nordea.
Lenders:	Nordea, DnB NOR and HSH Nordbank AG.
Credit Facility:	A term loan facility in the aggregate principal amount of $800 million.
Outstanding Loan:	$650 million as per 12 February 2009 (excluding the US$150,000,000 received by the Agent on 12 February 2009 representing net sales proceed relating to recent equity issues by Dry-ships).
Scheduled Repayments:	The remaining instalments under the credit facility are:
	(1)	12 February 2009	$75 million;
	(2)	12 May 2009	$75 million;
	(3)	12 August 2009	$50 million;
	(4)	12 November 2009	$50 million;
	(5)	12 February 2010	$50 million;
	(6)	12 May 2010	$350 million.
Maturity Date:	12 May 2010.
Interest Rate:	LIBOR plus a Margin of 2.125% per annum.
Default Interest Rate:	LIBOR plus the Margin plus 2.00% per annum.
Financial Covenants:	The Group shall ensure that at all times the:
	(a)    Minimum Market Adjusted Equity Ratio is 30%; (b)    Minimum Interest Coverage Ratio is 3.0x; (c)    Maximum Net Debt-to-EBITDA Ratio is 5.0x; (d)    Minimum Liquid Funds is $50 million.
Dividend Restriction:	Each Guarantor may make a declaration or payment of annual dividend (other than by way of stocks or shares in the Borrower or similar instruments) provided always that:
	(a)    the Borrower and the Guarantors are in compliance with all financial and other covenants;

-2-

	(b)    no Event of Default has occurred which is continuing or which will occur as a result of the making of such distribution; (c)    subsequent to the making of such distribution, Liquid Funds shall be not less than $100 million and DryShips Inc. shall provide a certificate in form satisfactory to the Agent confirming compliance with this sub-clause (c); (d)    such Distribution shall not exceed $0.25 per share of DryShips Inc. in any financial quarter.
Security Cover:	If the Agent notifies the Borrower that (a) the aggregate Fair Market Value of the Ocean Rig Shares; plus (b) the net realisable value of any additional security previously provided is below 150 percent of the Loans, then the Borrower shall, within five Business Days of the Agent serving notice, either (i) provide, or ensure that a third party provides, additional security in the form of additional shares in Ocean Rig ASA or any other security which, in the opinion of the Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Lenders, approve or require; or (ii) prepay such part (at least) of the Loans as is equal to the shortfall.
	“Fair Market Value” means the fair value of the Ocean Rig Shares as reasonably determined by the Agent by reference to the net asset value of the Ocean Rig Shares on the relevant date adjusted to take account of the current market value of any vessels or drilling rigs owned by Ocean Rig ASA.
Monthly Retentions:	The Borrower undertakes with each Creditor Party to ensure that, one month after 12 May 2008 on the same day of each following month during the Security Period, there is transferred to the Retention Account by either the Borrower, the Shareholders or DryShips:
	(a)    not less than one-third of the amount of the repayment instalment falling due on the next Repayment Date; and (b)    the relevant fraction of the aggregate amount of interest on the Loans which is payable on the next due date for payment of interest under this Agreement;
	the “relevant fraction” is a fraction of which the numerator is 1 and the denominator the number of months comprised in each then current Interest Period (or, if the period is shorter, the number of months from the later of the commencement of each current Interest Period or the last due date for payment of interest to the next due date for payment of interest under this Agreement).
Mandatory Prepayments:	The Borrower shall make mandatory prepayments of the Loans to the Agent in the event that:
	(a)    the Borrower shall seek to sell or otherwise dispose of any of the Ocean Rig Shares in whole or in part (subject to the prior written consent of the Agent which shall not to be unreasonably withheld or delayed) then such sale or other disposal shall be on terms reasonably satisfactory to the Agent and, upon completion of such sale or other disposal, the Borrower shall prepay the Loans in an amount equal to the proceeds of such disposal, together with all costs and expenses; or

-3-

	(b)    the Borrower shall have any Unutilised Funds standing to the credit of the Retention Account; or (c)    any Security Party issues equity, bonds or other unsecured debt then, upon completion of such issue, the Borrower shall prepay the Loans in an amount equal to the fifty per cent (50%) of the net proceeds of such issue; or (d)    any dividend is declared by Ocean Rig ASA in respect of the Ocean Rig Shares, upon payment of such dividend, the Borrower shall prepay the Loans in an amount equal to such dividend, provided that, at the Borrower’s option, the Borrower may retain in the Dividend Account in NOK, or pay into the Retention Account in US Dollars, up to 50% of such dividend for application against regular repayments of principal or interest under the Loan Facility.
	A prepayment shall be made together with (i) accrued interest (and any other amount payable in respect of any Indemnities or otherwise) in respect of the amount prepaid; and (ii) if the prepayment is not made on the last day of an Interest Period, together with any sums payable in respect of breakage costs and otherwise; but without premium or penalty.
	No partial prepayment shall be made during the Availability Period unless the Loan Facility is fully drawn or the remaining Commitment cancelled and partial prepayment shall be applied against the repayment instalments specified in Clause 8.1 on a pro-rata basis.
	No amount repaid or prepaid may be reborrowed,
Ownership Maintenance:	The ultimate beneficial ownership and the ultimate control of the voting rights attaching to any of the issued shares in DryShips Inc. by Entrepreneurial Spirit Foundation, controlled by Mr. George Economou beneficially (or by any other entity controlled by Mr. George Economou beneficially), shall not, in each case, be less than 25%.
Negative Pledge:	The Borrower will hold the legal title to, and the entire beneficial interest in, the Ocean Rig Shares and the Earnings free from all Security Interests other than Permitted Security Interests.

-4-

Disposal of Assets:	The Borrower will not dispose of (a) any interest in the Ocean Rig Shares or the Earnings; or (b) all or any part of its other assets, except for full value.
Ocean Rig Listing:	The Borrower shall ensure that Ocean Rig ASA shall maintain its listing status on the Oslo Bors or if it is de-listed the Borrower shall ensure that Ocean Rig ASA is at all times a wholly owned subsidiary of the Borrower.
Notification of Litigation:	The Borrower shall procure that the Agent is provided details of any legal or administrative action involving the Borrower, any Security or the Earnings as soon as such action is instituted or it becomes apparent Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.
Notification of Default:	The Borrower will notify the Agent as soon as the Borrower becomes aware of (a) the occurrence of an Event of Default or a Potential Event of Default; or (b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred; and will thereafter keep the Agent fully up-to-date with all developments.
Governing Law:	English law.
Legal Counsel:	Watson, Farley & Williams LLP, London, U.K.

-5-

Part 2

WAIVER TERMS AND CONDITIONS

Purpose:	To allow a waiver period for the remedy of Events of Default.
Events of Default:	The following events or potential events of default have occurred or have been identified:
	(a)    Breach of the undertaking to deposit Monthly Retentions into the Retention Account held by the Borrower with the Agent in London. (LGFA clause 20.3); (b)    Breach of the Minimum Required Security Cover (LGFA clause 17.1) as per the calculations in Annex I hereto; (c)    Breach of the undertaking to prepay Loans in an amount equal to 50% of the net proceeds of equity issued by DryShips Inc upon completion of such issue (LGFA clause 8.7c); reference is made to a facsimile from DnB NOR dated 16 January 2009 attached as Annex II hereto; (d)    Alleged breach of the undertaking to give Notification of Default (LGFA clause 15.14) under the DryShips’ $700 million credit facility led by HSH Nordbank; (e)    Potential payment default in respect of the instalment due on 12 February 2009 (LGFA clause 21.1 (a)) as advised in a letter dated 9 January 2009 from DryShips Inc to the Agent; attached as Annex III hereto to which the Agent responded in a letter dated 16 January 2009, attached hereto as Annex IV; (f)     Potential breach of the Minimum Market-Adjusted Equity Ratio covenant as of 31 December 2008 as per the calculation attached as Annex V hereto (g)    Potential breach of the negative pledge to hold legal title of the Ocean Rig Shares and the Earnings (LGFA clause 15.2) as a consequence of the Redomicile Project; (h)    Potential breach of the undertaking to not dispose of any interests in the Ocean Rig Shares or the Earnings or all or any parts of its assets (LGFA clause 15.3) as a consequence of the Redomicile Project; (i)     Potential breach of the undertaking to ensure that Ocean Rig ASA is at all times a wholly owned subsidiary of the Borrower (LGFA clause 16.4) as a consequence of the Redomicile Project; (j)     Potential breach of Clause 11.13(c) of the Corporate Guarantee due to equity issues by Dryships Inc.;

-6-

Redomicile Project:	An organisational restructuring of the Group in which the ultimate objectives (as set out in the Ocean Rig Step Plan of 30 December 2008) are:
	(a)    the incorporation of Primelead Holding Inc, as a subsidiary of Primelead Shareholders Inc, and as the new parent of Primelead Limited; (b)    the incorporation of Drill Rigs Holdings Inc, as a subsidiary of Primelead Holdings Inc; (c)    sale of the drill rigs Erik Raude and Leiv Erikson from Ocean Rigs to non-Norwegian subsidiaries of Drill Rigs Holdings Inc; (d)    liquidation of Ocean Rig ASA and redemption of the Ocean Rig Shares; (e)    transfer/novation/refinancing of the Loan from/in Primelead Limited to/in Primelead Holding Inc; (f)     change of security, including but not limited to, from a shares pledge in Ocean Rig ASA to a shares pledge in Primelead Holding Inc and in Drill Rigs Holdings Inc;
Waiver Period:	From the date upon which this Letter is executed as a Deed by the Borrower and Guarantors and acknowledged by the Lenders, the Agent and the Security Trustee and the Conditions Precedent set out below are satisfied (the “Effective Date”) until the earlier of: (i) 12 August 2009; and (ii) Completion of the Redomicile Project; and (iii) the date upon which any default occurs under any of the Waiver Terms or Waiver Conditions or Conditions Precedent or Condition Subsequent; and (iv) any other Event of Default occurs under the LGFA which is not specifically waived by the terms of this Letter (the “Waiver Period”).
Waiver Terms:	During the Waiver Period, the following terms wilt apply:
	(a)    The Minimum Required Security Cover of 150% shall be waived in full; (b)    The Minimum Market-Adjusted Equity Ratio of 30% shall be waived in full; (c)    The $75 million instalment due on 12 February 2009 shall be postponed until the Completion of the Redomicile Project (to be defined) but not longer than until 12 May 2009; (d)    The LGFA clause 8.7c will be waived and instead read; if a Security Party issues equity, bonds or other unsecured debt after 1 January 2009, then upon completion of such issue, the Borrower shall prepay the Loans in an amount equal to (i) 100% of the net proceeds from the first batch of $100 million of shares sold, (ii) 50% of the net proceeds from the second

-7-

batch of $100 million of shares sold, (iii) 25% of the net proceeds from the third and fourth batch of $100 million of shares sold, and (iv) 0% of the net proceeds from any additional shares sold above the first $400 million of shares sold. Such partial prepayments shall be applied against the repayment instalments on a chronological basis, commencing with the instalment due on 12 August 2009. The US$150,000,000 received by the Agent on 12 February 2009, representing net sales proceed relating to recent equity issues by Dryships, shall be so applied; (e)    Approval in principle of the Redomicile Project but subject to detailed approval of proposals and documentation and to preserving at all times the security position of the Lenders to a situation no less favourable than that under current documentation; and (f)     Approval of dilution of the ultimate beneficial ownership and control or the voting rights attaching to any of the issued shares in DryShips Inc. by Entrepreneurial Spirit Foundation, controlled by Mr. George Economou beneficially (or by any other entity controlled by Mr. George Economou beneficially) to below the twenty five percent (25%) level required by clause 11.13 of the LGFA, provided: (i) that the proceeds of the issue(s) referred to in Waiver Terms paragraph (d) above are applied in accordance with that paragraph, (ii) that Mr. George Economou, Entreprenurial Spirit Foundation or any other entity controlled by Mr. George Economou does not divest any of its interests in any of its issued shares in DryShips Inc. that were owned on 27 January 2009; and (iii) there is no change in control of DryShips.

Waiver Conditions:

The waived terms will be subject to the following conditions: (a)    Current on any interest payable; (b)    Commencement of the $16.7 million monthly deposits onto the Retention Account beginning 12 June 2009 up to a maximum aggregate amount equal to the next scheduled instalment; (c)    The Borrower and the Guarantors to procure that Ocean Rig ASA deposit $180 million of cash into a bank account held in its name with Nordea Bank and/or with DnB NOR ASA, Oslo, by no later than 12 February 2009 and to procure (a) that such deposits and any interest accrued shall not be in any way charged, pledged, encumbered or paid out by Ocean Rig ASA until Completion of the Redomicile Project, and (b) any consents, waivers or approvals required in relation to maintaining such deposits are obtained and supplied to the Agent; (d)    Payment in arrears of the $75 million instalment due on 12 February 2009 upon Completion of the Redomicile Project no later than 12 May 2009;

-8-

(e)    Payment in advance of the $75 million instalment due on 12 May 2009 upon Completion of the Redomicile Project no later than 12 May 2009;

(f)     Scheduled repayments to recommence from 12 August 2009;

(g)    No dividend or other distribution declared or paid out during the waiver period;

(h)    Disclosure on a weekly basis of the controlled equity offerings, including the number of shares issued and the net proceeds raised from such issues, by means of a report to the Agent on every Tuesday before noon London time in respect of the previous week and attaching a statement from the investment bank or banks handling such controlled equity offerings. Such disclosure requirement to apply only until the prepayments referred to in Waiver Terms (d) have been made in full;

(i)     Payment to the Retention Account of the proceeds of any controlled equity offerings in accordance with Waiver Term (d) by no later than one Business Day following the receipt of the proceeds of the equity offering from the relevant underwriter/bank or banks to DryShips’ bank in Greece;

(j)     Prompt disclosure of all material transactions (and details thereof) entered into by DryShips or the Group with third parties;

(k)    Prompt disclosure, upon request, of the details of any financial restructuring of Dryships or the Group with any other bank or banks or financial institutions;

(1)    No cash capital expenditure or commitment to cash capital expenditure or the cash acquisition of assets by the Group without the prior written consent of the Lenders unless such commitment to capital expenditure has been made prior to the Waiver Period but which, for the avoidance of doubt, shall prohibit the acquisition by the Group of the drilling rigs hull nos. 1837 or 1838 (or any rights or interests in such rigs or the Shipbuilding Contracts relating thereto) until prepayment of the Loans to below US$375,000,000;

(m)   The Margin applicable from 9 January 2009 to be increased to three and one eighth per cent (3.125%) per annum;

(n)    A non-refundable Amendment Fee in an amount equal to 0.15% of the Loans outstanding on the Effective Date, plus an amount equal to one per cent (1.0%) per annum on the Loans outstanding for the period from 9 January 2009 until 12 February 2009, which fee shall be paid to the Agent for further distribution to the Lenders on a pro rata basis;

-9-

	(o)    All fees and expenses (including legal fees) in relation to the Waiver Letter and the Redomicile Project (whether or not either is completed or is approved by the Lenders) to be paid by the Borrower and/or the Guarantors; and (p)    The Borrower and the Guarantors to provide by not later than 20 February 2009 such additional security (and supporting corporate documentation) as the Lenders shall require (in form and substance to the Lenders’ entire satisfaction) to protect their security interests during the liquidation procedures in Norway relating to Ocean Rig ASA, including a Pledge over the shares of Primelead Limited and Drill Rigs Holdings Inc. and such legal opinions in Norway and Cyprus as may be required. The Borrower and the Guarantor shall additionally procure that Ocean Rig ASA and its Liquidation Committee execute any documentation required in relation to the foregoing.
Conditions Precedent:	Including but not limited to:
	(a)    Agent to confirm current on interest payable by no later than 12 February 2009; (b)    Agent to confirm receipt of Amendment Fee by no later than the Effective Date; (c)    Nordea and DnB NOR to confirm Ocean Rig ASA aggregate deposits of $180 million referred to in Waiver Conditions (c) above, by no later than the Effective Date; (d)    Credit approval by each of the Lenders.
Condition Subsequent:	Primelead Limited facility to be refinanced/redocumented to the satisfaction of the Agent, the Lenders and the Security Trustee and with Primelead Holding Inc as new Borrower by no later than the Completion of the Redomicile Project, in an aggregate principal loan amount of which is not less than $150 million less than the then outstanding Loan (i.e. simultaneous repayment/prepayment of the two instalments due on 12 February 2009 and 12 May 2009).
Miscellaneous:	(a)    The definition of, and references throughout to, the expression “Finance Documents” shall be construed as if the same included references to this Letter; (b)    The definition of, and references throughout to, the any of the other Finance Documents shall be construed as if the same referred to those Finance Documents as amended and supplemented by this Letter; (c)    References throughout to “this Agreement”, “hereunder” and other like expressions shall be construed as if the same referred to the LGFA as amended and supplemented by this Letter;

-10-

(d)    With effect from the date of this Letter, each of the Finance Documents other than the LGFA shall be, and shall be deemed by this Letter to be, amended as follows;

(e)    references throughout each of the Finance Documents to the expression “Finance Documents” shall be construed as if the same included references to this Letter;

(f)     the definition of, and references throughout each of the Finance Documents to, the “Loan Agreement” and any of the other Finance Documents shall be construed as if the same referred to the LGFA and those Finance Documents as amended and supplemented by this Letter;

(g)    references throughout each of the Finance Documents to “this Agreement”, “this Deed”, “hereunder” and other like expressions shall be construed as if the same referred to such Finance Document as amended and supplemented by this Letter;

(e)    The LGFA and the other Finance Documents shall each remain in full force and effect in accordance with its terms save as amended and supplemented by:

(i)     the amendments to the Finance Documents contained or referred to above; and

(ii)    such further or consequential modifications as may be necessary to give full effect to the terms of this Letter.

(f)     The Borrowers and the Guarantor undertake to procure that the Agent is provided at the time of execution of this Letter with corporate documents (including directors’ resolutions and, if required, shareholders’ resolutions) in a form acceptable to the Agent of each of the Borrower and the Guarantors approving the execution and performance of this Letter;

(g)    Each of the Borrower and the Guarantors will at its own expense and forthwith upon the request of the Agent execute, sign, perfect, do and (if required) register, each and every such further assurance, documents, act or thing as, in the absolute opinion of the Agent, may be necessary for the purpose of implementing the terms and provisions of this letter; or for the purpose of validly and effectively creating any right or obligation of any kind which the Agent intended should be created by or pursuant to this Letter;

(h)    With the exception of the persons who are parties to this Letter, no term of this Letter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Letter;

-11-

(i)     This Letter may be signed in any number of counterparts (and delivered physically or by e-mail or facsimile transmission) and any such counterparts taken together shall be deemed to constitute one and the same Letter;

(j)     Clause 32 (Law and Jurisdiction) of the LGFA and Clause 19 (Governing Law and Jurisdiction) of the Corporate Guarantee shall apply equally to this Letter.

Yours faithfully
EXECUTED AND DELIVERED AS A DEED by PRIMELEAD LIMITED acting by duly authorised in accordance with the laws of the Republic of Cyprus such execution being witnessed by: E. PRASSA	) ) ) ) ) ) )
EXECUTED AND DELIVERED	) ) ) ) )
AS A DEED by PRIMELEAD SHAREHOLDERS INC. acting by duly authorised in accordance with the laws
of the Republic of the Marshall Islands)
such execution being	)
witnessed by: E. PRASSA	)
EXECUTED AND DELIVERED AS A DEED by DRYSHIPS INC. acting by duly authorised in accordance with the laws	) ) ) )
of the Republic of the Marshall Islands)
such execution being	)
witnessed by: E. PRASSA	)
We hereby acknowledge receipt of, and agree to the terms of, this Letter.
ELENI SKALA
for and on behalf of
NORDEA BANK FINLAND PLC, LONDON BRANCH as Agent and as Security Trustee

-12-

ELENI SKALA

for and on behalf of

NORDEA BANK FINLAND PLC, LONDON BRANCH

as Lender

ELENI SKALA

for and on behalf of

DNB NOR BANK ASA, LONDON BRANCH

As Lender

ELENI SKALA

for and on behalf of

HSH NORDBANK AG

as Lender

-13-

EX-4.38

Exhibit 4.38

DATED 13 MAY 2008

IONIAN TRADERS INC.

NORWALK STAR OWNERS INC.

(as Borrowers)

- and -

DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT

BAYERISCHE HYPO- UND VEREINSBANK AG

and others

(as Lenders)

- and -

DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT

(as Agent)

- and -

DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT

BAYERISCRE HYPO- UND VEREINSBANK AG

(as Swap Providers)

- and -

DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT

(as Security Agent)

US$125,000,000 SECURED

LOAN AGREEMENT

m.vs. “GRAN TRADER” (tbr CAPRI) and “NORD LUNA” (tbr POSITANO)

STEPHENSON HARWOOD

One St. Paul’s Churchyard

London EC4M 8SH

Tel: 020 7329 4422

Fax: 020 7329 7100

Ref: 09. 212

CONTENTS

		Page
1	Definitions and Interpretation	2
2	The Loan and its Purpose	12
3	Conditions of Utilisation	13
4	Advance	14
5	Repayment	14
6	Prepayment	15
7	Interest	16
8	Indemnities	19
9	Arrangement Fee	23
10	Security and Application of Moneys	23
11	Representations	25
12	Undertakings and Covenants	28
13	Events of Default	34
14	Assignment and Sub-Participation	38
15	The Master Agreement	40
16	The Agent, the Security Agent and the Lenders	41
17	Set-Off	51
18	Payments	51
19	Notices	53
20	Partial Invalidity	54
21	Remedies and Waivers	55

22	Joint and several liability	55
23	Miscellaneous	56
24	Law and Jurisdiction	57
SCHEDULE 1: The Lenders, the Commitments and the Swap Providers		59
SCHEDULE 2: Conditions Precedent and Subsequent		60
	Part I: Conditions precedent	60
	Part II: Conditions subsequent	65
SCHEDULE 3: Form of Drawdown Notice		67
SCHEDULE 4: Form of Transfer Certificate		68
SCHEDULE 5: Form of Compliance Certificate		71

LOAN AGREEMENT

Dated: 13 May 2008

BETWEEN:

(1) NORWALK STAR OWNERS INC., and IONIAN TRADERS INC., both companies incorporated under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, (together the “Borrowers” and each a “Borrower”) jointly and severally; and

(2) the banks listed in Schedule 1 (The Lenders, the Commitments and the Swap Providers), each acting through its office at the address indicated against its name in Schedule 1 together the “Lenders” and each a “Lender”); and

(3) DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT, acting as agent and arranger through its office at 17, Domshof, 28195, Bremen, Federal Republic of Germany (in that capacity the “Agent”); and

(4) the banks listed in Schedule 1 (The Lenders, the Commitments, and the Swap Providers), each acting through its office at the address indicated against its name in Schedule 1 (together the “Swap Providers” and each a “Swap Provider”); and

(5) DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT, acting as security agent through its office at 17, Domshof, 28195, Bremen, Federal Republic of Germany (in that capacity the “Security Agent”).

WHEREAS:

(A) Each Borrower has agreed to purchase the relevant Vessel from the relevant Seller on the terms of the relevant MOA and intends to register that Vessel under the relevant flag specified below in the definition of “Vessels”.

(B) Each of the Lenders has agreed to advance to the Borrowers on a joint and several basis its Commitment (aggregating, with all the other Commitments, an amount not exceeding the lesser of (i) $125,000,000 and (ii) sixty per cent (60%) of the Fair Market Value on the Drawdown Date) to assist the Borrowers to finance part of the aggregate Purchase Price of the Vessels.

IT IS AGREED as follows:

1 Definitions and interpretation

1.1 In this Agreement:

“Administration” has the meaning given to it in paragraph 1.1.3 of the ISM Code.

“Annex VI” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).

“Assignments” means the deeds of assignment referred to in Clause 10.1.2 (Security Documents).

“Availability Termination Date” means 31 July 2008 or such later date as the Lenders may in their discretion agree.

“Break Costs” means all sums payable by the Borrowers from time to time under Clause 8.3 (Break Costs).

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in New York, London, Bremen, Hamburg and Piraeus.

“Commitment” means, in relation to a Lender, the amount of the Loan which that Lender agrees to advance to the Borrowers as its several liability as indicated against the name of that Lender in Schedule 1 (The Lenders and the Commitments) and/or, where the context permits, the amount of the Loan advanced by that Lender and remaining outstanding and “Commitments” means more than one of them.

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 5 (Form of Compliance Certificate).

“Confirmation” means a confirmation exchanged, or deemed exchanged, between a Swap Provider and the Borrowers as contemplated by the relevant Master Agreement.

“Credit Support Document” means any document described as such in the Master Agreements and, where the context permits, any other document referred to in any Credit Support Document which has the effect of creating an Encumbrance in favour of any of the Finance Parties.

2

“Credit Support Provider” means any person (other than a Borrower) described as such in the Master Agreements.

“Currency of Account” means, in relation to any payment to be made to a Finance Party under a Finance Document, the currency in which that payment is required to be made by the terms of that Finance Document.

“Deeds of Covenants” means the deeds of covenants referred to in Clause 10.1.1 (Security Documents).

“Default” means an Event of Default or any event or circumstance specified in Clause 13.1 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

“DOC” means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

“Dollars” and “$” each means available and freely transferable and convertible funds in lawful currency of the United States of America.

“Drawdown Date” means the date on which the relevant Drawing is advanced under Clause 4 (Advance) and “Second Drawdown Date” means the second such Drawdown Date to occur.

“Drawdown Notice” means a notice substantially in the form set out in Schedule 3 (Form of Drawdown Notice).

“Drawing” means any part of the Loan advanced or to be advanced pursuant to a Drawdown Notice and “Drawings” means both of them.

“Earnings” means all hires, freights, pool income and other sums payable to or for the account of a Borrower in respect of a Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire,

3

and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of a Vessel.

“Encumbrance” means a mortgage, charge, assignment, pledge, lien, or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

“Event of Default” means any of the events or circumstances set our in Clause 13.1 (Events of Default).

“Facility Period” means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been paid in full and the Security Parties have ceased to be under any further actual or contingent liability to the Finance Parties under or in connection with the Finance Documents.

“Fair Market Value” means the market value of a Vessel to be conclusively determined by a reputable, independent and first class firm of shipbrokers appointed by the Agent, after consultation with the Borrowers, on the basis of a charter-free sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing seller and a willing buyer.

“Fee Letter” means any letter or letters dated on or about the date of this Agreement between the Agent and the Borrowers setting out any of the fees referred to in Clause 9 (Fees)

“Finance Documents” means this Agreement, the Master Agreements, the Security Documents, any Fee Letter and any other document designated as such by the Agent and the Borrowers and “Finance Document” means any one of them.

“Finance Parties” means the Agent, the Security Agent, the Swap Providers and the Lenders and “Finance Party” means any one of them.

“Financial Indebtedness” means any obligation for the payment or repayment of money, whether present or future, actual or contingent, in respect of:

(a) moneys borrowed;

(b) any acceptance credit;

4

(c) any bond, note, debenture, loan stock or similar instrument;

(d) any finance or capital lease;

(e) receivables sold or discounted (other than on a non-recourse basis);

(f) deferred payments for assets or services;

(g) any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

(h) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

(i) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and

(j) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.

“GAAP” means generally accepted accounting principles in the United States of America.

“Guarantee” means the guarantee and indemnity referred to in Clause 10.1.3 (Security Documents).

“Guarantor” means DryShips Inc. of the Marshall Islands and/or (where the context permits) any other person who shall at any time during the Facility Period give to the Lenders or to the Security Agent on their behalf a guarantee and/or indemnity for the repayment of all or part of the Indebtedness.

“Hedging Transaction” means a Transaction entered into between a Swap Provider and the Borrowers pursuant to a Master Agreement for the express purpose of hedging all or part of the Borrowers’ interest rate risk under this Agreement.

“IAPPC” means a valid international air pollution prevention certificate for a Vessel issued under Annex VI.

5

“Indebtedness” means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to any of the Finance Parties under all or any of the Finance Documents.

“Insurances” means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with a Vessel or her increased value or her Earnings and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.

“Interest Coverage” means the earnings before interest, tax, depreciation and amortisation over interest expense calculated on a trailing basis.

“Interest Payment Date” means each date for the payment of interest in accordance with Clause 7.8 (Accrual and payment of interest).

“Interest Period” means each period for the determination and payment of interest selected by the Borrowers or agreed or selected by the Agent pursuant to Clause 7 (Interest).

“ISM Code” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention.

“ISM Company” means, at any given time, the company responsible for a Vessel’s compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

“ISPS Code” means the International Ship and Port Facility Security Code.

“ISPS Company” means, at any given time, the company responsible for a Vessel’s compliance with the ISPS Code.

“ISSC” means a valid international ship security certificate for a Vessel issued under the ISPS Code.

“LIBOR” means:

(a) the applicable Screen Rate; or

6

(b) (if no Screen Rate is available for any Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the London interbank market,

at 11.00 a.m. two (2) Business Days before the first day of the relevant Interest Period for the offering of deposits in Dollars in an amount comparable to the Loan (or any relevant part of the Loan) and for a period comparable to the relevant Interest Period.

“Loan” means the aggregate amount advanced or to be advanced by the Lenders to the Borrowers under Clause 4 (Advance) or, where the context permits, the amount advanced and for the time being outstanding.

“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than sixty seven per cent (67%) of the aggregate of all the Commitments.

“Management Agreements” means the agreements for the commercial and/or technical management of the Vessels between the Borrowers respectively and the Managers and “Management Agreement” means either of them.

“Managers” means Cardiff Marine Inc. of the Republic of Liberia, or such other commercial and/or technical managers of the Vessels nominated by the Borrowers as the Agent may approve.

“Margin” means one point one five per cent (1.15%) per annum.

“Market Adjusted Equity Ratio” means the interest bearing liabilities plus the shareholders’ equity after shareholder’s equity has been adjusted for market values.

“Master Agreements” means any Deutscher Rahmenvertrag (Rahmenvertrag Für Finanztermingeschäfte) Master Agreement (or any other form of master agreement relating to interest or currency exchange transactions) entered into between each Swap Provider and the Borrowers during the Facility Period, including each Schedule to any Master Agreement and each Confirmation exchanged pursuant to any Master Agreement. and “Master Agreement” means either one of them.

“Maximum Drawing Amount” means (a) an aggregate amount not exceeding eighty one million eight hundred thousand Dollars ($81,800,000) in respect of the Drawing relating to “GRAN TRADER” and (b) an aggregate amount not exceeding forty three million two hundred thousand Dollars ($43,200,000) in respect of the Drawing relating to “NORD LUNA”.

7

“Maximum Loan Amount” means an aggregate amount not exceeding the lesser of (a) one hundred and twenty five million Dollars ($125,000,000) and (b) sixty per cent (60%) of the aggregate Fair Market Value on the Drawdown Date.

“Minimum Liquidity” means the sum of cash and cash equivalents excluding restricted cash, as each such term is defined in the applicable financial statements for the Guarantor.

“Minimum Net Worth” means the charter free market value of total assets less total liabilities, as each such term is defined in the applicable financial statements for the Guarantor.

“MOAs” means the memoranda of agreement dated 13 November 2007 in respect of “GRAN TRADER” and 12 March 2008, in respect of “NORD LUNA” on the terms and subject to the conditions of which the Sellers will sell the Vessels to the Borrowers respectively for the applicable Purchase Price and “MOA” means either of them.

“Mortgagee’s Insurances” means all policies and contracts of mortgagee’s interest insurance, mortgage’s additional perils (oil pollution) insurance and any other insurance from time to time taken out by the Agent in relation to a Vessel.

“Mortgages” means the statutory mortgages referred to in Clause 10.1.1 (Security Documents) together with the Deeds of Covenants and “Mortgage” means either of them.

“Notional Amount”, in respect of any Hedging Transaction, means the Notional Amount as defined in the Confirmation relating to that Hedging Transaction.

“Original Financial Statements” means the audited consolidated financial statements of the Guarantor for the financial year ended 2007.

“Permitted Encumbrance” means any Encumbrance which has the prior written approval of the Agent, or any liens for current crews’ wages and salvage and liens incurred in the ordinary course of trading a Vessel up to an aggregate amount at any time not exceeding.

8

“Proportionate Share” means, at any time, the proportion which a Lender’s Commitment (whether or not advanced) then bears to the aggregate Commitments of all the Lenders (whether or not advanced).

“Purchase Price” means one hundred and fifty two million two hundred and fifty thousand Dollars ($152,250,000) in respect of the “GRAN TRADER” and seventy two million Dollars ($72,000,000) in respect of the “NORD LUNA”.

“Relevant Documents” means the Finance Documents, the MOAs, the Management Agreements and the Managers’ confirmation specified in Part I of Schedule 2 (Conditions precedent).

“Repayment Date” means the date for payment of any Repayment Instalment in accordance with Clause 5.1 (Repayment of Loan).

“Repayment Instalment” means any instalment of the Loan to be repaid by the Borrowers under Clause 5.1 (Repayment of Loan).

“Requisition Compensation” means all compensation or other money which may from time to time be payable to a Borrower as a result of a Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).

“Screen Rate” means in relation to LIBOR, the British Bankers’ Association Interest Settlement Rate for the relevant currency and period displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or the service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrowers and the Lenders.

“Security Documents” means the Mortgages, the Deeds of Covenants, the Assignments, the Guarantee and any other Credit Support Documents or (where the context permits) any one or more of them and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness and “Security Document” means any one of them.

“Security Parties” means the Borrowers, the Guarantor, any other Credit Support Provider and any other person who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, and “Security Party” means any one of them.

9

“Sellers” means the persons specified as such in the definition of “Vessels” below and “Seller” means either of them.

“SMC” means a valid safety management certificate issued for a Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

“Total Loss” means:

(a) an actual, constructive, arranged, agreed or compromised total loss of a Vessel; or

(b) the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire); or

(c) the capture, seizure, arrest, detention or confiscation of a Vessel by any government or by persons acting or purporting to act on behalf of any government, unless that Vessel is released and returned to the possession of the relevant Borrower within one month after the capture, seizure, arrest, detention or confiscation in question.

“Transaction” means a transaction entered into between a Swap Provider and the Borrowers governed by a Master Agreement.

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrowers.

“Transfer Date”, in relation to any Transfer Certificate, the later of:

(a) the proposed Transfer Date specified in the Transfer Certificate; and

(b) the date on which the Agent executes the Transfer Certificate.

10

“Trust Property” means:

(a) all benefits derived by the Security Agent from Clause 10 (Security and Application of Moneys); and

(b) all benefits arising under (including, without limitation, all proceeds of the enforcement of) each of the Security Documents.

with the exception of any benefits arising solely for the benefit of the Security Agent.

“Vessels” means the following vessels, and everything now or in the future belonging to them on board and ashore, currently registered under the respective flags set out below in the ownership of the respective Sellers set out below and intended to be sold to the respective Borrowers set out below on the terms of the MOAs and “Vessel” means either of them:

Name of Vessel	IMO no.	Flag	Seller	Borrower
“NORD LUNA” (tbr POSITANO)	9213791	Malta	Dampskibsseiskabet     “NORDEN” A/S	Ionian Traders Inc.
“GRAN TRADER” (tbr CAPRI)	9248526	Malta	Ratu Shipping Co. S.A.	Norwalk Star Owners Inc.

1.2 In this Agreement:

1.2.1 words denoting the plural number include the singular and vice versa;

1.2.2 words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi- governmental bodies or authorities and vice versa;

1.2.3 references to Recitals, Clauses and Schedules are references to recitals, clauses and schedules to or of this Agreement;

1.2.4 references to this Agreement include the Recitals and the Schedules;

11

1.2.5 the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement;

1.2.6 references to any document (including, without limitation, to all or any of the Relevant Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time;

1.2.7 references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted;

1.2.8 references to any Finance Party include its successors, transferees and assignees;

1.2.9 a time of day (unless otherwise specified) is a reference to London time; and

1.2.10 words and expressions defined in a Master Agreement, unless the context otherwise requires, have the same meaning.

1.3 Offer letter

This Agreement supersedes the terms and conditions contained in any correspondence relating to die subject matter of this Agreement exchanged between any Finance Party and the Borrowers or their representatives prior to the date of this Agreement.

2 The Loan and its Purpose

2.1 Amount Subject to the terms of this Agreement, the Lenders agree to make available to the Borrowers a term loan not exceeding the Maximum Loan Amount.

2.2 Finance Parties’ obligations The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other party to the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

12

2.3 Purpose The Borrowers shall apply the Loan for the purposes referred to in Recital (B).

2.4 Monitoring No Finance Party is bound to monitor or verify the application of any amount borrowed under this Agreement.

3 Conditions of Utilisation

3.1 Conditions precedent The Borrowers are not entitled to have any Drawing advanced unless the Agent has received all of the documents and other evidence listed in Part I of Schedule 2 (Conditions precedent), save that references in Section 2 of that Part I to “the Vessel” or to any person or document relating to a Vessel shall be deemed to relate solely to any Vessel specified in the relevant Drawdown Notice or to any person or document relating to that Vessel respectively.

3.2 Further conditions precedent The Lenders will only be obliged to advance a Drawing if on the date of the Drawdown Notice and on the proposed Drawdown Date:

3.2.1 no Default is continuing or would result from the advance of that Drawing; and

3.2.2 the representations made by the Borrowers under Clause 11 (Representations) are true in all material respects.

3.3 Drawing limit The Lenders will only be obliged to advance a Drawing if that Drawing will not increase the Loan to a sum in excess of the Maximum Loan Amount nor exceed the Maximum Drawing Amount.

3.4 Conditions subsequent The Borrowers undertake to deliver or to cause to be delivered to the Agent on, or as soon as practicable after, the relevant Drawdown Date the additional documents and other evidence listed in Part II of Schedule 2 (Conditions subsequent), save that references in that Part II to “the Vessel” or to any person or document relating to a Vessel shall be deemed to relate solely to any Vessel specified in the relevant Drawdown Notice or to any person or document relating to that Vessel respectively.

3.5 No Waiver If the Lenders in their sole discretion agree to advance a Drawing to the Borrowers before all of the documents and evidence required by Clause 3.1

13

(Conditions precedent) have been delivered to or to the order of the Agent, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Agent no later than the date specified by the Agent.

The advance of a Drawing under this Clause 3.5 shall not be taken as a waiver of the Lenders’ right to require production of all the documents and evidence required by Clause 3.1 (Conditions precedent).

3.6 Form and content All documents and evidence delivered to the Agent under this Clause 3 shall:

3.6.1 be in form and substance acceptable to the Agent; and

3.6.2 if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent.

4 Advance

4.1 Drawdown Request The Borrowers may request a Drawing to be advanced in one amount on any Business Day prior to the Availability Termination Date by delivering to the Agent a duly completed Drawdown Notice not more than ten (10) and not fewer than (a) one (1) Business Day before the proposed Drawdown Date in respect of the Drawing relating to the “GRAN TRADER” and (b) three (3) Business Days before the proposed Drawdown Date respect of the Drawing relating to the “NORD LUNA”.

4.2 Lenders’ participation Subject to Clauses 2 (The Loan and its Purpose) and 3 (Conditions of Utilisation), the Agent shall promptly notify each Lender of the receipt of a Drawdown Notice, following which each Lender shall advance its Proportionate Share of the relevant Drawing to the Borrowers through the Agent on the relevant Drawdown Date.

5 Repayment

5.1 Repayment of Loan The Borrowers agree to repay the Loan to the Agent for the account of the Lenders by thirty two (32) consecutive quarterly instalments the first eight (1^st-8^th) such repayment instalments each in the sum of six million five hundred thousand Dollars ($6,500,000), the following twenty three (9^th-31^st) such repayment instalments each in the sum of two million two hundred and fifty

14

thousand Dollars ($2,250,000) and thirty second (32^nd) and final such repayment instalment in the sum of twenty one million two hundred and fifty thousand Dollars ($21,250,000) (comprising an instalment of two million two hundred and fifty thousand Dollars ($2,250,000) and a balloon amount of nineteen million Dollars ($19,000,000)), the first instalment falling due on the date which is three calendar months after the earlier to occur of the Second Drawdown Date and the Availability Termination Date and subsequent instalments falling due at consecutive intervals of three calendar months thereafter.

5.2 Reduction of Repayment Instalments If the aggregate amount advanced to the Borrowers is less than the Maximum Loan Amount, the amount of each Repayment Instalment shall be reduced pro rata to the amount actually advanced.

5.3 Reborrowing The Borrowers may not reborrow any part of the Loan which is repaid or prepaid.

6 Prepayment

6.1 Illegality If it becomes unlawful in any jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Loan:

6.1.1 that Lender shall promptly notify the Agent of that event;

6.1.2 upon the Agent notifying the Borrowers, the Commitment of that Lender (to the extent not already advanced) will be immediately cancelled; and

6.1.3 the Borrowers shall repay that Lender’s Commitment (to the extent already advanced) on the last day of the current interest Period or, if earlier, the date specified by that Lender in the notice delivered to the Agent and notified by the Agent to the Borrowers (being no earlier than the last day of any applicable grace period permitted by law) and the remaining Repayment Instalments shall be reduced pro rata.

6.2 Voluntary prepayment of Loan The Borrowers may prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the Loan by a minimum amount of five hundred thousand Dollars ($500,000) or integral multiples thereof) subject as follows:

6.2.1 they give the Agent not less than five (5) Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice;

15

6.2.2 no prepayment may be made until after the Availability Termination Date; and

6.2.3 any prepayment under this Clause 6.2 shall satisfy the obligations under Clause 5.1 (Repayment of Loan) in inverse order of maturity.

6.3 Mandatory prepayment on sale or Total Loss If a Vessel is sold by a Borrower or becomes a Total Loss, the Borrowers shall, simultaneously with any such sale or within one hundred and twenty (120) days after any such Total Loss, make a prepayment of the Drawing applicable to that Vessel. Any such prepayment shall be applied in prepayment of the remaining Repayment Instalments in inverse order of maturity.

6.4 Restrictions Any notice of prepayment given under this Clause 6 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment is to be made and the amount of that prepayment.

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs and subject to Clause 6.2 (Voluntary prepayment of Loan) and Clause 6.3 (Mandatory prepayment on sale or Total Loss), without premium or penalty.

If the Agent receives a notice under this Clause 6 it shall promptly forward a copy of that notice to the Borrowers or the Lenders, as appropriate.

7 Interest

7.1 Interest Periods The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of three, six or twelve months’ duration, as selected by the Borrowers by written notice to the Agent not later than 11.00 a.m. on the third Business Day before the beginning of the Interest Period in question, or such other duration as may be agreed by the Agent (acting on the instructions of all the Lenders).

16

7.2 Beginning and end of Interest Periods Each Interest Period shall start on the first Drawdown Date or (if a Drawing is already made) on the last day of the preceding Interest Period and end on the date which numerically corresponds to the first Drawdown Date or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month.

7.3 Second and subsequent Drawings If the second or any subsequent Drawing is made otherwise than on the first day of an Interest Period for the balance of the Loan, there shall be a separate initial Interest Period for that Drawing commencing on its Drawdown Date and expiring on the final date of the then current Interest Period for the balance of the Loan.

7.4 Interest Periods to meet Repayment Dates If an Interest Period will expire after the next Repayment Date, there shall be a separate Interest Period for a part of the Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.

7.5 Non-Business Days If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

7.6 Interest rate During each Interest Period interest shall accrue on the Loan at the rate determined by the Agent to be the aggregate of (a) the Margin and (b) LIBOR.

7.7 Failure to select Interest Period If the Borrowers at any time fail to select or agree an Interest Period in accordance with Clause 7.1 (Interest Periods), the interest rate applicable shall be the rate determined by the Agent in accordance with Clause 7.6 (Interest rate) for an Interest Period of such duration (not exceeding three (3) months) as the Agent may select.

7.8 Accrual and payment of interest Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice differs, in accordance with the prevailing market practice) and shall be paid by the Borrowers to the Agent for the account of the Lenders on the last day of each Interest Period and, if the Interest Period is longer than three (3) months, on the dates falling at three (3) monthly intervals after the first day of that Interest Period.

17

7.9 Default interest If a Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent (2%) higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan in the currency of the overdue amount for successive Interest Periods, each selected by the Agent (acting reasonably). Any interest accruing under this Clause 7.9 shall be immediately payable by that Borrower on demand by the Agent. If unpaid, any such interest will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

7.10 Changes in market circumstances If at any time the Agent determines (which determination shall be final and conclusive and binding on the Borrowers) that in the London interbank market either adequate and fair means do not exist for determining the rate of interest on the Loan for any Interest Period or the cost to a Lender or Lenders of obtaining matching deposits for any Interest Period would be in excess of LIBOR:

7.10.1 the Agent shall give notice to the Lenders and the Borrowers of the occurrence of such event; and

7.10.2 the rate of interest on each Lenders Commitment for that Interest Period shall be the rate per annum which is the sum of:

(a) the Margin; and

(b) the rate notified to the Agent by that Lender as soon as practicable, and in any event before interest is due to be paid in respect of that interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its Commitment from whatever source it may reasonably select,

PROVIDED THAT if the resulting rate of interest on any Commitment is not acceptable to the Borrowers:

7.10.3 the Agent on behalf of the Lenders will negotiate with the Borrowers in good faith with a view to modifying this Agreement to provide a substitute basis for determining the rate of interest which is financially a substantial equivalent to the basis provided for in this Agreement;

18

7.10.4 any substitute basis agreed pursuant to Clause 7.10.3 shall be binding on all the parties to this Agreement and shall apply to all Commitments; and

7.10.5 if, within thirty (30) days of the giving of the notice referred to in Clause 7.10.1, the Borrowers and the Agent fail to agree in writing on a substitute basis for determining the rate of interest, the Borrowers will immediately prepay the relevant Commitment, together with any Break Costs, and the remaining Repayment Instalments shall be reduced pro rata.

7.11 Determinations conclusive The Agent shall promptly notify the Borrowers of the determination of a rate of interest under this Clause 7 and each such determination shall (save in the case of manifest error) be final and conclusive.

8 Indemnities

8.1 Transaction expenses The Borrowers will, within fourteen (14) days of the Agent’s written demand, pay the Agent (for the account of the Finance Parties) the amount of all costs and expenses (including legal fees and Value Added Tax or any similar or replacement tax if applicable) incurred by the Finance Parties or any of them in connection with:

8.1.1 the negotiation, preparation, printing, execution and registration of the Finance Documents (whether or not any Finance Document is actually executed or registered and whether or not all or any part of the Loan is advanced);

8.1.2 any amendment, addendum or supplement to any Finance Document (whether or not completed); and

8.1.3 any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of the Vessels).

19

8.2 Funding costs The Borrowers shall indemnify each Finance Party, by payment to the Agent (for the account of that Finance Party) on the Agent’s written demand, against all losses and costs incurred or sustained by that Finance Party if, for any reason, a Drawing is not advanced to the Borrowers after the relevant Drawdown Notice has been given to the Agent, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by a Finance Party).

8.3 Break Costs The Borrowers shall indemnify each Finance Party, by payment to the Agent (for the account of that Finance Party) on the Agent’s written demand, against all costs, losses, premiums or penalties incurred by that Finance Party as a result of its receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 6 (Prepayment) or otherwise) on a day other than the last day of an Interest Period for the Loan or relevant part of the Loan, or any other payment under or in relation to the Finance Documents on a day other than the due date for payment of the sum in question, including (without limitation) any losses or costs incurred in liquidating or re-employing deposits from third parties acquired to effect or maintain all or any part of the Loan, and any liabilities, expenses or losses incurred by that Finance Party in terminating or reversing, or otherwise in connection with, any Transaction or any other interest rate and/or currency swap, transaction or arrangement entered into by that Finance Party to hedge any exposure arising under this Agreement, or in terminating or reversing, or otherwise in connection with, any open position arising under this Agreement or a Master Agreement.

8.4 Currency indemnity In the event of a Finance Party receiving or recovering any amount payable under a Finance Document in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrowers shall, on the Agents written demand, pay to the Agent for the account of the relevant Finance Party such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Agent on behalf of the relevant Finance Party as a separate debt under this Agreement.

20

8.5 Increased costs (subject to Clause 8.6 (Exceptions to increased costs)) If, by reason of the introduction of any law, or any change in any law, or any change in the interpretation or administration of any law, or compliance with any request or requirement from any central bank or any fiscal, monetary or other authority occurring after the date of this Agreement:

8.5.1 a Finance Party (or the holding company of a Finance Party) shall be subject to any Tax with respect to payment of all or any part of the Indebtedness (other than Tax on overall net income); or

8.5.2 the basis of Taxation of payments to a Finance Party in respect of all or any part of the Indebtedness shall be changed; or

8.5.3 any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of a Finance Party; or

8.5.4 the manner in which a Finance Party allocates capital resources to its obligations under this Agreement and/or a Master Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which a Finance Party is required or requested to maintain shall be affected; or

8.5.5 there is imposed on a Finance Party (or on the holding company of a Finance Party) any other condition in relation to the Indebtedness or the Finance Documents;

and the result of any of the above shall be to increase the cost to a Finance Party (or to the holding company of a Finance Party) of that Finance Party making or maintaining its Commitment, or its obligations under a Master Agreement, or to cause a Finance Party to suffer (in its opinion) a material reduction in the rate of return on its overall capital below the level which it reasonably anticipated at the date of this Agreement and which it would have been able to achieve but for its entering into this Agreement or a Master Agreement, and/or performing its obligations under this Agreement or a Master Agreement, then, subject to Clause 8.6 (Exceptions to increased costs), the Finance Party affected shall notify the Agent and the Borrowers shall from time to time pay to the Agent on demand for the account of that Finance Party the amount which shall compensate that Finance Party (or the relevant holding company) for such additional cost or reduced return. A certificate signed by an authorised signatory of that Finance Party setting out the amount of that payment and the basis of its calculation shall be submitted to the Borrowers and shall be conclusive evidence of such amount save for manifest error or on any question of law.

21

8.6 Exceptions to increased costs Clause 8.5 (Increased costs) does not apply to the extent any additional cost or reduced return referred to in that Clause is:

8.6.1 compensated for by a payment made under Clause 8.10 (Taxes); or

8.6.2 compensated for by a payment made under Clause 18.3 (Grossing-up); or

8.6.3 attributable to the wilful breach by the relevant Finance Party (or the holding company of that Finance Party) of any law or regulation.

8.7 Events of Default The Borrowers shall indemnify each Finance Party from time to time, by payment to the Agent (for the account of that Finance Party) on the Agent’s written demand, against all losses, costs and liabilities incurred or sustained by that Finance Party as a consequence of any Event of Default.

8.8 Enforcement costs The Borrowers shall pay to the Agent (for the account of each Finance Party) on the Agent’s written demand the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document including (without limitation) any losses, costs and expenses which that Finance Party may from time to time sustain, incur or become liable for by reason of that Finance Party being mortgagee of a Vessel and/or a lender to the Borrowers, or by reason of that Finance Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of a Vessel.

8.9 Other costs The Borrowers shall pay to the Agent (for the account of each Finance Party) on the Agent’s written demand the amount of all sums which that Finance Party may pay or become actually or contingently liable for on account of a Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which that Finance Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by that Finance Party in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which that Finance Party may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.

22

8.10 Taxes The Borrowers shall pay all Taxes to which all or any part of the Indebtedness or any Finance Document may be at any time subject (other than Tax on a Finance Party’s overall net income) and shall indemnify the Finance Parties, by payment to the Agent (for the account of the Finance Parties) on the Agent’s written demand, against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.

9 Arrangement Fee

The Borrowers shall pay to the Agent for retention by the Agent or for distribution to the Lenders in such manner as the Agent and the Lenders may agree, a non-refundable arrangement fee of $375,000 (i.e. zero point three per cent (0.3%) of the Maximum Loan Amount) on the first Drawdown Date to occur.

10 Security and Application of Moneys

10.1 Security Documents As security for the payment of the Indebtedness, the Borrowers shall execute and deliver to the Security Agent or cause to be executed and delivered to the Security Agent the following documents in such forms and containing such terms and conditions as the Security Agent shall require:

10.1.1 first statutory mortgages over the Vessels together with collateral deeds of covenants;

10.1.2 first priority deeds of assignment of the Insurances, Earnings and Requisition Compensation of the Vessels;

10.1.3 a guarantee and indemnity from the Guarantor.

10.2 General application of moneys Each Borrower, subject to Clause 10.3 (Application of moneys on sale or Total Loss), irrevocably authorises the Agent and the Security Agent to apply all sums which either of them may receive:

10.2.1 pursuant to a sale or other disposition of its Vessel or any right, title or interest in its Vessel; or

10.2.2 by way of payment of any sum in respect of the Insurances, Earnings or Requisition Compensation of its Vessel; or

23

10.2.3 otherwise arising under or in connection with any Security Document,

in or towards satisfaction, or by way of retention on account, of the Indebtedness, in such manner as the Agent may in its discretion determine PROVIDED THAT any part of the Indebtedness arising out of a Master Agreement shall be satisfied, or retained for, on a pari passu basis with the remainder of the Indebtedness.

10.3 Application of moneys on sale or Total Loss Each Borrower irrevocably authorises the Agent and the Security Agent to apply all sums which either of them may receive pursuant to a sale by that Borrower of its Vessel or a Total Loss of its Vessel in or towards satisfaction of the prepayment due and payable by virtue of that sale or Total Loss under Clause 6.3 (Mandatory prepayment on sale or Total Loss), but the Borrowers’ obligation to make that prepayment shall not be affected if those sums are insufficient to satisfy that obligation.

10.4 Additional security If at any time the aggregate of the Fair Market Value of the Vessels and the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers appointed by the Agent (in the case of other charged assets), and determined by the Agent in its discretion (in all other cases)) for the time being provided to the Security Agent under this Clause 10.4 is less than one hundred and twenty five per cent (125%) of the Loan the Borrowers shall, within thirty (30) days of the Agent’s request, at the Borrowers’ option:

10.4.1 pay to the Security Agent or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Security Agent as additional security for the payment of the Indebtedness; or

10.4.2 give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its discretion; or

10.4.3 prepay the amount of the Indebtedness which will ensure that the aggregate of the Fair Market Value of the Vessels and the value of any such additional security is not less than one hundred and twenty five per cent (125%) of the Loan.

Clauses 5.3 (Reborrowing), 6.2.3 (Voluntary prepayment of Loan) and 6.4 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 10.4 and the value of any additional security provided shall be determined as stated above.

24

11 Representations

11.1 Representations The Borrowers make the representations and warranties set out in this Clause 11.1 to each Finance Party on the date of this Agreement.

11.1.1 Status Each Security Party (which is not an individual) is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation and has the power to own its assets and carry on its business as it is being conducted.

11.1.2 Binding obligations The obligations expressed to be assumed by each Security Party in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations.

11.1.3 Non-conflict with other obligations The entry into and performance by each Security Party of, and the transactions contemplated by, the Finance Documents do not conflict with,

(a) any law or regulation applicable to that Security Party;

(b) the constitutional documents of that Security Party; or

(c) any document binding on that Security Party or any of its assets,

and in borrowing the Loan, the Borrowers are acting for their own account.

11.1.4 Power and authority Each Security Party has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.

11.1.5 Validity and admissibility in evidence All consents, licences, approvals, authorisations, filings and registrations required or desirable,

(a) to enable each Security Party lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party or to enable each Finance Party to enforce and exercise all its rights under the Finance Documents; and

25

(b) to make the Finance Documents to which any Security Party is a party admissible in evidence in its jurisdiction of incorporation,

have been obtained or effected and are in full force and effect.

11.1.6 Governing law and enforcement The choice of English law as the governing law of any Finance Document expressed to be governed by English law will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party, and any judgment obtained in England in relation to any such Finance Document will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party.

11.1.7 Deduction of Tax No Security Party is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document.

11.1.8 No filing or stamp taxes Under the law of jurisdiction of incorporation of each relevant Security Party it is not necessary that the Finance Documents (other than the Security Documents) be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents.

11.1.9 No default No Event of Default is continuing or might reasonably be expected to result from the advance of any Drawing.

11.1.10 No misleading information Any factual information provided by any Security Party to any Finance Party was true and accurate in all material respects as at the date it was provided.

11.1.11 Pari passu ranking The payment obligations of each Security Party under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

26

11.1.12 No proceedings pending or threatened No Litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have been started or (to the best of the Borrowers’ knowledge threatened) which, if adversely determined, might reasonably be expected to have a materially adverse effect on the business, assets, financial condition or credit worthiness of any Security Party.

11.1.13 Disclosure of material facts The Borrowers are not aware of any material facts or circumstances which have not been disclosed to the Agent and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrowers.

11.1.14 No established place of business in the UK or US No Security Party (other than the Guarantor) has an established place of business in the United Kingdom or the United States of America.

11.1.15 Completeness of Relevant Documents The copies of any Relevant Documents provided or to be provided by the Borrowers to the Agent in accordance with Clause 3 (Conditions of Utilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Agent.

11.1.16 Indirect subsidiary of the Guarantor The Borrowers are and shall remain indirect subsidiaries of the Guarantor.

11.2 Repetition Each representation and warranty in Clause 11.1 (Representations) is deemed to be repeated by the Borrowers by reference to the facts and circumstances then existing on the date of each Drawdown Notice and the first day of each Interest Period.

27

12 Undertakings and Covenants

The undertakings and covenants in this Clause 12 remain in force for the duration of the Facility Period.

12.1 Information Undertakings

12.1.1 Financial statements The Borrowers shall procure that the Guarantor supplies to the Agent as soon as the same become available, but in any event within one hundred and eighty (180) days after the end of each of their financial years, the Guarantor’s audited consolidated financial statements for that financial year, together with a Compliance Certificate, signed by an authorised signatory of the Guarantor, setting out (in reasonable detail) computations as to compliance with Clause 12.2 (Financial covenants) as at the date at which those financial statements were drawn up, containing (amongst other things) the Guarantor’s profit and loss account for, and the balance sheet at the end of, each such financial year.

12.1.2 Requirements as to financial statements Each set of financial statements delivered by the Borrowers under Clause 12.1.1 (Financial statements):

(a) shall be certified by a director or an authorised signatory of the Guarantor, as fairly representing its financial condition as at the date as at which those financial statements were drawn up; and

(b) shall be prepared using GAAP. accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Guarantor notifies the Agent that there has been a change in GAAP, the accounting practices or reference periods and the Guarantor’s auditors respectively deliver to the Agent:

(i) a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and

28

(ii) sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to make an accurate comparison between the financial position indicated in those financial statements and that indicated in the Original Financial Statements.

12.1.3 Information: miscellaneous The Borrowers shall supply to the Agent:

(a) all documents dispatched by any Borrower to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched; and

(b) promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which might, if adversely determined, have a materially adverse effect on the business, assets, financial condition or credit worthiness of that Security Party.

12.1.4 Notification of default

(a) The Borrowers shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

(b) Promptly upon a request by the Agent, each Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers or an authorised signatory on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

12.1.5 “Know your customer” checks If:

(a) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

(b) any change in the status of a Borrower after the date of this Agreement; or

29

(c) a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of (c) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrowers shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender for itself (or, in the case of (c) above, on behalf of any prospective new Lender) in order for the Agent or that Lender (or, in the case of (c) above, any prospective new Lender) to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

12.2 Financial covenants The Borrowers shall procure that at all times the Guarantor’s financial condition, as evidenced by the most recent financial statements, shall be such that:

12.2.1 the Guarantor maintains Interest Coverage which exceeds 3.1; and

12.2.2 Minimum Net Worth is not lower than one hundred and eighty million Dollars ($180,000,000) for the financial year ending 31 December 2008 and two hundred and twenty five million Dollars ($225,000,000) thereafter; and

12.2.3 throughout the Facility Period the Guarantor maintains aggregate Minimum Liquidity in an amount in excess of twenty million Dollars ($20,000,000); and

12.2.4 the Guarantor maintains a Market Adjusted Equity Ratio of not lower than twenty five per cent (25%) in respect of the financial year ending 31 December 2008 and thirty per cent (30%) thereafter.

30

The financial covenants contained in this Clause 12.2 shall be tested semi-annually on the basis of the annual or semi-annual financial statements provided under Clause 12.1.1 and shall be confirmed in the relevant Compliance Certificate.

12.3 General undertakings

12.3.1 Authorisations The Borrowers shall promptly:

(a) obtain, comply with and do all that is necessary to maintain in full force and effect; and

(b) supply certified copies to the Agent of,

any consent, licence, approval or authorisation required under any law or regulation to enable each Security Party to perform its obligations under the Finance Documents to which it is a party and to ensure the legality, validity, enforceability or admissibility in evidence in the jurisdiction of incorporation of each relevant Security Party of any Finance Document.

12.3.2 Compliance with laws Each Borrower shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.

12.3.3 Conduct of business Each Borrower shall carry on and conduct its business in a proper and efficient manner, file all requisite tax returns and pay all tax which becomes due and payable (except where contested in good faith).

12.3.4 Evidence of good standing The Borrowers will from time to time if requested by the Agent provide the Agent with evidence in form and substance satisfactory to the Agent that the Security Parties and all corporate shareholders of any Security Party remain in good standing.

12.3.5 Negative pledge and no disposals Neither Borrower shall without the prior written consent of the Agent create nor permit to subsist any Encumbrance or other third party rights over any of its present or future assets or undertaking nor dispose of any those assets or of all or part of that undertaking.

31

12.3.6 Merger Neither Borrower shall without the prior written consent of the Agent enter into any amalgamation, demerger, merger or corporate reconstruction.

12.3.7 Change of business Neither Borrower shall without the prior written consent of the Agent make any substantial change to the general nature of its business from that carried on at the date of this Agreement.

12.3.8 No other business Neither Borrower shall without the prior written consent of the Agent engage in any business other than the ownership, operation, chartering and management of its Vessel.

12.3.9 No place of business in UK or US Neither Borrower shall have an established place of business in the United Kingdom or the United States of America at any time during the Facility Period.

12.3.10 No borrowings Neither Borrower shall without the prior written consent of the Agent borrow any money (except for the Loan and unsecured Financial Indebtedness subordinated to the Loan) nor incur any obligations under leases.

12.3.11 No substantial liabilities Except in the ordinary course of business, neither Borrower shall without the prior written consent of the Agent incur any liability to any third party which is in the Agent’s opinion of a substantial nature.

12.3.12 No loans or other financial commitments Neither Borrower shall without the prior written consent of the Agent make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person except for loans made in the ordinary course of business in connection with the chartering, operation or repair of its Vessel.

12.3.13 No dividends Upon the occurrence of an Event of Default, neither Borrower shall without the prior written consent of the Agent pay any dividends or make any other distributions to shareholders or issue any new shares.

32

12.3.14 Inspection of records Each Borrower will permit the inspection of its financial records and accounts from time to time by the Agent or its nominee.

12.3.15 No change in Relevant Documents The Borrowers shall procure that, without the prior written consent of the Agent, there shall be no termination of, alteration to, or waiver of any term of, any of the Relevant Documents which are not Finance Documents.

12.3.16 No dealings with Master Agreement Neither Borrower shall assign, novate or encumber or in any other way transfer any of its rights or obligations under a Master Agreement, nor enter into any interest rate exchange or hedging agreement with anyone other than the Swap Providers.

12.3.17 No change in shareholding The Borrowers shall not, without the prior written consent of the Agent, permit any change in their beneficial ownership or control.

12.3.18 Subordination of shareholder loans The Borrowers shall subordinate any shareholder loans and/or inter company borrowings to the Loan and shall procure that they are given on terms and conditions acceptable to the Agent.

12.4 Vessel undertakings

12.4.1 No sale of Vessel No Borrower shall sell or otherwise dispose of its Vessel or any shares in its Vessel nor agree to do so without the prior written consent of the Agent.

12.4.2 No change in management Each Borrower shall procure that, without the prior written consent of the Agent, there shall be no termination of, alteration to, or waiver of any term of, the Management Agreement in respect of its Vessel and no Borrower shall without the prior written consent of the Agent permit the Managers to sub-contract or delegate the commercial or technical management of its Vessel to any third party.

12.4.3 Physical condition survey The Borrowers will permit the Agent to conduct, and will procure that any charterer permits the Agent to conduct, a physical condition survey of a Vessel and to conduct a comprehensive inspection of

33

the class and other records of a Vessel by a surveyor appointed by the Agent (in its discretion) at any reasonable time during the Facility Period, at the Borrowers’ expense and without interruption of the operation of that Vessel.

13 Events of Default

13.1 Events of Default Each of the events or circumstances set out in this Clause 13.1 is an Event of Default.

13.1.1 Non-payment The Borrowers do not pay on the due date any amount payable by them under a Finance Document at the place at and in the currency in which it is expressed to be payable.

13.1.2 Other obligations A Security Party or any other person (except a Finance Party) does not comply with any provision of any of the Relevant Documents to which that Security Party or person is a party (other than as referred to in Clause 13.1.1 (Non-payment)).

No Event of Default under this Clause 13.1.2 will occur if the failure to comply is capable of remedy and is remedied within ten (10) Business Days of the Agent giving notice to the Borrowers or the Borrowers becoming aware of the failure to comply.

13.1.3 Misrepresentation Any representation, warranty or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be repeated.

13.1.4 Cross default Any Financial Indebtedness in excess of one million Dollars ($1,000,000) of a Security Party:

(a) is not paid when due or within any originally applicable grace period; or

(b) is declared to be, or otherwise becomes, due and payable before its specified maturity as a result of an event of default (however described); or

34

(c) is capable of being declared by a creditor to be due and payable before its specified maturity as a result of such an event.

13.1.5 Insolvency

(a) A Security Party is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Financial Indebtedness.

(b) The value of the assets of a Security Party is less than its liabilities (taking into account contingent and prospective liabilities).

(c) A moratorium is declared in respect of any Financial Indebtedness of a Security Party.

13.1.6 Insolvency proceedings Any corporate action, legal proceedings or other procedure or step is taken for:

(a) the suspension of payments, a moratorium of any Financial Indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Security Party (other than a solvent liquidation or reorganisation of a Security Party which is not a Borrower);

(b) a composition, compromise, assignment or arrangement with any creditor of a Security Party;

(c) the appointment of a liquidator (other than in respect of a solvent liquidation of a Security Party which is not a Borrower), receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of any Security Party or any of its assets; or

(d) enforcement of any Encumbrance over any assets of a Security Party, or any analogous procedure or step is taken in any jurisdiction.

35

13.1.7 Creditors’ process Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Security Party and is not discharged within thirty (30) days.

13.1.8 Change in ownership or control of a Borrower There is any change in the beneficial ownership or control of a Borrower from that advised to the Agent by the Borrowers at the date of this Agreement.

13.1.9 Repudiation A Security Party or any other person (except a Finance Party) repudiates any of the Relevant Documents to which that Security Party or person is a party or evidences an intention to do so.

13.1.10 Impossibility or illegality Any event occurs which would, or would with the passage of time, render performance of any of the Relevant Documents by a Security Party or any other party to any such document impossible, unlawful or unenforceable by a Finance Party or a Security Party.

13.1.11 Conditions subsequent Any of the conditions referred to in Clause 3.4 (Conditions subsequent) is not satisfied within the time reasonably required by the Agent.

13.1.12 Revocation or modification of authorisation Any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable a Security Party or any other person (except a Finance Party) to comply with any of its obligations under any of the Relevant Documents is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be, prejudicial to the interests of a Finance Party, or ceases to remain in full force and effect.

13.1.13 Curtailment of business A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business or, as a result of intervention by or under the authority of any government, the business of a Security Party is wholly or partially curtailed or suspended, or all or a substantial part of the assets or undertaking of a Security Party is seized, nationalised, expropriated or compulsorily acquired.

36

13.1.14 Reduction of capital A Security Party reduces its authorised or issued or subscribed capital.

13.1.15 Loss of Vessel A Vessel suffers a Total Loss or is otherwise destroyed, abandoned, confiscated, forfeited or condemned as prize, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Security Agent as security for the payment of all or any part of the Indebtedness, except that a Total Loss, or event similar to a Total Loss in relation to any other vessel, shall not be an Event of Default if:

(a) that Vessel or other vessel is insured in accordance with the Security Documents; and

(b) no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Agent in its discretion that any such refusal or dispute is likely to occur; and

(c) payment of all insurance proceeds in respect of the Total Loss is made in full to the Security Agent within one hundred and eighty (180) days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Agent may in its discretion agree.

13.1.16 Challenge to registration The registration of a Vessel or a Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of a Mortgage is contested.

13.1.17 War The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Borrower does not, within thirty (30) days of such war or civil war, change the flag of the Vessels to a flag acceptable to the Agent in its absolute discretion and the Agent in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced.

37

13.1.18 Master Agreement A Master Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect, unless any such event occurs subject to an agreement between the relevant Swap Provider and the Borrowers.

13.1.19 Notice of termination The Guarantor gives notice to the Security Agent to determine its obligations under the Guarantee.

13.1.20 Material adverse change Any event or series of events occurs which, in the opinion of the Agent, is likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness of a Security Party.

13.2 Acceleration If an Event of Default is continuing the Agent may by notice to the Borrowers cancel any part of the Maximum Loan Amount not then advanced and:

13.2.1 declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, whereupon they shall become immediately due and payable; and/or

13.2.2 declare that the Loan is payable on demand, whereupon it shall immediately become payable on demand by the Agent.

14 Assignment and Sub-Participation

14.1 Lenders’ rights With prior written notice to the Borrowers, a Lender may assign any of its rights under this Agreement or transfer by novation any of its rights and obligations under this Agreement to any other branch of that Lender or to any other bank or financial institution and may grant sub-participations in all or any part of its Commitment.

14.2 Borrowers’ co-operation The Borrowers will co-operate fully with a Lender in connection with any assignment, transfer or sub-participation by that Lender; will execute and procure the execution of such documents as that Lender may require in that connection; and irrevocably authorise any Finance Party to disclose to any proposed assignee, transferee or sub-participant (whether before or after any assignment, transfer or sub-participation and whether or not any assignment, transfer or sub-participation shall take place) all information relating to the Security Parties, the Loan, the Relevant Documents and the Vessels which any Finance Party may in its discretion consider necessary or desirable.

38

14.3 Rights of assignee Any assignee of a Lender shall (unless limited by the express terms of the assignment) take the full benefit of every provision of the Finance Documents benefitting that Lender.

14.4 Transfer Certificates If a Lender wishes to transfer any of its rights and obligations under or pursuant to this Agreement, it may do so by delivering to the Agent a duly completed Transfer Certificate, in which event on the Transfer Date:

14.4.1 to the extent that Lender seeks to transfer its rights and obligations, the Borrowers (on the one hand) and that Lender (on the other) shall be released from all further obligations towards the other;

14.4.2 the Borrowers (on the one hand) and the transferee (on the other) shall assume obligations towards the other identical to those released pursuant to Clause 14.4.1; and

14.4.3 the Agent, each of the Lenders and the transferee shall have the same rights and obligations between themselves as they would have had if the transferee had been an original party to this Agreement as a Lender

PROVIDED THAT the Agent shall only be obliged to execute a Transfer Certificate once:

(a) it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to the transferee; and

(b) the transferee has paid to the Agent for its own account a transfer fee of ten (10) Dollars.

The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Borrowers a copy of that Transfer Certificate.

14.5 Finance Documents Unless otherwise expressly provided in any Finance Document or otherwise expressly agreed between a Lender and any proposed transferee and notified by that Lender to the Agent on or before the relevant Transfer

39

Date, there shall automatically be assigned to the transferee with any transfer of a Lender’s rights and obligations under or pursuant to this Agreement the rights of that Lender under or pursuant to the Finance Documents (other than this Agreement) which relate to the portion of that Lender’s rights and obligations transferred by the relevant Transfer Certificate.

14.6 No assignment or transfer by the Borrowers No Borrower may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

15 The Master Agreement

15.1 Applicability Subject to a Swap Provider’s discretion and approval, the Borrowers and that Swap Provider may enter into one or more Transactions to hedge interest rate risks in respect of the relevant Swap Provider’s Commitment, or any part thereof, in an aggregate notional amount not exceeding that Swap Provider’s Commitment (in its capacity as Lender). The following provisions of this Clause 15 will apply if a Swap Provider and the Borrowers have entered during the Facility Period, a Transaction with that Swap Provider.

15.2 Additional Termination If the Loan is for any reason not advanced to the Borrowers on or before the Availability Termination Date, and the Swap Providers, or either of them, and the Borrowers have entered into any Transactions on or before the Availability Termination Date, these Transactions shall terminate on the Availability Termination Date.

15.3 Adjustment of Notional Amounts If:

15.3.1 the amount of a Commitment actually advanced by a Lender to the Borrowers is less than the relevant Notional Amount (or the aggregate Notional Amounts) of the Hedging Transactions entered into by that Lender (in its capacity as Swap Provider) on or before the Drawdown Date; or

15.3.2 the Borrowers prepay part of the Loan under any provision of this Agreement, and the amount of the Loan remaining outstanding after that prepayment is less than the Notional Amount (or the aggregate Notional Amounts) of the Hedging Transactions then in effect,

40

the Borrowers’ obligations under those Hedging Transactions shall (unless otherwise agreed by the Lenders) be calculated (so far as the relevant Swap Provider considers it practicable to do so) by reference to a Notional Amount (or aggregate Notional Amounts) equal to the amount of their respective commitments or the amount of the Loan actually advanced or remaining outstanding after that prepayment, as reduced on each Repayment Date by the amount of the Repayment Instalment then due, and adjusted if necessary in accordance with Clause 5.2 (Reduction of Repayment Instalments).

15.4 Authority In order to give effect to Clause 15.3 (Adjustments of Notional Amounts), or in the event of voluntary or mandatory prepayment by the Borrowers of the whole of the Loan, the Swap Providers shall, subject to the Borrowers’ consent, amend, restructure, unwind, cancel, net out, terminate, liquidate, transfer or assign any of the rights or obligations under any Hedging Transaction, and/or to enter into any other interest rate exchange and/or hedging transaction or commitment with any other counterparty.

15.5 Termination of Transactions If the exercise of the Swap Providers’ rights under Clause 15.2 (Additional Termination) and/or Clause 15.4 (Authority) results in the termination of any Transaction, that Transaction shall, for the purposes of the relevant Master Agreement (including, without limitation, section 7.1 of that Master Agreement) be treated as a terminated transaction.

15.6 Indemnity The Borrowers will indemnify the Swap Providers from time to time on demand in respect of all liabilities, losses, costs or expenses suffered, incurred or sustained by the Swap Providers, or either of them, arising in any way in relation to the exercise by the Swap Providers of their rights under this Clause 15, or arising in any way from any other termination, cancellation, unwinding or restructuring of any Transaction.

16 The Agent, the Security Agent and the Lenders

16.1 Appointment

16.1.1 Each Lender appoints the Agent to act as its agent under and in connection with the Finance Documents and each Lender and the Agent appoints the Security Agent to act as its security agent for the purpose of the Security Documents.

41

16.1.2 Each Lender authorises the Agent and each Lender and the Agent authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent or the Security Agent (as the case may be) under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

16.1.3 The Swap Providers appoint the Security Agent to act as their security agent for the purpose of the Security Documents and authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Security Documents together with any other incidental rights, powers, authorities and discretions.

16.1.4 Except where the context otherwise requires, references in this Clause 16 to the “Agent” shall mean the Agent and the Security Agent individually and collectively.

16.2 Authority Each Lender irrevocably authorises the Agent (subject to Clauses 16.4 (Limitations on authority) and 16.18 (Instructions)):

16.2.1 to execute any Finance Document (other than this Agreement) on its behalf;

16.2.2 to collect, receive, release or pay any money on its behalf;

16.2.3 acting on the instructions from time to time of the Majority Lenders to give or withhold any waivers, consents or approvals under or pursuant to any Finance Document; and

16.2.4 acting on the instructions from time to time of the Majority Lenders to exercise, or refrain from exercising, any rights, powers, authorities or discretions under or pursuant to any Finance Document.

The Agent shall have no duties or responsibilities as agent or as security agent other than those expressly conferred on it by the Finance Documents and shall not he obliged to act on any instructions from the Lenders or the Majority Lenders if to do so would, in the opinion of the Agent, be contrary to any provision of the Finance Documents or to any law, or would expose the Agent to any actual or potential liability to any third party.

42

16.3 Trust The Security Agent agrees and declares, and each of the other Finance Parties acknowledges, that, subject to the terms and conditions of this Clause 16.3, the Security Agent holds the Trust Property on trust for the Finance Parties absolutely. Each of the other Finance Parties agrees that the obligations, rights and benefits vested in the Security Agent shall be performed and exercised in accordance with this Clause 16.3. The Security Agent shall have the benefit of all of the provisions of this Agreement benefiting it in its capacity as security agent for the Finance Parties, and all the powers and discretions conferred on trustees by the Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:

16.3.1 the Security Agent and any attorney, agent or delegate of the Security Agent may indemnify itself or himself out of the Trust Property against all liabilities, costs, fees, damages, charges, losses and expenses sustained or incurred by it or him in relation to the taking or holding of any of the Trust Property or in connection with the exercise or purported exercise of the rights, trusts, powers and discretions vested in the Security Agent or any other such person by or pursuant to the Security Documents or in respect of anything else done or omitted to be done in any way relating to the Security Documents;

16.3.2 the other Finance Parties acknowledge that the Security Agent shall be under no obligation to insure any property nor to require any other person to insure any property and shall not be responsible for any loss which may be suffered by any person as a result of the lack or insufficiency of any insurance; and

16.3.3 the Finance Parties agree that the perpetuity period applicable to the trusts declared by this Agreement shall be the period of eighty years from the date of this Agreement.

The provisions of Part I of the Trustee Act 2000 shall not apply to the Security Agent or the Trust Property.

43

16.4 Limitations on authority Except with the prior written consent of all the Lenders, the Agent shall not be entitled to:

16.4.1 release or vary any security given for the Borrowers’ obligations under this Agreement; nor

16.4.2 waive the payment of any sum of money payable by any Security Party under the Finance Documents; nor

16.4.3 change the meaning of the expressions “Majority Lenders” or “Margin”; nor

16.4.4 exercise, or refrain from exercising, any right, power, authority or discretion, or give or withhold any consent, the exercise or giving of which is, by the terms of this Agreement, expressly reserved to the Lenders; nor

16.4.5 extend the due date for the payment of any sum of money payable by any Security Party under any Finance Document; nor

16.4.6 take or refrain from taking any step if the effect of such action or inaction may lead to the increase of the obligations of a Lender under any Finance Document; nor

16.4.7 agree to change the currency in which any sum is payable under any Finance Document (other than in accordance with the terms of the relevant Finance Document); nor

16.4.8 agree to amend this Clause 16.4.

16.5 Liability Neither the Agent nor any of its directors, officers, employees or agents shall he liable to the Lenders for anything done or omitted to be done by the Agent under or in connection with any of the Relevant Documents unless as a result of the Agent’s gross negligence or wilful misconduct.

16.6 Acknowledgement Each Lender acknowledges that:

16.6.1 it has not relied on any representation made by the Agent or any of the Agent’s directors, officers, employees or agents or by any other person acting or purporting to act on behalf of the Agent to induce it to enter into any Finance Document;

44

16.6.2 it has made and will continue to make without reliance on the Agent, and based on such documents and other evidence as it considers appropriate, its own independent investigation of the financial condition and affairs of the Security Parties in connection with the making and continuation of the Loan;

16.6.3 it has made its own appraisal of the creditworthiness of the Security Parties; and

16.6.4 the Agent shall not have any duty or responsibility at any time to provide it with any credit or other information relating to any Security Party unless that information is received by the Agent pursuant to the express terms of a Finance Document.

Each Lender agrees that it will not assert nor seek to assert against any director, officer, employee or agent of the Agent or against any other person acting or purporting to act on behalf of the Agent any claim which it might have against them in respect of any of the matters referred to in this Clause 16.6.

16.7 Limitations on responsibility The Agent shall have no responsibility to any Security Party or to any Lender on account of:

16.7.1 the failure of a Lender or of any Security Party to perform any of its obligations under a Finance Document; nor

16.7.2 the financial condition of any Security Party; nor

16.7.3 the completeness or accuracy of any statements, representations or warranties made in or pursuant to any Finance Document, or in or pursuant to any document delivered pursuant to or in connection with any Finance Document; nor

16.7.4 the negotiation, execution, effectiveness, genuineness, validity, enforceability, admissibility in evidence or sufficiency of any Finance Document or of any document executed or delivered pursuant to or in connection with any Finance Document.

45

16.8 The Agent’s rights The Agent may:

16.8.1 assume that all representations or warranties made or deemed repeated by any Security Party in or pursuant to any Finance Document are true and complete, unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary;

16.8.2 assume that no Default has occurred unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary;

16.8.3 rely on any document or notice believed by it to be genuine;

16.8.4 rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers selected or approved by it;

16.8.5 rely as to any factual matters which might reasonably be expected to be within the knowledge of any Security Party on a certificate signed by or on behalf of that Security Party; and

16.8.6 refrain from exercising any right, power, discretion or remedy unless and until instructed to exercise that right, power, discretion or remedy and as to the manner of its exercise by the Lenders (or, where applicable, by the Majority Lenders) and unless and until the Agent has received from the Lenders any payment which the Agent may require on account of, or any security which the Agent may require for, any costs, claims, expenses (including legal and other professional fees) and liabilities which it considers it may incur or sustain in complying with those instructions.

16.9 The Agent’s duties The Agent shall:

16.9.1 if requested in writing to do so by a Lender, make enquiry and advise the Lenders as to the performance or observance of any of the provisions of any Finance Document by any Security Party or as to the existence of an Event of Default; and

16.9.2 inform the Lenders promptly of any Event of Default of which the Agent has actual knowledge.

46

16.10 No deemed knowledge The Agent shall not be deemed to have actual knowledge of the falsehood or incompleteness of any representation or warranty made or deemed repeated by any Security Party or actual knowledge of the occurrence of any Default unless a Lender or a Security Party shall have given written notice thereof to the Agent in its capacity as the Agent. Any information acquired by the Agent other than specifically in its capacity as the Agent shall not be deemed to be information acquired by the Agent in its capacity as the Agent.

16.11 Other business The Agent may, without any liability to account to the Lenders, generally engage in any kind of banking or trust business with a Security Party or with a Security Party’s subsidiaries or associated companies or with a Lender as if it were not the Agent.

16.12 Indemnity The Lenders shall, promptly on the Agent’s request, reimburse the Agent in their respective Proportionate Shares, for, and keep the Agent fully indemnified in respect of all liabilities, damages, costs and claims sustained or incurred by the Agent in connection with the Finance Documents other than the Master Agreements), or the performance of its duties and obligations, or the exercise of its rights, powers, discretions or remedies under or pursuant to any Finance Document (other than the Master Agreements), to the extent not paid by the Security Parties and not arising solely from the Agent’s gross negligence or wilful misconduct.

16.13 Employment of agents In performing its duties and exercising its rights, powers, discretions and remedies under or pursuant to the Finance Documents, the Agent shall be entitled to employ and pay agents to do anything which the Agent is empowered to do under or pursuant to the Finance Documents (including the receipt of money and documents and the payment of money) and to act or refrain from taking action in reliance on the opinion of, or advice or information obtained from, any lawyer, banker, broker, accountant, valuer or any other person believed by the Agent in good faith to be competent to give such opinion, advice or information.

16.14 Distribution of payments The Agent shall pay promptly to the order of each Lender that Lender’s Proportionate Share of every sum of money received by the Agent pursuant to the Finance Documents (with the exception of any amounts payable pursuant to Clause 9 (Fees) and/or any Fee Letter and any amounts which, by the terms of the Finance Documents, are paid to the Agent for the account of the Agent alone or specifically for the account of one or more Lenders) and until so paid such amount shall be held by the Agent on trust absolutely for that Lender.

47

16.15 Reimbursement The Agent shall have no liability to pay any sum to a Lender until it has itself received payment of that sum. If, however, the Agent does pay any sum to a Lender on account of any amount prospectively due to that Lender pursuant to Clause 16.14 (Distribution of payments) before it has itself received payment of that amount, and the Agent does not in fact receive payment within five (5) Business Days after the date on which that payment was required to be made by the terms of the Finance Documents, that Lender will, on demand by the Agent, refund to the Agent an amount equal to the amount received by it, together with an amount sufficient to reimburse the Agent for any amount which the Agent may certify that it has been required to pay by way of interest on money borrowed to fund the amount in question during the period beginning on the date on which that amount was required to be paid by the terms of the Finance Documents and ending on the date on which the Agent receives reimbursement.

16.16 Redistribution of payments Unless otherwise agreed between the Lenders and the Agent, if at any time a Lender receives or recovers by way of set-off, the exercise of any lien or otherwise from any Security Party, an amount greater than that Lender’s Proportionate Share of any sum due from that Security Party to the Lenders under the Finance Documents (the amount of the excess being referred to in this Clause 16.16 and in Clause 16.17 (Rescission of Excess Amount) as the “Excess Amount”) then:

16.16.1 that Lender shall promptly notify the Agent (which shall promptly notify each other Lender);

16.16.2 that Lender shall pay to the Agent an amount equal to the Excess Amount within ten (10) days of its receipt or recovery of the Excess Amount; and

16.16.3 the Agent shall treat that payment as if it were a payment by the Security Party in question on account of the sum due from that Security Party to the Lenders and shall account to the Lenders in respect of the Excess Amount in accordance with the provisions of this Clause 16.16.

However, if a Lender has commenced any legal proceedings to recover sums owing to it under the Finance Documents and, as a result of, or in connection with, those

48

proceedings has received an Excess Amount, the Agent shall not distribute any of that Excess Amount to any other Lender which had been notified of the proceedings and had the legal right to, but did not, join those proceedings or commence and diligently prosecute separate proceedings to enforce its rights in the same or another court.

16.17 Rescission of Excess Amount If all or any part of any Excess Amount is rescinded or must otherwise be restored to any Security Party or to any other third party, the Lenders which have received any part of that Excess Amount by way of distribution from the Agent pursuant to Clause 16.16 (Redistribution of payments) shall repay to the Agent for the account of the Lender which originally received or recovered the Excess Amount, the amount which shall be necessary to ensure that the Lenders share rateably in accordance with their Proportionate Shares in the amount of the receipt or payment retained, together with interest on that amount at a rate equivalent to that (if any) paid by the Lender receiving or recovering the Excess Amount to the person to whom that Lender is liable to make payment in respect of such amount, and Clause 16.16.3 (Redistribution of payments) shall apply only to the retained amount.

16.18 Instructions Where the Agent is authorised or directed to act or refrain from acting in accordance with the instructions of the Lenders or of the Majority Lenders each of the Lenders shall provide the Agent with instructions within three (3) Business Days of the Agent’s request (which request may be made orally or in writing). If a Lender does not provide the Agent with instructions within that period, that Lender shall be bound by the decision of the Agent. Nothing in this Clause 16.18 shall limit the right of the Agent to take, or refrain from taking, any action without obtaining the instructions of the Lenders or the Majority Lenders if the Agent in its discretion considers it necessary or appropriate to take, or refrain from taking, such action in order to preserve the rights of the Lenders under or in connection with the Finance Documents. In that event, the Agent will notify the Lenders of the action taken by it as soon as reasonably practicable, and the Lenders agree to ratify any action taken by the Agent pursuant to this Clause 16.18.

16.19 Payments All amounts payable to a Lender under this Clause 16 shall be paid to such account at such bank as that Lender may from time to time direct in writing to the Agent.

49

16.20 “Know your customer” checks Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

16.21 Resignation Subject to a successor being appointed in accordance with this Clause 16.21, the Agent may resign as agent and/or security agent at any time without assigning any reason by giving to the Borrowers and the Lenders notice of its intention to do so, in which event the following shall apply:

16.21.1 the Lenders may within thirty (30) days after the date of the Agent’s notice appoint a successor to act as agent and/or security agent or, if they fail to do so, the Agent may appoint any other bank or financial institution as its successor;

16.21.2 the resignation of the Agent shall take effect simultaneously with the appointment of its successor on written notice of that appointment being given to the Borrowers and the Lenders;

16.21.3 the Agent shall thereupon be discharged from all further obligations as agent and/or security agent but shall remain entitled to the benefit of the provisions of this Clause 16; and

16.21.4 the Agent’s successor and each of the other parties to this Agreement shall have the same rights and obligations amongst themselves as they would have had if that successor had been a party to this Agreement.

16.22 No fiduciary relationship Except as provided in Clauses 16.3 (Trust) and 16.14 (Distribution of payments), the Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or for any other person and nothing contained in any Finance Document shall constitute a partnership between any two or more Lenders or between the Agent and any other person.

50

17 Set-Off

17.1 Set-off A Finance Party may set off any matured obligation due from the Borrowers under any Finance Document (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to any Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, that Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

17.2 Master Agreement rights The rights conferred on the Swap Providers by this Clause 17 shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Swap Providers by the Master Agreements.

18 Payments

18.1 Payments Each amount payable by a Borrower under a Finance Document (other than the Master Agreements) shall be paid to such account at such bank as the Agent may from time to time direct to the Borrowers in the Currency of Account and in such funds as are customary at the time for settlement of transactions in the relevant currency in the place of payment. Payment shall be deemed to have been received by the Agent on the date on which the Agent receives authenticated advice of receipt, unless that advice is received by the Agent on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Agent in its discretion considers that it is impossible or impracticable for the Agent to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Agent on the Business Day next following the date of receipt of advice by the Agent.

18.2 No deductions or withholdings Each payment (whether of principal or interest or otherwise) to be made by a Borrower under a Finance Document shall, subject only to Clause 18.3 (Grossing-up), be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.

18.3 Grossing-up If at any time any law requires (or is interpreted to require) a Borrower to make any deduction or withholding from any payment, or to change the rate or

51

manner in which any required deduction or withholding is made, the Borrowers will promptly notify the Agent and, simultaneously with that payment, will pay to the Agent whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after the deduction or withholding, the relevant Finance Parties receive a net sum equal to the sum which they would have received had no deduction or withholding been made.

18.4 Evidence of deductions If at any time a Borrower is required by law to make any deduction or withholding from any payment to be made by it under a Finance Document, that Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty (30) days after making that payment, deliver to the Agent an original receipt issued by the relevant authority, or other evidence acceptable to the Agent, evidencing the payment to that authority of all amounts required to be deducted or withheld.

18.5 Adjustment of due dates If any payment or transfer of funds to be made under a Finance Document, other than a payment of interest on the Loan or a payment under a Master Agreements, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment.

18.6 Control Account The Agent shall open and maintain on its books a control account in the names of the Borrowers showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement and a Master Agreements. The Borrowers’ obligations to repay the Loan and to pay interest and all other sums due under this Agreement and a Master Agreements shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 18.6 and those entries will, in the absence of manifest error, be conclusive and binding.

52

19 Notices

19.1 Communications in writing Any communication to be made under or in connection with this Agreement shall be made in writing and, unless otherwise stated, may be made by fax or letter.

19.2 Addresses The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party to this Agreement for any communication or document to be made or delivered under or in connection with this Agreement are:

19.2.1 in the case of the Borrowers, c/o Cardiff Marine Inc. of 80 Kifissias Avenue, 151 25 Amaroussion, Greece (fax no: +30 210 809 0585) marked for the attention of Mr A. Ioannidis;

19.2.2 in the case of each Lender, those appearing opposite its name in Schedule 1 (The Lenders, the Commitments, and the Swap Providers);

19.2.3 in the case of the Agent, at the address at the head of this Agreement (fax no: +49 421 3609 293) marked for the attention of Mr Timo Kühl; and

19.2.4 in the case of each Swap Provider, those appearing opposite its name in Schedule 1 (The Lenders, the Commitments and the Swap Providers); and

19.2.5 in the case of the Security Agent, at the address at the head of this Agreement (fax no: +49 421 3609 293) marked for the attention of Mr Timo Kühl,

or any substitute address, fax number, department or officer as any party may notify to the Agent (or the Agent may notify to the other parties, if a change is made by the Agent) by not less than five (5) Business Days’ notice.

19.3 Delivery Any communication or document made or delivered by one party to this Agreement to another under or in connection this Agreement will only be effective:

19.3.1 if by way of fax, when received in legible form; or

53

19.3.2 if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

and, if a particular department or officer is specified as part of its address details provided under Clause 19.2 (Addresses), if addressed to that department or officer.

Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent.

All notices from or to the Borrowers shall be sent through the Agent.

19.4 Notification of address and fax number Promptly upon receipt of notification of an address, fax number or change of address, pursuant to Clause 19.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other parties to this Agreement.

19.5 English language Any notice given under or in connection with this Agreement must be in English. All other documents provided under or in connection with this Agreement must be:

19.5.1 in English; or

19.5.2 if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

20 Partial Invalidity

If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

54

21 Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under a Finance Document shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

22 Joint and several liability

22.1 Nature of liability The representations, warranties, covenants, obligations and undertakings of the Borrowers contained in this Agreement shall be joint and several so that each Borrower shall be jointly and severally liable with all the Borrowers for all of the same and such liability shall not in any way be discharged, impaired or otherwise affected by:

22.1.1 any forbearance (whether as to payment or otherwise) or any time or other indulgence granted to any other Borrower or any other Security Party under or in connection with any Finance Document;

22.1.2 any amendment, variation, novation or replacement of any other Finance Document;

22.1.3 any failure of any Finance Document to be legal valid binding and enforceable in relation to any other Borrower or any other Security Party for any reason;

22.1.4 the winding-up or dissolution of any other Borrower or any other Security Party;

22.1.5 the release (whether in whole or in part) of, or the entering into of any compromise or composition with, any other Borrower or any other Security Party; or

22.1.6 any other act, omission, thing or circumstance which would or might, but for this provision, operate to discharge, impair or otherwise affect such liability.

55

22.2 No rights as surety Until the Indebtedness has been unconditionally and irrevocably paid and discharged in full, each Borrower agrees that it shall not, by virtue of any payment made under this Agreement on account of the Indebtedness or by virtue of any enforcement by a Finance Party of its rights under this Agreement or by virtue of any relationship between, or transaction involving, the relevant Borrower and any other Borrower or any other Security Party:

22.2.1 exercise any rights of subrogation in relation to any rights, security or moneys held or received or receivable by a Finance Party or any other person; or

22.2.2 exercise any right of contribution from any other Borrower or any other Security Party under any Finance Document; or

22.2.3 exercise any right of set-off or counterclaim against any other Borrower or any other Security Party; or

22.2.4 receive, claim or have the benefit of any payment, distribution, security or indemnity from any other Borrower or any other Security Party; or

22.2.5 unless so directed by the Agent (when the relevant Borrower will prove in accordance with such directions), claim as a creditor of any other Borrower or any other Security Party in competition with any Finance Party

and each Borrower shall hold in trust for the Finance Parties and forthwith pay or transfer (as appropriate) to the Agent any such payment (including an amount equal to any such set-off), distribution or benefit of such security, indemnity or claim in fact received by it.

23 Miscellaneous

23.1 No oral variations No variation or amendment of a Finance Document shall be valid unless in writing and signed on behalf of all the Finance Parties.

23.2 Further Assurance If any provision of a Finance Document shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by or on behalf of the Finance Parties or any of them are considered by the Lenders for any reason insufficient to carry out the terms of this Agreement, then from time to time the

56

Borrowers will promptly, on demand by the Agent, execute or procure the execution of such further documents as in the opinion of the Lenders are necessary to provide adequate security for the repayment of the Indebtedness.

23.3 Rescission of payments etc. Any discharge, release or reassignment by a Finance Party of any of the security constituted by, or any of the obligations of a Security Party contained in, a Finance Document shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge. release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.

23.4 Certificates Any certificate or statement signed by an authorised signatory of the Agent purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any Finance Document shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrowers of that amount.

23.5 Counterparts This Agreement may he executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.

23.6 Contracts (Rights of Third Parties) Act 1999 A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

24 Law and jurisdiction

24.1 Governing law This Agreement shall in all respects be governed by and interpreted in accordance with English law.

24.2 Jurisdiction For the exclusive benefit of the Finance Parties, the parties to this Agreement irrevocably agree that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that any proceedings may be brought in those courts.

24.3 Alternative jurisdictions Nothing contained in this Clause 24 shall limit the right of the Finance Parties to commence any proceedings against the Borrowers in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Borrowers in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.

57

24.4 Waiver of objections Each Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause 24, and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.

24.5 Service of process Without prejudice to any other mode of service allowed under any relevant law, each Borrower:

24.5.1 irrevocably appoints Ince Process Agents, of International House, 1 St. Katharine’s Way, London E1W 1AY, United Kingdom, c/o Mr M. Volikas, as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement; and

24.5.2 agrees that failure by a process agent to notify any Borrower of the process will not invalidate the proceedings concerned.

58

IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year first before written.

SIGNED by as duly authorised for and on behalf of IONIAN TRADERS INC. in the presence of:	) ) ) ) )
SIGNED by	)
as duly authorised	)
for and on behalf of	)
NORWALK STAR OWNER INC.	)
in the presence of:	)
SIGNED by	)
as duly authorised	)
for and on behalf of	)
DEUTSCHE SCHIFFSBANK	)
AKTIENGESELLSCHAFT	)
(as Lender)	)
in the presence of:	)
	)

73

SIGNED by as duly authorised for and on behalf of BAYERISCHE HYPO- UND VEREINSBANK AG (as Lender) in the presence of:	) ) ) ) ) ) )
SIGNED by as duly authorised for and on behalf of DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT (as the Agent) in the presence of:	) ) ) ) ) ) )
SIGNED by as duly authorised for and on behalf of DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT (as Swap Provider) in the presence of:	) ) ) ) ) ) )

74

SIGNED by	)
as duly authorised	)
for and on behalf of	)
BAYERISCHE HYPO- UND	)
VEREINSBANK AG	)
(as Swap Provider)	)
in the presence of:	)
SIGNED by	)
as duly authorised	)
for and on behalf of	)
DEUTSCHE SCHIFFSBANK	)
AKTIENGESELLSCHAFT	)
(as the Security Agent)	)
in the presence of:	)

75

EX-4.39

Exhibit 4.39

CONSULTANCY AGREEMENT

THIS AGREEMENT between DRYSHIPS INC. a Marshall Islands corporation having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 duly represented herein by George Demathas (the “Company”) and FABIANA SERVICES S.A. a company having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 duly represented herein by George Economou (the “Consultant”).

BY WHICH, in consideration of the mutual covenants and agreements set forth herein, the parties hereto agree as follows:

1. The Company. The Company is engaged directly or through subsidiaries in the ownership, operation and management of cargo vessels trading worldwide. The Company is listed with NASDAQ Global Market.

2. Engagement. The Company hereby engages the Consultant to act as consultant for the Company and for any affiliates, subsidiaries or holding companies (the “Affiliates”) as directed by the Company, in connection with the duties of the Chief Executive Officer and Interim Chief Financial Officer of the Company and the Consultant hereby accepts such engagement. It is expressly agreed that Consultant is acting as an independent contractor in performing its services hereunder.

3. Duration. The duration of the engagement shall be for a term of five (5) years commencing as of the effective date of this agreement and ending (unless terminated earlier on the basis of any other provision of this Agreement) on the day before the fifth anniversary of such date (the said period as it may be extended on an at-will basis by written agreement to this effect being hereinafter referred to as the “Term”).

4. Duties. The Consultant shall provide its services, using all its experience, resources and due diligence. The duties of the Consultant shall be offered on a worldwide non-exclusive basis. The Consultant shall report to the Board of Directors of the Company. Consultant’s duties and responsibilities hereunder shall always be subject to the policies and directives of the Board as communicated from time to time to the Consultant.

It is expected from the Consultant’s Executive to provide services worldwide commensurate with the high level of service provided by the Company and the importance of the Consultant’s role.

The Consultant’s Executive will be responsible for resolving on policy and all significant matters of management at the most senior level.

Within the foregoing broad categories, it is the role of the Consultant’s Executive to both inform the Board, and to carry out its policies and instructions, regarding all senior management matters. In order to properly carry out this job, the Consultant’s Executive will have the authority to direct the actions of other executives or employees whose functions involve management matters, and such executives or employees will report directly to the Consultant’s Executive.

Subject to the above, the precise duties, responsibilities and authority of the Consultant and the Consultant’s Executive may be expanded, limited or modified, from time to time, at the discretion of either the Board or the Executive Committee of the Company. The Consultant agrees that during the term of the engagement hereunder, the Consultant’s Executive and/or its personnel shall devote substantially knowledge and experience and give its best effort, skill and abilities, to promote the business and interests of the Affiliates.

5. Fee

a) Base Fee

The Company shall pay the Consultant a fee in the amount of US Dollars two million (USD 2,000,000) per annum payable monthly on the last working day of every month in twelve installments (each monthly installment of USD 166,666).

b) Bonus.

The Consultant shall be eligible to receive bonus compensation for the services provided at the end of each year with any such bonus to be determined by the compensation committee. The payment of any bonuses will be at the sole discretion of the Board of Directors.

All payments made shall be net of any taxes or other withholdings of whatsoever nature

c) Stock

The Company will make available to the Consultant 1,000,000 restricted shares of common stock in favor of the Consultant under the Company’s 2008 Equity Incentive Plan and as it may be amended by the Board of Directors from time to time. Subject shares to be vested quarterly in eight (8) equal installments, with the first vesting installment to occur on the date this Agreement is signed. Such shares are given in the form of an incentive award for services to be performed from the grant date and going forward.

The grant date shall be 10^th April 2008.

In the event that the consultant ceases to provide consultancy services to the Company, any unvested restricted common shares will be subject to forfeiture.

6. Expenses.

The Company shall reimburse the Consultant’s Executive for any out-of-pocket expenses connected with business of the Company and/or any of its Affiliates.

7. Representations and Warranties by the Consultant.

The Consultant represents and warrants to the Company the following:

(a) The Consultant represents that it has personnel fully qualified, without the benefit of any further training or experience (the “Consultant’s Executive”) and if needed will obtain all necessary permits and licenses, to perform the duties customarily incident to such services.

2

(b) The Consultant is fully responsible for the actions and/or omissions of the Consultant’s Executive and of its personnel. As a consequence the Consultant shall be jointly and severally responsible with them for the fulfillment of its duties under the present agreement and the remedy of any eventual damage to be caused to the Company by the Consultant, and/or the Consultant’s Executive and/or its personnel.

(c) The Consultant will rely only on its generalized knowledge and skill in performing its services hereunder;

8. Non exclusivity—Obligation of Faith.

(a) It is acknowledged that for the duration of the present agreement Consultant’s services shall be non-exclusive.

(b) The Consultant recognizes that due to the nature of its work it has an increased obligation of faith. More specifically:

(i) The Consultant shall handle with honesty and care all monetary sums, titles, checks, etc., that would come to its possession or administration in its capacity as an Consultant of the Company;

(ii) The Consultant must at all times abide by the rules of SEC and NASDAQ and any other regulatory agency applicable to the Company and behave in a manner that shall not offend the business and social image and fame of the Company and the Affiliates;

(iii) The Consultant shall inform the appropriate officers of the Company about any eventual illegal act or irregularity that would come to the Consultant’s actual knowledge with respect to the business of the Company;

(iv) Subject to the provisions of subparagraph (a) of this paragraph 8 the Consultant must abstain from any act which would create, or that could be interpreted to create, liens towards third parties to the detriment of the interests of the Company or the Affiliates; and

(v) The same obligations of the Consultant apply towards the Affiliates as well, whether expressly spelled out above or not.

(c) The Consultant acknowledges that the foregoing limitations are reasonable under the circumstances and represents and warrants that the fulfillment of the obligations by the Consultant set forth in this paragraph are not of a nature to cause to the Consultant any substantial economic hardship.

3

9. Termination.

(a) This Agreement, unless otherwise agreed in writing between the parties, shall be terminated as follows:

(i) At the end of the Term unless extended by mutual agreement in writing.

(ii) The parties, by mutual agreement, may terminate this Agreement at any time.

(iii) The Company may terminate this Agreement at any time with Cause as provided under (b) below or without Cause subject to the provisions of sub-paragraph (b) of this paragraph 9.

(iv) The Consultant may opt to terminate this Agreement by written notice to the Company prior to actual termination date by observing a prior written notice period of thirty (30) days.

(b) The Company may immediately terminate the Consultancy Agreement for Cause (as defined herein). In such event the obligations of the Company shall cease immediately and the Consultant shall not be entitled to any further payments of any kind. For purposes of this Agreement, Cause shall include:

(i) dishonesty, willful misconduct or fraud in connection with the Consultant’s hiring by the Company, the performance of the Consultant’s duties, or in any way related to the business of the Company and/or the Affiliates;

(ii) conviction or a plea of nolo contendere (or the equivalent) to a felony relating to the Company;

(c) In the event that the Consultant’s engagement is terminated by the Company without Cause on or before the end of the Term the Consultant shall be entitled to receive its full contractual payout under the balance of the agreement in cash within 15 days of such termination. In addition 100% of stocks awarded to the consultant will vest immediately and exchanged for common shares. This clause shall apply subject to the Consultant signing industry standard Release Agreements in favor of the Company

(d) The Consultant may terminate this Agreement for Good Reason (as defined herein). In such event the Consultant shall be entitled to receive its full contractual payout under the balance of the agreement in cash within 15 days of such termination. In addition 100% of stocks awarded to the consultant will vest immediately and exchanged for common shares.

For purposed of this agreement Good Reason shall include:

(i) Any diminution in the Consultant’s duties, responsibilities and authorities

(ii) Any behavior by the Company or its Board of Directors that affects the public perception of the Consultant

4

10. Change of Control.

(a) In the event of a “Change of Control” (as defined herein), during the term of this Agreement, the Consultant has the option to cease providing his services to the Company within three (3) months following such Change in Control, and shall be eligible to receive the payment specified in sub-paragraph (c), below, provided that the conditions of said paragraph are satisfied.

(b) For purposes of this Agreement, the term “Change of Control” shall mean the:

(i) acquisition by any individual, entity or group of beneficial ownership of fifty percent (50%) or more of either (A) the then-outstanding shares of common stock of the Company or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors;

(ii) consummation of a reorganization, merger or consolidation of the Company or the sale or other disposition of all or substantially all of the assets of the Company and/or of the Affiliates; or

(iii) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(c) If the Consultant as a result of the above ceases to render its services to the Company or if the Consultant exercises its option under Clause 10a) at any time following a Change of Control, the Consultant shall receive a payment equal to three times the base fee

(d) For the avoidance of any doubt it is mutually agreed that for the purposes of the Change of Control the provisions of the present paragraph do not apply if the entity in question is Elios Investments Inc. and/or its affiliates and/or subsidiaries and/or other related companies.

11. Notices. Every notice, request, demand or other communication under this Agreement shall:

(a) be in writing delivered personally or by courier or by fax or shall be served through a process server;

(b) be deemed to have been received, subject as otherwise provided in this Agreement in the case of fax upon receipt of a successful transmission report (or -if sent after business hours- the following business day) and in the case of a letter when delivered personally or through courier or served at the address below; and

(c) be sent:

(i) If to the Company, to:

DRYSHIPS INC.

80 Kifissias Avenue

Maroussi GR 151 25

Telephone: 210 8090570

Telefax: 210 8090205

Attn: George Demathas

5

(ii) If to the Consultant, to:

FABIANA SERVICES S.A.

c/o A. Neocleous & Co

Neocleous Building

199 Arch. Makariou III Avenue

Limassol, Cyprus

Attn: Ms. Andri Papadopoulou

or to such other person, address or telefax, as is notified by the relevant Party to the other Party to this Agreement and such notification shall not become effective until notice of such change is actually received by the other Party. Until such change of person or address is notified, any notification to the above addresses and fax numbers are agreed to be validly effected for the purposes of this Agreement.

12. Entire Agreement. This Agreement supersedes all prior agreements written or oral, with respect thereto.

13. Amendments. This Agreement may be amended, superseded, canceled, renewed or extended and the terms hereof may be waived, only by a written instrument signed by the parties.

14. Independent Contractor. All services provided hereunder shall be provided by the Consultant as an independent contractor. No employment contract, partnership or joint venture has been created in or by this Agreement or as a result of services provided hereunder.

15. Assignment. This Agreement, and the Consultant’s rights and obligations hereunder, may not be assigned by the Consultant; any purported assignment in violation hereof shall be null and void. This Agreement, and the Company’s rights and obligations hereunder, may not be assigned by the Company; provided, however, that in the event of any sale, transfer or other disposition of all or substantially all of the Company’s assets and business, whether by merger, consolidation or otherwise, the Company may assign this Agreement and its rights hereunder to the successor to its assets and business.

16. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, executors and legal representative.

17. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by one of the parties hereto.

18. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

6

19. Governing Law and Jurisdiction.

(a) This Agreement shall be governed by and construed in accordance with English Law.

(b) The parties hereby irrevocably submit to the exclusive jurisdiction of the High Court of Justice in London, England, in connection with any dispute which may arise out of or is related to this Agreement. Finally, the parties hereby waive any objections to the inconvenience of England as a forum.

20. Effective Date

For the purposes of this agreement the effective date shall be the 1^st of January, 2008.

IN WITNESS WHEREOF, the parties hereto have signed their names this 28 day of May 2008.

On behalf of DRYSHIPS INC.
By:
	George Demathas
	Chairman of the Compensation Committee
On behalf of FABIANA SERVICES S.A.
By:
	George Economou
	Authorized signatory

7

EX-4.40

Exhibit 4.40

Date 20 June 2008

AEGEAN TRADERS INC. and

IGUANA SHIPPING COMPANY LIMITED

as Borrowers

- and -

WESTLB AG, LONDON BRANCH

as Lender

LOAN AGREEMENT

relating to a loan facility of up to US$103,200,000

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

Clause		Page
1	INTERPRETATION	1
2	FACILITY	15
3	DRAWDOWN	15
4	INTEREST	16
5	INTEREST PERIODS	17
6	DEFAULT INTEREST	17
7	REPAYMENT AND PREPAYMENT	18
8	CONDITIONS PRECEDENT	20
9	REPRESENTATIONS AND WARRANTIES	21
10	GENERAL UNDERTAKINGS	23
11	CORPORATE UNDERTAKINGS	26
12	INSURANCE	26
13	SHIP COVENANTS	31
14	SECURITY COVER	35
15	PAYMENTS AND CALCULATIONS	36
16	APPLICATION OF RECEIPTS	37
17	APPLICATION OF EARNINGS	38
18	EVENTS OF DEFAULT	38
19	FEES AND EXPENSES	42
20	INDEMNITIES	43
21	NO SET-OFF OR TAX DEDUCTION	44
22	ILLEGALITY, ETC	45
23	INCREASED COSTS	46
24	SET-OFF	47
25	TRANSFERS AND CHANGES IN LENDING OFFICE	47
26	VARIATIONS AND WAIVERS	48

27	NOTICES	48
28	JOINT AND SEVERAL LIABILITY	50
29	SUPPLEMENTAL	50
30	LAW AND JURISDICTION	51
SCHEDULE 1 DRAWDOWN NOTICE		52
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS		53
SCHEDULE 3 MANDATORY COST FORMULA		58
EXECUTION PAGE		60

THIS AGREEMENT is made on 20 June 2008

BETWEEN

(1) AEGEAN TRADERS INC., a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 and IGUANA SHIPPING COMPANY LIMITED, a company incorporated in Malta whose registered office is at 5/2, Merchants Street, Valletta, Malta (together the “Borrowers” and each a “Borrower”); and

(2) WESTLB AG, LONDON BRANCH, a company incorporated in Germany having its registered office at Herzogstrasse 15 in 40217 Duesseldorf, Germany and acting through its London branch at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA, England (as “Lender”).

BACKGROUND

The Lender has agreed to make available to the Borrowers, on a joint and several basis, a loan facility up to One hundred and three million two hundred thousand United States Dollars (US$103,200,000) for the purpose of:

(a) financing part of the acquisition cost of the m.v. “FEDERAL MAPLE” (as such cost is determined by referred to the purchase price payable pursuant to the MOA relative thereto); and

(b) either:

(i) refinancing part of the acquisition cost of m.v. “IGUANA”; or

(ii) financing part of the acquisition cost of a Panamax bulk carrier constructed within the period commencing on 1 January 2002 and ending on 31 December 2006.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

“Account” means:

(a) in the case of “FEDERAL MAPLE”, an earnings account in the name of Aegean with the Lender designated “Aegean Traders Inc. - Earnings Account”;

(b) in the case of “IGUANA”, an earnings account in the name of Iguana with the Lender designated “Iguana Shipping Company Limited - Earnings Account”; and

(c) in the case of the Collateral Ship, an earnings account in the name of the Collateral Owner with the Lender designated “[name of Collateral Owner] - Earnings Account,

or, in any case, any other account (with that or another office of the Lender or with a bank or financial institution other than the Lender) which is designated by the Lender as the Account for the relevant Ship for the purposes of this Agreement;

“Account Pledge” means, in relation to each Account, the deed of pledge in respect of that Account to be executed by the relevant Owner in favour of the Lender in such form as the Lender may approve or require and in the plural means all of them;

“Advance” means the principal amount of each borrowing by the Borrowers in respect of Tranche B under this Agreement being the First Tranche B Advance or the Second Tranche B Advance and, in the plural, means both of them;

“Approved Broker” means each of ASM, Platou Shipbrokers A.S., Arrow Sale & Purchase (UK) Ltd. and Fearnley AS or any other company which the Lender may approve from time to time as an Approved Broker under this Agreement;

“Approved Charter” means, in relation to a Ship, any time charter party of that Ship, including, without limitation, an agreed recap of charter party terms in which case a complete time charterparty will be provided to Lender once executed by the relevant parties, to be entered by the relevant Owner and a charterer in all respects acceptable to the Lender, exceeding or which, by virtue of any optional extensions is capable of exceeding, 24 months in duration as the same may be amended or supplemented from time to time in favour and substance in all respects acceptable to the Lender;

“Approved Flag” means, in relation to a Ship, the Maltese flag or such flag as the Lender may, in sole and absolute discretion, approve as the flag on which that Ship shall be registered;

“Approved Flag State” means, in relation to a Ship, any country in which the Lender may in its sole and absolute discretion, approve that such Ship be registered;

“Approved Manager” means in relation to each Ship, Cardiff Marine Inc. a corporation incorporated under the laws of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia and maintaining a ship management office at Omega Building, 80 Kifissias Avenue, 151 25 Maroussi, Greece or any other company which the Lender may reasonably approve as the commercial, technical and/or operational manager of that Ship;

“Approved Manager’s Undertaking” means, in relation to each Ship, a letter of undertaking executed or to be executed by the Approved Manager in favour of the Lender in such form as the Lender may approve or require agreeing certain matters in relation to the management of that Ship and subordinating the rights of the Approved Manager against the Ship and the relevant Owner thereof to the rights of the Lender under the Finance Documents and, in the plural, means any of them;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

(a)	(i)	in the case of Tranche A, 31 July 2008; and
	(ii)	in the case of Tranche B, 31 December 2008,
	(or, in each case, such later date as the Lender may agree with the Borrowers); or
(b)	if earlier, the final Drawdown Date or the date on which the Lender’s obligation to make the Loan is cancelled or terminated;

“Balloon Instalment” means each of the Tranche A Balloon Instalment and the Tranche B Balloon Instalment and in the plural means both of them;

“Borrower” means each of Aegean and Iguana and, in the plural, means both of them;

2

“Business Day” means a day on which banks are open in London, Athens and Piraeus, Düsseldorf and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Charter Assignment” means in relation to a Ship, a specific assignment of the rights of the relevant Owner under an Approved Charter relating to that Ship, pursuant to Clause 10.17 and any guarantee of such charter, to be executed by that Owner in favour of the Lender in such form as the Lender may approve or require and, in the plural, means all of them;

“Collateral General Assignment” means, in relation to the Collateral Ship, a general assignment of the Earnings, Insurances and Requisition Compensation of that Collateral Ship in such form as the Lender may approve or require;

“Collateral Guarantee” means the guarantee to be given by the Collateral Owner in such form as the Lender may approve or require;

“Collateral Mortgage” means, in relation to the Collateral Ship, the first preferred or priority ship mortgage on that Ship and, if required pursuant to the laws of the applicable Approved Flag State, a deed of covenant collateral thereto in such form as the Lender may approve or require;

“Collateral Owner” means a company incorporated and existing under the laws of a jurisdiction acceptable to the Lender which is a direct or indirect wholly owned subsidiary of the Corporate Guarantor which will be the registered owner of the Collateral Ship;

“Collateral Ship” means, a Panamax bulk carrier constructed within the period commencing on 1 January 2002 and ending on 31 December 2006 and being in all respects acceptable to the Lender;

“Commitment” means $103,200,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement;

“Confirmation” and “Early Termination Date” in relation to any continuing Transaction, have the meanings given in the Master Agreement;

“Contractual Currency” has the meaning given in Clause 20.4;

“Corporate Guarantee” means a guarantee to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may approve or require;

“Corporate Guarantor” means Dryships Inc., a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Deed of Covenant” means in relation to an Identified Ship, a deed of covenant collateral to the relevant Mortgage in such form as the Lender may approve or require and, in the plural, means both of them;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means the date requested by the Borrowers for the Loan to be advanced or (as the context requires) the date on which the Loan is actually advanced;

“Drawdown Notice” means a notice in the form set out in Schedule 1 (or in any other form which the Lender approves or reasonably requires);

3

“Earnings” means, in relation to each Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner of such Ship and which arise out of the use or operation of such Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the relevant Owner in the event of requisition of its Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of such Ship;

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c) if and whenever such Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to such Ship;

“Environmental Claim” means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from a Ship; or

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or an Owner and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where an Owner and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

4

“Event of Default” means any of the events or circumstances described in Clause 18.1;

“FEDERAL MAPLE” means the 2004-built bulk carrier vessel of 78,593 metric tons deadweight having IMO Number 9310408 and currently registered in the ownership of the relevant Seller under the flag of Panama with the name “FEDERAL MAPLE” to be acquired by Aegean pursuant to the relevant MOA and to be registered in the ownership of Aegean under the relevant Approved Flag with the name “SORRENTO”;

“Finance Documents” means:

(a) this Agreement;

(b) the Master Agreement;

(c) the Master Agreement Security Deed,

(d) the Corporate Guarantee;

(e) the General Assignments;

(f) the Mortgages;

(g) the Deeds of Covenants;

(h) the Account Pledges;

(i) the Approved Manager’s Undertakings;

(j) the Collateral Guarantee;

(k) the Collateral Mortgage;

(l) the Collateral General Assignment;

(m) any Charter Assignment; and

(n) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrowers (or either of them) or any Security Party or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

5

(e) under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

“First Tranche B Advance” means an amount of up to the lesser of (i) $32,500,000 and (ii) 55 per cent. of the Initial Market Value of “IGUANA” to be advanced to the Borrowers for the purpose of refinancing part of the acquisition cost of that Ship;

“General Assignment” means, in relation to an Identified Ship, a general assignment of the Earnings, the Insurances and the Requisition Compensation of such Ship to be executed by the relevant Borrower in favour of the Lender in such form as the Lender may approve or require, and, in the plural means both of them;

“Group” means the Corporate Guarantor and its subsidiaries (whether direct or indirect and including, but not limited to, each Owner) from time to time during the Security Period and “member of the Group” shall be construed accordingly;

“Identified Ship” means each of “FEDERAL MAPLE” and “IGUANA” and, in the plural, means both of them;

“Iguana” means Iguana Shipping Company Limited, a company incorporated in Malta, whose registered office is at 5/2 Merchants Street, Valletta, Malta;

“IGUANA” means the 1996-built bulk carrier vessel of 70,349 metric tons deadweight, having IMO Number 9123847 and registered in the ownership of Iguana under the relevant Approved Flag with the name “IGUANA”;

“Initial Market Value” means in relation to:

(a) “FEDERAL MAPLE”, the Market Value thereof calculated in accordance with paragraph 4 of Schedule 2, Part B;

(b) “IGUANA”, the Market Value thereof calculated in accordance with paragraph 4 of Schedule 2, Part C; and

(c) the Collateral Ship, the Market Value thereof calculated in accordance with paragraph 9 of Schedule 2, Part D;

“Insurances” means, in relation to each Ship:

(a) all policies and contracts of insurance, including entries of such Ship in any protection and indemnity or war risks association, which are effected in respect of such Ship, its Earnings or otherwise in relation to it; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interest Period” means, in relation to each Tranche, a period determined in accordance with Clause 5;

6

“ISM Code” means, in relation to its application to the Owners, the Ships and their operation:

(a) the International Management Code for the Safe Operation of Ships and for Pollution Prevention, currently known or referred to as the “ISM Code”, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4th November, 1993 and incorporated on 19th May, 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25th November, 1995,

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” includes, in relation to a Ship:

(a) the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to such Ship within the periods specified by the ISM Code;

(b) all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain such Ship’s compliance or the compliance by the Borrower owning such Ship with the ISM Code which the Lender may require;

“ISM SMS” means, in relation to a Ship, the safety management system for such Ship which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”) now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of the IMO on Maritime Security in December 2002 and includes any amendments or extensions to it and any regulation issued pursuant to it but shall only apply insofar as it is applicable law in the relevant Approved Flag State and any jurisdiction in which such Ship is operated;

“ISPS Code Documentation” includes:

(a) the International Ship Security Certificate issued pursuant to the ISPS Code in relation to each Ship within the period specified in the ISPS Code; and

(b) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Lender may require;

“Lender” means WestLB AG, London Branch, a company incorporated in Germany having its registered office at Herzogstrasse 15 in 40217 Duesseldorf, Germany and acting through its London branch at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA, England;

“LIBOR” means, for an Interest Period, the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00 am

7

(London time) on the second Business Day prior to the commencement of that Interest Period (and, for the purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display designated as “Reuters BBA Page LIBOR 01” on the Reuters Money News Service or such other page as may replace Reuters BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying the British Bankers’ Association Interest Settlement Rates for Dollars);

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means any casualty to a Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Mandatory Cost” means the percentage rate per annum calculated by the Lender in accordance with Schedule 3;

“Margin” means 1.20 per cent. per annum;

“Market Value” means, in relation to each Ship, the market value of that Ship determined in accordance with Clause 14.3;

“Master Agreement” means the master agreement (on the 1992 ISDA (Multicurrency - Crossborder) form as modified) made or to be made between the Corporate Guarantor and the Lender, and includes all Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement and any amending, supplementing or replacement agreements made from time to time;

“Master Agreement Security Deed” means the assignment of the Master Agreement executed or to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may approve or require;

“MOA” means:

(a) in relation to “FEDERAL MAPLE”, the memorandum of agreement dated 14 April 2008 entered into between Aegean as buyer and the relevant Seller as seller; and

(b) in relation to the Collateral Ship, the memorandum of agreement entered or, as the case may be, to be entered into between the Collateral Owner as buyer and the relevant Seller as seller,

as each may be amended and supplemented and, in the plural, means both of them;

“Mortgage” means, in relation to each Identified Ship, the first priority Maltese statutory mortgage on that Ship, in such form as the Lender may approve or require and in the plural means both of them;

“Negotiation Period” has the meaning given in Clause 4.6;

“Owner” means, in relation to:

(a) “FEDERAL MAPLE”, Aegean;

(b) “IGUANA”, Iguana; and

8

(c) the Collateral Ship, the Collateral Owner

in the plural, means all of them;

“Payment Currency” has the meaning given in Clause 20.4;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

(c) liens for salvage;

(d) liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;

(e) liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Owner of such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 13.12(g);

(f) any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where an Owner is actively prosecuting or defending such proceedings or arbitration in good faith; and

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

“Pertinent Document” means:

(a) any Finance Document;

(b) any policy or contract of insurance contemplated by or referred to in Clause 12 or any other provision of this Agreement or another Finance Document;

(c) any other document contemplated by or referred to in any Finance Document; and

(d) any document which has been or is at any time sent by or to the Lender in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company has the centre of its main interests or in which the company’s central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

9

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Lender and/or the satisfaction of any other condition, would constitute an Event of Default;

“Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period;

“Repayment Date” means a date on which a repayment is required to be made under Clause 7;

“Requisition Compensation” includes, in relation to a Ship, all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Second Tranche B Advance” means an amount of up to the lesser of (i) $51,600,000 and (ii) 60 per cent. of the Initial Market Value of the Collateral Ship to be made available to the Borrowers for the purpose of assisting the Collateral Owner in financing part of the acquisition cost of the Collateral Ship to be acquired by the Collateral Owner from the relevant Seller in accordance with the relevant MOA;

“Secured Liabilities” means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

10

(b) the security rights of a plaintiff under an action in rem; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Corporate Guarantor, the Collateral Owner, the Approved Manager and any other person (except the Lender) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Lender notifies the Borrowers and the Security Parties that:

(a) all amounts which have become due for payment by each of the Borrowers or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither Borrower nor any Security Party has any future or contingent liability under Clause 19, 20 or 21 or any other provision of this Agreement or another Finance Document; and

(d) the Lender does not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of any of the Borrowers or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

“Seller” means:

(a) in relation to “FEDERAL MAPLE”, Fednav International Ltd., a company incorporated in Barbados whose registered office is at 3rd floor, International Trading Centre, St. Michael, Barbados, West Indies; and

(b) in relation to the Collateral Ship the seller of that Ship in accordance with the relevant MOA,

and, in the plural, means both of them;

“Ships” means, together, the Identified Ships and the Collateral Ship and in the singular means any of them;

“Swap Exposure” means, as at any relevant date, the amount certified by the Lender to be the aggregate net amount in Dollars which would be payable by the Corporate Guarantor to the Lender under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Transactions entered into between the Corporate Guarantor and the Lender;

“Total Loss” means, in relation to a Ship:

(a) actual, constructive, compromised, agreed or arranged total loss of such Ship;

11

(b) any expropriation, confiscation, requisition or acquisition of such Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the owner owning such Ship;

(c) any arrest, capture, seizure or detention of such Ship (including any hijacking or theft) unless it is within 1 month redelivered to the full control of the Owner owning such Ship;

“Total Loss Date” means, in relation to a Ship:

(a) in the case of an actual loss of such Ship, the date on which it occurred or, if that is unknown, the date when such Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of such Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Owner owning such Ship with such Ship’s insurers in which the insurers agree to treat such Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which the relevant underwriters consider that the event constituting the total loss occurred; and

“Tranche” means each of Tranche A and Tranche B and, in the plural, means both of them;

“Tranche A” means an amount of to the lesser of (i) $51,600,000 and (ii) 60 per cent. of the Initial Market Value of “FEDERAL MAPLE”;

“Tranche A Balloon Instalment” has the meaning given in Clause 7.1(a);

“Tranche B” means an amount of up to $51,600,000 comprised at any time either by the First Tranche B Advance or the Second Tranche B Advance;

“Tranche B Balloon Instalment” has the meaning given in Clause 7.1(b)(ii); and

“Transaction” has the meaning given in the Master Agreement.

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 12, approved in writing by the Lender;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

12

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, fax or telex;

“excess risks” means, in relation to a Ship the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1,3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning the Ship is obliged to effect, under Clause 12 or any other provision of this Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1.4;

“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls) (1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“subsidiary” has the meaning given in Clause 1.4;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

13

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

and any company of which S is a subsidiary is a parent company of S.

1.5 General Interpretation. In this Agreement:

(a) references in Clause 1.1 to a Finance Document or any other document being in a particular form include references to that form with any modifications to that form which the Lender approves or reasonably requires;

(b) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(c) references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

14

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lender shall make available to the Borrowers a loan facility not exceeding One hundred and three million two hundred thousand United States Dollars ($103,200,000) to be divided into two Tranches.

2.2 Purpose of the Loan. Each Borrower undertakes with the Lender to use the Loan only for the purpose stated in the preamble to this Agreement.

3 DRAWDOWN

3.1 Request for Advance/Tranche. Subject to the following conditions, the Borrowers may request a Tranche or an Advance to be advanced by ensuring that the Lender receives a completed Drawdown Notice not later than 11.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date.

3.2 Availability. The conditions referred to in Clause 3.1 are that:

(a) the Drawdown Date has to be a Business Day during the Availability Period;

(b) each Tranche or, as the case may be, Advance shall be made in a single amount and any amount undrawn under Tranche A or, as the case may be, an Advance shall be cancelled and may not be borrowed by the Borrowers at a later date;

(c) Tranche A shall not exceed, an amount equal to the lesser of (i) $51,600,000 and (ii) 60 per cent. of the Initial Market Value of “FEDERAL MAPLE”;

(d) the First Tranche B Advance shall not exceed an amount equal to the lesser of (i) $32,500,000 and (ii) 55 per cent. of the Initial Market Value of “IGUANA”; or

(e) the Second Tranche B Advance shall not exceed an amount equal to the lesser of (i) $51,600,000 and (ii) 60 per cent. of the Initial Market Value of the Collateral Ship;

(f) the Second Tranche B Advance may only be made available to the Borrowers not earlier than 2 Business Days after the Borrowers have prepaid in full the First Tranche B Advance in accordance with Clause 7; and

(g) the aggregate of the Tranches shall not exceed the Commitment.

3.3 Drawdown Notice irrevocable. A Drawdown Notice must be signed by a director, officer or a duly authorised signatory of each Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender.

3.4 Disbursement of Loan. Subject to the provisions of this Agreement, the Lender shall on each Drawdown Date make available the relevant Tranche or Advance to the Borrowers; and payment to the Borrowers shall be made to the account which the Borrowers specify in the relevant Drawdown Notice.

3.5 Disbursement of Tranche or Advance to third party. The payment by the Lender under Clause 3.4 shall constitute the making of the Tranche or, as the case may be, Advance and the Borrowers shall at that time become indebted, as principal and direct obligor, to the Lender in an amount equal to the Loan.

15

4 INTEREST

4.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on each Tranche in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.

4.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest applicable to each Tranche in respect of an Interest Period shall be the aggregate (a) the Margin, (b) LIBOR and (c) the Mandatory Cost (if any) for that Interest Period.

4.3 Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

4.4 Notification of market disruption. The Lender shall promptly notify the Borrowers if no rate is quoted on Reuters BBA Page LIBOR01 or if for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fund the Loan (or any part of it) or a Tranche during any Interest Period, stating the circumstances which have caused such notice to be given.

4.5 Suspension of drawdown. If the Lender’s notice under Clause 4.4 is served before a Tranche or, as the case may be, Advance is made, the Lender’s obligation to make available that Tranche or, as the case may be, Advance shall be suspended while the circumstances referred to in the Lender’s notice continue.

4.6 Negotiation of alternative rate of interest. If the Lender’s notice under Clause 4.4 is served after a Tranche or, as the case may be, Advance is drawndown, the Borrowers and the Lender shall use reasonable endeavours to agree, within 15 days after the date on which the Lender serves its notice under Clause 4.4 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lender to fund or continue to fund that Tranche or, as the case may be, Advance during the Interest Period concerned.

4.7 Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

4.8 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set an interest period and interest rate representing the cost of funding of the Lender in Dollars or in any available currency of the Tranche or Loan plus the Margin and the Mandatory Cost (if any); and the procedure provided for by this Clause 4.8 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Lender.

4.9 Notice of prepayment. If the Borrowers do not agree with an interest rate set by the Lender under Clause 4.8, the Borrowers may give the Lender not less than 10 Business Days’ notice of their intention to prepay the Loan (or any part thereof) or Tranche at the end of the interest period set by the Lender.

4.10 Prepayment. A notice under Clause 4.9 shall be irrevocable; and on the last Business Day of the interest period set by the Lender, the Borrowers shall prepay (without premium or penalty) the Loan (or any part thereof) or Tranche, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

4.11 Application of prepayment. The provisions of Clause 7 shall apply in relation to the prepayment.

16

5 INTEREST PERIODS

5.1 Commencement of Interest Periods. The first Interest Period applicable to Tranche A or, in the case of Tranche B, the relevant Advance thereof shall commence on the Drawdown Date in respect of that Tranche or, as the case may be, that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

5.2 Duration of normal Interest Periods. Subject to Clauses 5.3 and 5.4, each Interest Period shall be:

(a) 1, 3, 6 or 12 months as notified by the Borrowers to the Lender not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or

(b) 3 months, if the Borrowers fail to notify the Lender by the time specified in paragraph (a); or

(c) such other period as the Lender may agree with the Borrowers.

5.3 Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 7 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

5.4 Non-availability of matching deposits for Interest Period selected. If, after the Borrowers have selected and the Lender has agreed an Interest Period longer than 6 months, the Lender notifies the Borrowers by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

6 DEFAULT INTEREST

6.1 Payment of default interest on overdue amounts. The Borrowers shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrowers under any Finance Document which the Lender does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 18.4, the date on which it became immediately due and payable.

6.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Lender to be 2 per cent. above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 6.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 6.3(b).

17

6.3 Calculation of default rate of interest. The rates referred to in Clause 6.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

(b) the aggregate of the Mandatory Cost (if any) and the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Lender may select from time to time:

(i) LIBOR; or

(ii) if the Lender determines that Dollar deposits for any such period are not being made available to it by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Lender by reference to the cost of funds to it from such other sources as the Lender may from time to time determine.

6.4 Notification of interest periods and default rates. The Lender shall promptly notify the Borrowers of each interest rate determined by it under Clause 6.3 and of each period selected by it for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Lender’s notification.

6.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.

6.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

6.7 Application to Master Agreement. For the avoidance of doubt, this Clause 6 does not apply to any amount payable under the Master Agreement in respect of any continuing Transaction as to which section 2(e) (Default Interest; Other Amounts) of the Master Agreement shall apply.

7 REPAYMENT AND PREPAYMENT

7.1 Repayment instalments. The Borrowers shall repay:

(a) Tranche A by 32 consecutive three-monthly instalments of (i) in the case of the first to eighth instalments (inclusive), in the amount of $1,750,000 each, (ii) in the case of the ninth to the sixteenth instalments (inclusive), in the amount of $1,200,000 each, (iii) in the case of the seventeenth to the thirty-second instalments (inclusive) in the amount of $750,000 and (iv) a balloon payment of $16,000,000 (the “Tranche A Balloon Instalment”); and

(b) Tranche B:

(i) in the case of the First Tranche B Advance, by 20 consecutive three-monthly instalments (i) in the case of the first to eighth instalments (inclusive), in the amount of $2,000,000 each and (ii) in the case of the ninth to the twentieth instalments (inclusive), in the amount of $1,375,000 each; or

(ii) in the case of the Second Tranche B Advance, by 32 consecutive three-monthly instalments of (i) in the case of the first to eighth instalments (inclusive), in the amount of $1,750,000 each, (ii) in the case of the ninth to the sixteenth instalments (inclusive), in the amount of $1,200,000 each, (iii) in the case of the seventeenth to the thirty-second instalments (inclusive) in the amount of $750,000 and (iv) a balloon payment of $16,000,000 (the “Tranche B Balloon Instalment”).

18

Provided that if a Tranche or, as the case may be, Advance is drawdown in less than the maximum available amount thereof, each repayment instalment applicable to that Tranche or, as the case may be, Advance (including the relevant Balloon Instalment) shall be reduced pro rata by an amount in aggregate equal to such undrawn amount.

7.2 Repayment Dates. The first repayment instalment for each Tranche or, as the case may be, Advance shall be repaid on the date falling 3 months after the Drawdown Date relative to that Tranche or, as the case may be, Advance each subsequent repayment instalment shall be repaid at 3-monthly intervals thereafter and the last instalment shall be repaid:

(a) in the case of Tranche A, together with the Balloon Instalment relative to that Tranche, on the earlier of (i) the date falling on the eighth anniversary of the Drawdown Date relative thereto and (ii) 31 July 2016;

(b) in the case of the First Tranche B Advance, on the earlier of (i) the date falling on the fifth anniversary of the Drawdown Date for that Tranche or Advance and (ii) 31 December 2013; and

(c) in the case of the Second Tranche B Advance, together with the Balloon Instalment relative to that Advance, on the earlier of (i) the date falling on the eighth anniversary of the Drawdown Date relative thereto and (ii) 31 December 2016.

7.3 Final Repayment Date. On the final Repayment Date, the Borrowers shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.

7.4 Voluntary prepayment. Subject to the following conditions, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period.

7.5 Conditions for voluntary prepayment. The conditions referred to in Clause 7.4 are that:

(a) a partial prepayment shall be $500,000 or a multiple of $500,000;

(b) the Lender has received from the Borrowers at least 5 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

(c) the Borrowers have provided evidence satisfactory to the Lender that any consent required by the Borrowers or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affect the Borrowers or any Security Party has been complied with.

7.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

7.7 Mandatory prepayment. If a Ship is sold or becomes a Total Loss the Borrowers shall be obliged to prepay the Relevant Tranche:

(a) if a Ship is sold, on or before the date on which the sale is completed by delivery of such Ship to the buyer; or

(b) if a Ship becomes a total loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.

19

In this Clause 7.7, “Relevant Tranche” means the Tranche which has been made available hereunder to finance that Ship.

7.8 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 20 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clauses 20.1(b) and 20.2 but without premium or penalty.

7.9 Application of partial prepayment. Each partial prepayment made pursuant to Clauses 7.4 or 7.7 shall be applied pro rata against the repayment instalments specified in Clause 7.1 outstanding at the time of the partial prepayment (including, without limitation, the relevant Balloon Instalment).

7.10 Reborrowing. Subject to the other terms of this Agreement, if the First Tranche B Advance is prepaid in accordance with this Clause 7 it may be reborrowed to allow the Borrowers to draw down the Second Tranche B Advance. No amount which is prepaid in respect of Tranche A or the Second Tranche B Advance may be reborrowed.

8 CONDITIONS PRECEDENT

8.1 Documents, fees and no default. The Lender’s obligation to make the Loan available is subject to the following conditions precedent:

(a) that, on or before the date of this Agreement, the Lender receives:

(i) the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers; and

(ii) payment in full of that part of the arrangement fee referred to in Clauses 19.1(a)(i) and 19.1(a)(ii)(A);

(b) that, on or before the Drawdown Date in respect of Tranche A, the Lender receives:

(i) the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers (save in the case of the ISSC and SMC referred to in paragraph 3(b) in Part B of Schedule 2 to be delivered by the Borrowers 5 Business Days after the relevant Drawdown Date); and

(ii) all accrued commitment fee payable pursuant to Clause 19.1(b)(A);

(c) that, on or before the Drawdown Date in respect of the First Tranche B Advance, the Lender receives the documents described in Part C of Schedule 2 in form and substance satisfactory to it and its lawyers;

(d) that on or before the Drawdown Date in respect of the Second Tranche B Advance, the Lender receives:

(i) the documents described in Part D of Schedule 2 in form and substance satisfactory to it and its lawyers (save in the case of the ISSC and SMC referred to in paragraph 8(b) in Part D of Schedule 2 to be delivered by the Borrowers to the Lender 5 Business Days after the relevant Drawdown Date); and

(ii) all accrued commitment fee payable pursuant to Clause 19.1(b)(B);

20

(e) that both at the date of each Drawdown Notice and at each Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the relevant Tranche or Advance;

(ii) the representations and warranties in Clause 9 and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) none of the circumstances contemplated by Clause 4.4 has occurred and is continuing;

(f) that, if the ratio set out in Clause 14.1 were applied immediately following the making of a Tranche or an Advance, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

(g) that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may reasonably request by notice to the Borrowers prior to the Drawdown Date.

8.2 Waivers of conditions precedent. If the Lender, at its discretion, permits a Tranche or an Advance to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 10 Business Days after the Drawdown Date relative thereto (or such longer period as the Lender may specify).

9 REPRESENTATIONS AND WARRANTIES

9.1 General. Each Borrower represents and warrants to the Lender as follows.

9.2 Status. Aegean is duly incorporated, validly existing and in goodstanding under the laws of the Marshall Islands and Iguana is duly incorporated and validly existing and in good standing under the laws of Malta.

9.3 Share capital and ownership. Each Borrower has:

(a) in the case of Aegean, an authorised share capital of $10,000 divided into 500 shares of $20 each and the legal title and beneficial ownership of all the Aegean’s shares is held, free of any Security Interest or other claim, by Aegean Shareholders Inc. of the Marshall Islands; and

(b) in the case of Iguana, an authorised share capital of LM 500 divided into 500 ordinary shares of LM 1 each, 200 of which are held by Iguana Shipholding One Inc. of the Marshall Islands and the remaining 300 by Iguana Shipholding Two Inc. of the Marshall Islands, free of any Security Interest or other claim.

9.4 Corporate power. Each Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to own its Ship and register it in its name under the relevant Approved Flag;

(b) to execute the Finance Documents and any Approved Charter to which it is a party; and

(c) to borrow under this Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which it is a party.

9.5 Consents in force. All the consents referred to in Clause 9.4 remain in force and nothing has occurred which makes any of them liable to revocation.

21

9.6 Legal validity; effective Security Interests. The Finance Documents to which each Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a) constitute the legal, valid and binding obligations of that Borrower enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

subject to any relevant insolvency laws affecting creditors’ rights generally.

9.7 No third party Security Interests. Without limiting the generality of Clause 9.6, at the time of the execution and delivery of each Finance Document:

(a) each Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

9.8 No conflicts. The execution by each Borrower of each Finance Document to which it is a party, and the borrowing by the Borrowers of the Loan, and their compliance with each Finance Document will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrowers; or

(c) any contractual or other obligation or restriction which is binding on the Borrowers or any of their assets.

9.9 No withholding taxes. All payments which the Borrowers are liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

9.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

9.11 Information. All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to the Lender in connection with any Finance Document satisfied the requirements of Clause 10.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 10.7; and there has been no material adverse change in the financial position or state of affairs of any of the Borrowers from that disclosed in the latest of those accounts.

9.12 No litigation. No legal or administrative action involving either Borrower (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to either Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on either Borrower’s financial position or profitability.

9.13 Compliance with certain undertakings. At the date of this Agreement, each of the Borrowers is in compliance with Clauses 10.2, 10.4, 10.9 and 10.13.

9.14 Taxes paid. Each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or the Ship owned by it.

22

9.15 ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrowers, the Approved Manager and the Ships have been complied with.

9.16 No money laundering. Without prejudice to the generality of Clause 2.2, in relation to the borrowing by the Borrowers of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents, each Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

9.17 Repetition of representation and warranties. The representation and warranties in this Clause 9 shall be deemed to be repeated on each Drawdown Date with respect to the facts and circumstances existing at that time.

10 GENERAL UNDERTAKINGS

10.1 General. Each Borrower undertakes with the Lender to comply with the following provisions of this Clause 10 at all times during the Security Period, except as the Lender may otherwise permit (in the case of Clause 10.18 such permission not to be unreasonably withheld).

10.2 Title; negative pledge and pari passu ranking. Each Borrower will:

(a) hold the legal title to, and own the entire beneficial interest in its Ship, her Insurances and her Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents (and the effect of assignments contained in the Finance Documents) and except for Permitted Security Interests;

(b) not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and

(c) procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future liabilities except for liabilities which are mandatorily preferred by law.

10.3 No disposal of assets. Neither Borrower will transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

10.4 No other liabilities or obligations to be incurred. Neither Borrower will incur any liability or obligation except liabilities and obligations under the Finance Documents to which it is a party and any MOA to which it is a party and liabilities and obligations reasonably incurred in the ordinary course of operating and chartering its Ship.

10.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrowers under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

10.6 Provision of financial statements. The Borrowers will send or procure there are sent to the Lender as soon as possible, but in no event later than 180 days after the end of each

23

financial year of the Borrowers and the Corporate Guarantor (in the case of the management accounts or, if available, the audited financial statements for the Borrowers commencing with the financial year ending on 31 December 2008 and in the case of the audited consolidated financial statements the Corporate Guarantor commencing with the financial year ending on 31 December 2007), the management accounts or, if available, the audited financial statements in respect of each of the Borrowers, and the audited consolidated financial statements in respect of the Corporate Guarantor, in each case for that financial year.

10.7 Form of financial statements. All accounts (audited and unaudited) delivered under Clause 10.6 will:

(a) be prepared in accordance with all applicable laws and generally accepted accounting principles consistently applied;

(b) give a true and fair view of the state of affairs of each Borrower or, as the case may be, the Corporate Guarantor at the date of those accounts and of profit for the period to which those accounts relate; and

(c) fully disclose or provide for all significant liabilities of each Borrower or, as the case may be, the Corporate Guarantor.

10.8 Shareholders and creditor notices. Each Borrower will send the Lender, at the same time as they are despatched, copies of all communications which are despatched to that Borrower’s shareholders or creditors or any class of them.

10.9 Consents. Each Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Lender of, all consents required:

(a) for each Borrower to perform its obligations under any Finance Document to which it is a party;

(b) for the validity or enforceability of any Finance Document to which it is a party; and

(c) for each Borrower to continue to own and operate its Ship,

and the Borrowers will comply with the terms of all such consents.

10.10 Maintenance of Security Interests. Each Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a) above, authorise and hereby authorises the Lender at the cost of the Borrowers to promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

10.11 Notification of litigation. Each Borrower will provide the Lender with details of any legal or administrative action involving either Borrower, any Security Party, the Approved Manager, any Ship, the Earnings or the Insurances as soon as such action is instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

24

10.12 Principal place of business. Each Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 27.2(a) and neither Borrower will establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.

10.13 Confirmation of no default. Each Borrower will, within 2 Business Days after service by the Lender of a written request, serve on the Lender a notice which is signed by a director of each Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

10.14 Notification of default. Each Borrower will notify the Lender as soon as either Borrower becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will keep the Lender fully up-to-date with all developments.

10.15 Provision of further information. Each Borrower will, as soon as practicable after receiving the request, provide the Lender with:

(a) any additional financial or other information relating to such Borrower, its Ship, the Earnings, the Insurances, the Approved Manager, the Group or the Corporate Guarantor; or

(b) any additional financial or other information relating to any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by the Lender at any time.

10.16 “Know your customer” requirements. Each Borrower shall provide to the Lender such documentation and evidence as may be required by the Lender from time to time to comply with applicable laws and regulations and its own internal guidelines in relation to the opening of bank accounts and the identification of its customers.

10.17 Time Charter Assignment. If either Borrower enters into any bareboat charter or any Approved Charter in respect of its Ship, such Borrower shall execute in favour of the Lender a Charterparty Assignment in respect of such bareboat charter or Approved Charter and deliver to the Lender any documents in relation thereto which the Lender may require.

10.18 No amendment to MOA. Aegean will not, and the Borrowers will procure that the Collateral Owner will not, agree to any amendment or supplement to, or waive or fail to enforce, any MOA to which Aegean or the Collateral Owner is a party or any of its provisions.

10.19 Purchase of other assets. The Borrowers shall not purchase any other assets other than the Ships.

10.20 General and administrative costs. The Borrowers shall ensure that the payment of all the general and administrative costs of the Owners in connection with the ownership and operation of the Ships (including, without limitation, the payment of the management fees) shall be fully subordinated to the payment obligations of the Borrowers under this Agreement and the other Finance Documents throughout the Security Period.

25

11 CORPORATE UNDERTAKINGS

11.1 General. Each Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit.

11.2 Maintenance of status. Aegean will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands and Iguana will maintain its separate corporate existence and remain in good standing under the laws of Malta.

11.3 Negative undertakings. Neither Borrower will:

(a) carry on any business other than the ownership, chartering and operation of the Ship owned by it; or

(b) provide any form of credit or financial assistance (other than any assistance to the Collateral Owner in connection with the financing of the Collateral Ship under this Agreement) to:

(i) a person who is directly or indirectly interested in such Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected,

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to such Borrower than those which it could obtain in a bargain made at arms’ length;

(c) open or maintain any account with any bank or financial institution except accounts with the Lender for the purposes of the Finance Documents;

(d) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(e) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or

(f) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

11.4 Maintenance of Ownership of Owners. Each Borrower shall procure that the Corporate Guarantor shall remain the ultimate legal owner of the entire issued and allotted share capital of each Owner free from any Security Interest.

12 INSURANCE

12.1 General. Each Borrower also undertakes with the Lender to comply and shall procure that the Collateral Owner complies with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may otherwise permit.

12.2 Maintenance of obligatory insurances. Each Borrower shall, and shall procure that the Collateral Owner shall, keep the Ship owned by it insured at the expense of such Owner against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

26

(b) war risks;

(c) protection and indemnity risks; and

(d) any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for such Owner to insure and which are specified by the Lender by notice to such Owner.

12.3 Terms of obligatory insurances. Each Borrower shall, and shall procure that the Collateral Owner shall, effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) an amount, which when aggregated with the insured value of any other Ship at the relevant time subject to a Mortgage, is equal to 120 per cent. of the aggregate of (A) the Loan and (B) the Swap Exposure and (ii) the Market Value of such Ship; and

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;

(d) in relation to protection and indemnity risks, in respect of the relevant Ship’s full tonnage;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

12.4 Further protections for the Lender. In addition to the terms set out in Clause 12.3, each Borrower shall procure that the obligatory insurances shall:

(a) whenever the Lender requires, name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(b) name the Lender as loss payee with such directions for payment as the Lender may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Lender in respect of any rights or interests (secured or not) held by or available to the Lender in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the relevant Owner or the Lender) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

27

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender;

(f) provide that the Lender may make proof of loss if the relevant Owner fails to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Lender, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Lender for 30 days (or 7 days in the case of war risks) after receipt by the Lender of prior written notice from the insurers of such cancellation, change or lapse.

12.5 Renewal of obligatory insurances. Each Borrower shall, and shall procure that the Collateral Owner shall:

(a) at least 14 days before the expiry of any obligatory insurance:

(i) notify the Lender of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom such Owner proposes to renew that obligatory insurance and of the proposed terms of renewal; and

(ii) obtain the Lender’s approval to the matters referred to in paragraph (i) above;

(b) at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Lender’s approval pursuant to paragraph (a) above; and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.

12.6 Copies of policies; letters of undertaking. Each Borrower shall, and shall procure that the Collateral Owner shall, ensure that all approved brokers provide the Lender with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Lender and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 12.4;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;

(c) they will advise the Lender immediately of any material change to the terms of the obligatory insurances;

(d) they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the relevant Owner or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the relevant Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the relevant Ship or otherwise, they waive any lien on the policies (including, without limitation, any fleet lien), or any sums received under them, which they might have in respect of such premiums or other

28

amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the relevant Ship forthwith upon being so requested by the Lender.

12.7 Copies of certificates of entry. Each Borrower shall, and shall procure that the Collateral Owner shall, ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Lender with:

(a) a certified copy of the certificate of entry for such Ship;

(b) a letter or letters of undertaking in such form as may be required by the Lender;

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Owner in accordance with the requirements of such protection and indemnity association; and

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to such Ship.

12.8 Deposit of original policies. Each Borrower shall, and shall procure that the Collateral Owner shall, ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

12.9 Payment of premiums. Each Borrower shall, and shall procure that the Collateral Owner shall, punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Lender.

12.10 Guarantees. Each Borrower shall, and shall procure that the Collateral Owner shall, ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

12.11 Restrictions on employment. Neither Borrower shall, and shall procure that the Collateral Owner shall not, employ the Ship owned by it, nor permit her to be employed, outside the cover provided by any obligatory insurances.

12.12 Compliance with terms of insurances. Each Borrower shall, and shall procure that the Collateral Owner shall, neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular;

(a) each Owner shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 12.7(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;

(b) no Owner shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;

(c) each Owner shall make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

29

(d) no Owner shall employ its Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

12.13 Alteration to terms of insurances. Neither Borrower shall, and shall procure that neither Borrower shall, make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

12.14 Settlement of claims. Neither Borrower shall, and shall procure that the Collateral Owner will not, settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

12.15 Provision of copies of communications. Each Borrower shall provide and shall procure that the Collateral Owner provides the Lender, at the time of each such communication, copies of all written communications between the relevant Owner and:

(a) the approved brokers; and

(b) the approved protection and indemnity and/or war risks associations; and

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) that Owner’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between that Owner and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

12.16 Provision of information. In addition, each Borrower shall, and shall procure that the Collateral Owner shall, promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17 below or dealing with or considering any matters relating to any such insurances,

and each Borrower shall, forthwith upon written demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.

12.17 Mortgagee’s interest and additional perils (pollution) insurances. The Lender shall be entitled from time to time to effect, maintain and renew a mortgagee’s marine insurance in respect of each Ship and a mortgagee’s interest additional perils (pollution) insurance in respect of the Ship, each in an amount equal to 120 per cent. of the aggregate of (i) the Loan and (ii) the Swap Exposure, on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate and

30

the Borrowers shall upon demand fully indemnify the Lender in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

12.18 Review of insurance requirements. The Lender shall be entitled to review the requirements of this Clause 12 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lender, significant and capable of affecting the Owners or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Owners may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrowers.

12.19 Modification of insurance requirements. The Lender shall notify the Borrowers of any proposed modification under Clause 12.18 to the requirements of this Clause 12 which the Lender considers appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 12 and shall bind the Borrowers accordingly.

12.20 Compliance with mortgagee’s instructions. The Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require any Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Owner of that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 12.19.

13 SHIP COVENANTS

13.1 General. Each Borrower also undertakes with the Lender to comply, and shall procure that the Collateral Owner complies, with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit.

13.2 Ship’s name and registration. Each Borrower shall, and shall procure that the Collateral Owner shall, keep the Ship owned by it registered in its ownership under an Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of a Ship.

13.3 Repair and classification. Each Borrower shall, and shall procure that the Collateral Owner shall, keep the Ship owned by it in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the highest classification available for vessels of the same age, type and specification as such Ship with s classification society which is a member of IACS acceptable to the Lender, free of overdue recommendations and requirements affecting such Ship’s class; and

(c) so as to comply with all laws and regulations applicable to vessels registered at ports in the relevant Approved Flag or to vessels trading to any jurisdiction to which such Ship may trade from time to time, including but not limited to the ISM Code, the ISM Code Documentation and the ISPS Code Documentation.

13.4 Classification society undertaking. The Borrowers shall instruct the classification society referred to in Clause 13.3(a) (and procure that the classification society undertakes with the Security Trustee):

(a) to send to the Lender, following receipt of a written request from the Lender, certified true copies of all original class records held by the classification society in relation to the Ship owned by it;

31

(b) to allow the Lender (or its agents), at any time and from time to time, to inspect the original class and related records of the relevant Owner and the Ship owned by it at the offices of the classification society and to take copies of them;

(c) to notify that Owner immediately in writing if the classification society:

(i) receives notification from that Owner or any person that the Ship’s owned by it classification society is to be changed; or

(ii) becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship’s class under the rules or terms and conditions of that Owner’s or that Ship’s membership of the classification society;

(d) following receipt of a written request from the Lender:

(i) to confirm that each Owner is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or

(ii) if an Owner is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Lender in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.

13.5 Modification. Neither Borrower shall, and shall procure that the Collateral Owner shall not, make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on such Ship which would or might materially alter the structure, type or performance characteristics of such Ship or materially reduce its value.

13.6 Removal of parts. Neither Borrower shall, and shall procure that the Collateral Owner shall not, remove any material part of the Ship owned by it, or any item of equipment installed on such Ship, unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lender and becomes on installation on such Ship the property of the relevant Borrower and subject to the security constituted by the Mortgage and if applicable, the Deed of Covenant relative to that Ship Provided that an Owner may install equipment owned by a third party if the equipment can be removed without any risk of damage to its Ship.

13.7 Surveys. Each Borrower shall, and shall procure that the Collateral Owner shall, submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender, provide the Lender at the expense of the Borrowers, with copies of all survey reports Provided that an Owner may install equipment owned by a third party if the equipment can be removed without any risk of damage to that Ship.

13.8 Inspection. Each Borrower shall, and shall procure that the Collateral Owner shall, permit the Lender (by surveyors or other persons appointed by it for that purpose) to

32

board the Ship owned by it at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

13.9 Prevention of and release from arrest. Each Borrower shall, and shall procure that the Collateral Owner shall, promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, her Earnings or her Insurances;

(b) all taxes, dues and other amounts charged in respect of the Ship owned by it, her Earnings or her Insurances; and

(c) all other outgoings whatsoever in respect of the Ship owned by it, the Earnings or the Insurances,

and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, the relevant Owner shall procure its release by providing bail or otherwise as the circumstances may require.

13.10 Compliance with laws etc. Each of the Borrowers shall, and shall procure that the Collateral Owner shall:

(a) comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of the relevant Owner;

(b) not employ the Ship owned by it, nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit it to enter or trade to any zone which is declared a war zone by any government or by such Ship’s war risks insurers unless the prior written consent of the Lender has been given and the relevant Owner has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.

13.11 Provision of information. Each Borrower shall, and shall procure that the Collateral Owner shall, promptly provide the Lender with any information which it requests regarding:

(a) the Ship owned by it, its employment, position and engagements;

(b) the Earnings and payments and amounts due to such Ship’s master and crew;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of such Ship and any payments made in respect of such Ship;

(d) any towages and salvages; and

(e) the relevant Owner’s, the Approved Manager’s or such Ship’s compliance with the ISM Code and the ISPS Code,

and, upon the Lender’s request, provide copies of any current charter relating to such Ship, of any current charter guarantee and of the ISM Code Documentation and ISPS Code Documentation.

33

13.12 Notification of certain events. Each Borrower shall, and shall procure that the Collateral Owner shall immediately notify the Lender by fax, confirmed forthwith by letter, of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d) any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on such Ship or its Earnings or any requisition of such Ship for hire;

(e) any intended dry docking of the Ship owned by it;

(f) any Environmental Claim made against the relevant Owner or in connection with the Ship owned by it, or any Environmental Incident;

(g) any claim for breach of the ISM Code or the ISPS Code being made against the relevant Borrower, the Approved Manager or otherwise in connection with the Ship owned by it; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and each Borrower shall keep the Lender advised in writing on a regular basis and in such detail as the Lender shall require of each Owner’s, the Approved Manager’s or any other person’s response to any of those events or matters.

13.13 Restrictions on chartering, appointment of managers etc. Neither Borrower shall, and shall procure that the Collateral Owner will not:

(a) let the Ship owned by it on demise charter for any period;

(b) enter into any time or consecutive voyage charter in respect of the Ship owned by it for a term which exceeds, or which by virtue of any optional extensions may exceed, 24 months;

(c) enter into any charter in relation to the Ship owned by it under which more than 2 months’ hire (or the equivalent) is payable in advance;

(d) charter the Ship owned by it otherwise than on bona fide arm’s length terms at the time when such Ship is fixed;

(e) appoint a manager of the Ship owned by it other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment;

(f) de-activate or lay up the Ship owned by it; or

(g) put the Ship owned by it into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on such Ship or her Earnings for the cost of such work or for any other reason.

34

13.14 Notice of Mortgage. Each Borrower shall, and shall procure that the Collateral Owner shall, keep the Mortgage registered against the Ship owned by it as a valid first priority mortgage, carry on board such Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of such Ship a framed printed notice stating that such Ship is mortgaged by the relevant Owner to the Lender.

13.15 Sharing of Earnings. Neither Borrower shall, and shall procure that the Collateral Owner shall not, enter into any agreement or arrangement for the sharing of any Earnings.

14 SECURITY COVER

14.1 Minimum required security cover. Clause 14.2 applies if the Lender notifies the Borrowers that:

(a) the aggregate Market Value of the Ships; plus

(b) the net realisable value of any additional security previously provided under this Clause 14,

is below 135 per cent. of the aggregate of (i) the Loan and (ii) the Swap Exposure.

14.2 Provision of additional security; prepayment. If the Lender serves a notice on the Borrowers under Clause 14.1, the Borrowers shall, within 1 month after the date on which the Lender’s notice is served, either:

(a) provide, or ensure that a third party provides, additional security which, in the opinion of the Lender, has a net realisable value at least equal to the shortfall and is documented in such terms as the Lender may approve or require; or

(b) prepay such part (at least) of the Loan as will eliminate the shortfall.

14.3 Valuation of Ships. The Market Value of a Ship at any date is that shown by the average of two valuations prepared:

(a) as at a date not more than 14 days previously;

(b) by 2 Approved Brokers which the Lender has appointed or approved for the purpose;

(c) with or without physical inspection of the relevant Ship (as the Lender may require);

(d) on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer;

(e) free of any existing charter or other contract of employment (other than in the case of any Approved Charter which has an unexpired duration of at least 24 months, in which such Approved Charter shall be taken into account in determining the Market Value of the relevant Ship); and

(f) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

14.4 Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 14.2 and which consists of a Security Interest over a vessel shall be that shown by way of a valuation complying with the requirements of Clause 14.3.

35

14.5 Valuations binding. Any valuation under Clause 14.2, 14.3 or 14.4 shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Lender makes of any additional security which does not consist of or include a Security Interest.

14.6 Provision of information. Each Borrower shall promptly provide the Lender and any Approved Broker or expert acting under Clause 14.3 with any information which the Lender or any Approved Broker may request for the purposes of the valuation; and, if a Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which that Approved Broker or the Lender (or the expert appointed by it) considers prudent.

14.7 Payment of valuation expenses. Without prejudice to the generality of the Borrowers’ obligations under Clauses 19.2, 19.3 and 20.3, each Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any Approved Broker instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause Provided that prior to an Event of Default or Potential Event of Default the Borrowers shall not be obliged to reimburse the Lender for more than one set of two valuations of the Ship per calendar year and Provided further that such valuations show that the Borrowers comply with the terms of Clause 14.1.

14.8 Application of prepayment. Clause 7 shall apply in relation to any prepayment pursuant to Clause 14.2(b).

15 PAYMENTS AND CALCULATIONS

15.1 Currency and method of payments. All payments to be made by the Borrowers to the Lender under a Finance Document shall be made to the Lender:

(a) by not later than 11.00 a.m. (Athens time) on the due date;

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

(c) to the account of the Lender with JP Morgan Chase New York, CHASUS33 A/C WestLB AG London Branch WELAGB2L (Account No. with WestLB AG, London Branch 001-1-352267 SWIFT WELAGB2L), or to such other account with such other bank as the Lender may from time to time notify to the Borrowers.

15.2 Payment on non-Business Day. If any payment by the Borrowers under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

15.3 Basis for calculation of periodic payments. All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

36

15.4 Lender accounts. The Lender shall maintain an account showing the amounts advanced by the Lender and all other sums owing to the Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

15.5 Accounts prima facie evidence. If the account maintained under Clause 15.4 shows an amount to be owing by the Borrowers or a Security Party to the Lender, that account shall be prima facie evidence, save in the case of manifest error, that amount is owing to the Lender.

16 APPLICATION OF RECEIPTS

16.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents (or any of them) and the Master Agreement in the following order and proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents and the Master Agreement other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrowers under Clauses 18, 19 and 20 of this Agreement or by the Borrowers or any Security Party under any corresponding or similar provision in any other Finance Document or in the Master Agreement;

(ii) secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Lender under the Finance Documents and the Master Agreement (and, for this purpose, the expression “interest” shall include any net amount which the Borrowers shall have become liable to pay or deliver under section 2(e) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Lender at the time of application or distribution under this Clause 16); and

(iii) thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure calculated as at the actual Early Termination Date applying to each particular Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

(b) SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document and the Master Agreement but which the Lender, by notice to the Borrowers and the Security Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of this Clause 16.1; and

(c) THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

16.2 Variation of order of application. The Lender may, by notice to the Borrowers and the Security Parties, provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

16.3 Notice of variation of order of application. The Lender may give notices under Clause 16.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

37

16.4 Appropriation rights overridden. This Clause 16 and any notice which the Lender gives under Clause 16.3 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any other Security Party.

17 APPLICATION OF EARNINGS

17.1 Payment of Earnings. Each Borrower undertakes with the Lender to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignments), all the Earnings in relation to each Ship are paid to the Account in respect of that Ship.

17.2 Interest accrued on Accounts. Any credit balance on the Accounts shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts.

17.3 Location of accounts. Each Borrower shall promptly:

(a) comply with any requirement of the Lender as to the location or re-location of the Accounts or any of them;

(b) execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts.

17.4 Debits for expenses etc. The Lender shall be entitled (but not obliged) from time to time to debit the Accounts (or any of them) with prior notice in order to discharge any amount due and payable (which remains unpaid) to it under Clauses 19 or 20 or payment of which it has become entitled to demand under Clauses 19 or 20.

18 EVENTS OF DEFAULT

18.1 Events of Default. An Event of Default occurs if:

(a) either Borrower or the Corporate Guarantor or any other Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs of Clauses 8.2, 11.2, 11.3 or 14.2 of this Agreement or clauses 11.11, 11.12, 11.15 and 11.16 of the Corporate Guarantee; or

(c) (subject to any applicable grace period specified in any Finance Document) any breach by either Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (b) above) unless, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 30 days after the earlier of (i) written notice from the Lender requesting action to remedy the same and (ii) the date on which the relevant Borrower or Security Party becomes aware of the breach; or

(d) any representation, warranty or statement made by, or by an officer of, either Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

38

(e) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(f) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Lender, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Security Party, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrowers, the Collateral Owner or the Corporate Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days (or such longer period as the Lender may, in its sole and absolute discretion agree or specify) of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non judicial suspension or deferral of payments, reorganisation of its debt (or substantial part of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them (save for, in the case of the Corporate Guarantor, non judicial suspension or deferral of payments, reorganisation of its debt (or substantial part of its debt) or arrangement which occurs in its ordinary course of its business and not as a result

39

of the Corporate Guarantor’s inability to meet its obligations and/or liabilities and having been indicated a priori to the Lender) or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Lender, is similar to any of the foregoing; or

(g) either Borrower or any Security Party ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, is material in the context of this Agreement; or

(h) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for either Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or

(ii) for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(i) any consent necessary to enable either Borrower or the Collateral Owner to own, operate or charter the Ship owned by it or to enable either Borrower or any Security Party to comply with any provision which the Lender considers material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(j) it appears to the Lender that, without its prior consent, a change has occurred or probably has occurred after the date of this Agreement in the ultimate beneficial ownership of any of the shares in either Borrower or the Collateral Owner or in the ultimate control of the voting rights attaching to any of those shares; or

(k) any provision which the Lender considers material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(l) either Borrower or any Security Party repudiates any of the Finance Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Finance Documents; or

(m) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(n) any Ship ceases to be managed by the Approved Manager unless prior to such cessation the relevant Owner has appointed a substitute manager acceptable to the Lender; or

(o) an Event of Default (as defined in section 14 of the Master Agreement) occurs; or

(p) the Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason except with the consent of the Lender; or

40

(q) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of either Borrower, the Collateral Owner or the Corporate Guarantor; or

(ii) any accident or other event involving either of the Ships or another vessel, owned, chartered or operated by a Relevant Person,

in the light of which the Lender considers that there is a significant risk that either Borrower or any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

18.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default the Lender may:

(a) serve on the Borrowers a notice stating that all obligations of the Lender to the Borrowers under this Agreement are terminated; and/or

(b) serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(c) take any other action which, as a result of the Event of Default or any notice served under paragraph (a) or (b) above, the Lender is entitled to take under any Finance Document or any applicable law.

18.3 Termination of Commitment. On the service of a notice under Clause 18.2(a) the Commitment, and, all other obligations of the Lender to the Borrowers under this Agreement shall terminate.

18.4 Acceleration of Loan. On the service of a notice under Clause 18.2(b), the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers (or either of them) or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

18.5 Multiple notices; action without notice. The Lender may serve notices under Clauses 18.2(a) and (b) simultaneously or on different dates and it may take any action referred to in Clause 18.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

18.6 Exclusion of Lender liability. Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrowers (or either of them) or any other Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been caused directly and mainly by the dishonesty, the gross negligence or the wilful misconduct of the Lender’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

41

18.7 Relevant Persons. In this Clause 18 a “Relevant Person” means each Borrower or any other Security Party.

18.8 Interpretation. In Clause 18.1(e) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 18.l(f) “petition” includes an application.

19 FEES AND EXPENSES

19.1 Arrangement and commitment fees. The Borrowers shall pay to the Lender:

(a) a non-refundable arrangement fee of up to $474,000 as follows:

(i) in the case of Tranche A, $237,000 payable on the date of this Agreement; and

(ii) in the case of Tranche B:

(A) $150,000 payable on the date of this Agreement; and

(B) $87,000 payable on the Drawdown Date of the Second Tranche B Advance;

(b) quarterly in arrears during the period from (and including) the date of this Agreement to:

(A) in the case of Tranche A, the earlier of (i) the Drawdown Date in respect of Tranche A and (ii) the last day of the relevant Availability Period and on the last day of that period, a non-refundable commitment fee equal to 0.40 per cent. per annum of the undrawn amount of Tranche A; and

(B) in the case of Tranche B, the earlier of (i) the Drawdown Date in respect of the Second Tranche B Advance and (ii) the last day of the relevant Availability Period and on the last day of that period, a non-refundable commitment fee equal to 0.40 per cent. per annum of the undrawn amount of the Second Tranche B Advance.

19.2 Costs of negotiation, preparation etc. The Borrowers shall pay to the Lender on its demand the amount of all expenses incurred by the Lender in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

19.3 Costs of variations, amendments, enforcement etc. The Borrowers shall pay to the Lender, within 5 Business Days of the Lender’s demand, the amount of all expenses incurred by the Lender in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 14 or any other matter relating to such security;

(d) the opinions of the independent insurance consultant referred to in paragraph 6 of Schedule 2, Part B, paragraph 6 of Schedule 2, Part C of paragraph 11 of Schedule 2, Part D; or

42

(e) any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (e) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

19.4 Documentary taxes. The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender’s demand, fully indemnify the Lender against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrowers (or either of them) to pay such a tax.

19.5 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

20 INDEMNITIES

20.1 Indemnities regarding borrowing and repayment of Loan. The Borrowers shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c) any failure (for whatever reason) by the Borrowers (or any of them) to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 6);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,

and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under any Finance Document.

20.2 Breakage costs. Without limiting its generality, Clause 20.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by the Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or a number of transactions of which this Agreement is one.

43

20.3 Miscellaneous indemnities. The Borrowers shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by the Lender, in any country, as a result of or in connection with:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document;

(b) any other Pertinent Matter,

other than liability items which are shown to have been caused by the gross negligence or wilful misconduct or by the dishonesty of the officers or employees of the Lender.

Without prejudice to its generality, this Clause 20.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

20.4 Currency indemnity. If any sum due from the Borrowers or any Security Party to the Lender under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrowers (or either of them) or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment,

the Borrowers shall indemnify the Lender against the loss arising when the amount of the payment actually received by the Lender is converted at the available rate of exchange into the Contractual Currency.

In this Clause 20.4, the “available rate of exchange” means the rate at which the Lender is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 20.4 creates a separate liability of the Borrowers which is distinct from their other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

20.5 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

21 NO SET-OFF OR TAX DEDUCTION

21.1 No deductions. All amounts due from the Borrowers under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

(b) free and clear of any tax deduction except a tax deduction which the Borrowers are required by law to make.

44

21.2 Grossing-up for taxes. If the Borrowers are required by law to make a tax deduction from any payment:

(a) the Borrowers shall notify the Lender as soon as it becomes aware of the requirement;

(b) the Borrowers shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

21.3 Evidence of payment of taxes. Within one month after making any tax deduction, the Borrowers shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.

21.4 Exclusion of tax on overall net income. In this Clause 21 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on the Lender’s overall net income.

22 ILLEGALITY, ETC

22.1 Illegality. This Clause 22 applies if the Lender notifies the Borrowers that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

22.2 Notification and effect of illegality. On the Lender notifying the Borrowers under Clause 22.1, the Commitment shall terminate; and thereupon or, if later, on the date specified in the Lender’s notice under Clause 22.1 as the date on which the notified event would become effective the Borrowers shall prepay the Loan in full in accordance with Clause 7.

22.3 Mitigation. If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 22.2 the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

45

23 INCREASED COSTS

23.1 Increased costs. This Clause 23 applies if the Lender notifies the Borrowers that it considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

(b) the effect of complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

is that the Lender (or a parent company of it) has incurred or will incur an “increased cost”.

23.2 Meaning of “increased costs”. In this Clause 23, “increased costs” means:

(a) an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining the Commitment or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums; or

(b) a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital;

(c) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan; or

(d) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement;

but not an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 20.1 or by Clause 21 or an item arising directly out of the implementation by the applicable authorities having jurisdiction over the Notifying Lender of the matters set out in the statement of the Basle Committee on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International Convergence of Capital Measurement and Capital Standards”, to the extent and according to the timetable provided for in the statement.

For the purposes of this Clause 23.2 the Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

23.3 Payment of increased costs. The Borrowers shall pay to the Lender, on its demand, the amounts which the Lender from time to time notifies the Borrowers that it has specified to be necessary to compensate it for the increased cost.

23.4 Notice of prepayment. If the Borrowers are not willing to continue to compensate the Lender for the increased cost under Clause 23.3, the Borrowers may give the Lender not less than 14 days’ notice of their intention to prepay the Loan at the end of an Interest Period.

23.5 Prepayment. A notice under Clause 23.4 shall be irrevocable; and on the date specified in its notice of intended prepayment, the Commitment shall terminate and the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin.

46

23.6 Application of prepayment. Clause 7 shall apply in relation to the prepayment.

24 SET-OFF

24.1 Application of credit balances. The Lender may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrowers (or either of them) at any office in any country of the Lender in or towards satisfaction of any sum then due from the Borrowers (or any of them) to the Lender under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrowers (or either of them);

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

24.2 Existing rights unaffected. The Lender shall not be obliged to exercise any of its rights under Clause 24.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document).

24.3 No Security Interest. This Clause 24 gives the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrowers (or any of them).

25 TRANSFERS AND CHANGES IN LENDING OFFICE

25.1 Transfer by Borrowers. Neither Borrower may, without the consent of the Lender, transfer, novate or assign any of its rights, liabilities or obligations under any Finance Document.

25.2 Assignment by Lender. The Lender may assign or transfer all or any of the rights and interests which it has under or by virtue of the Finance Documents without the consent of, but following consultation with, the Borrowers.

25.3 Rights of assignee. In respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document, or any misrepresentation made in or in connection with a Finance Document, a direct or indirect assignee or transferee of any of the Lender’s rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee or transferee as a result of the breach or misrepresentation irrespective of whether the Lender would have incurred a loss of that kind or amount.

25.4 Sub-participation; subrogation assignment. The Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrowers; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.

47

25.5 Disclosure of information. The Lender may disclose to a potential assignee or transferee or sub-participant any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

25.6 Change of lending office. The Lender may change its lending office by giving notice to the Borrowers and the change shall become effective on the later of:

(a) the date on which the Borrowers receive the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

26 VARIATIONS AND WAIVERS

26.1 Variations, waivers etc. by Lender. A document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or the Lender’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax by the Borrowers and the Lender and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

26.2 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

(b) an Event of Default; or

(c) a breach by the Borrowers (or either of them) or any other Security Party of an obligation under a Finance Document or the general law; or

(d) any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

27 NOTICES

27.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

27.2 Addresses for communications. A notice shall be sent:

(a)       to the Borrowers:	c/o the Approved Manager
	Omega Building 80 Kifissias Avenue 151 25 Maroussi Greece
	Fax No: (+30) 210 8090 275 Attn: Mr. Aristidis Ioannidis

48

(b)      to the Lender:	Woolgate Exchange
	25 Basinghall Street London EC2V 5HA United Kingdom
	Fax No: +44 207 020 7820 Attn: Shipping-Transportation
	and
	Fax No: +44 207 020 7620 Attn: Mrs. Jutta Brown

or to such other address as the relevant party may notify the other.

27.3 Effective date of notices. Subject to Clauses 27.4 and 27.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

(b) a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

27.4 Service outside business hours. However, if under Clause 27.3 a notice would be deemed to be served:

(a) on a day which is not a Business Day in the place of receipt; or

(b) on such a Business Day, but after 5 p.m. local time,

the notice shall (subject to Clause 27.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

27.5 Illegible notices. Clauses 27.3 and 27.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

27.6 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

27.7 English language. Any notice under or in connection with a Finance Document shall be in English.

27.8 Meaning of “notice”. In this Clause 27 “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

49

28 JOINT AND SEVERAL LIABILITY

28.1 General. All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be several and, if and to the extent consistent with Clause 28.2, joint.

28.2 No impairment of Borrower’s obligations. The liabilities and obligations of each Borrower shall not be impaired by:

(a) this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;

(b) the Lender entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;

(c) the Lender releasing the other Borrower or any Security Interest created by a Finance Document; or

(d) any combination of the foregoing.

28.3 Principal debtors. Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and neither Borrower shall in any circumstances be construed to be a surety for the obligations of the other Borrower under this Agreement.

28.4 Subordination. Subject to Clause 28.5, during the Security Period, neither Borrower shall:

(a) claim any amount which may be due to it from the other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or

(b) take or enforce any form of security from the other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of the other Borrower; or

(c) set off such an amount against any sum due from it to the other Borrower; or

(d) prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower or other Security Party; or

(e) exercise or assert any combination of the foregoing.

28.5 Borrower’s required action. If during the Security Period, the Lender, by notice to a Borrower, requires it to take any action referred to in paragraphs ((a)) to ((d)) of Clause 28.4, in relation to the other Borrower, that Borrower shall take that action as soon as practicable after receiving the Lender’s notice.

29 SUPPLEMENTAL

29.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to the Lender are:

(a) cumulative;

(b) may be exercised as often as appears expedient; and

50

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3 Counterparts. A Finance Document may be executed in any number of counterparts.

29.4 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

30 LAW AND JURISDICTION

30.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

30.2 Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

30.3 Choice of forum for the exclusive benefit of the Lender. Clause 30.2 is for the exclusive benefit of the Lender, which reserves the right:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

Neither Borrower shall commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

30.4 Process agent. Each Borrower irrevocably appoints Ince Process Agents Ltd. for the time being presently of 5th Floor, International House, 1 St. Katharine’s Way, London E1 W 1AY, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

30.5 Lender’s rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

30.6 Meaning of “proceedings”. In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

51

EXECUTION PAGE

BORROWERS
SIGNED by for and on behalf of AEGEAN TRADERS INC. in the presence of:	) ) ) ) )
SIGNED by for and on behalf of IGUANA SHIPPING COMPANY LIMITED in the presence of:	) ) ) ) )
LENDER
SIGNED by for and on behalf of WESTLB AG, LONDON BRANCH in the presence of:	) ) ) ) )

60

EX-4.41

Exhibit 4.41

Date 23 July 2008

CRETAN TRADERS INC.

as Borrower

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

- and -

NORDDEUTSCHE LANDESBANK GIROZENTRALE

as Swap Bank

- and -

NORDDEUTSCHE LANDESBANK GIROZENTRALE

as Underwriter, Mandated Lead Arranger and Bookrunner

- and -

NORDDEUTSCHE LANDESBANK GIROZENTRALE

as Agent and Security Trustee

LOAN AGREEMENT

relating to

a term loan facility of up to US$126,400,000

to finance the acquisition of a capesize bulk carrier

currently named “NIGHTFLIGHT” (tbn “FLECHA”)

WATSON, FARLEY & WILLIAMS

Piraeus

INDEX

Clause		Page
1	INTERPRETATION	1
2	FACILITY	13
3	POSITION OF THE LENDERS	14
4	DRAWDOWN	15
5	INTEREST	15
6	INTEREST PERIODS	17
7	DEFAULT INTEREST	18
8	REPAYMENT AND PREPAYMENT	19
9	CONDITIONS PRECEDENT	21
10	REPRESENTATIONS AND WARRANTIES	21
11	GENERAL UNDERTAKINGS	23
12	CORPORATE UNDERTAKINGS	26
13	INSURANCE	27
14	SHIP COVENANTS	32
15	SECURITY COVER	34
16	PAYMENTS AND CALCULATIONS	36
17	APPLICATION OF RECEIPTS	37
18	APPLICATION OF EARNINGS	38
19	EVENTS OF DEFAULT	39
20	FEES AND EXPENSES	43
21	INDEMNITIES	44
22	NO SET-OFF OR TAX DEDUCTION	45
23	ILLEGALITY, ETC	46
24	INCREASED COSTS	47
25	SET-OFF	48
26	TRANSFERS AND CHANGES IN LENDING OFFICES	49

27	VARIATIONS AND WAIVERS	51
28	NOTICES	52
29	SUPPLEMENTAL	54
30	LAW AND JURISDICTION	54
SCHEDULE 1 LENDERS AND COMMITMENTS		56
SCHEDULE 2 DRAWDOWN NOTICE		57
SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS		58
SCHEDULE 4 TRANSFER CERTIFICATE		61
EXECUTION PAGES		65

THIS AGREEMENT is made on 23 July 2008

BETWEEN

(1) CRETAN TRADERS INC. as Borrower;

(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders;

(3) NORDDEUTSCHE LANDESBANK GIROZENTRALE, as Swap Bank;

(4) NORDDEUTSCHE LANDESBANK GIROZENTRALE, as Underwriter, Mandated Lead Arranger and Bookrunner; and

(5) NORDDEUTSCHE LANDESBANK GIROZENTRALE, as Agent and Security Trustee.

BACKGROUND

(A) The Lenders have agreed to make available to the Borrower a facility of up to the lesser of (i) $126,400,000 and (ii) 80 per cent of the lesser of (1) the Contract Price of the Ship pursuant to the MOA and (2) of the Market Value of the Ship as determined in accordance with paragraph 5 of Schedule 3, Part B, for the purpose of financing the acquisition cost of the Ship.

(B) The Borrower may, if it wishes, from time to time hedge its exposure under this Agreement to interest rate fluctuations by entering into interest rate swap transactions with the Swap Bank.

(C) The Lenders and the Swap Bank have agreed to share pari passu in security to be granted to the Security Trustee pursuant to this Agreement.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

“Account Pledge” means a pledge creating security in respect of the Earnings Account in such form as the Agent may approve or require;

“Affected Lender” has the meaning given in Clause 5.7;

“Agency and Trust Deed” means the agency and trust deed executed or to be executed between the Borrower, the Lenders, the Agent and the Security Trustee in such form as the Agent may approve or require;

“Agent” means Norddeutsche Landesbank Girozentrale, acting in such capacity through its office at Friedrichswall 10, D-30159, Hannover, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Approved Broker” means each of RS Platou Shipbrokers A.S., Dipl, -Ing. Weselmann of Hamburg, Fearleys AS, Arrow Sale and Purchase (UK) Ltd. or any other independent and reputable valuer selected by the Agent and approved by the Borrower and, in the plural means all of them;

1

“Approved Charter” means a time charter to be entered within one month from the date of this Agreement, into between the Borrower and the Approved Charterer for a duration of at least 10 years, at a gross daily charter hire rate of at least $55,000 and/or on such other terms as shall be acceptable in all respects acceptable to the Agent;

“Approved Charter Assignment” means an assignment of the rights of the Borrower under the Approved Charter in such form as the Agent may approve or require;

“Approved Charterer” means Fortescue Metals Group Ltd., a company incorporated in Australia whose principal office is at Level 2, 87 Adelaide Terrace, East Perth, Western Australia 6004;

“Approved Flag” means the Greek flag, the Maltese flag, the Cypriot flag or the flag of any other country in the European Union;

“Approved Manager” means Cardiff Marine Inc., a corporation incorporated in the Republic of Liberia and maintaining a ship management office at Omega Building, 80 Kifissias Avenue, Maroussi 151 25, Greece, or any other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the manager of the Ship;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

(a) 31 August 2008 (or such later date as the Agent may, with the authorisation of the Lenders, agree with the Borrower); or

(b) if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

“Bookrunner” means Norddeutsche Landesbank Girozentrale, acting in such capacity through its office at Friedrichswall 10, D-30159, Hannover, Germany, or any successor;

“Borrower” means Cretan Traders Inc., being a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

“Business Day” means a day on which banks are open in London, New York and Hannover;

“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Confirmation” and “Early Termination Date”, in relation to any continuing Transaction, have the meanings given in the Master Agreement;

“Contract Price” means the contract price payable for the Ship pursuant to the MOA being the amount of $158,000,000;

“Contractual Currency” has the meaning given in Clause 21.4;

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

2

“Creditor Party” means the Mandated Lead Arranger, the Underwriter, the Bookrunner, the Agent, the Security Trustee or any Lender, whether as at the date of this Agreement or at any later time;

“Deed of Covenant” means a deed of covenant collateral to the Mortgage and creating a charge over the Ship in such form as the Agent may approve or require;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to the Loan, the date requested by the Borrower for the Loan to be advanced, or (as the context requires) the date on which the Loan is actually advanced;

“Drawdown Notice” means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Security Trustee and which arise out of the use or operation of the Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the Borrower or the Security Trustee in the event of requisition of the Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c) if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

“Earnings Account” means an account in the name of the Borrower with the Agent in Hannover designated “Cretan Traders Inc. - Earnings Account” and any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which is designated by the Agent as the Earnings Account in relation to the Ship for the purposes of this Agreement;

“Environmental Claim” means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from a Ship; or

3

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship and/or the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Event of Default” means any of the events or circumstances described in Clause 19.1;

“Finance Documents” means:

(a) this Agreement;

(b) the Master Agreement;

(c) the Agency and Trust Deed;

(d) the Guarantee;

(e) the Master Agreement Assignment;

(f) the Mortgage;

(g) the Deed of Covenant;

(h) the General Assignment;

(i) the Account Pledge;

(j) the Negative Pledge;

(k) the Approved Charter Assignment; and

(l) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition;

4

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e) under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within paragraphs (a) to (e) if the references to the debtor referred to the other person;

“General Assignment” means a deed containing a general assignment of the Earnings, the Insurances, any Requisition Compensation of the Ship in respect of the Ship in such form as the Agent may approve or require;

“Guarantee” means a guarantee in such form as the Agent may approve or require;

“Guarantor” means Dryships Inc., a corporation incorporated in the Marshall Islands whose principal office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960;

“IFRS” means the International Financial Reporting Standards (formerly IAS including US GAAP);

“Insurances” means, in relation to the Ship:

(a) all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to it; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interest Period” means a period determined in accordance with Clause 6;

“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924 (22) of the International Maritime Organisation (“IMO”) adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to take effect on 1 July 2004;

5

“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

“Lender” means a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Agent under Clause 26.14) or its transferee, successor or assignee;

“LIBOR” means, for an Interest Period:

(a) the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00 am (London time) on the Quotation Date for that Interest Period (and, for the purposes of this Agreement, “Reuters BBA Page LIBOR 01” means the display designated as “Reuters BBA Page LIBOR 01” on the Reuters Money News Service or such other page as may replace Reuters BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying the British Bankers’ Association Interest Settlement Rates for Dollars); or

(b) if no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.) of the rates per annum notified to the Agent by each Reference Bank to be the rate per annum at which deposits in Dollars are offered to that Reference Bank by leading banks in the London Interbank Market at that Reference Bank’s request at or about 11.00 a.m. (London time) on the Quotation Date for that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Majority Lenders” means:

(a) before the Loan has been made, Lenders whose Commitments total 66.66 per cent. of the Total Commitments; and

(b) after the Loan has been made, Lenders whose Contributions total 66.66 per cent. of the Loan;

“Mandated Lead Arranger” means Norddeutsche Landesbank Girozentrale, acting in such capacity through its office at Friedrichswall 10, D-30159, Hannover, Germany, or any successor;

“Margin” means:

(a) in relation to Tranche A, 1.25 per cent. per annum; and

(b) in relation to Tranche B, 1.35 per cent. per annum;

“Market Value” means the market value of the Ship determined from time to time in accordance with Clause 15.3;

6

“Master Agreement” means the master agreement (on the 1992 ISDA (Multicurrency - Crossborder) form and including the schedule thereto) made or to be made between the Borrower and the Swap Bank and includes all Transactions from time to time entered into and Confirmations from time to time exchanged thereunder;

“Master Agreement Assignment” means the assignment of the Master Agreement in favour of the Security Trustee executed or to be executed by the Borrower, in such form as the Lenders may approve or require;

“MOA” means the memorandum of agreement dated 30 April 2008 made between the Seller and the Approved Manager, as the same has been novated to the Borrower by an Addendum No 1 dated 2 May 2008, pursuant to which the Seller has agreed to sell, and the Borrower has agreed to purchase, the Ship;

“Mortgage” means the first priority Maltese ship mortgage in such form as the Agent may approve or require;

“Mortgage-Backed Bonds” means bonds to be issued by the Agent in compliance with German law for mortgage-backed bonds (“Pfandbriefgesetz”);

“Negative Pledge” means the negative pledge in relation to the share capital of the Borrower executed or to be executed by the Shareholder in such form as the Agent may approve or require;

“Negotiation Period” has the meaning given in Clause 5.10;

“Payment Currency” has the meaning given in Clause 21.4;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

(c) liens for salvage;

(d) liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to the Ship not prohibited by this Agreement;

(e) liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(g);

(f) any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

7

“Pertinent Document” means:

(a) any Finance Document;

(b) any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;

(c) any other document contemplated by or referred to in any Finance Document; and

(d) any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company’s central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a);

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

“Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

“Reference Banks” means, subject to Clause 26.16, the Hannover branch of Norddeutsche Landesbank Girozentrale and any Lender;

8

“Relevant Person” has the meaning given in Clause 19.9;

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Secured Liabilities” means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b) the security rights of a plaintiff under an action in rem; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Guarantor, the Approved Manager and any other person (except a Creditor Party and the Approved Charterer) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the Lenders that:

(a) all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither the Borrower nor any Security Party has any future or contingent liability under Clause 20, 21 or 22 or any other provision of this Agreement or another Finance Document; and

(d) the Agent, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

9

“Security Trustee” means Norddeutsche Landesbank Girozentrale, acting in such capacity through its office at Friedrichswall 10, D-30159, Hannover, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

“Seller” means Nightflight Marine Ltd., a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

“Shareholder” means the owners of the whole of the issued share capital of the Borrower at the time of signature of the Negative Pledge;

“Ship” means the Capesize bulk carrier of approximately 170,000 metric tons deadweight currently named “NIGHTFLIGHT” and registered in the name of the Seller under the Bahamas flag with IMO No 9284570 to be purchased by the Borrower pursuant to the MOA and registered in the name of the Borrower under the Maltese flag with the name “FLECHA”;

“Successful Syndication” means a syndication of not less than 40 per cent. of the Total Commitments by Norddeutsche Landesbank Girozentrale to banks or financial institutions experienced in ship finance;

“Swap Bank” means Norddeutsche Landesbank Girozentrale, acting in such capacity through its office at Friedrichswall 10, D-30159, Hannover, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Swap Exposure” means, as at any relevant date the aggregate net amount in Dollars which would be payable by the Borrower to the Lenders under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Transactions entered into between the Borrower and the Swap Bank;

“Total Loss” means:

(a) actual, constructive, compromised, agreed or arranged total loss of the Ship;

(b) any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the full control of the Borrower; and

(c) any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless it is within 1 month redelivered to the full control of the Borrower;

“Total Loss Date” means, in relation to the Ship:

(a) in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of the Borrower, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

10

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Borrower with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

“Tranche A” means an amount of the Loan, currently estimated to be $39,600,000, representing that part which may be covered by Mortgage-Backed Bonds which shall be determined by the Agent in accordance with Clause 2.6 and, at all times after the determination thereof means the principal outstanding amount thereof;

“Tranche B” means, as at the date of determination thereof, the amount of the Total Commitments less Tranche A and at all times thereafter means the principal outstanding amount thereof;

“Tranches” means, together Tranche A and Tranche B, and in the singular means any of them;

“Transfer Certificate” has the meaning given in Clause 26.2;

“Transaction” has the meaning given in the Master Agreement;

“Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Agreement;

“Underwriter” means Norddeutsche Landesbank Girozentrale, acting in such capacity through its office at Friedrichswall 10, D-30159, Hannover, Germany, or any successor of it; and

“US GAAP” means generally accepted accounting principles in the United States of America established by the Financial Accounting Standards Board (FASB).

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 13, approved in writing by the Agent;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, fax or telex;

“excess risks” means, in relation to the Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

11

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to the Ship, all insurances effected, or which the Borrower owning the Ship is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

“on demand” means:

(a) at any time when an Event of Default has occurred and is continuing, within 3 days of the Agent’s written demand; and

(b) at all other times, within 21 days of the Agent’s written demand.

“parent company” has the meaning given in Clause 1.4;

“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“subsidiary” has the meaning given in Clause 1.4;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls)(1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

12

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

and any company of which S is a subsidiary is a parent company of S.

1.5 General Interpretation. In this Agreement:

(a) references in Clause 1.1 to a Finance Document or any other document being in the form of a particular appendix include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires;

(b) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(c) references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower, in one advance, a loan facility of up to the lesser of (i) $126,400,000 and (ii) 80 per cent, of the lesser of (a) the Contract Price and (b) the Market Value of the Ship as determined in accordance with paragraph 5 of Schedule 3, Part B for the purpose of part-financing the acquisition cost of the Ship under the MOA.

13

2.2 Lenders’ participations in the Loan. Subject to the other provisions of this Agreement, each Lender shall participate in the Loan in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments.

2.3 Purpose of the Loan. The Borrower undertakes with each Creditor Party to use the Loan only for the purpose stated in the preamble to this Agreement.

2.4 Market Flex. Immediately after the amounts of Tranche A and Tranche B are definitively determined by the Agent pursuant to Clause 2.6 (but in any event not later than the period commencing on 1 July 2009 and ending on 31 December 2009), the Borrower agrees that the Agent shall be entitled, after consultation with the Borrower and the Guarantor, to change the pricing, with the exception of the arrangement fee to be caped up to 0.50% of the Total Commitment, terms and structure of the Loan outlined in this Agreement if the Mandated Lead Arranger considers that such changes would be necessary in order to enhance the prospects of a Successful Syndication and the Borrower shall enter into such documentation as may be required by the Agent in order to document the resultant amendments to this Agreement and any of the other Finance Documents. To determine whether the changes suggested by the Mandated Lead Arranger will in fact enhance the prospects of a Successful Syndication the Agent shall contact 3 banks or financial institutions experienced in ship finance which shall be selected with the prior approval of the Borrower (which shall not be unreasonably withheld or delayed) to seek their opinion.

2.5 Transfer of the Loan; Successful Syndication. Norddeutsche Landesbank Girozentrale is entitled to complete a Successful Syndication during the period commencing on the date of this Agreement and ending on 31 December 2009 Provided that following the Successful Syndication its Contribution is greater than that of any other Lender.

2.6 Determination of Tranches. The Agent shall after issuing the Mortgage-Backed Bonds but in any event by no later than 31 August 2009, determine the amounts of Tranche A and Tranche B and shall advise the Borrower in writing of the amount of each Tranche and the Borrower agrees and acknowledges that such determination shall be final and binding on the Borrower save in the case of manifest error.

3 POSITION OF THE LENDERS

3.1 Interests of Lenders several. The rights of the Lenders under this Agreement are several.

3.2 Individual Lender’s right of action. Each Lender shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement without joining the Agent, the Security Trustee or any other Lender as additional parties in the proceedings.

3.3 Proceedings by individual Lender requiring Majority Lenders’ consent. Except as provided in Clause 3.2, no Lender may commence proceedings against the Borrower or any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.

3.4 Obligations of Lenders several. The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement shall not result in:

(a) the obligations of the other Lenders being increased; nor

(b) the Borrower, any Security Party or any other Lender being discharged (in whole or in part) from its obligations under any Finance Document; and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.

14

4 DRAWDOWN

4.1 Request for Loan. Subject to the following conditions, the Borrower may request the Loan to be made by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date.

4.2 Availability. The conditions referred to in Clause 4.1 are that:

(a) a Drawdown Date has to be a Business Day during the Availability Period; and

(b) the aggregate amount of the Loan shall not exceed the Total Commitments;

4.3 Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

(a) the amount of the Loan and the Drawdown Date;

(b) the amount of that Lender’s participation in the Loan; and

(c) the duration of the first Interest Period.

4.4 Drawdown Notice irrevocable. A Drawdown Notice must be signed by a director, an officer or an authorised attorney in fact of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

4.5 Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent the amount due from that Lender on that Drawdown Date under Clause 2.2.

4.6 Disbursement of Loan. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrower shall be made:

(a) to the account which the Borrower specifies in the Drawdown Notice; and

(b) in the like funds as the Agent received the payments from the Lenders.

4.7 Disbursement of Loan to third party. The payment by the Agent under Clause 4.6 shall constitute the making of the Loan and the Borrower shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender’s Contribution.

5 INTEREST

5.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

5.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of the applicable Margin and LIBOR for that Interest Period.

15

5.3 Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

5.4 Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:

(a) each rate of interest; and

(b) the duration of each Interest Period;

as soon as reasonably practicable after each is determined.

5.5 Obligation of Reference Banks to quote. A Reference Bank which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement.

5.6 Absence of quotations by Reference Banks. If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks; but if 2 or more of the Reference Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5.

5.7 Market disruption. The following provisions of this Clause 5 apply if:

(a) 2 or more of the Reference Banks do not, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or

(b) at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent of the Loan, notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or

(c) at least 1 Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

5.8 Notification of market disruption. The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.7 which have caused its notice to be given.

5.9 Suspension of drawdown. If the Agent’s notice under Clause 5.8 is served before the Loan is advanced:

(a) in a case falling within Clauses 5.7(a) or (b), the Lenders’ obligations to advance the Loan;

(b) in a case falling within Clause 5.7(c), the Affected Lender’s obligation to participate in the Loan;

shall be suspended while the circumstances referred to in the Agent’s notice continue.

5.10 Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.8 is served after the Loan is advanced, the Borrower, the Agent and the Lenders or (as the

16

case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.8 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

5.11 Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

5.12 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the applicable Margin; and the procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

5.13 Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12, the Borrower may give the Agent not less than 15 Business Days’ notice of their intention to prepay at the end of the interest period set by the Agent.

5.14 Prepayment; termination of Commitments. A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

(b) on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the applicable Margin.

5.15 Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.

5.16 Determination of Margin. The Agent shall review the applicable Margin in relation to each Tranche on the date falling on the earlier of (i) 12 months after the Drawdown Date and (ii) 30 August 2009 (the “Margin Calculation Date”), and shall advise the Borrower in writing within 5 Business Days of the Margin Calculation Date of the Margin which will apply to that Tranche commencing on the Margin Calculation Date Provided that if the Borrower disagrees with the revised Margin the provisions of Clause 8.8(c) and 8.8(d) shall apply.

6 INTEREST PERIODS

6.1 Commencement of Interest Periods. The first Interest Period applicable to the Loan shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

6.2 Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

(a) 1, 3, 6 or 12 months as notified by the Borrower to the Agent not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or

17

(b) 3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or

(c) such other period as the Agent may, with the authorisation of all the Lenders, agree with the Borrower.

6.3 Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

6.4 Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than 6 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

7 DEFAULT INTEREST

7.1 Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, within three (3) Business Days as of the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

7.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 1.35 per cent. above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 7.3(b).

7.3 Calculation of default rate of interest. The rates referred to in Clause 7.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);

(b) the applicable Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

(i) LIBOR; or

(ii) if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine.

18

7.4 Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrower are liable to pay such interest only with effect from the date of the Agent’s notification.

7.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

7.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

7.7 Application to Master Agreement. For the avoidance of doubt this Clause 7 does not apply to any amount payable under the Master Agreement in respect of any continuing Transaction as to which section 2(e) (Default Interest, Other Amounts) of the Master Agreement shall apply.

8 REPAYMENT AND PREPAYMENT

8.1 Amount of repayment instalments.

(a) The Borrower shall repay the Loan by 40 equal consecutive three-monthly instalments in the amount of $2,650,000 each and by a balloon instalment in the amount of $20,400,000;

(b) Until the amount of the Tranches is determined by the Agent pursuant to Clause 2.6, each repayment instalment and the balloon instalment shall be allocated between the Tranches in the following manner:

	Repayment Instalment		Balloon Instalment
Tranche A	$	830,221.52	$	6,391,139.20
Tranche B	$	1,819,778.48	$	14,008,860.80

(c) When the amount of the Tranches is determined by the Agent pursuant to Clause 2.6, the Agent shall send a notice in writing to the Borrower setting out how the amount of each repayment instalment and the balloon instalment will as from the date of the notice and at all times thereafter be allocated between the Tranches.

8.2 Repayment Dates. The first instalment of the Loan or of each Tranche (as the case may be) shall be repaid on the date falling 3 months after the Drawdown Date and the last instalment of the Loan or of each Tranche (as the case may be) on the date falling on the tenth anniversary after the Drawdown Date together with the relevant balloon instalment.

8.3 Final Repayment Date. On the final Repayment Date, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.

8.4 Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan or any Tranche (as the case may be) on the last day of an Interest Period.

19

8.5 Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

(a) a partial prepayment shall be $250,000 or a multiple of $250,000;

(b) the Agent has received from the Borrower at least 5 days’ prior written notice specifying the amount to be prepaid, the date on which the prepayment is to be made; and

(c) the Borrower has provided evidence satisfactory to the Agent that any consent required by it or any Security Party in connection with the prepayment has been obtained and remains in force, and that any official regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

8.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

8.7 Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).

8.8 Mandatory prepayment. Without prejudice to the provisions of Clause 15, the Borrower shall be obliged to prepay the Loan in full in the following circumstances;

(a) if the Ship is sold, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or

(b) if the Ship becomes a Total Loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss; or

(c) if the Borrower does not agree to the revised Margin proposed by the Agent pursuant to Clause 5.16, on the date falling 60 days after the date on which the Agent notifies the Borrower of the revised Margin pursuant to Clause 5.16; or

(d) if a Successful Syndication has not been achieved by 31 December 2009, on the date falling 60 days after the Agent’s notice that a Successful Syndication has not been achieved.

8.9 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.1(b) but without premium or penalty.

8.10 Application of partial prepayment. Each partial prepayment made pursuant to:

(a) Clause 8.4, shall be applied first against the balloon instalment of Tranche A and thereafter against the then outstanding amount of Tranche A in inverse order of maturity. Thereafter any other repayments shall be applied first again the balloon instalment in respect of Tranche B and thereafter against the then outstanding amount of Tranche B in inverse order of maturity; and

(b) Clause 8.8, shall be applied in fully repaying the Loan.

8.11 No reborrowing. No amount prepaid may be reborrowed.

20

9 CONDITIONS PRECEDENT

9.1 Documents, fees and no default. Each Lender’s obligation to contribute to the Loan is subject to the following conditions precedent:

(a) that, on or before the service of the Drawdown Notice, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

(b) that, on the Drawdown Date but prior to the advance of the Loan, the Agent receives the documents described in Part B of Schedule 3 in form and substance satisfactory to it and its lawyers;

(c) that, on or before the service of the Drawdown Notice, the Agent receives the arrangement fee referred to in Clause 20.1, all accrued commitment fee payable pursuant to Clause 20.1 and has received payment of the expenses referred to in Clause 20.2; and

(d) that both at the date of the Drawdown Notice and at the Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan;

(ii) the representations and warranties in Clause 10.1 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) none of the circumstances contemplated by Clause 5.7 has occurred and is continuing; and

(e) that, if the ratio set out in Clause 15.1 were applied immediately following the advance of the Loan, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause;

(f) that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrower prior to the Drawdown Date.

9.2 Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit the Loan to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 10 Business days after the Drawdown Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify).

10 REPRESENTATIONS AND WARRANTIES

10.1 General. The Borrower represents and warrants to each Creditor Party as follows.

10.2 Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands.

10.3 Share capital and ownership. The aggregate number of shares of stock that the Borrower is authorised to issue is 500 registered shares with a par value of $20.00 each, all of which have been issued fully paid up and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, by the Shareholder.

21

10.4 Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to execute the MOA to which it is a party, to purchase and pay for the Ship and register the Ship in its name under the Maltese flag;

(b) to execute the Finance Documents to which the Borrower is a party; and

(c) to borrow under this Agreement, to enter into Transactions under the Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents and the Master Agreement.

10.5 Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

10.6 Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a) constitute the Borrower’s legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate;

subject to any relevant insolvency laws affecting creditors’ rights generally.

10.7 No third party Security Interests. Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document:

(a) the Borrower which is a party to that Finance Document will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

10.8 No conflicts. The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by it of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrower; or

(c) any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.

10.9 No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

10.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

10.11 Information. All information which has been provided in writing by or on behalf of the Borrower or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5; all audited and unaudited accounts

22

which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts.

10.12 No litigation. No legal or administrative action involving the Borrower (including action relating to any alleged or actual breach of the ISM Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower’s financial position or profitability.

10.13 Validity and completeness of MOA. The MOA constitutes valid, binding and enforceable obligations of the parties thereto in accordance with its terms and:

(a) the copy of the MOA delivered to the Agent before the date of this Agreement is a true and complete copy; and

(b) no amendments or additions to the MOA have been agreed nor has any party thereto either waived any of their respective rights under the MOA.

10.14 No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrower, the Seller or any third party in connection with the purchase by the Borrower of the Ship, other than as disclosed to the Lenders in writing on or prior to the date of this Agreement.

10.15 Compliance with certain undertakings. At the date of this Agreement, the Borrower in compliance with Clauses 11.2, 11.4, 11.9 and 11.13.

10.16 Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower, its business or the Ship.

10.17 ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Ship have been complied with.

10.18 No money laundering. Without prejudice to the generality of Clause 2,3, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

11 GENERAL UNDERTAKINGS

11.1 General. The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

11.2 Title; negative pledge. The Borrower will:

(a) hold the legal title to, and own the entire beneficial interest, in the Ship, her Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents and except for Permitted Security Interests; and

23

(b) not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future including, but not limited to, the Borrower’s rights against the Swap Bank under the Master Agreement or all or any part of the Borrower’s interest in any amount payable to the Borrower by the Swap Bank under the Master Agreement.

11.3 No disposal of assets. The Borrower will not transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

11.4 No other liabilities or obligations to be incurred. The Borrower will not incur any liability or obligation except:

(a) liabilities and obligations under the MOA and the Finance Documents to which it is a party;

(b) liabilities or obligations reasonably incurred in the ordinary course of operating and chartering the Ship; and

(c) any Financial Indebtedness by means of a loan or financial assistance from the Shareholder provided that the Borrower’s financial position is not adversely affected by the incurrence of such Financial Indebtedness and the Borrower enters into such additional documents as shall be required by the Agent so that any such Financial Indebtedness is subordinated to the rights of the Creditor Parties under this Agreement and the other Finance Documents.

11.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

11.6 Provision of financial statements. The Borrower will send to the Agent or, as the case may be, procure that there is sent to the Agent:

(a) as soon as possible, but in no event later than 180 days after the end of each financial year of the Guarantor (commencing with the financial year ended 31 December 2007) the annual audited consolidated accounts of the Guarantor for such financial year;

(b) as soon as possible, but in no event later than 90 days after the end of each 6-month period ending on 30 June and 31 December in each financial year of the Guarantor (commencing with the 6-month period ended 30 June 2008), the semi-annual consolidated accounts of the Guarantor for such 6-month period certified as to their correctness by the Guarantor’s chief financial officer or other authorised signatory;

(c) as soon as possible, but in no event later than 180 days after the end of each financial year of the Borrower (commencing with the financial year ending 31 December 2008), the annual management accounts of the Borrower for such financial year certified as to their correctness by a director or officer of the Borrower; and

(d) as soon as possible but in no event later than 30 days before the beginning of each financial year of the Borrower, the annual cashflow-projections of the Ship for the immediately subsequent financial year, prepared by the Borrower in a form acceptable to the Agent.

24

11.7 Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.6 will:

(a) be prepared in accordance with all applicable laws and IFRS standards or US GAAP consistently applied;

(b) give a true and fair view of the state of affairs of the Guarantor and its subsidiaries or, as the case may be, the Borrower at the date of those accounts and of their profit for the period to which those accounts relate; and

(c) fully disclose or provide for all significant liabilities of the Guarantor or, as the case may be, the Borrower.

11.8 Shareholder and creditor notices. The Borrower will send the Agent, at the same time as they are despatched, copies of all communications which are despatched to the Borrower’s shareholders or creditors or any class of them.

11.9 Consents. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

(a) for the Borrower to perform its obligations under any Finance Document to which it is a party;

(b) for the validity or enforceability of any Finance Document to which it is a party;

(c) for the Borrower to continue to own and operate the Ship;

and the Borrower will comply with the terms of all such consents.

11.10 Maintenance of Security Interests. The Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

11.11 Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any Security Party, the Approved Manager or the Ship, the Earnings or the Insurances as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

11.12 No amendment to MOA. The Borrower will not agree to any amendment or supplement to, or waive or fail to enforce, the MOA to which it is a party or any of its provisions.

11.13 Principal place of business. The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 28.2(a); and the Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in any country other than the Marshall Islands.

25

11.14 Confirmation of no default. The Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by the sole director of the Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

11.15 Notification of default. The Borrower will notify the Agent as soon as it becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred;

and will keep the Agent fully up-to-date with all developments.

11.16 Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:

(a) to the Borrower, the Ship, the Earnings or the Insurances; or

(b) to any other matter relevant to, or to any provision of, a Finance Document;

which may be requested by the Agent, the Security Trustee or any Lender at any time.

11.17 Provision of copies and translation of documents. The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Borrower will provide a certified English translation prepared by a translator approved by the Agent.

11.18 Provision of “know your customer” information. The Borrower will, as soon as practicable after receiving a request from the Agent, provide the Agent with any information required by any Creditor Party in relation to its “know your customer” regulations.

11.19 Purchase of other assets. The Borrower shall not purchase any other assets other than the Ship.

11.20 Approved Charter. The Borrower shall provide the Agent with certified true copy of the Approved Charter, duly executed by the Borrower and the Approved Charterer, within 30 days from the date of this Agreement.

12 CORPORATE UNDERTAKINGS

12.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

12.2 Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands.

123 Negative undertakings. The Borrower will not:

(a) carry on any business other than the ownership, chartering and operation of the Ship; or

26

(b) pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital if an Event of Default has occurred and is continuing at the relevant time or resulting from the payment of a dividend or the making of any other form of distribution; or

(c) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in the Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected;

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length;

(d) open or maintain any account with any bank or financial institution except accounts with the Agent and the Security Trustee for the purposes of the Finance Documents;

(e) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(f) enter into any transaction in a derivative other than Transactions pursuant to the Master Agreement; and

(g) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

13 INSURANCE

13.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

13.2 Maintenance of obligatory insurances. The Borrower shall keep the Ship insured at its expense against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

(b) war risks;

(c) protection and indemnity risks; and

(d) any other risks against which the Security Trustee considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for the Borrower to insure and which are specified by the Security Trustee by notice to the Borrower.

13.3 Terms of obligatory insurances. The Borrower shall effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) the market value of the Ship and (ii) an amount which is equal to 125 per cent, of the Loan and the Swap Exposure;

27

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;

(d) in relation to protection and indemnity risks in respect of the full tonnage of the Ship;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

13.4 Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, the Borrower shall procure that the obligatory insurances shall:

(a) whenever the Security Trustee requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(b) name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the Borrower or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party;

(f) provide that the Security Trustee may make proof of loss if the Borrower fails to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Security Trustee for 30 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

13.5 Renewal of obligatory insurances. The Borrower shall:

(a) at least 21 days before the expiry of any obligatory insurance effected by it:

(i) notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and

28

(ii) obtain the Security Trustee’s approval to the matters referred to in paragraph (i);

(b) at least 14 days before the expiry of any obligatory insurance effected by it, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

13.6 Copies of policies; letters of undertaking. The Borrower shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

(c) they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

(d) they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Security Trustee.

13.7 Copies of certificates of entry. The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provides the Security Trustee with:

(a) a certified copy of the certificate of entry for the Ship;

(b) a letter or letters of undertaking in such form as may be required by the Security Trustee;

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by the Borrower in relation to the Ship in accordance with the requirements of such protection and indemnity association; and

29

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Borrower.

13.8 Deposit of original policies. The Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.

13.9 Payment of premiums. The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Security Trustee.

13.10 Guarantees. The Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

13.11 Compliance with terms of insurances. The Borrower shall not do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:

(a) the Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

(b) the Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Ship approved by the underwriters of the obligatory insurances;

(c) the Borrower shall not make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) the Borrower shall not employ the Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

13.12 Alteration to terms of insurances. The Borrower shall neither make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

13.13 Settlement of claims. The Borrower shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

13.14 Provision of copies of communications. The Borrower shall not provide the Security Trustee, at the time of each such communication, copies of all written communications between the Borrower and;

(a) the approved brokers; and

(b) the approved protection and indemnity and/or war risks associations; and

30

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) the Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

13.15 Provision of information. In addition, the Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such insurances;

and the Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).

13.16 Mortgagee’s interest and additional perils (pollution) insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s marine insurance in respect of the Ship and a mortgagee’s interest additional perils (pollution) insurance in respect of the Ship, each in such amounts, on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the Borrower shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

13.17 Review of insurance requirements. The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Majority Lenders, significant and capable of affecting the Borrower or the Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrower.

13.18 Modification of insurance requirements. The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.17 to the requirements of this Clause 13 which the Majority Lenders consider appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Borrower accordingly.

13.19 Compliance with mortgagee’s instructions. The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require the Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.18.

31

14 SHIP COVENANTS

14.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit (which permission shall not be unreasonably withheld in the case of the matters referred to at Clauses 14.12(b) and 14.14).

14.2 Ship’s name and registration. The Borrower shall keep the Ship registered in its name as a Maltese ship shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of the Ship.

14.3 Repair and classification. The Borrower shall keep the Ship in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the highest class applicable to vessels of the same type, age and specifications as the Ship at Lloyd’s Register (or such other first class classification society which is a member of IACS acceptable to the Agent) free of recommendations and conditions; and

(c) so as to comply with all laws and regulations applicable to vessels registered at ports where the Ship is registered or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.

14.4 Modification. The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce its value.

14.5 Removal of parts. The Borrower shall not remove any material part of the Ship, or any item of equipment installed on, the Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the Ship the property of the Borrower and subject to the security constituted by the relevant Mortgage and the Deed of Covenant (if relevant) Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship.

14.6 Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports.

14.7 Inspection. The Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

14.8 Prevention of and release from arrest. The Borrower shall promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship, the Earnings or the Insurances;

32

(b) all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and

(c) all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances;

and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall procure its release by providing bail or otherwise as the circumstances may require.

14.9 Compliance with laws etc. The Borrower shall:

(a) comply, or procure compliance with the ISM Code, all Environmental Laws, the ISPS Code and all other laws or regulations relating to the Ship, its ownership, operation and management or to the business of the Borrower;

(b) not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers unless the prior written consent of the Security Trustee has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.

14.10 Provision of information. The Borrower shall promptly provide the Security Trustee with any information which it requests regarding:

(a) the Ship, its employment, position and engagements;

(b) the Earnings and payments and amounts due to the master and crew of the Ship;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made in respect of the Ship;

(d) any towages and salvages;

(e) its compliance, the Approved Manager’s compliance and the compliance of the Ship with the ISM Code and the ISPS Code;

and, upon the Security Trustee’s request, provide copies of any current charter relating to the Ship, of any current charter guarantee and copies of the Ship’s Document of Compliance, Safety Management Certificate and ISSC.

14.11 Notification of certain events. The Borrower shall immediately notify the Security Trustee by fax, confirmed forthwith by letter, of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d) any arrest or detention of the Ship, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of the Ship for hire;

33

(e) any intended dry docking of the Ship;

(f) any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident;

(g) any claim for breach of the ISM Code or of the ISPS Code being made against the Borrower, the Approved Manager or otherwise in connection with the Ship; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with;

and the Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.

14.12 Restrictions on chartering, appointment of managers etc. The Borrower shall not, in relation to the Ship:

(a) (save under the Approved Charter) let the Ship on demise charter for any period;

(b) (save under the Approved Charter) enter into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 13 months;

(c) enter into any charter in relation to the Ship under which more than 2 months’ hire (or the equivalent) is payable in advance;

(d) charter the Ship otherwise than on bona fide arm’s length terms at the time when the Ship is fixed;

(e) appoint a manager of the Ship other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment;

(f) de-activate or lay up the Ship; or

(g) put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or its Earnings for the cost of such work or for any other reason.

14.13 Notice of Mortgage. The Borrower shall keep the relevant Mortgage registered against the Ship as a valid first priority mortgage, carry on board the Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Security Trustee.

14.14 Sharing of Earnings. The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings.

15 SECURITY COVER

15.1 Minimum required security cover. Clause 15.2 applies if the Agent notifies the Borrower that:

(a) the Market Value (determined as provided in Clause 15.3) of the Ship; plus

34

(b) the net realisable value of any additional security previously provided under this Clause 15;

is below 125 per cent. of the aggregate of the Loan.

15.2 Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 15.1, the Borrower shall, within 1 month after the date on which the Agent’s notice is served, either:

(a) provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require; or

(b) prepay such part (at least) of the Loan as will eliminate the shortfall.

15.3 Valuation of Ship. The Market Value of the Ship at any date is that shown by the average of two valuations each prepared:

(a) as at a date not more than 30 days previously;

(b) an Approved Broker;

(c) with or without physical inspection of the Ship (as the Agent may require);

(d) on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer;

(e) with or without charter or other contract of employment at the option of the Lender; and

(f) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

15.4 Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.3.

15.5 Valuations binding. Any valuation under Clause 15.2, 15.3 or 15.4 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Security Interest.

15.6 Provision of information. The Borrower shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.3 or 15.4 with any information which the Agent or that Approved Broker may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

15.7 Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, within 21 days of the Agent’s written demand, pay the Agent the amount of the fees and expenses of each Approved Broker instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause provided that prior to an Event of Default the Borrower shall only be liable to reimburse the Agent for two such valuations per calendar year and provided further that such valuations show that the Borrower complies with the terms of Clause 15.1.

35

15.8 Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 5.2(b).

16 PAYMENTS AND CALCULATIONS

16.1 Currency and method of payments. All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(a) by not later than 11.00 a.m. (New York City time) on the due date;

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

(c) in the case of an amount payable by a Lender to the Agent or by the Borrower to the Agent or any Lender, to the account of the Agent at JP Morgan Chase Bank, New York City, NY, U.S.A. (Swift Code: CHASUS33 Account No 001-1-337 268 with reference 2214/4629 m.v. “FLECHA” ), or to such other account with such other bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

(d) in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

16.2 Payment on non-Business Day. If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

16.3 Basis for calculation of periodic payments. All interest and the commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

16.4 Distribution of payments to Creditor Parties. Subject to Clauses 16.5,16.6 and 16.7:

(a) any amount received by the Agent under a Finance Document for distribution or remittance to a Lender or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

(b) amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

16.5 Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

36

16.6 Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender until the Agent has satisfied itself that it has received that sum.

16.7 Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower or a Lender, without first having received that sum, the Borrower or (as the case may be) the Lender concerned shall, within 21 days of the Agent’s written demand:

(a) refund the sum in full to the Agent; and

(b) pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

16.8 Agent may assume receipt. Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

16.9 Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

16.10 Agent’s memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

16.11 Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall be prima facie evidence that amount is owing to that Creditor Party.

17 APPLICATION OF RECEIPTS

17.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);

(ii) secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Swap Bank at the time of application or distribution under this Clause 17); and

37

(iii) thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure of the Swap Bank (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

(b) SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1 (a); and

(c) THIRDLY: any surplus shall be paid to the Borrower.

17.2 Variation of order of application. The Agent may, with the authorisation of the Majority Lenders, by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

17.3 Notice of variation of order of application. The Agent may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

17.4 Appropriation rights overridden. This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

18 APPLICATION OF EARNINGS

18.1 Payment of Earnings. The Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignment), all the Earnings of the Ship are paid to the Earnings Account.

18.2 Interest accrued on Earnings Account. Any current interest requires separate documentation.

18.3 Location of accounts. The Borrower shall promptly:

(a) comply with any requirement of the Agent as to the location or re-location of the Earnings Account;

(b) execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account.

18.4 Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Account without prior notice in order to discharge any amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 or 21.

38

19 EVENTS OF DEFAULT

19.1 Events of Default. An Event of Default occurs if:

(a) the Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs of Clause 9.2, 11.2, 11.3, 12.2, 12.3 or 15.1; or

(c) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 10 days after written notice from the Agent requesting action to remedy the same; or

(d) (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c)); or

(e) any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or

39

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or the Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days (or such longer period as the Agent may, in its sole and absolute discretion, agree or specify) of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them (save for in the case of the Guarantor, non judicial suspension or deferral of payments, reorganization of its debt (or substantial part of its debt) or arrangement which occurs in its ordinary course of its business and not as a result of the Guarantor’s inability to meet its obligations and/or liabilities) or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi); or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Majority Lenders, is similar to any of the foregoing; or

(h) the Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

(ii) for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) any official consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document or the MOA is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

40

(k) any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(l) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(m) the Ship ceases to be managed by the Approved Manager on the terms of the management agreement applicable to it, unless prior to such cessation the Borrower has appointed a substitute manager acceptable to the Lenders in all respects; or

(n) if, without the prior consent of the Majority Lenders, Mr George Economou (either directly and/or through companies beneficially owned by members of the and/or trusts or foundations of which Mr George Economou is a beneficiary) owns and controls less than 10 per cent. of the issued voting share capital of the Guarantor; or

(o) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of the Borrower or the Guarantor; or

(ii) any accident or other event involving the Ship or another vessel owned, chartered or operated by a Relevant Person;

in the light of which the Majority Lenders consider that there is a significant risk that the Borrower or the Guarantor are, or will later become, unable to discharge its or his liabilities under the Finance Documents as they fall due.

(p) the Approved Charter is terminated or becomes invalid or unenforceable or otherwise ceases to be in full force and effect for any reason prior to its stated termination date and the Approved Charter is not replaced within 60 days by another charter having similar characteristics to the Approved Charter and the Approved Charterer, in a form and on terms acceptable to the Lender; or

(q) an Event of Default (as defined in Section 14 of the Master Agreement) occurs;

(r) the Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in the full force and effect for any reason except with the consent of the Majority Lenders;

19.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:

(a) the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i) serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or

(ii) serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

41

(iii) take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b) the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law.

19.3 Termination of Commitments. On the service of a notice under Clause 19.2(a)(i), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate.

19.4 Acceleration of Loan. On the service of a notice under Clause 19.2(a)(ii), the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

19.5 Multiple notices; action without notice. The Agent may serve notices under Clauses 19.2(a)(i) or (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

19.6 Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

19.7 Lender’s rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

19.8 Exclusion of Creditor Party liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party;

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset;

except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been directly and mainly caused by the dishonesty or the wilful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

19.9 Relevant Persons. In this Clause 19 a “Relevant Person” means the Borrower or any other Security Party (except for the Approved Manager).

19.10 Interpretation. In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “petition” includes an application.

42

20 FEES AND EXPENSES

20.1 Arrangement, commitment, agency fees. The Borrower shall pay to the Agent:

(a) an arrangement fee at the rate of 0.40 per cent. of the Total Commitment, on the date of this Agreement, Provided that if the Loan is prepaid pursuant to the provisions of Clauses 8.8(c) or 8.8(d), the Agent shall refund to the Borrower on the date on which such pre-payment is made an amount equal to the lesser of (1) 50 per cent. of the total amount of the arrangement fee paid by the Borrower pursuant to this Clause 20.1 and (2) $252,800; and

(b) quarterly in arrears during the period from (and including) the date of this Agreement to the Drawdown Date, a commitment fee at the rate of 0.40 per cent. per annum on the undrawn amount of the Loan, for distribution among the Lenders pro rata to their Commitments, Provided that if the Loan Agreement is signed more than 2 months after the date of the Mandated Lead Arranger’s commitment letter (dated 25 June 2008), the commitment fee will be calculated from 25 August 2008.

20.2 Costs of negotiation, preparation etc. The Borrower shall pay to the Agent within 21 days of the Agent’s written demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

20.3 Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, within 21 days of the Agent’s written demand, for the account of the Creditor Party concerned the amount of all expenses incurred by a Creditor Party in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 15 or any other matter relating to such security; or

(d) any step taken by the Creditor Party concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

20.4 Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.

20.5 Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

43

21 INDEMNITIES

21.1 Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c) any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19;

and in respect of any tax (other than tax on its overall net income) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

21.2 Breakage costs. Without limiting its generality, Clause 21.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by a Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.

21.3 Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by a Creditor Party, in any country, as a result of or in connection with:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; or

(b) any other Pertinent Matter;

44

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty or wilful misconduct or negligence of the officers or employees of the Creditor Party concerned.

Without prejudice to its generality, this Clause 21.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

21.4 Currency indemnity. If any sum due from the Borrower or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment;

the Borrower shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

In this Clause 21.4 the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 21.4 creates a separate liability of the Borrower which is distinct from their other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

21.5 Application of Master Agreement. For the avoidance of doubt, Clause 21.4 does not apply in respect of sums due from the Borrower to the Lenders under or in connection with the Master Agreement as to which sums the provisions of Section 8 (Contractual Currency) of the Master Agreement shall apply.

21.6 Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

21.7 Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

22 NO SET-OFF OR TAX DEDUCTION

22.1 No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

45

(b) free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

22.2 Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

(a) The Borrower shall notify the Agent as soon as it becomes aware of the requirement;

(b) The Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

22.3 Evidence of payment of taxes. Within 1 month after making any tax deduction, the Borrower concerned shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

22.4 Exclusion of tax on overall net income. In this Clause 22 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party’s overall net income.

22.5 Application of Master Agreement. For the avoidance of doubt, Clause 22 does not apply in respect of sums due from the Borrower to the Lenders under or in connection with the Master Agreement as to which sums the provisions of Section 2(d) (Deduction or Withholding for Tax) of the Master Agreement shall apply.

23 ILLEGALITY, ETC

23.1 Illegality. This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

23.2 Notification of illegality. The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

23.3 Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 23.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 23.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution in accordance with Clause 8.

23.4 Mitigation. If circumstances arise which would result in a notification under Clause 23.1 then, without in any way limiting the rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

46

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

24 INCREASED COSTS

24.1 Increased costs. This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

(b) complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”.

24.2 Meaning of “increased cost”. In this Clause 24, “increased cost” means, in relation to a Notifying Lender:

(a) an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;

(b) a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

(c) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

(d) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement;

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22 or an item arising directly out of the implementation by the applicable authorities having jurisdiction over the Notifying Lender of the matters set out in the statement of the Basle Committee on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International Convergence of Capital Measurement and Capital Standards”, to the extent and according to the timetable provided for in the statement.

47

For the purposes of this Clause 24.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

24.3 Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

24.4 Payment of increased costs. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

24.5 Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4, the Borrower may give the Agent not less than 14 days’ notice of their intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.

24.6 Prepayment; termination of Commitment. A notice under Clause 24.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

(b) on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the applicable Margin.

24.7 Application of prepayment. Clause 8 shall apply in relation to the prepayment.

25 SET-OFF

25.1 Application of credit balances. Each Creditor Party may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrower;

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

25.2 Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

25.3 Sums deemed due to a Lender. For the purposes of this Clause 25, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

48

25.4 No Security Interest. This Clause 25 gives the Creditor Parties a contractual right of set-off only, and does not create any equitable change or other Security Interest over any credit balance of the Borrower.

26 TRANSFERS AND CHANGES IN LENDING OFFICES

26.1 Transfer by Borrower. No Borrower may, without the consent of the Agent, given on the instructions of all the Lenders transfer any of its rights, liabilities or obligations under any Finance Document.

26.2 Transfer by a Lender. Subject to Clauses 2.5 and 26.4, a Lender (the “Transferor Lender”) may at any time, with the consent of the Agent (such consent not to be unreasonably withheld), cause:

(a) its rights in respect of all or part of its Contribution; or

(b) its obligations in respect of all or part of its Commitment; or

(c) a combination of (a) and (b);

to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Agreement.

26.3 Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

(a) sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee and each of the other Lenders;

(b) on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;

(c) send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.

26.4 Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date, Provided that it is signed by the Agent under Clause 26.3 on or before that date.

26.5 No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

26.6 Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by

49

notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

26.7 Effect of Transfer Certificate. A Transfer Certificate takes effect in accordance with English law as follows:

(a) to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

(b) the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

(c) the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

(d) the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

(e) any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

(f) the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.8 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

(g) in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

26.8 Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days prior notice.

26.9 Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts

50

of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

26.10 Authorisation of Agent to sign Transfer Certificates. The Borrower, the Security Trustee and each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

26.11 Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,000 from the Transferor Lender or (at the Agent’s option) the Transferee Lender.

26.12 Sub-participation; subrogation assignment. A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

26.13 Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

26.14 Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

(a) the date on which the Agent receives the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

26.15 Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

26.16 Replacement of Reference Bank. If any Reference Bank ceases to be a Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 then, unless the Borrower, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting the Borrower, shall appoint another bank (whether or not a Lender) to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank’s appointment shall cease to be effective.

27 VARIATIONS AND WAIVERS

27.1 Variations, waivers etc. by Majority Lenders. Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax or telex, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

27.2 Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:

(a) a change in the Margin or in the definition of LIBOR;

51

(b) a change to the date for, the amount of, any payment of principal, interest, fees, or other sum payable under this Agreement;

(c) a change to any Lender’s Commitment;

(d) an extension of Availability Period;

(e) a change to the definition of “Majority Lenders” or “Finance Documents”;

(f) a change to the preamble or to Clause 2, 3, 4, 5.1, 17, 18 or 30;

(g) a change to this Clause 27;

(h) any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

(i) any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.

27.3 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

(b) an Event of Default; or

(c) a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

(d) any right or remedy conferred by any Finance Document or by the general law;

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

28 NOTICES

28.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, fax or telex; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

28.2 Addresses for communications. A notice shall be sent:

(a)	to the Borrower:	c/o Dryships Inc. 80 Kifissias Avenue Maroussi 15125 Athens
		Fax No: +30 210 809 0575

52

(b)	to a Lender:	At the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate.
(c)	to the Swap Bank:	Norddeutsche Landesbank Girozentrale Ship and Aircraft Finance Department Friedrichswall 10 30159 Hannover Germany
		Fax No: +49 511 361 4785
(d)	to each of the Bookrunner, the Underwriter, the Lead Mandated Arranger, the Agent And the Security Trustee:	Norddeutsche Landesbank Girozentrale Ship and Aircraft Finance Department Friedrichswall 10 30159 Hannover Germany
		Fax No: +49 511 361 4785

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrower, the Lenders and the Security Parties.

28.3 Effective date of notices. Subject to Clauses 28.4 and 28.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;

(b) a notice which is sent by telex or fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

28.4 Service outside business hours. However, if under Clause 28.3 a notice would be deemed to be served:

(a) on a day which is not a business day in the place of receipt; or

(b) on such a business day, but after 5 p.m. local time;

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

28.5 Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

28.6 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

53

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

28.7 English language. Any notice under or in connection with a Finance Document shall be in English.

28.8 Meaning of “notice”. In this Clause 28, “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

29 SUPPLEMENTAL

29.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:

(a) cumulative;

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3 Counterparts. A Finance Document may be executed in any number of counterparts.

29.4 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

30 LAW AND JURISDICTION

30.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

30.2 Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

30.3 Choice of forum for the exclusive benefit of the Creditor Parties. Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

Neither Borrower shall commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

30.4 Process agent. The Borrower irrevocably appoints Ince Process Agents Ltd. at its registered office for the time being, presently at International House, 1 St Katherine’s

54

Way, London E1N 1UN, London, United Kingdom, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

30.5 Creditor Party rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

30.6 Meaning of “proceedings”. In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

55

EXECUTION PAGES

BORROWER
SIGNED by	)
Eugenia Papapontikon	)
for and on behalf of	)
CRETAN TRADERS INC.	)
LENDERS
SIGNED by	)
Evaggelia Hatziefstratial	)
for and on behalf of	)
NORDDEUTSCHE LANDESBANK	)
GIROZENTRALE	)
SWAP BANK
SIGNED by	)
Evaggelia Hatziefstratial	)
for and on behalf of	)
NORDDEUTSCHE LANDESBANK	)
GIROZENTRALE	)
AGENT
SIGNED by	)
Evaggelia Hatziefstratial	)
for and on behalf of	)
NORDDEUTSCHE LANDESBANK	)
GIROZENTRALE	)
SECURITY TRUSTEE
SIGNED by	)
Evaggelia Hatziefstratial	)
for and on behalf of	)
NORDDEUTSCHE LANDESBANK	)
GIROZENTRALE	)

65

UNDERWRITER
SIGNED by	)
Evaggelia Hatziefstratial	)
for and on behalf of	)
NORDDEUTSCHE LANDESBANK	)
GIROZENTRALE	)
MANDATED LEAD ARRANGER
SECURITY TRUSTEE
SIGNED by	)
Evaggelia Hatziefstratial	)
for and on behalf of	)
NORDDEUTSCHE LANDESBANK	)
GIROZENTRALE	)
BOOKRUNNER
SECURITY TRUSTEE
SIGNED by	)
Evaggelia Hatziefstratial	)
for and on behalf of	)
NORDDEUTSCHE LANDESBANK	)
GIROZENTRALE	)
Witness to all the	)	Joanna Davey
above signatures	)
Name:
Address:

66

EX-4.44

Exhibit 4.44

17 September 2008

GUARANTEE, REVOLVING CREDIT AND TERM LOAN FACILITY AGREEMENT

between

OCEAN RIG ASA

and

OCEAN RIG NORWAY AS

as borrowers

OCEAN RIG ASA

OCEAN RIG NORWAY AS

OCEAN RIG 1 AS

OCEAN RIG 2 AS

OCEAN RIG NORTH SEA AS

and

OCEAN RIG USA LLC

as original guarantors

THE FINANCIAL INSTITUTIONS

listed in Schedule 1

as banks

DNB NOR BANK ASA

as guarantee bank

DNB NOR BANK ASA

as mandated lead arranger and bookrunner

and

HSH NORD BANK AG

NORDEA BANK NORGE ASA

and

SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)

as mandated lead arrangers

DNB NOR BANK ASA

as agent

USD 1,040,000,000

INDEX

1	INTERPRETATION	4
2	THE FACILITIES	22
3	CONDITIONS PRECEDENT	23
4	UTILISATION OF THE TERM LOAN FACILITY	24
5	UTILISATION OF THE REVOLVING CREDIT FACILITIES	24
6	UTILISATION OF THE GUARANTEE FACILITY	26
7	DEMAND UNDER THE LETTER OF CREDIT	27
8	REPAYMENT AND REDUCTION	29
9	PREPAYMENT AND CANCELLATION	30
10	INTEREST PERIODS	34
11	INTEREST AND GUARANTEE COMMISSION	35
12	PAYMENTS	36
13	SECURITY	38
14	COORDINATION OF SENIOR SECURITY DOCUMENTS AND JUNIOR SECURITY DOCUMENTS	39
15	TAXES	41
16	MARKET DISRUPTION	41
17	INCREASED COSTS	42
18	ILLEGALITY	43
19	MITIGATION	43
20	GUARANTEE AND INDEMNITY	44
21	REPRESENTATIONS AND WARRANTIES	48
22	UNDERTAKINGS	52
23	FINANCIAL COVENANTS	61
24	EVENT OF DEFAULT	65
25	THE AGENT AND THE ARRANGERS	70
26	FEES	74
27	EXPENSES	74
28	INDEMNITIES	75
29	CALCULATIONS	76
30	AMENDMENTS AND WAIVERS	76
31	CHANGES TO THE PARTIES	77
32	DISCLOSURE OF INFORMATION	80
33	DISTRIBUTION AND PRO RATA SHARING	81

2/118

34	SEVERABILITY	82
35	NOTICES	82
36	GOVERNING LAW	83
37	ENFORCEMENT	84
Schedules
		Page
1.	Banks and Commitments	85
2.	Form of Compliance Certificate	87
3.	Form of Drawdown Notice	91
4.	Form of Renewal Notice	93
5.	Form of Transfer Certificate	94
6.	Conditions precedent documents	98
Appendix
1.	Form of First Security Agreement	102
2.	Form of Accession Agreement	115

3/118

THIS AGREEMENT (the “Agreement”) is dated 17 September 2008 and made between and amongst:

(1) OCEAN RIG ASA, org. no. NO 976 769 643, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway and OCEAN RIG NORWAY AS, org. no. NO 879 750 172, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway (“OR Norway”) as borrowers (the “Borrowers”);

(2) OCEAN RIG ASA, org. no. NO 976 769 643, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway, OCEAN RIG NORWAY AS, org. no. NO 879 750 172, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway, OCEAN RIG 1 AS, org. no. NO 979 750 188, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway, OCEAN RIG 2 AS, org. no. NO 979 750 196, Vestre Svanholmen nr.. 6, Forus, N-4313 Sandnes, Norway, OCEAN RIG NORTH SEA AS, org. no. NO 992 250 941, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway and OCEAN RIG USA LLC, 2^nd Floor, Suite 200, 333 North Sam Houston Parkway East, Houston, Texas 77060, United States of America as original guarantors (the “Original Guarantors”);

(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as original banks (the “Original Banks”);

(4) DNB NOR BANK ASA, Stranden 21, N-0021 Oslo, Norway as guarantee bank (the “Guarantee Bank”);

(5) DNB NOR BANK ASA, Stranden 21, N-0021 Oslo, Norway as mandated lead arranger and bookrunner and HSH NORBANK AG, Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, NORDEA BANK NORGE ASA, Middelthunsgate 17, N-0368 Oslo, Norway and SKANDINAVISKA ENSKILDA BANKEN AB (PUBL), SE-106 40 Stockholm, Sweden as mandated lead arrangers (the “Arrangers”); and

(6) DNB NOR BANK ASA, Stranden 21, N-0021 Oslo, Norway as agent and security trustee (the “Agent”).

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions

In this Agreement:

“Accession Agreement”

means a document substantially in the form of Appendix 2 (Form of Accession Agreement), under which a member of the Group becomes a Guarantor under this Agreement.

4/118

“Additional Guarantor”

means a member of the Group which becomes a Guarantor after the Signing Date in accordance with Clause 31.8 (Additional Guarantors).

“Applicable Margin”

means:

(i) in respect of the Term Loan Facility and Revolving Credit Facility A, 1.50 (one point fifty) per cent per annum; and

(ii) in respect of Revolving Credit Facility B and Revolving Credit Facility C, the rates per annum in respect thereof set out in the Margin and Fee Letter.

“Approved Accounting Principles”

means generally accepted accounting principles and practices in Norway, including the regulations and guidelines of the IFRS, or generally accepted accounting principles and practices in the United States of America, in each case consistently applied.

“Approved Brokers”

means Feamley Offshore AS, R.S. Platou Offshore AS, ODS Petrodata and such other brokers as may be approved by the Agent.

“Availability Period”

means:

(i) in respect of the Term Loan Facility, the period commencing on the Signing Date and ending on 30 September 2008; and

(ii) in respect of the Revolving Credit Facilities, the period commencing on the Signing Date and ending on the date occurring one month prior to its Final Maturity Date.

“Bank”

means each Original Bank, where the context so requires, the Guarantee Bank, and any other bank or other financial institution which becomes a party hereto pursuant to a transfer in accordance with Clause 31.2 (Transfers by Banks) and any reference to the “Banks” shall, unless the context otherwise requires, be construed as a reference to the Original Banks, where the context so requires, the Guarantee Bank, and each other bank or other financial institution which shall have so become a party hereto.

“Basel Rules”

means the policy guidelines on credit risk measurement methods issued by the Basel Committee and/or corresponding EU/EEA legislation from time to time in force and applicable to a Bank through national implementation.

5/118

“Beneficiary”

means Tullow Oil Plc., 3^rd Floor – Building 11, Chiswick Park, 566 Chiswick High Road, London W4 5YS, England, company reg. no. 3919249.

“Borrowing Base Amount”

means 80 per cent. of the amount representing the present value of the Qualifying Contracts (provided, however, that the New Eirik Raude Qualifying Contract for the purpose of the calculation of the Borrowing Base Amount shall be regarded as a Qualifying Contract from the entering into thereof even if no Earnings have started to accrue thereunder) calculated on a quarterly basis applying (i) the rate payable by the Qualifying Contract Party thereunder in excess of the Borrowing Base Rate and (ii) a discount rate equal to the relevant swap rate for the tenor of the New Eirik Raude Qualifying Contract determined by the Agent plus the Applicable Margin in respect of Revolving Credit Facility B.

“Borrowing Base Rate”

means USD 325,000 per day per Unit (net of any withholding tax, mobilisation fees received for upgrade of a Unit and other deductions) based on operating expenses (including a pro rata share of general administration costs) of not more than USD 162,000 per day per Unit, and as adjusted each time the Borrowers are required to calculate or recalculate the Borrowing Base Amount pursuant to Clause 9.6 (Mandatory prepayment – Borrowing Base Amount), in an amount equivalent to the amount by which the actual daily operating expenses at the relevant time exceeds USD 162,000 per Unit.

“Break Costs”

means the amount (if any) by which:

(a) the interest which a Bank should have received (less the Applicable Margin) for the period from the date of receipt of all or any part of its participation in a Loan to the last day of the current Interest Period in respect of that Loan, had the principal amount received been paid on the last day of that Interest Period;

exceeds:

(b) the amount which that Bank would be able to obtain by placing an amount equal to the principal amount received by it on deposit with a leading bank in the relevant interbank market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“Business Day”

means a day on which banks are open for business of the nature required by this Agreement in Oslo, London and New York.

6/118

“Commitment”

means, for a Bank, the aggregate of its Term Loan Facility Commitments, Revolving Credit Facility Commitments and Guarantee Facility Commitments.

“Compliance Certificate”

means certificates substantially in the form set out in Schedule 2 (Form of Compliance Certificate), which shall be completed by the Parent, and submitted to the Agent in accordance with Clause 22.3 (Compliance Certificates).

“Default”

means an Event of Default or an event which, with the giving of notice, lapse of time, or fulfilment or non-fulfilment (as the case may be) of any other applicable condition (or any combination of the foregoing), would constitute an Event of Default.

“Dollars” and “USD”

means the lawful currency for the time being of the United States of America.

“Drawdown Date”

means the date requested by a Borrower for a Loan to be advanced or (as the context requires) the date on which such advance is actually made to that Borrower.

“Drawdown Notice”

means the request for disbursement of a Loan substantially in the form of Schedule 3 (Form of Drawdown Notice).

“Earnings”

means:

(i) all freight, hire and passage moneys payable to any of the Obligors as a consequence of the operation of the Units, including without limitation payments of any nature under any Employment Contract entered into by any of the Obligors in respect thereof;

(ii) any claim under any guarantee in respect of any charterparty, pool agreement or other contract of employment entered into by any of the Obligors in respect of any of the Units or otherwise related to freight, hire or passage moneys payable to any of the Obligors as a consequence of the operation of any of the Units;

(iii) compensation payable to any of the Obligors in the event of any requisition of any of the Units;

(iv) remuneration for salvage, towage and other services performed by any of the Units and payable to any of the Obligors;

7/118

(v) demurrage and retention money receivable by any of the Obligors in relation to any of the Units;

(vi) all moneys which are at any time payable under the insurances in respect of loss of Earnings;

(vii) if and whenever any Unit is employed on terms whereby any moneys falling within (i) to (vi) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the relevant Unit; and

(viii) other money whatsoever due or to become due to any of the Obligors from third parties in relation to any of the Units.

“Earnings Accounts”

means the Dollar account opened by a Group Contract Party with the Agent, designated as the Earnings Account of the relevant Group Contract Party, to which all the Earnings of the relevant Group Contract Party shall be paid.

“Employment Contract”

means any charterparty, pool agreement or other contract of employment entered into by a member of the Group for the employment of a Unit, whether entered into with another member of the Group or with any other third party.

“Employment Contract Party”

means a party to an Employment Contract other than a Group Contract Party.

“Environmental Claim”

means:

(i) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(ii) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.

“Environmental Incident”

means:

(i) any release of Environmentally Sensitive Material from any Unit; or

8/118

(ii) any incident in which Environmentally Sensitive Material is released from a vessel and which involves a collision between any Unit and such vessel or some other incident of navigation or operation in connection with which any Unit is actually or potentially liable to be arrested, attached, detained or injuncted and/or where the relevant Unit and/or any Obligor and/or any operator or manager of the relevant Unit is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(iii) any other incident in which Environmentally Sensitive Material is released otherwise than from any Unit and in connection with which the relevant Unit is actually or potentially liable to be arrested, attached, detained or injuncted and/or where any Unit and/or any Obligor and/or any operator or manager of the relevant Unit is at fault or allegedly at fault or otherwise liable to any legal or administrative action.

“Environmental Law”

means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.

“Environmentally Sensitive Material”

means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.

“Event of Default”

means an event specified as such in Clause 24 (Event of Default).

“Existing Credit Facilities”

means the facilities under the USD 776,000,000 amended and restated credit facilities agreement dated 8 February 2007, as amended by an Addendum No. 1 thereto dated 15 April 2008 and an Addendum No. 2 thereto dated 9 July 2008, between, inter alia, OR Norway as borrower and DnB NOR Bank ASA as arranger and facility agent.

“Existing Guarantee Facility Agreement”

means the guarantee agreement dated 14 March 2008 entered into between OR Norway as debtor, the Parent, Ocean Rig 1 AS and Ocean Rig 2 AS as guarantors and the Guarantee Bank as bank.

“Expiry Date”

means in relation to the Letter of Credit, the date on which the Guarantee Bank has no further liability (actual or contingent) under the Letter of Credit.

“Facilities”

means the Term Loan Facility, the Revolving Credit Facilities and the Guarantee Facility.

9/118

“Final Maturity Date”

means:

(i) in respect of Revolving Credit Facility B, the earlier of the date when the New Eirik Raude Qualifying Contract has expired (for whatever reason) and the date occurring 36 calendar months after the Signing Date; and

(ii) in respect of the Term Loan Facility, Revolving Credit Facility A, Revolving Credit Facility C and the Guarantee Facility, the date occurring 60 calendar months after the Signing Date.

“Finance Documents”

means this Agreement, the Margin and Fee Letter, any Accession Agreements and the Security Documents.

“Finance Parties”

means the Agent, the Arrangers, the Guarantee Bank and the Banks.

“Financial Indebtedness”

means any indebtedness for or in respect of:

(i) moneys borrowed;

(ii) any amount raised by acceptance under any acceptance credit facility;

(iii) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(iv) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with the Approved Accounting Principles, be treated as a finance or capital lease;

(v) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(vi) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

(vii) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account)

(viii) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and

10/118

(ix) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (i) to (viii) above.

“First Equipment Charge”

means a first priority charge over the machinery and plant (pant i driftstilbehor) in the amount of USD 750,000,000 granted by each Owner in favour of the Agent as security for the obligations of the relevant Owner under the Finance Documents in relation to the Senior Facilities.

“First Mortgages”

means the first priority mortgage and the deed of covenants collateral thereto to be executed and recorded by the relevant Owner against each of the Units in the Bahamas Ship Register (or such other ship register acceptable to the Agent) in favour of the Agent as security for the obligations of the relevant Owner under the Finance Documents in relation to the Senior Facilities, in such form and substance the Agent may require.

“First Security Agreements”

means the first priority security agreements for each Unit in respect of (i) the assignment of Earnings (including any guarantee received by a Group Contract Party as security for the payment of Earnings), (ii) all insurances to be taken out in respect of the relevant Unit and (iii) the pledge of the relevant Earnings Account, to be entered into between each Group Contract Party and the Agent as security for the obligations of the relevant Group Contract Party under the Finance Documents in relation to the Senior Facilities, substantially in the form set out in Appendix 1 (Form of First Security Agreement).

“First Share Pledge Agreement”

means the first priority share pledge agreement(s) in respect of all of the shares in each of the Guarantors (other than the Parent and Ocean Rig USA LLC), to be entered into as security for the obligations of the Obligors under the Finance Documents in relation to the Senior Facilities, in such form and substance as the Agent may require.

“Group”

means the Parent and its Subsidiaries.

“Group Contract Party”

means a member of the Group which from time to time is party to an Employment Contract.

“Guarantee Facility”

means a guarantee facility made available under this Agreement in the amount of up to USD 20,000,000.

11/118

“Guarantee Facility Commitments”

means:

(i) in relation to an Original Bank, the amount in USD set opposite its name under the heading “Guarantee Facility Commitments” in Schedule 1 (Banks and Commitments); and

(ii) in relation to a Bank which becomes a bank after the Signing Date, the amount of a Guarantee Facility Commitment acquired by it pursuant to Clause 31.2 (Transfers by Banks),

to the extent not cancelled, reduced or transferred under this Agreement.

“Guarantors”

means the Original Guarantors and any Additional Guarantors.

“Hedging Letter”

means a letter prepared by the Parent describing the strategy and policy regarding hedging of the interest and currency rate exposure of the members of the Group.

“Interest Payment Date”

means the last Business Day of each Interest Period or, if the Interest Period is longer than three (3) months, the last Business Day of each three-month period during that Interest Period and the last day of that Interest Period.

“Interest Period”

means each period determined in accordance with Clause 10 (Interest Periods).

“Junior Bank”

means a Bank having a Commitment under the Junior Facilities or any of them.

“Junior Facilities”

means Revolving Credit Facility B, Revolving Credit Facility C and the Guarantee Facility.

“Junior Security Documents”

means the Second Equipment Charge, the Second Mortgages, the Second Security Agreements and the Second Share Pledge Agreement.

“Leiv Eiriksson Qualifying Contract”

means the drilling contract dated 20 October 2005 entered into in respect of “Leiv Eiriksson” by Ocean Rig 1 AS with Shell U.K. Limited, A/S Norske Shell and Shell E&P Ireland Limited at a daily rate (before index based rate revisions) of USD 465,000 and USD 500,000 (including uplift for 2/4 rotation), net of any withholding tax, mobilisation costs and other deductions, and assigned by Ocean Rig 1 AS to Ocean Rig North Sea AS pursuant to an assignment and assumption agreement dated 25 July 2008.

12/118

“Letter of Credit”

means the irrevocable standby letter of credit in the amount of USD 20,000,000 issued by the Guarantee Bank in favour of the Beneficiary on 14 March 2008 under the Existing Guarantee Facility Agreement to support payments by Ocean Rig 2 AS under the New Eirik Raude Qualifying Contract, and deemed to be issued under the Guarantee Facility on and from the date the Agent has given notice to the Borrowers and the Banks pursuant to Clause 3.1 (Documentary conditions precedent).

“LIBOR”

means, for any Interest Period (or other period for which an interest rate is to be calculated under any Finance Document):

(i) the rate per annum equal to the offered quotation for deposits in the relevant currency ascertained by the Agent to be the rate per annum as monitored on the Reuters screen LIBOR01 page at or about 11:00 hours (London time) on the applicable Quotation Date; or

(ii) if no such rate is available, the rate per annum determined by the Agent to be equal to the arithmetic mean (rounded upward to the nearest l/16^th of one per cent.) of the rates per annum, as supplied to the Agent at its request, quoted by each Bank to leading banks in the London interbank market at or about 12:00 hours noon (London time) on the applicable Quotation Date for the offering of deposits in the relevant currency for a period comparable to the relevant Interest Period.

“Loan”

means the principal amount of each borrowing by a Borrower under this Agreement, or the principal amount outstanding of any such borrowing from time to time.

“Loan Period”

means the period commencing on the Signing Date and ending on the day on which all amounts outstanding under the Finance Documents have been repaid in full.

“Majority Banks”

means:

(i) if there is no Loan then outstanding, a Bank or Banks whose Commitments aggregate more than 66 2/3 per cent. of the Total Commitment (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2/3 per cent. of the Total Commitment immediately prior to the reduction); or

(ii) at any other time, a Bank or Banks whose participation in the Loans then outstanding aggregate more than 66 2/3 per cent. of the Loans then outstanding.

13/118

“Majority Senior Banks”

means:

(i) if there is no Loan under any of the Senior Facilities then outstanding, a Senior Bank or Senior Banks whose Commitments under the Senior Facilities aggregate more than 66 2/3 per cent. of the aggregate Commitments of the Senior Banks under the Senior Facilities (or, if the aggregate Commitments of the Senior Banks under the Senior Facilities have been reduced to zero, aggregated more than 66 2/3 per cent. of the aggregate Commitments of the Senior Banks under the Senior Facilities immediately prior to the reduction); or

(ii) at any other time, a Senior Bank or Senior Banks whose participation in the Loans under the Senior Facilities then outstanding aggregate more than 66 2/3 per cent. of the Loans under the Senior Facilities then outstanding.

“Margin and Fee Letter”

means the letter dated 5 September 2008 from the Agent to the Borrowers setting out the Applicable Margin and commitment fee in respect of the Junior Facilities, the guarantee commission payable in respect of the Guarantee Facility, the amount of the arrangement fee referred to in Clause 26.2 (Arrangement fee) and the amount of the agency fee referred to in Clause 26.3 (Agency fee), and accepted by the Borrowers.

“Market Value”

means the fair market value of each Unit in USD determined by calculating the arithmetic mean of independent valuations of each Unit obtained from two of the Approved Brokers. Such valuations to be made on the basis of a sale for prompt delivery, for cash at arm’s length on normal commercial terms as between a willing buyer and seller, on an “as is where is” basis free of any existing charter or other contract of employment and/or pool arrangements. If such two valuations in respect of a Unit differ with more than 10 per cent., the Agent may require an additional valuation by another Approved Broker, and the Market Value of such Unit shall then be determined by calculating the arithmetic mean of all three valuations.

“New Eirik Raude Qualifying Contract”

means the form of contract for the provision of semi-submersible drilling unit “Eirik Raude” and associated drilling services dated 15 February 2008 entered into by the Owner thereof with Tullow Oil Plc, 3^rd Floor – Building 11, Chiswick Park, 566 Chiswick High Road, London W4 5YS, England at an initial daily rate of USD 580,000 and an average daily rate of USD 605,760 (net of any withholding tax, mobilisation costs and other deductions).

“Obligor”

means any party (other than a Finance Party) to any of the Finance Documents.

“Original Financial Statements

means the quarterly consolidated accounts of the Parent for the first quarter of the financial year of 2008.

14/118

“Owner”

means each of Ocean Rig 1 AS, org. no. NO 979 750 188, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway and Ocean Rig 2 AS, org. no. NO 979 750 196, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway.

“Parent”

means Ocean Rig ASA, org. no. NO 976 769 643, Vestre Svanholmen nr. 6, Forus, N-4313 Sandnes, Norway.

“Participation”

means, in respect of a Bank, that part of the Loans which is owing to that Bank.

“Party”

means a party to this Agreement.

“Project Company”

means any Subsidiary of the Parent:

(i) which is a single purpose company whose primary purpose is to invest in, lend to or carry out a specific project or portfolio of projects; and

(ii) none of whose liabilities to repay any indebtedness are the subject of security or a guarantee, indemnity or any similar form of assurance, undertaking or support by any member of the Group.

“Qualifying Contract”

means each of the New Eirik Raude Qualifying Contract and the Leiv Eiriksson Qualifying Contract.

“Quotation Date”

means, in relation to any period for which an interest rate is to be determined, two (2) Business Days before the first day of that period, unless market practice differs in the London interbank market, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Date will be the last of those days.

“Reduction Date”

means each date on which a Revolving Credit Facility Commitment shall be reduced pursuant to this Agreement, provided that if any such day is not a Business Day, the relevant Reduction Date shall instead be the next Business Day in the same calendar month, provided that if there is no next Business Day in the same calendar month, the relevant Reduction Date shall instead be the preceding Business Day.

15/118

“Renewal Notice”

means a request made by or on behalf of a Borrower for the selection of a new Interest Period in accordance with Clause 10.1 (Selection), substantially in the form set out in Schedule 4 (Form of Renewal Notice).

“Repayment Date”

means each repayment date determined in accordance with Clause 8 (Repayment and reduction).

“Revolving Credit Facilities”

means Revolving Credit Facility A, Revolving Credit Facility B and Revolving Credit Facility C.

“Revolving Credit Facility A”

means a revolving credit facility made available under this Agreement in the amount of up to USD 350,000,000.

“Revolving Credit Facility A Commitments”

means:

(i) in relation to an Original Bank, the amount in USD set opposite its name under the heading “Revolving Credit Facility A Commitments” in Schedule 1 (Banks and Commitments); and

(ii) in relation to a Bank which becomes a bank after the Signing Date, the amount of a Revolving Credit Facility A Commitment acquired by it pursuant to Clause 31.2 (Transfers by Banks),

to the extent not cancelled, reduced or transferred under this Agreement.

“Revolving Credit Facility B”

means a revolving credit facility made available under this Agreement in the amount of up to USD 250,000,000.

“Revolving Credit Facility B Commitments”

means:

(i) in relation to an Original Bank, the amount in USD set opposite its name under the heading “Revolving Credit Facility B Commitments” in Schedule 1 (Banks and Commitments); and

(ii) in relation to a Bank which becomes a bank after the Signing Date, the amount of a Revolving Credit Facility B Commitment acquired by it pursuant to Clause 31.2 (Transfers by Banks),

to the extent not cancelled, reduced or transferred under this Agreement.

16/118

“Revolving Credit Facility C”

means a revolving credit facility made available under this Agreement in the amount of up to USD 20,000,000.

“Revolving Credit Facility C Commitments”

means:

(i) in relation to an Original Bank, the amount in USD set opposite its name under the heading “Revolving Credit Facility C Commitments” in Schedule 1 (Banks and Commitments); and

(ii) in relation to a Bank which becomes a bank after the Signing Date, the amount of a Revolving Credit Facility C Commitment acquired by it pursuant to Clause 31.2 (Transfers by Banks),

to the extent not cancelled, reduced or transferred under this Agreement.

“Revolving Loan”

means a Loan under a Revolving Credit Facility.

“Rollover Loan”

means one or more Revolving Loans:

(i) made or to be made on the same day that a maturing Revolving Loan is due to be repaid;

(ii) the aggregate amount of which is equal to or less than the maturing Revolving Loan; and

(iii) made or to be made to a Borrower for the purpose of refinancing a maturing Revolving Loan.

“Second Equipment Charge”

means a second priority charge over the machinery and plant (pant i driftstilbehor) in the amount of USD 290,000,000 granted by each Owner in favour of the Agent as security for the obligations of the relevant Owner under the Finance Documents in relation to the Junior Facilities.

“Second Mortgages”

means the second priority mortgage and the deed of covenants collateral thereto to be executed and recorded by the relevant Owner against each of the Units in the Bahamas Ship Register (or such other ship register acceptable to the Agent) in favour of the Agent as security for the obligations of the relevant Owner under the Finance Documents in relation to the Junior Facilities.

17/118

“Second Security Agreements”

means the second priority security agreements for each Unit in respect of (i) the assignment of Earnings (including any guarantee received by a Group Contract Party as security for the payment of Earnings), (ii) all insurances to be taken out in respect of the relevant Unit and (iii) the pledge of the relevant Earnings Account, to be entered into between each Group Contract Party and the Agent as security for the obligations of the relevant Group Contract Party under the Finance Documents in relation to the Junior Facilities, substantially in the form set out in Appendix 1 (Form of First Security Agreement), but including provisions effecting the junior ranking thereof.

“Second Share Pledge Agreement”

means the second priority share pledge agreement(s) in respect of all of the shares in each of the Guarantors (other than the Parent and Ocean Rig USA LLC), to be entered into as security for the obligations of the Obligors under the Finance Documents in relation to the Junior Facilities.

“Security Documents”

means each of the documents referred to in Clause 13 (Security) and all such other documents which may be executed at any time in favour of the Agent or any of the other Finance Parties as security for the obligations of any of the Obligors under the Finance Documents or any of them.

“Security Interest”

means any mortgage, pledge, lien, charge (whether fixed or floating), assignment, finance lease, sale-and-repurchase or sale-and-leaseback arrangement, sale of receivables on a recourse basis or any other agreement or arrangement having the effect of conferring security, except for liens arising solely by operation of law, and/or in the ordinary course of business, securing amounts not more than 30 days overdue.

“Senior Bank”

means a Bank having a Commitment under the Senior Facilities or any of them.

“Senior Facilities”

means the Term Loan Facility and Revolving Credit Facility A.

“Senior Security Documents”

means the First Equipment Charge, the First Mortgages, the First Security Agreements and the First Share Pledge Agreement.

“Signing Date”

means the date of this Agreement.

18/118

“Subsidiary”

means an entity of which a person has direct or indirect control or owns directly or indirectly more than 50 per cent, of the voting capital or similar right of ownership.

“Tax on Overall Net Income”

means, in respect of a Finance Party, tax imposed on it by the jurisdiction under the laws of which it has been incorporated or in which it is located on (i) its world-wide net income, profits or gains and/or (ii) such of the net income, profits or gains of that Finance Party as are considered to arise in or to relate to or are taxable in that jurisdiction.

“Term Loan”

means a Loan under the Term Loan Facility.

“Term Loan Facility”

means the term loan facility made available under this Agreement in the amount of up to USD 400,000,000.

“Term Loan Facility Commitments”

means:

(i) in relation to an Original Bank, the amount in USD set opposite its name under the heading “Term Loan Facility Commitments” in Schedule 1 (Banks and Commitments); and

(ii) in relation to a Bank which becomes a bank after the Signing Date, the amount of a Term Loan Facility Commitment acquired by it pursuant to Clause 31.2 (Transfers by Banks),

to the extent not cancelled, reduced or transferred under this Agreement.

“Total Commitment”

means the aggregate of all the Commitments, being USD 1,040,000,000 at the Signing Date.

“Total Loss”

means:

(i) an actual, constructive, compromised, agreed, arranged or other total loss of a Unit;

(ii) any expropriation, confiscation, requisition or acquisition of a Unit, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period against payment of market hire, not exceeding one year without any right to extension; and

(iii) any condemnation of a Unit by any tribunal or by any person or persons claiming to be a tribunal.

19/118

“Total Loss Date”

means:

(i) in the case of an actual loss of a Unit, the date on which it occurred or, if that is unknown, the date when the Unit was last heard of;

(ii) in the case of a constructive, compromised, agreed or arranged total loss of a Unit, the earlier of (a) the date on which a notice of the abandonment is given to the insurers, and (b) the date of any compromise, arrangement or agreement made by or on behalf of a member of the Group with the Unit’s insurers in which the insurers agree to treat the Unit as a total loss; and

(iii) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred.

“Total Revolving Credit Facility A Commitment”

means the aggregate of all the Revolving Credit Facility A Commitments, being USD 350,000,000 at the Signing Date.

“Total Revolving Credit Facility B Commitment”

means the aggregate of all the Revolving Credit Facility B Commitments, being USD 250,000,000 at the Signing Date.

“Total Revolving Credit Facility C Commitment”

means the aggregate of all the Revolving Credit Facility C Commitments, being USD 20,000,000 at the Signing Date.

“Total Term Loan Facility Commitment”

means the aggregate of all the Term Loan Facility Commitments, being USD 400,000,000 at the Signing Date.

“Transaction Documents”

means this Agreement, the Security Documents, the Employment Contracts, and any document or agreement from time to time entered into pursuant to the terms of any such document.

“Transfer Certificate”

means a certificate evidencing the obligations of a New Bank (as defined in Clause 31.2 (Transfer by Banks)) following a transfer by a Bank of a part of its Commitments, such certificate to be substantially in the form set out in Schedule 5 (Form of Transfer Certificate).

20/118

“Units”

means the two 5^th generation Bingo-9000 design semi-submersible deep-water drilling rigs “Eirik Raude” and “Leiv Eiriksson”, and

“Unit” means any of them.

“Unsecured Bond Loan Agreement”

means the USD 250,000,000 loan agreement dated 29 March 2006 between the Parent as borrower and Norsk Tillitsmann ASA as security trustee on behalf of certain bondholders in relation to the bond issue named FRN Ocean Rig ASA Senior Open Bond Issue 2006/2011.

“Utilisation”

means the advance of a Loan or the deemed issue of the Letter of Credit under this Agreement.

“Utilisation Date”

means a Drawdown Date or the date the Letter of credit is deemed to be issued under this Agreement.

1.2 Construction

(a) Words importing the singular shall (unless the contrary intention appears) include the plural and vice versa.

(b) Reference to a Clause or a Schedule or an Appendix is respectively a reference to a clause of or schedule or appendix to this Agreement.

(c) A provision of law is a reference to that provision as amended or re-enacted from time to time, and to any regulations made by the appropriate authority pursuant to such law.

(d) Reference to a document is to be construed as a reference to such document as amended or supplemented (with any necessary consent) from time to time.

(e) Reference to a time is reference to Oslo time unless otherwise stated.

(f) Reference to the “Agent”, any “Arranger”, any “Bank”, any “Finance Party”, any “Borrower”, any “Guarantor”, any “Obligor” or any “Party” shall be construed as to include its successors in title, permitted assigns or permitted transferees.

(g) Reference to a “person” includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality.

(h) Reference to a person being “controlled” by another person means that the other person (whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, contract or otherwise) has the power to appoint or remove the majority of the members of the board of directors or managerial, administrative, supervisory or other governing body of the person or otherwise controls or has the power to control the affairs and policies of that person, and “control” shall be construed accordingly.

21/118

2 THE FACILITIES

2.1 The Term Loan Facility

Subject to the terms of this Agreement, each Senior Bank agrees to participate in the Term Loan Facility and to make available to the Borrowers a term loan facility up to an aggregate amount in USD not exceeding its Term Loan Facility Commitments.

2.2 The Revolving Credit Facilities

Subject to the terms of this Agreement:

(i) each Senior Bank agrees to participate in Revolving Credit Facility A and to make available to the Borrowers a revolving credit facility up to an aggregate amount in USD not exceeding its Revolving Credit Facility A Commitments;

(ii) each Junior Bank agrees to participate in Revolving Credit Facility B and to make available to the Borrowers a revolving credit facility up to an aggregate amount in USD not exceeding its Revolving Credit Facility B Commitments; and

(iii) each Junior Bank agrees to participate in Revolving Credit Facility C and to make available to the Borrowers a revolving credit facility up to an aggregate amount in USD not exceeding its Revolving Credit Facility C Commitments.

2.3 The Guarantee Facility

Subject to the terms of this Agreement, the Guarantee Bank agrees to participate in the Guarantee Facility and to maintain the Letter of Credit up to an aggregate amount in USD not exceeding its Guarantee Facility Commitments.

2.4 Purpose and application

(a) The Borrowers shall apply all amounts borrowed by them under the Term Loan Facility and Revolving Credit Facility A towards refinancing the Existing Facilities and for general corporate purposes.

(b) The Borrowers shall apply all amounts borrowed by them under Revolving Credit Facility B for general corporate purposes.

(c) The Borrowers shall apply all amounts borrowed by them under Revolving Credit Facility C for the purpose of serving as a cash reserve for required expenditure in relation to extraordinary maintenance or repair of a Unit having caused unforeseen operation downtime of that Unit.

(d) The purpose of the Guarantee Facility is to maintain the Letter of Credit issued in favour of the Beneficiary on behalf of and for the account of the Borrowers to support payments by Ocean Rig 2 AS under the New Eirik Raude Qualifying Contract

22/118

(e) Without affecting the obligations of any Obligor in any way, none of the Finance Parties is bound to monitor or verify the application of amounts borrowed issued under this Agreement.

2.5 Nature of rights and obligations of the Borrowers

The obligations of the Borrowers under this Agreement are joint and several obligations. The liability of a Borrower for the obligations of another Borrower under this Agreement shall be covered by its liabilities as a Guarantor hereunder and governed by the provisions of Clause 20 (Guarantee and indemnity).

2.6 Nature of rights and obligations of the Banks

(a) The obligations of the Banks under this Agreement are several. Failure of a Bank to carry out its obligations under this Agreement shall not relieve any other Party of any of its obligations under this Agreement. No Bank shall be responsible for the obligations of any other Bank hereunder.

(b) The rights of each Bank under this Agreement are separate and independent rights. A Bank may, except as otherwise stated in this Agreement, separately enforce those rights.

3 CONDITIONS PRECEDENT

3.1 Documentary conditions precedent

The obligations of each Bank to the Borrowers under this Agreement, and to participate in the first Utilisation to be made hereunder, are subject to the condition precedent that the Agent has notified the Borrowers and the Banks that it has received all of the documents set out in Part I of Schedule 6 (Conditions precedent documents) in a form and substance satisfactory to the Agent.

3.2 Further conditions precedent

The obligation of each Bank to participate in a Utilisation, is subject to the further conditions precedent that on both the date of a Drawdown Notice, the Drawdown Date for that Loan and on the date of each Renewal Notice:

(i) the representations and warranties in Clause 21 (Representations and Warranties) deemed to be repeated on those dates are correct and not misleading and will be correct and not misleading immediately after the relevant Drawdown Date with reference to the facts and circumstances then prevailing, unless otherwise informed to the Agent in writing and, if not permitted under this Agreement, waived by the Majority Banks prior to the relevant date; and

(ii) in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Loan, no Default is outstanding or would result from the making of that Loan.

23/118

4 UTILISATION OF THE TERM LOAN FACILITY

4.1 Utilisation – maximum number of Term Loans

Subject to the terms of this Agreement, the Term Loan Facility will be made available to the Borrowers in up to five (5) Term Loans.

4.2 Drawdown conditions for each Term Loan

(a) Subject to Clause 3 (Conditions precedent), a Term Loan will be made available to the Borrowers, if:

(i) not later than 10:00 a.m. three (3) Business Days prior to the requested Drawdown Date of such Term Loan, the Agent has received a properly completed Drawdown Notice; and

(ii) the requested Drawdown Date is a Business Day during the Availability Period in respect of the Term Loan Facility.

(b) Subject to the terms of this Agreement, each Drawdown Notice shall be irrevocable and the relevant Borrower shall be bound to accept the Term Loan in accordance with the Drawdown Notice.

(c) The Agent shall upon receipt of the completed Drawdown Notice notify each Bank of the details of the requested Term Loan and the amount of that Bank’s participation in such Term Loan.

4.3 Amount of each Bank’s participation in the Term Loans

The amount of a Bank’s participation in each Term Loan will be the proportion of that Term Loan which such Bank’s Term Loan Facility Commitments bears to the aggregate Term Loan Facility Commitments of all the Banks immediately prior to making the relevant Term Loan.

5 UTILISATION OF THE REVOLVING CREDIT FACILITIES

5.1 Utilisation of the Revolving Credit Facilities

Subject to Clause 8.2 (b) in relation to Revolving Credit Facility C, the Borrowers may utilise the Revolving Credit Facilities for drawdown of Revolving Loans on a revolving basis so that any amounts repaid prior to or at the end of the Availability Period in respect thereof may be redrawn by the Borrowers subject to the terms and conditions of this Agreement.

24/118

5.2 Drawdown conditions for each Revolving Loan

(a) Subject to Clause 3 (Conditions precedent), a Revolving Loan will be made available to the Borrowers, if:

(i) the sum of the requested Revolving Loan and the aggregate amount of all outstanding Revolving Loans under the relevant Revolving Credit Facility (other than Revolving Loans that are due to be repaid or prepaid on or before the proposed Drawdown Date) does not exceed the relevant Revolving Credit Facility Commitment;

(ii) not later than 10:00 a.m. three (3) Business Days prior to the requested Drawdown Date of such Revolving Loan, the Agent has received a properly completed Drawdown Notice, which, once received by the Agent, shall be irrevocable;

(iii) the requested Drawdown Date is a Business Day during the Availability Period in respect of the relevant Revolving Credit Facility; and

(iv) the amount and currency of the proposed Revolving Loan shall be (a) a minimum of USD 10,000,000 and in integral multiples thereof (or in any other amount approved by the Agent), or (b) the balance of the relevant Revolving Credit Facility undrawn on the requested Drawdown Date.

(b) Subject to the terms of this Agreement, each Drawdown Notice shall be irrevocable and the relevant Borrower shall be bound to accept the Revolving Loan in accordance with the Drawdown Notice.

(c) The Agent shall upon receipt of the completed Drawdown Notice notify each Bank of the details of the requested Revolving Loan and the amount of that Bank’s participation in such Revolving Loan.

(d) The aggregate number of Revolving Loans outstanding under this Agreement at any time shall not exceed ten (10).

5.3 Additional drawdown conditions for each Revolving Loan under Revolving Credit Facility B

(a) The following conditions shall apply to any Revolving Loan requested to be made under Revolving Credit Facility B in addition to those set out in Clause 5.2 (Drawdown conditions for each Revolving Loan):

(i) not later than 10:00 a.m. three (3) Business Days prior to the requested Drawdown Date of such Revolving Loan, the Agent has received an updated calculation of the Borrowing Base Amount, in a form and substance satisfactory to the Agent; and

(ii) the sum of the requested Revolving Loan and the aggregate amount of all outstanding Revolving Loans under Revolving Credit Facility B does not exceed the Borrowing Base Amount as so calculated.

(b) No Drawdown Notice may be delivered requesting a Revolving Loan under Revolving Credit Facility B until the Agent has received in a form and substance satisfactory to it true and certified copies of the Qualifying Contracts and any Employment Contracts entered into between any of the members of the Group, and any guarantee or other surety issued for the obligations of the Qualifying Contract Party thereunder, including in respect of the New Eirik Raude Qualifying Contract an on demand bank guarantee in the amount of at least USD 85,000,000.

25/118

5.4 Additional drawdown conditions for each Revolving Loan under Revolving Credit Facility C

The following conditions shall apply to any Revolving Loan requested to be made under Revolving Credit Facility C in addition to those set out in Clause 5.2 (Drawdown conditions for each Revolving Loan):

(i) not later than 10:00 a.m. three (3) Business Days prior to the requested Drawdown Date of such Revolving Loan, the Agent has received evidence satisfactory to it that (A) an unforeseen operation downtime has occurred in respect of a Unit and (B) that the relevant unforeseen operation downtime has resulted in a need for expenditure;

(ii) not more than 30 days have elapsed since the date on which the event causing the relevant unforeseen operational downtime occurred; and

(iii) the Junior Banks have approved the making of that Loan (in their sole discretion).

5.5 Each Bank’s participation in Revolving Loans

(a) The amount of a Bank’s participation in each Revolving Loan under Revolving Credit Facility A will be the proportion of that Revolving Loan which such Bank’s Revolving Credit Facility A Commitment bears to the Revolving Credit Facility A Commitments of all the Banks under Revolving Credit Facility A on the date of receipt of the relevant Drawdown Notice.

(b) The amount of a Bank’s participation in each Revolving Loan under Revolving Credit Facility B will be the proportion of that Revolving Loan which such Bank’s Revolving Credit Facility B Commitment bears to the Revolving Credit Facility B Commitments of all the Banks under Revolving Credit Facility B on the date of receipt of the relevant Drawdown Notice.

(c) The amount of a Bank’s participation in each Revolving Loan under Revolving Credit Facility C will be the proportion of that Revolving Loan which such Bank’s Revolving Credit Facility C Commitment bears to the Revolving Credit Facility C Commitments of all the Banks under Revolving Credit Facility C on the date of receipt of the relevant Drawdown Notice.

6 UTILISATION OF THE GUARANTEE FACILITY

6.1 Utilisation of the Guarantee Facility

The Guarantee Facility shall be utilised by the issuance of the Letter of Credit deemed to take effect under the Guarantee Facility automatically on and from the date the Agent has given notice to the Borrowers, the Guarantee Bank and the Banks pursuant to Clause 3.1

26/118

(Documentary conditions precedent). At the same time the obligations of those of the Obligors that are party to the Existing Guarantee Facility Agreement shall be deemed to be fulfilled and be replaced by the obligations of the Obligors in relation to the Guarantee Facility set out in this Agreement.

6.2 Each Bank’s participation in the Letter of Credit

The Letter of Credit has been issued by the Guarantee Bank for its own account.

7 DEMAND UNDER THE LETTER OF CREDIT

7.1 Demand under the Letter of Credit

(a) If the Beneficiary makes a demand under the Letter of Credit in accordance with its terms, the Guarantee Bank shall promptly notify the Borrowers specifying:

(i) the aggregate amount of the demand (the “Claimed Amount”);

(ii) the date on which payment is to be made (the “Payment Date”); and

(iii) the details of the account to which payment is to be made.

(b) The Borrowers shall, not later than 11.00 a.m. (2) two Business Days prior to the Payment Date, pay to the Guarantee Bank the Claimed Amount.

(c) The provisions of this Clause 7.1 are without prejudice to any other rights which the Guarantee Bank may have against the Borrowers under this Agreement (including, but without limitation, under Clause 11.3 (Default Interest)).

7.2 Counter indemnity

Each Borrower hereby irrevocably and unconditionally:

(i) authorises and directs the Guarantee Bank to pay any demand made by the Beneficiary under or by reference to the Letter of Credit on first request or demand being made in accordance with the terms thereof without requiring proof of the agreement of the Borrowers that the amounts so demanded are or were due and notwithstanding (a) that the Borrowers may dispute the validity of any such request, demand or payments, or make any set-off, counter-claim or defence against such demand for payment and/or (b) whether the Beneficiary is actually entitled to make a claim against a Borrower or any other member of the Group;

(ii) undertakes to reimburse to the Guarantee Bank on demand any and all sums which the Guarantee Bank may pay to the Beneficiary under the Letter of Credit, in the currency paid by the Guarantee Bank, together with interest at the rate determined in accordance with Clause 11.3 (Default interest) for overdue amounts from the date such payment is made by the Guarantee Bank until payment in full of such reimbursement;

27/118

(iii) undertakes to keep the Guarantee Bank indemnified against any and all liabilities, losses, damages, claims, demands, expenses (including, without limitation, legal fees and VAT) or actions which the Guarantee Bank suffer or incur in any way whatsoever under or in connection with or arising out of the Letter of Credit; and

(iv) agrees that the obligations of the Borrowers under this Agreement shall not be affected by any act, omission, matter or thing which, but for this provision, might operate to release or exonerate the Borrowers from its obligations hereunder in whole or in part, including, without limitation and whether or not known to the Borrowers or any other person:

(a) any time or waiver granted to or composition with the Beneficiary or any other person; or

(b) any taking, variation, compromise, renewal or release of, or refusal or neglect to perfect or enforce any rights, remedies or security available to the Guarantee Bank or the Beneficiary or any other person; or

(c) any variation of the terms of or substitution of the Letter of Credit so that references in this Agreement to the Letter of Credit shall include references to the Letter of Credit as so varied or substituted.

7.3 Continuing indemnity

The indemnity set out in Clause 7.2 (Counter indemnity) shall be a continuing indemnity, and shall extend to the ultimate balance of all amounts which may be or become due, owing or payable under this indemnity and shall continue in force notwithstanding any intermediate payment in whole or in part of any such amounts.

7.4 Certificate from the Guarantee Bank

A certificate in writing signed by the Guarantee Bank, certifying any amount due from the Borrowers under this indemnity which is a Claimed Amount as defined in Clause 7.1 (Demand under the Letter of Credit) shall be conclusive evidence of the matters so certified, save in the case of manifest error.

7.5 Invalidity

No invalidity or unenforceability of all or any part of this Clause 7 shall affect any rights of indemnity or otherwise which the Guarantee Bank would or may have in the absence of or in addition to this Clause 7.

28/118

8 REPAYMENT AND REDUCTION

8.1 Repayment of the Term Loan

The Borrowers shall repay the Term Loan in full on the Final Maturity Date in respect thereof.

8.2 Repayment of Revolving Loans

(a) The Borrowers shall repay each Revolving Loan on the last day of the Interest Period relating thereto and shall repay all Revolving Loans outstanding under a Revolving Credit Facility in full on the Final Maturity Date in respect of the relevant Revolving Credit Facility, provided however that where a Revolving Loan (the “New Loan”) is, subject to and in accordance with the other terms of this Agreement, to be made on a day on which another Revolving Loan (the “Maturing Loan”) is due to be paid, and further provided that the New Loan is denominated in the same currency as the Maturing Loan, then;

(i) the Maturing Loan shall be deemed to be repaid in whole on its Repayment Date if the amount of the New Loan is equal to or greater than the amount of the Maturing Loan or in part if the New Loan is less than the Maturing Loan. To the extent that the Maturing Loan is so deemed to have been repaid, the principal amount of the New Loan to be made on such date shall be deemed to have been credited to the account of the relevant Borrower by the Banks in accordance with the terms of this Agreement; and

(ii) the Banks shall only be obliged to make available an amount equal to the amount by which the New Loan exceeds the Maturing Loan.

(b) In addition to the repayment required to be made pursuant to paragraph (a) above, the Borrowers shall repay each Revolving Loan made under Revolving Credit Facility C in full at the latest on the date occurring six (6) calendar months after the Drawdown Date of the first Revolving Loan made in relation to the operational downtime of the Unit to which the relevant Revolving Loan relates.

8.3 Reduction of the Total Revolving Credit Facility A Commitment

(a) The Total Revolving Credit Facility A Commitment shall on the date occurring three (3) months after the Signing Date automatically be reduced by an amount equal to USD 17,500,000, and quarterly thereafter in the same amount until the Final Maturity Date in respect thereof. On the Final Maturity Date in respect thereof, the Total Revolving Credit Facility A Commitment shall automatically be reduced to zero.

(b) If, on any Reduction Date, the aggregate amount of all outstanding Revolving Loans under Revolving Credit Facility A would exceed the aggregate amount of the Total Revolving Credit Facility A Commitment (as so reduced), the Borrowers shall, on such Reduction Date, prepay (together with breakage costs, if any) or repay an amount of the Revolving Loans under Revolving Credit Facility A equal to such excess together with all interest accrued thereon to the relevant Reduction Date.

29/118

(c) Any reduction of the Total Revolving Credit Facility A Commitment shall reduce rateably the Revolving Credit Facility A Commitment of each Bank.

8.4 Reduction and repayment of the Total Revolving Credit Facility B Commitment

(a) The Total Revolving Credit Facility B Commitment shall on the date occurring three (3) months after the date when Earnings have started to accrue to the relevant Group Contract Party under the New Eirik Raude Qualifying Contract automatically be reduced by an amount each quarter representing a linear reduction of the Total Revolving Credit Facility B Commitment down to zero on the Final Maturity Date in respect of Revolving Credit Facility B. The Borrowers shall promptly give written notice to the Agent as soon as Earnings have started to accrue to the relevant Group Contract Party under the New Eirik Raude Qualifying Contract.

(b) If, on any Reduction Date, the aggregate amount of all outstanding Revolving Loans under Revolving Credit Facility B would exceed the aggregate amount of the Total Revolving Credit Facility B Commitment (as so reduced), the Borrowers shall, on such Reduction Date, prepay (together with breakage costs, if any) or repay an amount of the Revolving Loans under Revolving Credit Facility B equal to such excess together with all interest accrued thereon to the relevant Reduction Date.

(c) Any reduction of the Total Revolving Credit Facility B Commitment shall reduce rateably the Revolving Credit Facility B Commitment of each Bank.

8.5 Final Maturity Date

On the Final Maturity Date in respect of a Facility, the Borrowers shall pay to the Agent (on behalf of the Finance Parties) all sums then owing under the Finance Documents in relation to such Facility.

9 PREPAYMENT AND CANCELLATION

9.1 Voluntary prepayment

The Borrowers may (without penalty or premium, but subject to Clause 28.2 (Other indemnities)), by giving not less than ten (10) Business Days’ prior written notice to the Agent, prepay the whole or any part of a Loan in an amount being a minimum of USD 5,000,000 or in integral multiples thereof in each case, or in such other amounts as the Agent may from time to time agree.

9.2 Voluntary cancellation

The Borrowers may (without penalty or premium), by giving not less than ten (10) Business Days’ prior written notice to the Agent, cancel any undrawn portion of the Total Commitment in minimum amounts of USD 5,000,000 or in integral multiples thereof in each case, or in such other amounts as the Agent may from time to time agree.

30/118

9.3 Mandatory prepayment – sale or Total Loss

(a) If a Unit is sold or is otherwise disposed of, or all of the shares in an Owner are sold, transferred or otherwise disposed of, the Borrowers shall, unless otherwise agreed in writing by the Banks, make prepayment of the Loans, and the Total Commitment shall automatically be cancelled, in an amount equal to the ratio of (i) the sales proceeds (net of taxes payable and reasonable costs incurred in connection therewith) received or receivable by the relevant member of the Group in connection with such sale or other disposal to (ii) the aggregate of such net sales proceeds and the updated (as of the date of completion of the relevant sale, transfer or other disposal) Market Value of the other Unit. In addition all interest and costs and any other amount owing in connection with the prepaid amount under this Agreement shall be paid together with the prepaid amount.

(b) If a Unit becomes a Total Loss, the Borrowers shall, unless otherwise agreed in writing by the Banks, make prepayment of the Loans, and the Total Commitment shall automatically be cancelled, in an amount equal to the ratio of such Unit’s updated (as of the Total Loss Date) Market Value to the aggregate updated (as of the Total Loss Date) Market Value of both Units, plus interest and costs and any other amount owing in connection with the prepaid amount under this Agreement.

(c) Prepayment pursuant to paragraphs (a) and (b) above shall be made:

(i) in the case of a sale or other disposal of a Unit, or a sale, transfer or other disposal of shares in an Owner, on or before the date on which the sale, transfer or other disposal is completed by delivery of the relevant Unit or shares to the buyer thereof; or

(ii) in the case of a Total Loss, on the earlier of (A) the date falling 180 days after the Total Loss Date, and (B) the date of receipt by the Agent of the proceeds of insurance relating to such Total Loss (or in the event of a requisition for title of the relevant Unit, on the date of such requisition for title).

9.4 Mandatory prepayment – change of control

(a) If, at any time, any person or persons acting in concert (other than DryShips Inc. or other companies controlled by Mr. George Economou) obtains control (directly or indirectly) of 1/3 or more of the shares in the Parent:

(i) the Borrowers (whichever becomes first aware) shall promptly notify the Agent upon becoming aware of that event;

(ii) the Agent shall (if so instructed by any Bank) by not less than 60 days notice to the Borrowers, which notice must be received by the Borrowers no later than 90 days after receipt by the Agent of the notice referred to in sub-paragraph (i) above, cancel the Total Commitment and declare all outstanding Loans, together with accrued interest, and all other amounts accrued under this Agreement due and payable on any Business Day occurring after the expiry of such 60 days period, whereupon the Total Commitment will be cancelled and all such outstanding amounts will become due and payable on such Business Day, and on such Business

31/118

Day the Borrowers shall deposit immediate cash collateral cover with the Agent in amounts and currencies identical to the amounts representing the maximum contingent liability under the Letter of Credit, plus any outstanding costs, fees, interests and/or expenses, which amounts shall be placed on a blocked deposit account with the Agent bearing interest at the Agent’s usual rate for comparable deposits (so entitled as to indicate the interest of the Agent (on behalf of the Junior Banks) in such account) and the Borrowers agree that such amounts may be applied in fulfilment pro tanto of the Borrowers’ obligations hereunder and that the amounts so deposited will only be released to the Borrowers as and to the extent that they exceed the aggregate of the maximum contingent liability under the Letter of Credit and any outstanding costs, fees, interests and expenses.

(b) For the purpose of paragraph (a) above “acting in concert” means a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition of shares in the Parent by any of them, either directly or indirectly, to obtain or consolidate control of the Parent.

9.5 Mandatory prepayment – Employment Contracts

If at any time any Employment Contract is terminated by an Employment Contract Party, or an event of default occurs thereunder for any reason whatsoever which in the reasonable opinion of the Majority Banks might adversely affect any Obligor’s ability to perform its obligations under any of the Transaction Documents to which it is a party, then:

(i) the Obligor which becomes first aware shall promptly notify the Agent upon becoming aware of that event; and

(ii) the Agent shall (if so instructed by any Bank) by not less than 60 days notice to the Borrowers, which notice must be received by the Borrowers no later than 90 days after receipt by the Agent of the notice referred to in sub-paragraph (i) above, cancel the Total Commitment and declare all outstanding Loans, together with accrued interest, and all other amounts accrued under this Agreement due and payable on any Business Day occurring after the expiry of such 60 days period, whereupon the Total Commitment will be cancelled and all such outstanding amounts will become due and payable on such Business Day, and on such Business Day the Borrowers shall deposit immediate cash collateral cover with the Agent in amounts and currencies identical to the amounts representing the maximum contingent liability under the Letter of Credit, plus any outstanding costs, fees, interests and/or expenses, which amounts shall be placed on a blocked deposit account with the Agent bearing interest at the Agent’s usual rate for comparable deposits (so entitled as to indicate the interest of the Agent (on behalf of the Junior Banks) in such account) and the Borrowers agree that such amounts may be applied in fulfilment pro tanto of the Borrowers’ obligations hereunder and that the amounts so deposited will only be released to the Borrowers as and to the extent that they exceed the aggregate of the maximum contingent liability under the Letter of Credit and any outstanding costs, fees, interests and expenses.

32/118

9.6 Mandatory prepayment – Borrowing Base Amount

(a) The Borrowers shall together with each Compliance Certificate and each Drawdown Notice requesting a Revolving Loan under Revolving Credit Facility B, deliver to the Facility Agent an updated calculation of the Borrowing Base Amount, and in the event that the aggregate principal amount of the Loans under Revolving Credit Facility B (including any requested Revolving Loans) at any such time exceeds the Borrowing Base Amount, the Borrowers shall at the latest 30 days after the date of the relevant Compliance Certificate or Drawdown Notice (as the case may be), make prepayment of the Revolving Loans under Revolving Credit Facility B in an amount not less than the amount by which the principal amount of such Revolving Loans exceeds the Borrowing Base Amount as recalculated.

(b) Without prejudice to the rights of the Agent pursuant to paragraph (ii) of Clause 9.5 (Mandatory prepayment – Employment Contracts), if a Qualifying Contract (the “Expiring Qualifying Contract”) expires or is terminated, cancelled or otherwise ceases to be in full force and effect, the Borrowing Base Amount shall be recalculated and the Borrowers shall on the date occurring 30 days after the expiry, termination, cancellation etc. of the Expiring Qualifying Contract make prepayment of the Revolving Loans under Revolving Credit Facility B, and the Total Revolving Credit Facility B Commitment shall be automatically cancelled, in an amount not less than the amount (if any) by which the principal amount of such Revolving Loans exceeds the Borrowing Base Amount as recalculated.

9.7 Additional right of prepayment

If :-

(i) a Borrower is required to pay to a Bank any additional amounts under Clause 15 (Taxes); or

(ii) a Borrower is required to pay to a Bank any amount under Clause 17 (Increased costs); or

(iii) a Borrower is required to pay to a Bank interest at a rate set under Clause 16.5 (Alternative rate of interest in absence of agreement);

then, without prejudice to its obligations under those Clauses, that Borrower may, subject to Clause 9.8 (Miscellaneous provisions), whilst the circumstances continue, serve a notice of prepayment and cancellation on that Bank through the Agent. On the date falling three (3) Business Days after the date of service of the notice, the Borrowers shall prepay that Bank’s Participation and, if that Bank is the Guarantee Bank, release that Bank from its participation in the Letter of Credit in a manner reasonably acceptable to that Bank or, if no Loan or Letter of Credit is then outstanding, that Bank’s Commitment shall be cancelled.

9.8 Miscellaneous provisions

(a) Any notice of prepayment or cancellation under this Agreement shall be irrevocable and shall specify the date on which the prepayment or cancellation is to be made and the amount to be prepaid or cancelled. The Agent shall notify the Banks promptly of the receipt and contents of any such notice.

33/118

(b) All prepayments under this Agreement shall be made together with accrued interest and costs in respect of the amount prepaid and any Break Costs.

(c) Any amount prepaid under Clause 9.1 (Voluntary prepayment) shall be applied as determined by the Borrower making the prepayment.

(d) Any amount prepaid under Clause 9.3 (Mandatory prepayment – sale or Total Loss) shall be applied pro rata against the principal amount outstanding under the Term Loan Facility and the Revolving Credit Facilities, and in respect of Revolving Credit Facility A and Revolving Credit Facility B, to be applied pro rata against the remaining reductions thereunder.

10 INTEREST PERIODS

10.1 Selection

(a) The relevant Borrower shall select the Interest Period for each Loan in the Drawdown Notice related thereto, and each Interest Period shall commence on the relevant Drawdown Date. Each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

(b) The relevant Borrower shall by serving a Renewal Notice on the Agent not later than 10:00 a.m. three (3) Business Days before the beginning of the next Interest Period, specify the duration of each subsequent Interest Period of the Term Loan.

(c) Each Interest Period shall be for a period of one (1), three (3), six (6) or nine (9) months, or subject always to availability to all Banks, such other period as the Agent and the relevant Borrower may agree in writing. The Borrowers may not request more than three (3) one-month Interest Periods for each Loan during any calendar year.

(d) If a Borrower fails to select an Interest Period in accordance with paragraph (a) above, that Interest Period will, subject to the other provisions of this Agreement, be three (3) months.

(e) Notwithstanding the above, the Borrowers may with the consent of the Agent select Interest Periods of a duration other than as set out in paragraph (c) for the purpose of consolidating Interest Periods and Loans.

10.2 Non-Business Days

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

10.3 No overrunning

If an Interest Period in respect of a Loan would otherwise extend beyond a Repayment Date or the Final Maturity Date in respect of the Facility under which the Loan has been made, it shall be shortened so that it ends on such Repayment Date or such Final Maturity Date (as the case may be).

34/118

10.4 Notification

The Agent shall notify the Banks of the duration of each Interest Period promptly after ascertaining its duration.

11 INTEREST AND GUARANTEE COMMISSION

11.1 Interest rate

The rate of interest on each Loan for an Interest Period shall be the rate per annum determined by the Agent to be the aggregate of:

(i) the Applicable Margin; and

(ii) LIBOR.

11.2 Due dates

Except as otherwise provided in this Agreement, accrued interest on each Loan shall be payable by the Borrowers on each Interest Payment Date for that Loan.

11.3 Default interest

(a) If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is determined by the Agent to be the sum of two (2) per cent. per annum, the Applicable Margin and LIBOR for such periods as the Agent may select. Any interest accruing under this Clause 11.3 shall be compounded at the end of each such period selected by the Agent but shall be immediately payable by the relevant Obligor on demand from the Agent.

(b) If any overdue amount consists of all or part of a Loan which has become due on a day which is not the last day of an Interest Period for that Loan:

(i) the first period selected by the Agent for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period; and

(ii) the rate of interest applying to the overdue amount during that period shall be 2 per cent. per annum higher than the rate which would have applied if the overdue amount had not become due.

35/118

11.4 Notification

The Agent shall promptly notify each Bank and the Borrowers of the determination of a rate of interest under this Agreement.

11.5 Break Costs

(a) The Borrowers shall, within three (3) Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan being paid by a Borrower on a day other than the last day of an Interest Period for that Loan.

(b) Each Bank shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

11.6 Guarantee commission

The Borrowers shall pay to the Agent (for the account of the Guarantee Bank) a guarantee commission on the outstanding amount of the Letter of Credit from time to time during the period beginning on the date the Agent has given notice to the Borrowers and the Banks pursuant to Clause 3.1 (Documentary conditions precedent) and ending on the Expiry Date in respect of the Letter of Credit, such commission to be calculated at the rate per annum set out in the Margin and Fee Letter of the amount of the Letter of Credit, and to be payable quarterly in arrears on the last date of each successive period of three (3) months which ends during such period, and on the Expiry Date.

12 PAYMENTS

12.1 Place

All payments by an Obligor or a Bank under a Finance Document shall be made to the Agent to its account at such office or bank as it may notify to such Obligor or such Bank for this purpose.

12.2 Funds

Payments under a Finance Document to the Agent shall be made for value on the due date at such times and in such funds as the Agent may specify as being customary at the time for the settlement of transactions in the relevant currency in the place for payment.

12.3 Distribution

(a) Each payment received by the Agent under a Finance Document for another Party shall, subject to paragraphs (b) and (c) below, be made available by the Agent to that Party by payment (on the date and in the currency and funds of receipt) to its account with such office or bank in the principal financial centre of the country of the relevant currency as it may notify to the Agent for this purpose by not less than five (5) Business Days prior written notice.

36/118

(b) The Agent may with written notice to the relevant Obligor apply any amount received or held by it for such Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from such Obligor under any Finance Document or in or towards the purchase of any amount of any currency to be so applied.

(c) Where a sum is to be paid to the Agent under any Finance Document for distribution to another Party, the Agent shall not be obliged to pay that sum to that Party until it has established that it has actually received that sum. The Agent may, however, assume that the sum has been paid to it in accordance with the relevant Finance Document and, in reliance on that assumption, make available to that Party a corresponding amount. If the sum has not been received but the Agent has paid a corresponding amount to another Party and the Party liable does not forthwith on demand pay such amount to the Agent together with interest on that amount from the date of payment to the date of receipt, calculated at a rate determined by the Agent to reflect its cost of funds, the Party receiving the sum shall forthwith on demand by the Agent refund such amount to the Agent together with interest on that amount calculated as above.

12.4 Currency

(a) Except as otherwise provided in this Agreement, any amount payable under a Finance Document shall be payable in Dollars.

(b) Amounts payable in respect of costs, expenses, taxes and other liabilities shall be payable in the currency in which they are incurred.

12.5 Set-off and counterclaim

All payments made by an Obligor under a Finance Document shall be made without set-off or counterclaim.

12.6 Non-Business Days

If a payment under a Finance Document is due on a day which is not a Business Day, the due date for that payment shall instead be the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

12.7 Partial payments

If the Agent receives a payment insufficient to discharge all the amounts then due and payable by an Obligor under this Agreement, the Agent shall apply that payment towards the discharge of the obligations of that Obligor under this Agreement in the following order:

(i) firstly, in or towards payment pro rata of any unpaid costs and expenses of the Agent and the Senior Banks under the Finance Documents;

(ii) secondly, in or towards payment pro rata of any accrued fees due but unpaid under Clause 26 (Fees) in relation to the Senior Facilities;

37/118

(iii) thirdly, in or towards payment pro rata of any accrued interest (including default interest) due but unpaid under this Agreement in relation to the Senior Facilities;

(iv) fourthly, in or towards payment pro rata of any principal due but unpaid under this Agreement in relation to the Senior Facilities;

(v) fifthly, in or towards payment pro rata of any other sum due but unpaid under this Agreement in relation to the Senior Facilities;

(vi) sixthly, in or towards payment pro rata of any unpaid costs and expenses of the Junior Banks under the Finance Documents;

(vii) seventhly, in or towards payment pro rata of any accrued fees due but unpaid under Clause 26 (Fees) in relation to the Junior Facilities;

(viii) eighthly, in or towards payment pro rata of any accrued interest (including default interest) due but unpaid under this Agreement in relation to the Junior Facilities;

(ix) ninthly, in or towards payment pro rata of any principal due but unpaid under this Agreement in relation to the Junior Facilities;

(x) tenthly, in or towards payment pro rata of any other sum due but unpaid under this Agreement in relation to the Junior Facilities.

13 SECURITY

13.1 Security

(a) The obligations and liabilities of each Obligor under the Finance Documents in relation to the Senior Facilities, including without limitation any derived liability whatsoever of an Obligor towards the Finance Parties in connection with the Finance Documents in relation to the Senior Facilities, shall be secured by:

(i) the guarantee and indemnity set out in Clause 20 (Guarantee and indemnity);

(ii) the First Mortgages;

(iii) the First Security Agreements;

(iv) the First Equipment Charges; and

(v) the First Share Pledge Agreement.

(b) The obligations and liabilities of each Obligor under the Finance Documents in relation to the Junior Facilities, including without limitation any derived liability whatsoever of an Obligor towards the Finance Parties in connection with the Finance Documents in relation to the Junior Facilities, shall be secured by:

(i) the guarantee and indemnity set out in Clause 20 (Guarantee and indemnity);

38/118

(ii) the Second Mortgages;

(iii) the Second Security Agreements;

(iv) the Second Equipment Charges; and

(v) the Second Share Pledge Agreement.

13.2 Set-off

(a) Without prejudice to any other rights which it may have, each Finance Party may at any time, at its discretion and without prior notice, apply any balance (whether then due or not) which then stands to the credit of any of the Obligors at any branch or other office of that Finance Party in any country in or towards satisfaction of any amount then due from the Obligors to that Finance Party under any of the Finance Documents and, for that purpose, may:

(i) break, or change the maturity of, all or part of a deposit of an Obligor;

(ii) convert all or any part of a deposit or other credit balance from one currency into another; and

(iii) enter into any other transaction or make any entry with regard to the credit balance which the relevant Finance Party considers appropriate.

(b) For the purposes of paragraph (a) above, an amount payable by an Obligor to the Agent for distribution to, or for the account of, a Bank shall be treated as a sum due to that Bank.

14 COORDINATION OF SENIOR SECURITY DOCUMENTS AND JUNIOR SECURITY DOCUMENTS

14.1 Undertakings of the Junior Banks to the Senior Banks

Each Junior Bank hereby agrees with and undertakes to the Senior Banks that:

(i) its rights under the Junior Security Documents shall in all respects rank with priority below the rights of the Senior Banks under the Senior Security Documents;

(ii) all insurance proceeds and requisition compensation in respect of a Unit shall be paid and applied in accordance with the provisions of this Agreement and the Senior Banks shall have the absolute prior right to settle, agree, compromise and give a good discharge for and in respect of any claim in respect of the same, and it will, promptly on receiving written notice from the Senior Banks to that effect, forthwith at the expense of the Borrowers execute any document reasonably required by the Senior Banks for the purpose of effecting, completing or perfecting any such settlement agreement compromise and/or discharge;

39/118

(iii) it will not take any action to enforce any of its rights and powers under the Junior Security Documents unless and until:

(a) all sums secured by the Senior Security Documents up to the maximum principal amount secured by the Senior Security Documents pursuant to paragraph (i) of Clause 14.2 (Undertakings of the Senior Banks to the Junior Banks) have been paid to the Senior Banks; or

(b) the Senior Banks have given their prior written consent thereto;

(iv) it shall not in any way hinder the Senior Banks or the Agent in exercising the Senior Banks’ rights under the Senior Security Documents. Nothing herein shall preclude its right to join in or otherwise support any proceedings arising from or relating to the arrest or detention of a Unit or any equipment pertaining thereto or in any way relating to the Senior Security Documents by any other person (including the Senior Banks) with a view to substantiating, preserving or protecting its interest in the Junior Security Documents;

(v) it has not entered into and will not during the subsistence of the Senior Security Documents enter into any arrangement whereby the rights or securities of the Senior Banks thereunder is or may reasonably be expected to be prejudiced in any manner whatsoever;

(vi) the Senior Banks shall be entitled to exercise any rights available to them under the Senior Security Documents on such conditions and in such manner as the Senior Banks shall determine, without any responsibility or duty on the part of the Senior Banks to protect the rights and privileges of the Junior Banks, and for this purpose it covenants with the Senior Banks that it shall procure the discharge the Junior Security Documents and will co-operate fully with the Senior Banks in the completion of such exercising of rights by the Senior Banks, PROVIDED ALWAYS, that the Senior Banks shall, if considered by the Senior Banks not to prejudice the exercise of its rights under the Senior Security Documents, consult with the Junior Banks in connection with any such exercise, and comply with all laws and regulations applicable to such exercise of rights; and

(vii) it shall in connection with any sale of a Unit, when so directed by the Senior Banks, execute and deliver to the Senior Banks, or order all such documents required in order to discharge the Junior Security Documents.

14.2 Undertakings of the Senior Banks to the Junior Banks

Each Senior Bank hereby agrees and undertakes with the Junior Banks that:

(i) the maximum principal amount from time to time secured by the Senior Security Documents shall not exceed USD 750,000,000, plus interest, costs and expenses secured thereby;

(ii) it will through the Agent notify the Junior Banks in writing if it intends to exercise any of its rights under the Senior Security Documents, whereupon the Junior Banks shall have the option, to be exercised within ten (10) Business Days from receipt of

40/118

such notification, to pay to the Senior Banks within twenty (20) Business Days from receipt of such notification all sums secured by the Senior Security Documents, against an assignment and transfer of the rights established pursuant to the Senior Security Documents to or for the benefit of the Junior Banks;

(iii) the Senior Security Documents shall not secure any indebtedness other than the obligations of the Obligors under the Finance Documents in relation to the Senior Facilities; and

(iv) the rights of the Junior Banks and the Agent on their behalf under the Junior Security Documents have the full right of succession as and when claims due to the Senior Banks under the Finance Documents are paid off or redeemed.

15 TAXES

All payments by an Obligor under any Finance Document shall be made free and clear of and without deduction for or on account of any taxes, except to the extent that the relevant Obligor is required by law to make payment subject to any taxes. If by requirement of law any tax or amount in respect of tax must be deducted or withheld from any amount payable or paid by an Obligor to the Agent or any other Finance Party, or payable or paid by the Agent to a Finance Party, under any Finance Document, the relevant Obligor (or, as the case may be, the Agent) shall pay such tax to the relevant authority and the relevant Obligor shall pay such additional amounts as may be necessary to ensure that the Agent or, as the case may be, the relevant Finance Party receives (free from any liability in respect of any such deduction or withholding) a net amount equal to the full amount which it would have received had payment not been made subject to tax or other deduction. The Obligors shall promptly deliver to the Agent any receipts, certificates or other proof evidencing the amounts paid or payable in respect of any deduction or withholding as aforesaid.

16 MARKET DISRUPTION

16.1 Market disruption

The Agent shall promptly notify the Borrowers and each of the Banks if:

(a) no rate is quoted on the Reuters Page LIBOR01 and two or more of the Banks fail to provide quotations to the Agent, before 1.00 p.m. (London time) on any Quotation Date, in order to fix LIBOR; or

(b) at least one (1) Business Day before the start of an Interest Period, Banks having Participations totalling in aggregate more than 30 per cent. of the Loans (or, if no Loan has been made, Commitments totalling in aggregate more than 30 per cent. of the Total Commitment) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Banks of funding their respective Participations for that Interest Period in the London interbank eurocurrency market; or

(c) at least one (1) Business Day before the start of an Interest Period, the Agent is notified by a Bank (the “Affected Bank”) that for any reason it is unable to obtain Dollars in the London interbank eurocurrency market in order to fund its Participation for that Interest Period.

41/118

16.2 Suspension of drawdown

If the Agent’s notice under Clause 16.1 (Market disruption) is given before a Loan has been advanced:

(i) in circumstances falling within Clause 16.1 (a) or (b), the Banks’ obligations to advance the Loans;

(ii) in circumstances falling within Clause 16.1 (c), the Affected Bank’s obligation to participate in the Loans;

shall be suspended while the relevant circumstances continue to exist.

16.3 Negotiation of alternative rate of interest

If the Agent’s notice under Clause 16.1 is given after a Loan has been advanced, the Borrowers, the Agent and the Banks or (as the case may be) the Affected Bank shall use reasonable efforts to agree, within 30 days after the date of the Agent’s notice (the “Negotiation Period”), an alternative interest rate or an alternative basis for the Banks or (as the case may be) the Affected Bank to fund or continue to fund their respective Participations during the relevant Interest Period.

16.4 Application of agreed alternative rate of interest

Any alternative interest rate or alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

16.5 Alternative rate of interest in absence of agreement

If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances continue to exist at the end of the Negotiation Period, then the Agent shall set an interest period and interest rate representing the cost of funding of the Banks or (as the case may be) the Affected Bank in Dollars or in any available currency of their respective Participations plus the Applicable Margin; and the procedure provided for by this Clause 16 shall be repeated if the relevant circumstances continue to exist at the end of the interest period so set by the Agent.

17 INCREASED COSTS

If by reason of (i) changes in any existing law, rule or regulation, or (ii) the adoption of any new law, rule or regulation, or (iii) any change in the interpretation or administration of (i) or (ii) above by any governmental authority, or (iv) compliance with any directive (including the Basel Rules) or request from any governmental authority (whether or not having the force of law, but generally applicable to banks and/or other financial institutions) not known by the relevant Bank on the Signing Date, any of the Banks:

(a) incurs a cost as a result of its having entered into this Agreement and/or performing its obligations hereunder; or

42/118

(b) incurs an increase in the cost of maintaining or funding its participation in a Utilisation; or

(c) becomes liable for any new taxes (other than Tax on Overall Net Income) calculated by reference to a Utilisation; or

(d) becomes subject to any new or modified capital adequacy or similar requirements which has the effect of increasing the amount of capital required or expected to be maintained by such Bank based on such Bank’s obligations hereunder; or

(e) in any other manner suffers a reduction of its effective return hereunder;

then the Borrowers shall compensate that Bank for any such cost, liability or reduction of return upon request by the Agent, either in the form of an increased margin or in the form of an indemnification. The relevant Bank shall via the Agent give the Borrowers notice, within a reasonable time, of its intention to claim compensation under this Clause and it shall specify the form and amount of such compensation. The relevant Bank’s determination of the amount of compensation to be made under this Clause shall, absent manifest error, be conclusive.

18 ILLEGALITY

In the event that it shall be unlawful for any Bank to make available its Commitment or maintain or fund its participation in any Utilisation, then such Bank’s obligations shall terminate and all amounts owing by the Obligors to such Bank shall become due and payable on demand by such Bank through the Agent and the Obligors shall, if that Bank is the Guarantee Bank, release that the Guarantee Bank from its participation in the Letter of Credit in a manner reasonably acceptable to the Guarantee Bank.

19 MITIGATION

If circumstances arise in respect of any Bank which would, or would upon the giving of notice, result in:

(i) a Borrower being obliged to pay to that Bank any amounts pursuant to Clause 15 (Taxes) or Clause 17 (Increased costs); or

(ii) a Borrower being obliged to prepay that Bank’s Participation or that Bank’s Commitment being cancelled pursuant to Clause 18 (Illegality);

then, without in any way limiting, reducing or otherwise qualifying the Borrowers’ obligations under Clauses 15 (Taxes) to 18 (Illegality) (inclusive), that Bank shall, in consultation with the Agent and the Borrowers, endeavour to take such steps (without being under a legal obligation so to do) as may be open to it to mitigate or remove such

43/118

circumstances, including (without limitation) the transfer of its rights and obligations under this Agreement to another bank or financial institution reasonably acceptable to the Borrowers, unless to do so might (in the opinion of the Bank at its absolute discretion) be prejudicial to it.

20 GUARANTEE AND INDEMNITY

20.1 Guarantee obligations

Each Guarantor absolutely, irrevocably and unconditionally, jointly and severally:

(a) guarantees to each Finance Party as and for its own debt and not merely as surety the punctual performance by each Obligor of all of each Obligor’s obligations under the Finance Documents;

(b) undertakes with each Finance Party that whenever an Obligor does not pay any amount when due under or in connection with the Finance Documents, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

(c) indemnifies each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover from the Obligors or any of them.

20.2 Demands

Each Guarantor unconditionally and irrevocably undertakes immediately on written demand by the Agent from time to time to make payment in accordance with its guarantee obligations (the “Guarantee Obligations”) under Clause 20.1 (Guarantee obligations) where such demand is accompanied by a statement of the Agent that a payment has fallen due under the Finance Documents, that an Obligor has failed to make such payment when due and that notice of such non-payment has been issued. Each of such payments so demanded shall be made by the Guarantors to such account as the Agent may from time to time notify in writing.

20.3 Scope of liability

The liability of each Guarantor shall be limited to USD 1,040,000,000, plus any unpaid amount of interest, fees, liability and expenses under the Finance Documents.

20.4 Number of claims

There is no limit on the number of claims that may be made by the Agent on behalf of the Finance Parties under this guarantee.

44/118

20.5 Continuing guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by the Obligors under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

20.6 Survival of the Guarantors’ liability

(a) The Guarantors’ liability to the Finance Parties under this guarantee shall not be discharged, impaired or otherwise affected by reason of any of the following events or circumstances (regardless of whether any such events or circumstances occur with or without the Guarantors’ knowledge or consent):

(i) any time, waiver, consent, forbearance or other indulgence given or agreed by the Finance Parties with any Obligor or any third party in respect of any of its obligations under the Finance Documents, including, but not limited to, any postponement of repayments or the Final Maturity Date, any increase of any Commitment, prepayments in an other manner than scheduled in this Agreement, and any other issues;

(ii) any legal limitation, disability or incapacity of any Obligor or any third party related to the Finance Documents;

(iii) any invalidity, irregularity, unenforceability, imperfection or avoidance of or any defect in any security granted by, or the obligations of any party to the Finance Documents, or any amendment to or variation thereof, or of any other document or security comprised therein;

(iv) the liquidation, bankruptcy or dissolution (or proceedings analogous thereto) or the appointment of a receiver for an Obligor or any third party, or the occurrence of any circumstances whatsoever affecting the liability of any party to discharge its obligations under the Finance Documents;

(v) any challenge, dispute or avoidance by any liquidator of an Obligor or any third party in respect of any claim by an Obligor by right of subrogation in any such liquidation;

(vi) any release, discharge, renewal, amendment, extension, compromise, exchange or realisation of any security, obligation or term of the Finance Documents, or any further security for the obligations of the Obligors under the Finance Documents;

(vii) any failure on the part of the Finance Parties (whether intentional or not) to take or perfect any security agreed to be taken under or in relation to the Finance Documents; or

(viii) any other act, matter or thing (save for discharge in full of all of the Obligors’ obligations under the Finance Documents) which might otherwise constitute a legal discharge of the obligations of the Obligors under the Finance Documents.

45/118

(b) Each Guarantor specifically waives all rights under the provisions of the Norwegian Financial Services Act of 25 June 1999 No. 46 not being mandatory provisions, including the following provisions (the main contents of the relevant provisions being as indicated in the brackets):

(i) § 62 (1) (a) (to be notified of any security the giving of which was a precondition for the advance of any Loan or the issuance of the Letter of Credit, but which has not been validly granted or has lapsed);

(ii) § 63 (1) - (2) (to be notified of any event of default hereunder and to be kept informed thereof);

(iii) § 63 (3) (to be notified of any extension granted to an Obligor in payment of principal and/or interest);

(iv) § 63 (4) (to be notified of an Obligor’s bankruptcy proceedings or debt reorganisation proceedings and/or any application for the latter);

(v) § 65 (3) (that the consent of the Guarantor is required for the Guarantor to be bound by amendments to the Finance Documents that may be detrimental to its interest);

(vi) § 66 (1) - (2) (that the Guarantor shall be released from its liabilities hereunder if security which was given, or the giving of which was a precondition for the advance of any Loan or the issuance of the Letter of Credit, is released by the Finance Parties without the consent of the Guarantor);

(vii) § 66 (3) (that the Guarantor shall be released from its liabilities hereunder if, without its consent, security the giving of which was a precondition for the advance of any Loan or the issuance of the Letter of Credit, was not validly granted);

(viii) § 67 (2) (about reduction of the Guarantor’s liabilities hereunder);

(ix) § 67 (4) (that the Guarantor’s liabilities hereunder shall lapse after ten years, as the Guarantor shall remain liable hereunder as long as any amount is outstanding under the Finance Documents);

(x) § 70 (as the Guarantor shall have no right of subrogation into the rights of the Finance Parties under the Finance Documents until and unless the Finance Parties shall have received all amounts due or to become due to them under the Finance Documents);

(xi) § 71 (as the Finance Parties shall have no liability first to make demand upon or seek to enforce remedies against the other Obligors or any other security provided in respect of the other Obligors’ liabilities under the Finance Documents before demanding payment under or seeking to enforce the security created hereunder);

(xii) § 72 (as all interest and default interest due under the Finance Documents shall be secured hereunder);

46/118

(xiii) § 73 (1) - (2) (as all costs and expenses related to a default under the Finance Documents shall be secured hereunder); and

(xiv) § 74 (1) - (2) (as the Guarantor shall make no claim against the other Obligors for payment until and unless the Finance Parties first shall have received all amounts due or to become due to them under the Finance Documents).

20.7 Deferral of Guarantors’ rights

Each Guarantor does further undertake to the Finance Parties that as long as this guarantee is effective ;-

(i) following receipt by the Guarantor of a notice from the Agent of the occurrence of any Event of Default which is unremedied, the Guarantor will not make demand for or claim payment of any moneys due to the Guarantor from any other Obligor, or exercise any other right or remedy to which the Guarantor is entitled in respect of such moneys unless and until all moneys owing or due and payable by the other Obligors to the Finance Parties under the Finance Documents have been irrevocably paid in full;

(ii) if any other Obligor shall become the subject of an insolvency proceeding or shall be wound up or liquidated, the Guarantor shall not (unless so instructed by the Agent or to protect its rights against such Obligor, and then only on condition that the Guarantor holds the benefit of any claim in such insolvency or liquidation to pay any amounts recovered thereunder to the Agent) make any claim in such insolvency, winding-up or liquidation until all moneys owing or due and payable by the other Obligors to the Finance Parties under the Finance Documents have been irrevocably paid in full;

(iii) if the Guarantor, in breach of paragraph (i) or (ii) above of this Clause 20.7 receives or recovers any money pursuant to any such exercise, claim or proof as therein referred to, such money shall be held by the Guarantor for the Agent to apply the same as if they were moneys received or recovered by the Agent hereunder; and

(iv) the Guarantor has not taken and will not take from any other Obligor any security whatsoever for the moneys hereby guaranteed.

20.8 Exclusion of Guarantors’ rights

Until all moneys owing or due and payable by the Obligors to the Finance Parties have been paid in full, no Guarantor will take any action which would result in such Guarantor sharing in or succeeding to or benefiting from (by subrogation or otherwise) any rights which the Finance Parties may have in respect of any moneys owing or due and payable by the other Obligors to the Finance Parties or any security therefore or all or any of the proceeds of such rights or security.

47/118

20.9 Enforcement

(a) The Finance Parties shall not be obliged before taking steps to enforce this guarantee against the Guarantors:

(i) to obtain judgement against any Obligor or any third party in any court or other tribunal;

(ii) to make or file any claim in a bankruptcy or liquidation of any Obligor or any third party; or

(iii) to take any action whatsoever against any Obligor or any third party under the Finance Documents, except giving notice of payment of the relevant part of the amounts outstanding hereunder,

and each Guarantor hereby waives all such formalities or rights to which it would otherwise be entitled or which the Finance Parties would otherwise first be required to satisfy or fulfil before proceeding or making demand against the Guarantors hereunder, except as required hereunder or by mandatory law.

(b) Without affecting the obligations of the Guarantors hereunder, the Finance Parties may take such action as they in their own discretion may consider appropriate against any other person or parties and securities to recover moneys due and payable in respect of the obligations under the Finance Documents.

(c) Any release, discharge or settlement between a Guarantor and the Finance Parties or any of them in relation to this guarantee shall be conditional upon no right, security, disposition or payment to the Finance Parties by the other Obligors or any other person being void, set aside or ordered to be refunded pursuant to any enactment or law relating to breach of duty by any person, bankruptcy, liquidation, administration, protection from creditors generally or insolvency or for any reason. If any such right, security, disposition or payment is void or at any time so set aside or ordered to be refunded, the Finance Parties shall be entitled subsequently to enforce this guarantee against the Guarantors as if such release, discharge or settlement had not occurred and any such security, disposition or payment had not been made.

21 REPRESENTATIONS AND WARRANTIES

21.1 Representations and Warranties

Each Obligor makes the representations and warranties set out in this Clause 21 to each Finance Party.

21.2 Status and ownership

(a) Each of the Obligors is a limited liability company, duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and each has the power to own its assets and carry on its business as presently conducted.

48/118

(b) The Parent is the legal and beneficial owner of all the shares of OR Norway and OR Norway is the legal and beneficial owner of all the shares of each Guarantor (other than the Parent).

21.3 Powers and authority

Each of the Obligors has the power to enter into and perform, and has taken all necessary corporate action to authorise the entry into, performance and delivery of each of the Transaction Documents to which it is a party, and the transactions contemplated therein.

21.4 Legal validity and enforceability

Each Transaction Document constitutes (or will, when executed by the respective parties thereto, constitute) legal, valid and binding obligations of each Obligor which is party thereto, enforceable in accordance with its terms and, save as provided for therein and/or as have been or shall be completed prior to the relevant Drawdown Date, no registration, filing, payment of tax or fees or other formalities are necessary or desirable to render the relevant Transaction Document enforceable against each of the Obligors which is a party thereto and, in respect of the Units, for the First Mortgages to constitute valid and enforceable first priority mortgages and for the Second Mortgages to constitute valid and enforceable second priority mortgages.

21.5 Non-conflict

The entry into and performance by each of the Obligors of the Transaction Documents to which it is a party, and the transactions contemplated thereby, do not and will not conflict with:

(i) any present law or regulation or judicial or official order;

(ii) its articles of association, by-laws or other constitutional documents; or

(iii) any document or agreement which is binding on any of the Obligors.

21.6 No Default

(a) No Default exists or might result from the making of any Utilisation; and

(b) no other circumstances exist which constitute or (with the giving of notice, lapse of time, determination of materiality or the fulfilment of any other applicable condition, or any combination of the foregoing) would constitute a default under any document which is binding on any of the Obligors or any of their respective assets, and which may have a material effect on the ability of any of the Obligors to perform its obligations under the Transaction Documents to which it is a party.

49/118

21.7 Authorisations and consents

All authorisations and consents required to be obtained by any member of the Group in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, each of the Transaction Documents have been obtained and are in full force and effect, or will be obtained prior to a Borrower serving any Drawdown Notice hereunder.

21.8 Financial and other information

(a) The consolidated accounts of the Parent most recently delivered to the Agent which, at the Signing Date, are the Original Financial Statements:

(i) have been prepared in accordance with Approved Accounting Principles consistently applied;

(ii) fairly represent the consolidated financial condition of the Parent, as at the date on which they were drawn up,

and there has been no material adverse change in the consolidated financial condition of the Parent or any member of the Group since the date on which those accounts were drawn up, which might reasonably be expected to have a material adverse effect on the ability of any Obligors to perform its obligations under the Transaction Documents to which it is a party.

(b) All financial documents and information relating to the Obligors and the Group or otherwise relevant to the matters contemplated by this Agreement which have been supplied by or on behalf of the Obligors to any of the Finance Parties are complete and, as at the date of such documents or information, correct in all respects, and the Obligors have not omitted to disclose to any of the Finance Parties any off-balance sheet liabilities or other information, documents or agreements which, if disclosed, could reasonably be expected to affect the decision of the Banks to enter into this Agreement.

21.9 Litigation

No litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened against any of the Obligors which might, if adversely determined, be reasonably expected to have a material adverse effect on its ability to perform its obligations under any of the Transaction Documents to which it is a party.

21.10  No money laundering

Each Obligor is acting for its own account in relation to the Facilities and in relation to the performance and the discharge of its obligations and liabilities under the Transaction Documents and the transactions and other arrangements effected or contemplated by the Transaction Documents to which it is a party, and the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat money laundering (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

50/118

21.11  Compliance with laws and Environmental Claims

Except as may already have been disclosed in writing to, and acknowledged in writing by, the Agent:

(i) each Obligor is in compliance with the provisions of all laws, including without limitation all Environmental Laws, where failure to comply has or may have a Material Adverse Effect; and

(ii) no Environmental Claims which has or may have a Material Adverse Effect are pending or threatened against any of the Obligors and no incident, event or circumstance has occurred which may give rise to such an Environmental Claim.

21.12  Payment of taxes

Each Obligor has fully paid, when due, any and all taxes incurred to date in connection with the operation of its business, ownership or use of any of its assets, and conduct of its affairs on its premises, except for income and property taxes and assessments which are being contested in good faith and with due diligence, with adequate cash reserves in excess of the contested tax balances, in which case such balances will be paid before any tax liens ripen.

21.13  No deductions

No Obligor is required to make any deduction or withholding from any payment which it may become obliged to make to any of the Finance Parties under any of the Finance Documents.

21.14  Pari passu ranking

Each Obligor’s payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

21.15  No Security Interest

No Security Interest is created, incurred or assumed on any Unit or any other assets of an Owner or any other Group Contract Party, or any of the shares pledged to the Agent under the First Share Pledge Agreement and/or the Second Share Pledge Agreement, and no assignment of any Obligor’s rights to receive Earnings or proceeds of any insurance policy covering any Unit is made, other than those set out in Clause 22.17 (b) (Negative pledge).

21.16  No place of business in U.K. or U.S.A.

No Obligor (other than Ocean Rig USA LLC) has an established place of business in the United Kingdom or the United States of America.

51/118

21.17  Times for making representations and warranties

The representations and warranties set out in this Clause 21, are made by each Obligor on the Signing Date and are deemed to be repeated by each Obligor on the date of each Drawdown Notice, on each Drawdown Date and on the first date of each Interest Period, with reference to the facts and circumstances then existing, unless otherwise notified to the Agent in writing, and if not permitted under this Agreement, waived by the Majority Banks prior to such dates.

22 UNDERTAKINGS

22.1 Duration

The undertakings in this Clause 22 shall remain in force during the entire Loan Period.

22.2 Financial information

(a) The Borrowers shall supply to the Agent in sufficient copies for all of the Banks:

(i) as soon as reasonably practicable after the same are available (and in any event within 120 days after the end of each financial year), the audited consolidated accounts of the Parent, including balance sheet, profit and loss statement and cash flow analysis for that financial year;

(ii) as soon as reasonably practicable after the same are available (and in any event within 60 days after the end of the relevant reporting period), the quarterly unaudited consolidated accounts of the Parent, together with updated liquidity forecasts; and

(iii) such other information in respect of the business, properties or condition, financial or otherwise, of each of the Obligors as the Agent may from time to time reasonably request,

all such accounts to be prepared in accordance with the Approved Accounting Principles, and the financial reporting shall be as comprehensive and detailed as if the Parent was listed on the Oslo Stock Exchange, the New York Stock Exchange, NASDAQ or such other stock exchange acceptable to the Banks.

(b) The Borrowers shall supply to the Agent in sufficient copies for all of the Banks as soon as reasonably practicable after the same are available (and in any event within 15 February each calendar year), operating budgets with cash flow projections for the Group for such calendar year, and such updates of such budgets and projections as the Agent may reasonably request.

22.3 Compliance Certificates

The Borrowers undertake throughout the Loan Period:

(i) to provide to the Agent, on a quarterly basis together with the financial information to be provided by the Borrowers as specified in Clause 22.2(a)(i) and (ii) (Financial information); and

52/118

(ii) to provide to the Agent on a semi-annual basis, together with the valuations of the Market Value of the Units as specified in Clause 22.26 (Minimum value);

Compliance Certificates signed by the CEO or CFO of the Parent, enabling the Agent to determine and to monitor the compliance with the financial requirements set forth in Clause 23 (Financial covenants) and the compliance with the minimum value set forth in Clause 22.26 (Minimum Value), and containing an updated calculation of the Borrowing Base Amount as of the date the Compliance Certificate is received by the Agent.

22.4 Information - Miscellaneous

(a) Each Obligor shall provide to the Agent in writing, in sufficient copies for all of the Banks, promptly upon becoming aware of them, relevant details of any litigation, arbitration or administrative proceedings which are current or, to its knowledge, threatened or pending against it or any of the other Obligors and which might, if adversely determined, be reasonably expected to have a material adverse effect on the ability of any of the Obligors to perform its obligations under those of the Transaction Documents to which it is a party, and further details of any such matters previously disclosed to the Agent, as the Agent or any Bank acting through the Agent may reasonably request.

(b) The Borrowers shall provide to the Agent, in sufficient copies for all of the Banks, copies of all filings with or reports forwarded to the Oslo Stock Exchange in respect of the Parent.

(c) The Obligors shall give written notice to the Agent promptly upon the entering into of by any member of the Group of any Employment Contract, and promptly thereafter forward a copy of the relevant Employment Contract to the Agent.

22.5 Notification of Default

The Obligors shall notify the Agent of any Default which occurs (and the steps, if any, being taken to remedy it) promptly upon its occurrence.

22.6 Insurances

(a) Subject to paragraph (g) below, the Obligors shall procure that each Unit is fully insured against such risks (including, but not limited to Hull and Machinery, Hull Interest, Freight Interest, Protection & Indemnity (including club cover for oil pollution liability for each Unit in accordance with first class industry standards), War Risk (including terrorism) and Loss of Hire, in such amounts, on such terms (always applying Norwegian law and including the terms of the Norwegian Marine Insurance Plan of 1996, version 2007 (as amended from time to time) or such other terms as the Agent may approve in relation to losses payable thereunder) and with such insurance brokers and insurers as the Agent may approve or require.

53/118

(b) The insured value of each Unit shall at all times be equal to or greater than its Market Value, and the aggregate insured value of both Units shall be equal to or greater than 120 per cent. of the aggregate amount of the Loans and the maximum amount payable under the Letter of Credit.

Furthermore, the Hull and Machinery insured value of each Unit shall at all times cover 80 per cent, of its Market Value, while the remaining cover may be taken out by way of Hull and Freight Interest insurances.

(c) In addition to the insurances specified above, the Agent will take out Mortgagee Interest Insurance in an amount equal to 120 per cent. of the aggregate amount of the Loans and the maximum amount payable under the Letter of Credit and may at any time and at its discretion take out a Mortgagee Interest Insurance Additional Perils Pollution insurance equal to 110 per cent. of the aggregate amount of the Loans and the maximum amount payable under the Letter of Credit, and the Borrowers shall reimburse the Agent any and all sums paid as premium in respect of such insurance cover.

(d) Not later than 14 days before the expiry date of the relevant insurances, the Borrowers shall deliver to the Agent a certificate from the insurance broker(s) through whom the insurances relevant to the Units have been placed, evidencing that all insurances referred to in paragraph (a) above have been renewed and taken out in respect of the Units with insurance values as required by paragraph (b), that such insurances are in full force and effect and that the interests of the Finance Parties therein have been noted by the relevant insurers.

(e) The Obligors shall procure that the Units are always employed in conformity with the terms of the instruments of insurance (including any expressed or implied warranties) and shall comply with such requirements as to extra premium or otherwise as the insurers may prescribe.

(f) The Obligors shall procure that no more than one (1) Unit is employed in the Gulf of Mexico at any given time as long as the insurance markets practice limitations on coverage in such area, unless (i) otherwise agreed by the Agent (acting on the instructions of the Banks) in writing, or (ii) any shortfall in the applicable insurance cover is covered by the relevant Employment Contract Parry to the satisfaction of the Agent (acting on the instructions of the Banks).

(g) For as long as the insurance markets practice limitations of coverage in the Gulf of Mexico for named windstorms, and in the event that a Unit is employed in the Gulf of Mexico, the Finance Parties approve that such Unit is insured against Hull and Machinery, Hull Interest, Freight Interest and Loss of Hire combined in an amount of at least USD 602,800,000 each loss and in the aggregate combined single limit whilst the Unit is able to move off location, and in an amount of at least USD 332,800,000 each loss and in the aggregate combined single limit whilst the Unit is attached to the riser or is unable to move off location.

22.7 Notification of certain events

The Obligors shall immediately notify the Agent of:

(i) any accident to any Unit involving repairs the cost of which is likely to exceed USD 5,000,000;

54/118

(ii) a Total Loss;

(iii) the occurrence of any Environmental Claim against any Obligor or any Unit, or any incident, event or circumstances which may give rise to any such an Environmental Claim;

(iv) any capture, seizure, arrest, confiscation or detention of any Unit or the exercise or purported exercise of any lien on any Unit, its insurances, the Earnings or any Earnings Account; and

(v) the occurrence of any litigation, arbitration or administrative proceedings current or, to an Obligor’s knowledge, pending or threatened against any of the Obligors.

22.8 Total Loss

In the event of a Total Loss, the Borrowers shall, within 120 days after the Total Loss Date, obtain and present to the Agent a written confirmation from the relevant insurers that the claim relating to the Total Loss has been accepted in full, and the insurance proceeds shall, as soon as they are released, be paid to the Agent and applied in prepayment of the Loans in accordance with Clause 9.3 (Mandatory prepayment – sale or Total Loss).

22.9 Class and International Regulations

The Obligors shall procure that each Unit is classified and maintained in the highest class, with no overdue recommendations, with Det Norske Veritas or another classification society acceptable to the Agent, and at all times comply with the rules and regulations of the relevant classification society. Furthermore, the Obligors shall at all times ensure compliance with all international conventions and regulations, including SOLAS conventions and the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organisation and the International Ship and Port Security Code adopted by the Assembly of the International Maritime Organisation. In particular, the Obligors shall ensure compliance with the ISM-Code and the ISPS-Code and shall ensure that any charterer of any Unit and any company performing management services on behalf of any Obligor complies with said conventions and regulations.

22.10  Repair and compliance with laws etc.

(a) The Obligors shall procure that each Unit is kept in a good and safe condition and state of repair consistent with first class ownership and management practice.

(b) The Obligors shall procure that no material alteration or replacement is made which may affect the structure of any Unit.

(c) The Obligors shall procure that no part or any material equipment pertaining to any Unit is removed unless immediately replaced or substituted with parts or equipment of at least the same value and quality.

55/118

(d) The Obligors shall procure compliance with all Environmental Laws and all other laws and regulations relating to the Units, its ownership, operation and management or to the business of the Obligors where failure to comply has or may have a Material Adverse Effect.

22.11  Flag, name and registry

The Obligors shall not change the flag, name or registry of any Unit, or register any Unit simultaneously in more than one registry, without the prior written consent of the Agent (acting on the instructions of the Banks). The Banks hereby confirm that the flags of Bermuda, Cyprus, Cayman Islands, Marshall Islands, Singapore and Bahamas shall for the purposes of this Agreement be regarded as acceptable flags.

22.12  Management

The Obligors shall continue with the management of the Units within the Group, and no changes in such management shall be made without the prior written consent of the Agent (acting on the instructions of the Majority Banks).

22.13  Inspection and class records

(a) One person appointed by the Agent shall be permitted to inspect each Unit once every twelve (12) months, for the account of the Borrowers, upon the Agent giving prior notice thereof, such inspections not to interfere with the running management, operation and safety of the relevant Unit (provided, however, that if a Default shall occur the Agent shall have the right to a reasonable number of inspections of each Unit for the account of the Borrowers), and the Obligors shall upon the Agent’s request provide it with copies of the latest inspection reports in respect of the Units which are available to any of the Obligors or any managers.

(b) The Obligors shall instruct the classification society referred to in Clause 22.9 (Class and International Regulations) to send to the Agent, following receipt of a written request from the Agent, copies of all class records held by the classification society in relation to the Units.

22.14  Bank accounts

(a) The Obligors shall maintain all their operating accounts into which any Earnings are paid, with the Agent.

(b) All Earnings of each Unit shall be paid directly to the Earnings Accounts opened by each Group Contract Party with the Agent in respect of each Unit.

(c) The Parent shall procure that all other bank accounts and the cash management of the Group is established with the Agent at the latest within 31 December 2008, provided that the Agent can offer competitive terms, and provided that this shall not apply to accounts required to be held in jurisdictions where the Agent does not have any office.

56/118

22.15  Performance of Finance Documents

Each of the Obligors shall perform all of its obligations under the Finance Documents at the times, in the manner and upon the terms set out therein.

22.16  Payment of taxes

Each of the Obligors shall duly and punctually pay and discharge all taxes imposed on it or its assets within the time period allowed without incurring penalties (save to the extent that (i) payment is being contested in good faith and/or payment can be lawfully withheld and (ii) adequate reserves are being maintained for those taxes).

22.17  Negative pledge

(a) The Obligors shall procure that no Security Interest is created, incurred or assumed on any Unit or any other assets of an Owner or any other Group Contract Party, or any of the shares pledged to the Agent under the First Share Pledge Agreement and/or the Second Share Pledge Agreement, and that no assignment of any Obligor’s rights to receive Earnings or proceeds of any insurance policy covering any Unit is made.

(b) Paragraph (a) above does not apply to Security Interest:

(i) granted pursuant to the Finance Documents;

(ii) arising by operation of law in the ordinary course of business, and not arising as a result of any default or omission on the part of an Obligor;

(iii) arising under any retention of title or sales lien arrangements entered into in the ordinary course of business which are required by any supplier of any goods to any member of the Group in the normal course of such supplier’s business;

(iv) arising by way of set off or other standard netting, cash management or account-zeroing arrangements in connection with the Group’s banking arrangements;

(v) existing on the Signing Date and until the first Drawdown Date and granted as security for the Existing Facilities; or

(vi) consented to in writing by the Majority Banks.

22.18  Financial Indebtedness restrictions

(a) No Obligor shall, and the Parent shall ensure that no other member of the Group shall, incur, create or permit to subsist any Financial Indebtedness.

(b) Paragraph (a) above does not apply to Financial Indebtedness:

(i) incurred under the Finance Documents;

57/118

(ii) incurred through any derivative transaction entered into in the ordinary course of business in connection with protection against or benefit from fluctuation in any rate or price;

(iii) which is unsecured and fully subordinated to the rights of the Finance Parties under the Finance Documents (both in terms of ranking and in terms of debt service) on terms acceptable to the Agent (acting on the instructions of the Majority Banks);

(iv) incurred by way of (A) an unsecured convertible bond loan in a principal amount not exceeding USD 200,000,000 or (B) an ordinary unsecured bond loan in a principal amount not exceeding USD 200,000,000 to be applied for investment in a drilling unit or a company owning drilling unit(s), provided always that the Borrowers are able to demonstrate to the satisfaction of the Agent (acting on the instructions of the Majority Banks) that the Earnings under the Employment Contracts will be sufficient to service Revolving Credit Facility B when taking into account the debt service obligations incurred in connection with such Financial Indebtedness;

(v) incurred by a Project Company;

(vi) existing on the Signing Date and until 30 days after the first Drawdown Date and incurred under the Existing Facilities; or

(vii) consented to in writing by the Majority Banks.

22.19  Merger and reconstruction restrictions

(a) The Obligors shall not merge or consolidate with any other company, de-merge or undertake any corporate restructuring, without the prior written consent of the Majority Banks, other than any intra-Group merger, de-merger or re-organisation on a solvent basis.

(b) The Finance Parties hereby agree in principle to a reconstruction whereby the Group is moved to Cyprus or Marshall Islands jurisdiction with an equivalent structure of the Group as the one in existence at the Signing Date and the transfer of the Facilities and the Units to the new entities, provided that the financial condition of the new entities is not weaker than that of the Obligors and that satisfactory financing and security documentation equivalent to the Finance Documents is entered into by the new entities with the Finance Parties and customary conditions precedent documentation is delivered by the Obligors to the Finance Parties.

22.20  Disposal restrictions

(a) No Obligor shall, either in a single transaction or in a series of transactions, whether related or not and whether voluntarily or involuntarily, without the prior written consent of the Banks, sell, transfer, grant or lease out (on financial leasing terms) or otherwise dispose of any Unit or all of its shares in an Owner without making prepayment in accordance with the provisions of Clause 9.3 (Mandatory prepayment – sale or Total Loss), other than any sale or transfer made to another member of the Group in connection with a change of flag permitted by Clause 22.11 (Flag, name and registry), provided always that the members of the Group enter into such documentation for the amendment of this Agreement or any other Finance Document and/or the maintenance of the security constituted by the Security Documents as the Agent (acting on the instructions of the Majority Banks) may require.

58/118

(b) No Obligor shall, either in a single transaction or in a series of transactions, whether related or not and whether voluntarily or involuntarily, without the prior written consent of the Banks, sell, transfer, grant or lease out (on financial leasing terms) or otherwise dispose of less than 100 percent, of all shares in an Owner.

(c) The Parent shall not, either in a single transaction or in a series of transactions, whether related or not and whether voluntarily or involuntarily, without the prior written consent of the Banks, sell, transfer, grant or lease out (on financial leasing terms) or otherwise dispose of any of its shares in OR Norway.

(d) No Obligor shall, either in a single transaction or in a series of transactions, whether related or not and whether voluntarily or involuntarily, without the prior written consent of the Majority Banks, sell, transfer, grant or lease out (on financial leasing terms) or otherwise dispose of the whole or a substantial part of its assets (other than those referred to in paragraphs (a) and (b) above), or sell, transfer, grant or lease out or otherwise dispose of any of its assets other than at market value, against cash payment and on arms length terms.

22.21  Dividend restrictions

(a) The Parent shall not in any circumstances, without the prior written consent of the Banks, pay or declare any dividend or reduction of share capital, or pay, declare or make any other distribution to its shareholders or any of them if less than six (6) months (excluding options) remains of the contract period under the New Eirik Raude Qualifying Contract, unless the New Eirik Raude Qualifying Contract has been replaced with another Employment Contract which in the opinion of the Majority Banks is at least as favourable to the relevant member of the Group as the New Eirik Raude Qualifying Contract and is entered into with a contract party which in the opinion of the Majority Banks has a financial standing at least equal to the financial standing that Tullow Oil Plc had at the time Tullow Oil Plc entered into the New Eirik Raude Qualifying Contract.

(b) Until Earnings have started to accrue to the relevant Group Contract Party under the New Eirik Raude Qualifying Contract, the Parent shall not, without the prior written consent of the Banks, pay or declare any dividend or reduction of share capital, or pay, declare or make any other distribution to its shareholders exceeding the aggregate principal amount of the Loans under Revolving Credit Facility B outstanding at the time such dividend or other distribution is made.

22.22  Change of business

(a) The Obligors shall not, without the prior written consent of the Majority Banks, engage in any business other than the businesses in which they are engaged as of the Signing Date and activities directly related thereto, and similar or related business (for the avoidance of doubt, management of drilling units owned by third parties shall not be regarded as a change of business).

59/118

(b) The Obligors shall not, without the prior written consent of the Majority Banks, change its type of organisation, jurisdiction of organisation, legal name or financial year (other than the pre-approved change of jurisdiction to either Cyprus, Bermuda, Cayman Islands, Marshall Islands, Singapore or Bahamas).

22.23  Employment Contracts

The Obligors shall not, without the prior written consent of the Majority Banks, materially vary or amend, or terminate, or agree to any material variation or amendment of, or termination of, or waive any of its rights under, any Employment Contract, or enter into any further agreements related thereto, provided always that any variation or amendment which reduces or postpones the payment of any amount payable to a member of the Group thereunder or reduces the contract period, shall, without limitation, be deemed to be material for the purpose of this Clause.

22.24  Arm’s length terms

All agreements and transactions between the members of the Group shall be entered into and made on arm’s length terms, and all Employment Contracts entered into between any of the members of the Group shall be made in writing.

22.25  Hedging policy

(a) No Obligor shall enter into any interest and currency hedging, or other derivative transactions, for speculative purposes.

(b) The Borrowers shall hedge their interest and currency rate exposure in accordance with the Hedging Letter, and no amendments shall be made to the hedging policy set out therein without the prior written consent of the Agent.

22.26  Minimum value

(a) The Borrowers shall ensure that the aggregate Market Value of the Units (plus any additional security previously provided by the Obligors under paragraph (b) below) is at all times at least equal to 135 per cent, of the principal amount of the Loans outstanding under the Term Loan Facility, Revolving Credit Facility A and Revolving Credit Facility C.

(b) The Borrowers shall, if the Market Value does not comply with the requirements set out in paragraph (a) above, within ten (10) Business Days either make a prepayment of the Loans in accordance with Clause 9.1 (Voluntary prepayment), or provide the Finance Parties with such additional security, in form and substance satisfactory to the Majority Banks, required to restore the aforesaid ratio.

(c) The Market Value shall be determined semi-annually at the expense of the Borrowers.

60/118

23 FINANCIAL COVENANTS

23.1 Definitions

In this Clause 23 (and in any other relevant Clauses in this Agreement):

“Capital Expenditure”

means, at the date of calculation (on a consolidated basis for the Group for such period), the aggregate of investments in the acquisition (calculated on the basis of the Enterprise Value), construction, development or improvement of any asset or business (including shares) which shall be treated as a capital asset in accordance with the Approved Accounting Principles.

“Cash and Cash Equivalents”

means, at the date of calculation (on a consolidated basis for the Group), the aggregate amount of the Group’s:

(i) cash in hand or on deposit with any bank or financial institution; and

(ii) cash equivalents (as reported in the Parent’s consolidated financial statements in accordance with the Approved Accounting Principles),

as set out in the Group’s latest available balance sheet (whether audited or unaudited, as the case may be) and in all cases unencumbered by any Security Interest (other than pursuant to the Finance Documents) and provided that the relevant member of the Group’s use of such cash, deposit or cash equivalents is unrestricted.

“Current Assets”

means the aggregate value of the Group’s (on a consolidated basis) assets which are treated as current assets in accordance with the Approved Accounting Principles,

“Current Liabilities”

means the aggregate value of the Group’s (on a consolidated basis) liabilities which are treated as current liabilities in accordance with the Approved Accounting Principles, excluding the current portion of long term debt and the current portion of amortised loan issuance costs.

“EBITDA”

means, at the date of calculation (on a consolidated basis for the Group), earnings before interest, tax, depreciation and amortisation, not taking into account extraordinary and nonrecurring items and non-cash option costs in relation to the Group’s employee shares option program or any allocation of such costs to the Group, and excluding any profit or loss arising from the disposal of fixed assets and realised and unrealised exchange gains and losses.

61/118

“Enterprise Value”

means in respect of an acquisition (without double counting), the aggregate of (i) the consideration paid by the relevant member of the Group for the shares or other assets acquired, (ii) the amount of any Financial Indebtedness of any company acquired not repaid and discharged on or prior to the closing of the relevant acquisition and (iii) the amount of any Financial Indebtedness taken over by the relevant member of the Group in connection with the relevant acquisition.

“Free Cash”

means, at the date of calculation (on a consolidated basis for the Group), the aggregate amount of the Group’s cash on deposit with the Agent.

“Gross Interest Bearing Debt”

means, at the date of calculation (on a consolidated basis for the Group), the aggregate of the Group’s indebtedness for or in respect of:

(i) moneys borrowed;

(ii) any amount raised by acceptance under any acceptance credit facility;

(iii) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(iv) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with the Approved Accounting Principles, be treated as a financial lease;

(v) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; and

(vi) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution for the purpose of securing advance payments made by third parties to a member of the Group.

“Gross Interest Costs”

means, at the date of calculation (on a consolidated basis for the Group), the aggregate of the Group’s interest, commissions, periodic fees and other financing charges, incurred by the Group and paid or payable in cash during a Measurement Period (including the interest element payable under any financial lease, but excluding any upfront fees payable under this Agreement). For the avoidance of doubt it is specified that agio gains or losses on currency transactions shall not be considered as Gross Interest Costs.

62/118

“Measurement Period”

means a period of 12 months ending on the last day of a financial quarter, a financial half year or a financial year of the Parent.

“Net Interest Bearing Debt”

means, at the date of calculation (on a consolidated basis for the Group), the aggregate amount of the Group’s Gross Interest Bearing Debt less the total amount of the Group’s Cash and Cash Equivalents in excess of USD 30,000,000.

“Net Interest Costs”

means, at the date of calculation (on a consolidated basis for the Group), Gross Interest Costs less the aggregate of the Group’s interest and other financing income received or receivable in cash during a Measurement Period. For the avoidance of doubt it is specified that agio gains on currency transactions shall not be considered as income.

“Value Adjusted Total Assets”

means at the date of calculation (on a consolidated basis for the Group), the aggregate book value (adjusted to reflect the Market Value of the Units) of those of the Group’s assets which, according to the Approved Accounting Principles, shall be included as assets in a balance sheet.

“Value Adjusted Total Equity”

means, at the date of calculation (on a consolidated basis for the Group), the Group’s nominal book equity adjusted to reflect the Market Value of the Units.

23.2 Calculations

(a) For the purpose of this Clause 23, all calculations shall be conducted in accordance with the terms defined in Clause 1.1 (Definitions) and Clause 23.1 (Definitions) and, to the extent not inconsistent with those definitions, the Approved Accounting Principles applicable from time to time.

(b) For the purpose of determining EBITDA for the calculation of the leverage ratio pursuant to Clause 23.4 (Leverage ratio) for each Measurement Period ending 30 September 2008, 31 December 2008 and 31 March 2009, the amount thereof shall be calculated by annualising the actual figures as follows:

(i) for the period from 1 July to 30 September 2008, the actual figures of the Group for the period multiplied by four (4);

(ii) for the period from 1 July to 31 December 2008, the actual figures of the Group for the period multiplied by two (2); and

63/118

(iii) for the period from 1 July 2008 to 31 March 2009, the actual figures of the Group for the period multiplied by four (4) and divided by three (3).

(c) For the purpose of determining EBITDA, Gross Interest Cost and Net Interest Costs for the calculation of the interest coverage ratio pursuant to Clause 23.5 (Interest coverage ratio) for each Measurement Period ending 30 June, 30 September and 31 December 2008, the amount thereof shall be calculated by annualising the actual figures as follows:

(i) for the period from 31 March to 30 June 2008, the actual figures of the Group for the period multiplied by four (4);

(ii) for the period from 31 March to 30 September 2008, the actual figures of the Group for the period multiplied by two (2); and

(iii) for the period ending 31 December 2008, the actual figures of the Group for the period from 1 January to 31 December 2008.

(d) Any calculation under this Clause 23 shall exclude any Project Company.

(e) No item must be credited or deducted more than once in any calculation under this Clause 23.

23.3 Minimum liquidity

The Parent shall ensure that the Group’s (on a consolidated basis) Free Cash shall not at any time be less than USD 30,000,000.

23.4 Leverage ratio

The Parent shall ensure that the ratio of Net Interest Bearing Debt to EBITDA for the Parent measured at the end of each Measurement Period on the basis of 12 months rolling EBITDA (starting with the financial quarter ending 30 September 2008) at all times complies with the following maximum numbers:

As from quarter end	Ratio
30 Sep 2008	6.0
31 Dec 2008	6.0
31 Mar 2009	5.5
30 Jun 2009	5.5
30 Sep 2009	5.5
31 Dec 2009	5.5
31 Mar 2010	5.0
30 Jun 2010	5.0
30 Sep 2010	5.0
31 Dec 2010	5.0
Thereafter	4.5

64/118

23.5 Interest coverage ratio

The Parent shall ensure that the ratio of EBITDA to Net Interest Costs measured at the end of each Measurement Period on a 12 months rolling basis (starting with the financial quarter ending 30 June 2008) shall not at any time in the period to an including the financial quarter ending 30 June 2008 be less than 2.0, and thereafter not be less than 2.5.

23.6 Current ratio

The Parent shall ensure that the ratio of Current Assets to Current Liabilities measured at the end of each Measurement Period (starting with the financial quarter ending 30 June 2008) shall not at any time be less than 1.00, provided however that in relation to the financial quarter ending 30 June 2008, the amount outstanding at that time under the Unsecured Bond Loan Agreement shall not be included in the calculation of Current Liabilities for the purpose of this Clause.

23.7 Equity ratio

The Parent shall ensure that the ratio of Value Adjusted Equity to Value Adjusted Total Assets measured at the end of each Measurement Period (starting with the financial quarter ending 30 September 2008) shall not at any time be less than 0.25.

23.8 Capital Expenditure

The Parent shall ensure that the Capital Expenditure measured the end of each financial year shall not in any financial year exceed USD 50,000,000 (or the equivalent in any other currencies), and in the event of Capital Expenditure in excess of USD 30,000,000 in relation to the investment in one asset or group of assets, the Parent shall prior to the relevant Capital Expenditure being committed, present a finance plan to the Agent, which plan shall be accepted in writing by the Agent (acting on the instructions of the Majority Banks) before the relevant Capital Expenditure is committed.

24 EVENT OF DEFAULT

24.1 Event of Default

Each of the events set out in Clauses 24.2 to 24.16 (inclusive) is an Event of Default.

24.2 Non-payment

An Obligor does not pay on the due date an amount payable by it under any Finance Document at the place at, and in the currency in, which it is expressed to be payable, provided that if, such failure to pay has arisen as a consequence of an administrative or technical error only, then such event shall not be an Event of Default unless such failure continues for a period in excess of three (3) Business Days.

65/118

24.3 Breach of other obligations

An Obligor does not comply with any provision of a Finance Document (not otherwise specifically referred to in this Clause 24), provided that if such non-compliance is, in the opinion of the Agent, capable of remedy:

(i) the Agent notifies the Borrowers of such non-compliance; and

(ii) such non-compliance remains unremedied for a period exceeding ten (10) Business Days.

For the avoidance of doubt, a breach of Clause 22.6 (Insurances) is not capable of remedy.

24.4 Misrepresentation

A representation, warranty or statement made or repeated in or in connection with any Finance Document or in any document delivered by or on behalf of any Obligor under or in connection with a Finance Document was incorrect or misleading in any material respect when made or deemed to be made or repeated.

24.5 Breach of financial covenants

The financial covenants set out in Clause 23.3 (Minimum liquidity) to 23.8 (Capital Expenditure) (both inclusive) are not complied with.

24.6 Cross-default

Any of the following occurs in respect of any member of the Group (other than a Project Company), DryShips Inc. or any other person controlling (directly or indirectly) 1/3 or more of the shares in the Parent:

(i) any of its Financial Indebtedness (other than the obligations under the Finance Documents) is not paid when due (after the expiry of any originally applicable grace period);

(ii) any of its Financial Indebtedness where it is a guarantor is not paid, unless contested in good faith, when due;

(iii) any of its Financial Indebtedness:

a. becomes prematurely due and payable;

b. is placed on demand; or

c. is declared by a creditor to be prematurely due and payable or being placed on demand,

in each case, as a result of an event of default (howsoever described); or

66/118

(iv) any commitment for its Financial Indebtedness is cancelled or suspended as a result of an event of default (howsoever described),

provided, however, that no Event of Default will occur under this Clause 24.6 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iv) above is less than USD 1,500,000 (or its equivalent in other currencies).

24.7 Liens

A maritime or other lien (not being a lien for crew’s wages, salvage or a lien arising solely by operation of law and/or in the ordinary course of business), arrest, distress or similar charge is levied upon, or against any Unit, the Earnings, any Earnings Account or any other assets of any Obligor and is not discharged within fifteen (15) Business Days after the relevant Obligor became aware of the same, or unless the Finance Parties have been provided with additional security in such form and for such amounts as the Majority Banks may require.

24.8 Loss of property

A substantial part of any Obligor’s business or assets is destroyed, abandoned, seized, appropriated or forfeited for any reason provided, in the reasonable opinion of the Agent, that such occurrence will adversely affect that Obligor’s ability to perform its obligations under the Transaction Documents to which it is a party.

24.9 Insolvency

(a) Any member of the Group is, or for the purpose of law is deemed to be, unable to pay its debts as they fall due by reason of actual or anticipated financial difficulties or becomes insolvent, or admits inability or intention not to pay its debts as they are due; or

(b) any member of the Group, by reason solely of financial difficulties, begins negotiations with its creditors with a view to the readjustment or rescheduling of any of its indebtedness; or any step is taken with a view to an arrangement with its creditors; or

(c) a meeting of any member of the Group is convened for the purpose of considering any resolution for its winding-up or its administration or any such resolution is passed, ordered, or requested; or

(d) any other step (including petition (other than a frivolous or vexatious petition which is contested in good faith or set aside within 30 days after a Borrower or the relevant member of the Group became aware of the same), proposal or convening a meeting) is taken with a view to the administration, liquidation, winding-up (other than a solvent winding-up), dissolution or general debt negotiations of any member of the Group or any other insolvency proceedings involving a member of the Group,

provided, however, that no Event of Default shall occur if any of the circumstances set out in this Clause 24.9 are applicable only to a Project Company.

67/118

24.10 Appointment of receiver, etc.

Any liquidator, receiver, administrator or the like is appointed or requested to be appointed in respect of any member of the Group (other than a frivolous or vexatious petition which is contested in good faith), provided, however, that no Event of Default shall occur if any of the circumstances set out in this Clause 24.10 are applicable only to a Project Company.

24.11 Analogous proceedings

There occurs, in relation to any member of the Group, any event or circumstance which, in the reasonable opinion of the Majority Banks, appears to correspond with those mentioned in Clauses 24.9 (Insolvency) or 24.10 (Appointment of receiver, etc.), provided, however, that no Event of Default shall occur if any of the circumstances set out in this Clause 24.11 are applicable only to a Project Company.

24.12 Cessation of business

Any Obligor ceases or threatens to cease to carry on its business or changes its business, whether by one or a series of transactions, without the prior written consent of the Majority Banks.

24.13 Authorisations and consents

Any authorisation or consent required in connection with the entry into, performance, validity or enforceability of any of the Transaction Documents or any of the transactions contemplated thereby, or the business of any of the Obligors, is revoked, terminated or modified, or otherwise ceases to be in full force and effect, in a manner unacceptable to the Majority Banks.

24.14 Effectiveness of Finance Documents

(a) It is or becomes impossible or unlawful for any Obligor to perform any of its obligations under the Finance Documents.

(b) Any Finance Document does not at any time constitute legal, valid, binding and enforceable obligations in all respects of an Obligor being a party thereto, and, if in the reasonable opinion of the Agent capable of remedy, is not remedied to the satisfaction of the Agent within ten (10) Business Days after a Borrower or the relevant Obligor became or should have become aware of such event, or is alleged by an Obligor not to constitute its legal, valid, binding and enforceable obligations in any respect for any reason.

(c) A Security Document does not create the security it purports to create and the Borrowers do not within five (5) Business Days after receipt of notice from the Agent execute or procure the execution of such documentation as required by the Agent in order to remedy such defect, or if not, in the opinion of the Agent, remediable, the Borrowers do not within five (5) Business Days after receipt of a draft of security documentation procure that additional valid and duly perfected security of equal value to the security constituted by the relevant Security Document is put in place.

(d) An Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document.

68/118

24.15 Material adverse change

Any event or series of events occurs which, in the reasonable opinion of the Majority Banks, may have a material adverse effect on the ability of any of the Obligors to comply with its obligations under any of the Transaction Documents to which it is a party.

24.16 Accession

A member of the Group does not accede to this Agreement in accordance with Clause 31.8 (Additional Guarantors) or deliver any of the documents required to be delivered to the Agent thereunder within the time and in the form and substance required thereunder.

24.17 Acceleration

On and at any time after the occurrence of an Event of Default (unless remedied during any applicable remedy period), the Agent may, and shall if so directed by the Majority Banks, by notice to the Borrowers:-

(i) cancel the Total Commitment or any part thereof, whereupon it shall immediately be cancelled; and/or;

(ii) declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under any Finance Document be immediately due and payable, whereupon they shall become immediately due and payable; and/or

(iii) declare that all or part of the Loans be payable on demand, whereupon it shall immediately become payable on demand by the Agent on the instructions of the Majority Banks; and/or

(iv) demand immediate cash collateral cover to be deposited with the Agent in amounts and currencies identical to the amounts representing the maximum contingent liability under the Letter of Credit, plus any outstanding costs, fees, interests and/or expenses, whereupon the Borrowers shall pay such amounts to the Agent which amounts shall be placed on a blocked deposit account with the Agent bearing interest at the Agent’s usual rate for comparable deposits (so entitled as to indicate the interest of the Agent (on behalf of the Guarantee Bank) in such account) and the Borrowers agree that such amounts may be applied in fulfilment pro tanto of the Borrowers’ obligations hereunder and that the amounts so deposited will only be released to the Borrowers as and to the extent that they exceed the aggregate of the maximum contingent liability under the Letter of Credit and any outstanding costs, fees, interests and expenses.

(v) without prejudice to any other rights of the Finance Parties, with or without notice to any of the Obligors, take such other action as is available to the Finance Parties under any Finance Document.

69/118

25 THE AGENT AND THE ARRANGERS

25.1 Appointment as Agent

Each of the other Finance Parties hereby appoints the Agent to act as its agent under and in connection with the Finance Documents, and authorises the Agent on its behalf to perform the duties and to exercise the rights, powers and discretions that are specifically delegated to it under or in connection with the Finance Documents, together with any other incidental rights, powers and discretions. The Agent shall have only those duties which are expressly specified in a Finance Document.

25.2 Relationship

The relationship between the Agent and the other Finance Parties is that of agent and principal only and Agent shall not have any fiduciary relationship with or be a trustee for any other Party or any other person.

25.3 Majority Banks’ directions

The Agent will be fully protected if it acts in accordance with the instructions of the Majority Banks (save where any Finance Document provides for instructions by all the Banks) in connection with the exercise of any right, power or discretion or any matter not expressly provided for in any Finance Document. Any such instructions given by the Majority Banks will be binding on the Agent and all the other Finance Parties. In the absence of such instructions, the Agent may act in relation thereto as it considers to be in the best interests of all the Finance Parties. The Agent may not commence legal proceedings in a other Finance Party’s name without its consent.

25.4 Responsibility for documentation

Neither the Agent, nor any of its officers, employees or agents is responsible to any other Party for:

(i) the execution, genuineness, validity, enforceability or sufficiency of any of the Finance Documents or any other document;

(ii) the collectability of amounts payable under any of the Finance Documents; or

(iii) the accuracy of any statements (whether written or oral) made in or in connection with any of the Finance Documents.

25.5 Default

(a) The Agent is not obliged to monitor or enquire as to whether or not a Default has occurred. The Agent will not be deemed to have knowledge of the occurrence of a Default (unless it has actual knowledge of a Default arising under Clause 24.2 (Non-payment)). However, if the Agent receives notice from a Party referring to this Agreement, describing the Default and stating that the event is a Default, or if the Agent in this capacity has otherwise acquired actual knowledge of a Default, it shall promptly notify the other Finance Parties.

70/118

(b) The Agent may require security satisfactory to it from any Finance Party, whether by way of payment in advance or otherwise, against any liability or loss which it will or may incur in taking any proceedings or action arising out of or in connection with any of the Finance Documents before it commences those proceedings or takes that action.

25.6 Exoneration

(a) Without limiting paragraph (b) below, the Agent will not be liable to any other Finance Parties for any action taken or not taken by it under or in connection with any of the Finance Documents, unless caused by its gross negligence or wilful misconduct.

(b) No Party may take any proceedings against any officer or employee of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind (including negligence or wilful misconduct) by that officer or employee in relation to any of the Finance Documents.

(c) Except as specifically provided in the Finance Documents, the Arrangers do not have any obligations of any kind to any other Party under or in connection with any Finance Document.

25.7 Reliance

The Agent and each Arranger may:

(i) rely on any notice or document reasonably believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person;

(ii) rely on any written statement made by a director or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify; and

(iii) engage, pay for and rely on legal or other professional advisers selected by it (including those in the Agent’s employment and those representing a Party other than the Agent).

25.8 Approval and appraisal

Without affecting the responsibility of the Borrowers for information supplied by it or on its behalf in connection with any of the Finance Documents, each of the other Finance Parties confirms to the Agent that it:

(i) has made its own independent investigation and assessment of the financial condition and affairs of each Obligor in connection with its participation in the Finance Documents; and

(ii) will continue to make its own independent appraisal of the creditworthiness of each Obligor at all times during the Loan Period.

71/118

25.9 Information

(a) The Agent shall forward to the relevant person the original or a copy of any document which is delivered to the Agent by a Party for that person.

(b) The Agent shall supply each Bank with a copy of each document received by the Agent under Clause 3 (Conditions precedent).

(c) Except where this Agreement specifically provides otherwise, the Agent is not obliged to review or check the accuracy or completeness of any document which it forwards to another Party.

(d) If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.

(e) If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Parry under this Agreement it shall notify the other Finance Parties.

25.10  The Agent and the Arrangers as Banks

(a) The Agent and the Arrangers, as Banks, have the same rights, powers, obligations and liabilities under the Finance Documents as any other Bank and may exercise those rights and powers as though they were not, as the case may be, the Agent or an Arranger.

(b) The Agent and each Arranger may :-

(i) carry on any business with the Obligors and/or their related entities;

(ii) act as agent or trustee for, or in relation to, any financing involving the Obligors and/or their related entities; and

(iii) retain any profits or remuneration in connection with its activities as Agent or Arranger under this Agreement or in relation to any of the foregoing.

25.11  Indemnities

(a) Without limiting the liability of the Obligors under this Agreement, each Bank shall forthwith on demand indemnify the Agent for its proportion of any liability or loss incurred by the Agent in any way relating to or arising out of its acting as Agent, except to the extent that the liability or loss arises from the Agent’s gross negligence or wilful misconduct.

(b) A Bank’s proportion of the liability or loss set out in paragraph (a) above will be the proportion which its Commitment bears to the Total Commitment at the date of demand or, if the Total Commitment has then been cancelled, bore to the Total Commitment immediately before being cancelled.

72/118

(c) The Borrowers shall forthwith on demand reimburse each Bank for any payment made by it under paragraph (a) above.

(d) Without prejudice to the liability of the Borrowers, each Bank shall on demand reimburse to the Agent the amount of such Bank’s pro rata share of charges and expenses covered by Clause 27 (Expenses) but not then reimbursed by the Borrowers.

25.12  Compliance

(a) The Agent may refrain from doing anything which might, in its opinion, constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation of any jurisdiction.

(b) Without limiting paragraph (a) above, the Agent shall not disclose any information relating to the Obligors or any other person if the disclosure might, in the reasonable opinion of the Agent, constitute a breach of any law or regulation or any duty of secrecy or confidentiality or be otherwise actionable at the suit of any person.

25.13  Resignation of the Agent

(a) Notwithstanding its appointment, the Agent may resign by giving notice to the Banks and the Borrowers, in which case the Majority Banks may, after consultation with the Borrowers, appoint a successor Agent.

(b) If the appointment of a successor Agent is to be made by the Majority Banks but they have not, within 45 days after notice of resignation, appointed a successor Agent which accepts the appointment, the retiring Agent may, after consultation with the Borrowers, appoint another bank to act as its successor.

(c) The resignation of the retiring Agent and the appointment of a successor will each become effective only upon the successor Agent notifying all the Parties that it accepts its appointment. On giving the notification, the successor Agent will succeed to the position of the retiring Agent and the term “Agent” will mean the successor Agent.

(d) The retiring Agent shall, at its own cost, execute and make available to its successor such documents and records and provide such assistance as its successor may reasonably request for the purposes of performing its functions as the Agent under the Finance Documents.

(e) Upon its resignation becoming effective, this Clause 25 shall continue to benefit the retiring Agent in respect of any action taken or not taken by it under or in connection with the Finance Documents while it was the Agent and, subject to paragraph (d) above, it shall have no further obligation as Agent under the Finance Documents.

(f) If the Majority Banks so direct, the Agent shall resign in accordance with paragraph (a) above.

73/118

26 FEES

26.1 Commitment fee

(a) The Borrowers shall pay to the Agent (for distribution to the Senior Banks in accordance with a separate agreement between the Agent and each Senior Bank) a commitment fee calculated at the rate of 0.50 per cent. per annum of (i) the undrawn part of the Total Term Loan Facility Commitment during the period beginning on the date agreed separately between the Agent and the Borrower and ending on the last day of the Availability Period in respect of the Term Loan Facility and (ii) the undrawn part of the Total Revolving Credit Facility A Commitment during the period beginning on the date agreed separately between the Agent and the Borrower and ending on the last day of the Availability Period in respect of Revolving Credit Facility A, payable for the first time on the date occurring three (3) months after the Signing Date and thereafter quarterly in arrears during such period.

(b) The Borrowers shall pay to the Agent (for distribution to the Junior Banks in accordance with a separate agreement between the Agent and each Junior Bank) a commitment fee calculated at the rate set out in the Margin and Fee Letter of the undrawn parts of the Total Revolving Credit Facility B Commitment and the Total Revolving Credit Facility C Commitment during the period beginning on the date agreed separately between the Agent and the Borrower and ending on the last day of the Availability Period in respect of Revolving Credit Facility B and Revolving Credit Facility C respectively, payable for the first time on the date occurring three (3) months after the Signing Date and thereafter quarterly in arrears during such period.

26.2 Arrangement fee

The Borrowers shall pay to the Arrangers (for distribution in its sole discretion to the Banks) the non-refundable arrangement fee specified in the Margin and Fee Letter at the time and in the amount specified therein.

26.3 Agency fee

The Borrowers shall pay to the Agent (for its own account) the non-refundable annual agency fee specified in the Margin and Fee Letter at the time and in the amount specified therein.

27 EXPENSES

27.1 Initial and special costs

The Borrowers shall promptly following demand pay to the Agent the amount of all costs and expenses (including external legal fees and fees to a marine insurance broker) properly and reasonably incurred and documented by the Agent in connection with:

(i) the mandate, evaluation, negotiation, syndication, travelling, preparation, due diligence, printing and execution of the Finance Documents and any other documents referred to in the Finance Documents;

74/118

(ii) any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested (or, in the case of a proposal, made) by or on behalf of an Obligor and relating to any of the Finance Documents or a document referred to in any of the Finance Documents;

(iii) the release and/or discharge of any security granted pursuant to the Security Documents; and

(iv) any other matter, not of an ordinary administrative nature, directly arising out of or in connection with any of the Finance Documents.

27.2 Enforcement costs

The Obligors shall promptly following demand pay to the Agent and/or any other Finance Party (as the case may be) the amount of all costs and expenses (including external and internal legal fees) properly incurred by it in connection with the enforcement of or the preservation of, any rights under any of the Finance Documents.

28 INDEMNITIES

28.1 Currency indemnity

(a) If a Finance Party receives an amount in respect of an Obligor’s liability under any of the Finance Documents (or in respect of a claim, proof, judgement or order into which such liability is converted) in a currency other than the currency (the “contractual currency”) in which the amount is expressed to be payable under the relevant Finance Document, that Obligor shall indemnify that Finance Party as an independent obligation against any loss or liability arising out of or as a result of the conversion.

(b) The Obligors waive any right they may have by law to pay any amount under this Agreement in a currency other than the contractual currency.

28.2 Other indemnities

The Obligors shall forthwith on demand indemnify each Finance Party against any loss or liability (including funding breakage costs) which that Finance Party properly and reasonably incurs and which the Finance Party certifies (in a certificate containing reasonable detail) that it has incurred as a consequence of:

(i) the occurrence of any Event of Default;

(ii) the operation of Clause 24.17 (Acceleration);

(iii) any repayment or prepayment of principal or payment of an overdue amount being made otherwise than on the last day of an Interest Period (or other period selected under Clause 11.3 (Default interest)) relative to the amount so repaid, prepaid or paid; or

75/118

(iv) a Loan not being made available after a Borrower has delivered a Drawdown Notice or a Loan (or part of a Loan) not being prepaid or cancelled in accordance with a notice of prepayment or cancellation.

The liability of the Obligors in each case includes any loss of margin or other loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any of the Finance Documents, or any amount repaid or prepaid on the Loans, but the Obligors’ liability shall in no circumstances extend to any loss or expense to the extent that it arises as a consequence of any gross negligence or wilful default of a Bank.

29 CALCULATIONS

Interest, guarantee commission and commitment fees accrue from day to day and are calculated on the basis of the actual number of days elapsed and a year of 360 days.

30 AMENDMENTS AND WAIVERS

30.1 Procedure

(a) Subject to Clause 30.2 (Exceptions), any term of a Finance Document may be amended or waived with the written agreement of the Borrowers and the Majority Banks (or if authorised by the Majority Banks, the Agent). The Agent shall effect, on behalf of all Finance Parties, any amendment or waiver which has been so agreed.

(b) The Agent shall promptly notify all other Finance Parties of any amendment or waiver effected under paragraph (a) above and any such amendment or waiver shall be binding on all Finance Parties.

30.2 Exceptions

(a) An amendment or waiver which relates to:

(i) the definition of “Majority Banks”;

(ii) any postponement, or alteration in the amount or currency, or waiver, of any payment of principal, interest, Applicable Margin, commitment fee, costs or any other amount payable to the Banks under any Finance Document;

(iii) the release of any security constituted by the Security Documents;

(iv) a term of any Finance Document which expressly requires the consent of each Bank;

(v) any variation of Clauses 2.5 (Nature of rights and obligations of the Borrowers), 2.6 (Nature of rights and obligations of the Banks), 13 (Security), 14 (Coordination of Senior Security Documents and Junior Security Documents), 16 (Market disruption), 17 (Increased costs), 19 (Illegality), 25 (The Agent and the Arrangers), 26 (Fees), 33 (Distribution and pro rata sharing), or this Clause 30;

76/118

(vi) any change to the Total Commitment;

(vii) the release or addition of any Borrower under this Agreement;

(viii) the release of any Guarantor from its obligations under this Agreement other than where such Guarantor is not the Parent or an Owner and has ceased to be a Group Contract Party; or

(ix) any admission of joint and several liability;

may not be effected without the consent of each Bank.

(b) Subject to paragraph (a) above, any term of a Finance Document may be amended or waived with the written consent of the Majority Senior Banks (or if authorised by the Majority Senior Banks, the Agent).

(c) No amendment or waiver which affects the rights of the Agent or the Junior Banks under a Junior Security Document may be effected without the consent of the Junior Banks.

(d) No amendment or waiver which affects the rights or obligations of the Agent or an Arranger may be effected without the consent of the Agent or the relevant Arranger (as the case may be).

30.3 Waivers and remedies cumulative

The rights of each Finance Party under the Finance Documents:

(i) may be exercised as often as necessary;

(ii) are cumulative and not exclusive of its rights under the general law; and

(iii) may be waived only in writing.

No delay in exercising, or failure to exercise, any such right is a waiver of that right.

31 CHANGES TO THE PARTIES

31.1 Transfer by the Obligors

No Obligor may assign, transfer or dispose of any of, or any interest in, their rights and/or obligations under any of the Finance Documents.

77/118

31.2 Transfers by Banks

Subject to this Clause 31, a Bank (the “Existing Bank”) may (as long as no Default has occurred and is continuing, subject to the consent of, and without incurring any additional cost for, the Borrowers (unless the transfer is to another Bank or an affiliate of a Bank), which consent shall not be unreasonably withheld or delayed and which shall be deemed to have been given ten (10) Business Days after being sought unless expressly refused within that period) upon receiving the written approval of the Agent (such approval not to be unreasonably withheld or delayed) transfer all or any of its rights and/or obligations under the Finance Documents to another bank or financial institution (the “New Bank”).

31.3 Procedure for transfer

(a) To effect a transfer under Clause 31.2, the Existing Bank shall notify the Agent in writing of the proposed transfer, setting out the amount that it proposes to transfer and the identity of the bank or financial institution to which it proposes to make the transfer (the “Proposed Transferee”).

(b) The Agent shall have first right of refusal, to be exercised within fifteen (15) Business Days after receipt of the notice referred to in paragraph (a) above, to assume the rights and obligations of the Proposed Transferee in relation to the proposed transfer and become the New Bank.

(c) The Existing Bank and the New Bank (the Agent or the Proposed Transferee (as the case may be)) shall duly complete and execute a Transfer Certificate and deliver it to the Agent.

(d) As soon as reasonably practicable after receipt, the Agent shall execute the Transfer Certificate on behalf of itself, the Borrowers and each of the other Banks, and send a copy of the fully executed Transfer Certificate to the Borrowers, the Existing Bank, the New Bank and each of the other Banks.

(e) A Transfer Certificate shall become effective on the date specified in the Transfer Certificate as its effective date or, if later, on the date on which it is signed by the Agent.

(f) Each New Bank shall on or before the date the Transfer Certificate becomes effective pay to the Agent a transfer fee in the amount of USD 1,500.

31.4 Authorisation of Agent to sign Transfer Certificates

Each Borrower and each Bank irrevocably authorises the Agent to sign Transfer Certificates on its behalf.

31.5 Effect of Transfer Certificate

A Transfer Certificate takes effect as follows:

(a) to the extent specified in the Transfer Certificate, all rights and interests which the Existing Bank has under or by virtue of the Finance Documents are assigned to the New Bank absolutely, free of any defects in the Existing Bank’s title and of any rights or equities which a Borrower or any other Obligor might have against the Existing Bank;

78/118

(b) the Existing Bank’s Commitment is discharged to the extent specified in the Transfer Certificate;

(c) the New Bank becomes a Bank with a Participation and/or (as the case may be) a Commitment of an amount specified in the Transfer Certificate;

(d) the New Bank becomes bound by all the provisions of the Finance Documents which are applicable to the Banks generally and, to the extent that the New Bank becomes bound by those provisions as specified in the Transfer Certificate, the Existing Bank ceases to be bound by them (other than those relating to exclusion of liability);

(e) any Loan or part thereof which the New Bank advances after the transfer takes effect will rank as to priority and security in the same way as it would have ranked had it been advanced by the Existing Bank, assuming that any defects in the Existing Bank’s title and any rights or equities of a Borrower or any other Obligor against the Existing Bank had not existed;

(f) the New Bank becomes entitled to all the rights under the Finance Documents which are applicable to the Banks generally and, to the extent that the New Bank becomes entitled to such rights as specified in the Transfer Certificate, the Existing Bank ceases to be entitled to them; and

(g) in respect of any breach of a provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the New Bank shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the Existing Bank (or any prior transferor) would have incurred a loss of that kind or amount.

31.6 Maintenance of register of Banks

(a) During the Loan Period, the Agent shall maintain a register in which it shall record the name, Commitment, Participation and administrative details (including the lending office) from time to time of each Bank and the Agent shall make the register available for inspection by any Bank and the Borrowers during normal banking hours, subject to receiving at least three (3) Business Days prior notice.

(b) The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Banks, the amounts of their Commitments and Participations and the effective dates of Transfer Certificates.

31.7 Change of lending office

A Bank may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

(a) the date on which the Agent receives the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

79/118

31.8 Additional Guarantors

(a) The Parent shall procure that each of its Subsidiaries which becomes a Group Contract Party after the Signing Date, shall accede to this Agreement as an Additional Guarantor by delivering to the Agent the relevant documents and evidence listed in Part II of Schedule 6 (Condition precedent documents for an Additional Guarantor) in a form and substance satisfactory to the Agent. Such documents shall be delivered to the Agent within the earlier of (i) the date occurring 20 Business Days after the entering into of the relevant Employment Contract and (ii) the date when charter hire or other remuneration starts to accrue under the relevant Employment Contract.

(b) The relevant Subsidiary will become an Additional Guarantor when the Agent notifies the Banks and the Borrowers that it has received all of the documents and evidence referred to in paragraph (a) above in form and substance satisfactory to it, or on such earlier date as the Agent (acting on the instructions of the Banks) notifies the Banks and the Borrowers that the relevant Subsidiary has become and Additional Guarantor.

(c) Delivery of an Accession Agreement, executed by the relevant Subsidiary and the Parent, to the Agent constitutes confirmation by that Subsidiary and the Parent that the representations and warranties set out in Clause 21 (Representations and warranties) are then correct.

32 DISCLOSURE OF INFORMATION

32.1 Restrictions on use of information

Any information relating to the Obligors shall be used by the Finance Parties only for the purposes of this Agreement and shall be held in confidence and, subject to Clause 32.2 (Exceptions), not disclosed to any person without the prior written consent of a Borrower. Any such consent may be given by a Borrower subject to compliance with any stipulated conditions.

32.2 Exceptions

A Finance Party shall not require the consent of the Borrowers for the disclosure of any information required to be disclosed by law or for the disclosure of any information disclosed in the circumstances described below, namely:

(i) to a Subsidiary, its parent company or another Subsidiary of its parent company; or

(ii) to its professional advisers or any banking or other regulatory or examining authorities (whether governmental or otherwise) with whose instructions banks are accustomed to comply; or

80/118

(iii) to any person with whom it is proposing to enter, or has entered into, any kind of transfer, participation or other agreement in relation to the Finance Documents, but only after such Bank has received from such person an undertaking in writing as to confidentiality; or

(iv) which is or has become publicly available otherwise than in breach of this Clause 32.

33 DISTRIBUTION AND PRO RATA SHARING

33.1 Distribution

All moneys from time to time received or recovered by the Agent in connection with the realisation and enforcement of all or any part of the security granted by this Agreement and the Security Documents and/or any of the claims of the Finance Parties under the Finance Documents shall be held by the Agent on trust to apply them as soon as reasonably practicable and to the extent permitted by applicable law, in the following order of priority:

(i) firstly, in or towards payment of costs and expenses incurred by the Agent and the other Finance Parties in connection with such realisation and enforcement;

(ii) secondly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents in relation to the Senior Facilities; and

(iii) thirdly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents in relation to the Junior Facilities.

33.2 Redistribution

If any amount owing by an Obligor under any of the Finance Documents to a Bank (the “recovering Bank”) is discharged by payment, set-off or any other manner except through the Agent in accordance with Clause 12 (Payments) (a “recovery”), then:

(i) the recovering Bank shall, within three (3) Business Days, notify details of the recovery to the Agent;

(ii) the Agent shall determine whether the recovery is in excess of the amount which the recovering Bank would have received had the recovery been received by the Agent and distributed in accordance with Clause 12 (Payments);

(iii) subject to Clause 33.4 (Exceptions), the recovering Bank shall within three (3) Business Days of demand by the Agent pay to the Agent an amount (the “redistribution”) equal to that excess;

(iv) the Agent shall treat the redistribution as if it were a payment by the relevant Obligor under Clause 12 (Payments) and shall pay the redistribution to the Banks (other than the recovering Bank) in accordance with Clause 12.7 (Partial payments); and

81/118

(v) after payment of the full redistribution, the recovering Bank will be subrogated to the portion of the claims paid under item (iv) above and the relevant Obligor will owe the recovering Bank a debt which is equal to the redistribution, immediately payable and of the type originally discharged.

33.3 Reversal of redistribution

If, following a recovery under Clause 33.2 (Redistribution):

(i) a recovering Bank becomes obliged to return a recovery, or an amount measured by reference to a recovery, to an Obligor; and

(ii) the recovering Bank has paid a redistribution in relation to that recovery,

each Bank shall, within three (3) Business Days of demand by the recovering Bank through the Agent, reimburse the recovering Bank all or the appropriate portion of the redistribution paid to that Bank. Thereupon, the subrogation in Clause 33.2 (v) will operate in reverse to the extent of the reimbursement.

33.4 Exceptions

(a) A recovering Bank need not pay a redistribution to the extent that it would not, after the payment, have a valid claim against the relevant Obligor in the amount of the redistribution pursuant to Clause 33.2 (v).

(b) A Bank is not entitled to participate in a redistribution if the redistribution results from the proceeds of a judicial enforcement order obtained by the recovering Bank, and the other Bank had adequate notice of and opportunity to participate in the proceedings concerned or bring its own proceedings but did not do so.

34 SEVERABILITY

If a provision of any Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect the validity or enforceability in that jurisdiction of any other provision of that or any other Finance Document or the validity or enforceability in other jurisdictions of that or any other provision of that or any other Finance Document.

35 NOTICES

35.1 Giving of notices

Unless otherwise specifically provided, all notices or other communications under or in connection with any Finance Document shall be given or made in writing, by letter, telefax or SWIFT. Any such notice or communication addressed as provided in Clause 35.2 (Addresses for notices) shall be deemed to be given or made as follows:

(i) if by letter, when delivered at the address of the relevant Party;

82/118

(ii) if by telefax or SWIFT, when received.

However, a notice given in accordance with the above but received on a day which is not a business day in the place of receipt, or after 3:00 p.m. on such a business day, shall only be deemed to be given at 9:00 a.m. on the next business day in that place.

35.2 Addresses for notices

(a) The address, the telefax number and the SWIFT code:

(i) of the Agent is:

DnB NOR Bank ASA

Stranden 21

N-0021 Oslo, Norway

Attn: Loan Administration

Telefax: +47 22 48 28 94

SWIFT: DNBANOKK

(ii) of the Borrowers is:

c/o Ocean Rig ASA

Vestre Svanholmen 6, Forus

N-4313 Sandnes, Norway

Attn: Finance Manager Vidar Hoyvik

Telefax: +47 51 96 90 99

or such other address, telefax number or SWIFT code and/or marked for such other attention as one Party may notify to the other Parties by not less than five (5) Business Days’ prior notice.

(b) All notices from or to the Borrowers related to any Finance Document shall be sent through the Agent.

(c) The Agent shall, promptly upon request from any Party, give to that Party the address, telefax number or SWIFT code of any other Party applicable at the time for the purposes of this Clause.

36 GOVERNING LAW

This Agreement is governed by Norwegian law.

83/118

37 ENFORCEMENT

37.1 Jurisdiction

(a) The courts of Norway have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”), and any Dispute shall be referred to Oslo district court as the court of first instance.

(b) This Clause 37.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

* * * * *

84/118

SIGNATORIES

The Borrowers:

Ocean Rig ASA
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact
Ocean Rig Norway AS
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact

The Original Guarantors:

Ocean Rig ASA
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact
Ocean Rig Norway AS
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact
Ocean Rig 1 AS
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact
Ocean Rig 2 AS
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact
Ocean Rig North Sea AS
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact

116/118

Ocean Rig USA LLC
By:
Name:	Jan Rune Steinsland
Title:	Attorney-in-fact

The Original Banks:

p.p. DnB NOR Bank ASA
By:
Name:	Magnus Piene
Title:	Senior Vice President
HSH Nordbank AG
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact
Nordea Bank Norge ASA
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact
Skandinaviska Enskilda Banken AB (publ)
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact
DVB Bank N.V. Nordic Branch
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact
Deutsche Schiffsbank Aktiengesellschaft
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact
Natixis
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact

117/118

The Guarantee Bank:

p.p. DnB NOR Bank ASA
By:
Name:	Magnus Piene
Title:	Senior Vice President

The Arrangers:

p.p. DnB NOR Bank ASA
By:
Name:	Magnus Piene
Title:	Senior Vice President
HSH Nordbank AG
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact
Nordea Bank Norge ASA
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact
Skandinaviska Enskilda banken AB (publ)
By:
Name:	Johan Rasmussen
Title:	Attorney-in-fact

The Agent:

p.p. DnB NOR Bank ASA
By:
Name:	Magnus Piene
Title:	Senior Vice President

118/118

EX-4.46

Exhibit 4.46

AGREEMENT

Date: 15^th January 2009

DRYSHIPS INC. (“DRYS” or “the Company”) a corporation incorporated in accordance with the laws of the Republic of the Marshall Islands.

CENTRAL MARE INC. (“CENTRAL” or “the Contractor”) or their guaranteed nominees a corporation incorporated in accordance with the laws of the Republic of Marshall Islands.

Whilst three (3) subsidiaries of DRYS have contracted with respective three companies, being subsidiary or otherwise associated with Geden Lines of Turkey (“GEDEN”) for the purchase of three (3) N/Bs/ Hulls. Relevant N/Bs/ Hulls and contracting parties are:

a) Hull SWS 1128, Flash Shipping Ltd of Valletta, Malta as sellers and Belulu Limited of Majuro, Marshall Islands as buyers

b) Hull KS 0002, Winter Shipping Ltd of Valletta, Malta as sellers and Mensa Enterprises Inc. of Majuro, Marshall Islands as buyers, and

c) Hull KS 0003, Zen Navigation Ltd of Valletta, Malta as seller and Mandarin Shipholding Co. of Majuro, Marshall Islands as buyers.

Whilst Flash Shipping Ltd, a GEDEN associated company, which have contracted to sell the Hull SWS 1128 to Belulu Limited a subsidiary of DRYS (“the Buyers of Hull SWS 1128”) on or about 17^th November 2008 tendered delivery of this Hull. Such tender of the Hull 1128 was rejected by the Buyers of Hull SWS 1128.

Whilst the Buyers of Hull SWS 1128 have commenced arbitration proceedings, before London Arbitrators, seeking declaration that they correctly rejected the tender of the Hull from the Sellers.

Whilst the Buyers of Hulls KS 0002 and KS 0003 have commenced arbitration proceedings before London Arbitrators seeking to have relevant sale and purchase contracts declared terminated and the return of the deposits; relevant Sellers have opposed these proceedings of the respective Buyers.

Whilst Geden Holdings Ltd a company incorporated in Valletta, Malta, wrote to DRYS seeking information from DRYS and complained, among others, about the Hull 1128 and other transactions.

Whilst CENTRAL has approached DRYS and is offering to buy out the three (3) subsidiaries of DRYS involved in the respective disputes with the respective GEDEN associated companies at a fee to be paid to CENTRAL and to be agreed against the release of DRYS from all and any liabilities arising out of or anyhow relating to the sale and purchase transactions involving GEDEN and/or the companies associated with GEDEN.

Whilst under the terms and time frame set out herebelow DRYS is prepared to contract with CENTRAL to achieve the release of DRYS in full and final settlement of all disputes between it and/or its subsidiaries with GEDEN or with companies associated with GEDEN.

IN THE PREMISES against respective good and valuable consideration the parties to this agreement have agreed as follows:

DRYS conditionally undertakes:

a) to transfer title to CENTRAL in all shares of each one of the three (3) subsidiaries which have contracted with GEDEN and/or companies associated with GEDEN to purchase Hulls SWS 1128, KS 0002 and KS 0003.

b) to pay to CENTRAL a fee of USD 80 million payable as follows:

i. $30 million in cash on the day the conditions set out below are met i.e. on closing

ii. $25 million in cash or shares of DRYS in DRYS option, 30 days after (i) above has been paid

iii. $25 million in cash or shares of DRYS in DRYS option, 60 days after (i) above has been paid

The amount of shares payable in the Company’s options under items (ii) and (iii) above are agreed to be and are fixed to 2,598,753 shares respectively, at an applicable price of 9.62 per share being the average closing price of the Company’s shares the preceding 30 trading sessions from Friday 9^th January 2009 inclusive.

Settlement of the above shall only take place upon CENTRAL tendering evidence satisfactory to the Company and to the Company’s legal counsel of following conditions precedent:

1. written, irrevocable, full release of the Company and its Officers, Directors, agents or authorized representatives, by the GEDEN associated companies, from all and any liabilities past, present or contingent anyhow arising or relating to the guarantees given by the Company in connection with the purchase of Hulls SWS 1128, KS 0002 and KS 0003 or otherwise whether under contract, tort or otherwise.

2. Written evidence of full release of the Company from FORTIS BANK or otherwise evidence of prior irrevocable termination of all and any interest of FORTIS BANK (and/or its successor entities) in relevant sale and purchase transactions.

3. Written evidence that Geden Holdings Ltd has withdrawn any report filed with NASDAQ or the SEC (or any other Authorities or other entities or persons in

the U.S. or any other jurisdiction) as incorrect and filed in error. Further, evidence of full release of DRYS and its Officers, Directors, agents or authorized representatives from any complaint that they have violated any securities laws or regulations including a confirmation from Mr. Simon Harter, a New York attorney that there is no ground of complaint and an acknowledgement of a settlement of all purported claims.

4. Written confirmation from CENTRAL that DRYS have fully performed all its obligations pursuant to this Agreement.

This Agreement shall cease to be binding and effective if due to whatever cause, including force majeure, CENTRAL was unable to fully perform under this Agreement latest by 30th day of January 2009.

This Agreement shall in all respects be governed by and interpreted in accordance with English Law.

Any and all disputes arising out of or in relation to this Agreement shall exclusively be resolved through Arbitration to be conducted in London, U.K., in accordance with the applicable laws of England and relevant rules and procedure set out by the London Maritime Arbitration Association.

Each one of the parties to this Agreement authorises that all notices under or relating to this Agreement may be given to the respective party as follows:

a) to DRYS c/o INCE PROCESS AGENTS LTD of 1, St. Katharine’s Way, London E1W 1UN, U.K. (Attn: Mr. Michael Volikas, Partner) and

b) to CENTRAL c/o TOP TANKERS (UK) LIMITED of 8, Duke Street, W1U 3EW, London, U.K.”.

This Agreement was signed by authorised representatives of the parties this 15^th day of January 2009 as follows:

For DRYSHIPS INC.	For CENTRAL MARE INC.
	/s/    GEORGIOS PAGKALOS
Name:	Name:	GEORGIOS PAGKALOS
Capacity:	Capacity:	PRESIDENT/DIRECTOR

ADDENDUM NO. 1

to the agreement dated 15th January 2009

(the “Agreement”)

between

DRYSHIPS INC. of Marshall Islands

(the “Company”)

and

CENTRAL MARE INC. of Marshall Islands

(“Central”)

It is hereby noted and agreed that:

WHEREAS pursuant to the terms of the Agreement, the Company agreed to pay to Central a fee of USD 80 million in three installments, as follows:

a) USD 30 million in cash on the closing date

b) USD 25 million in cash or shares of the Company, at the Company’s option, 30 days after payment of the first installment

c) USD 25 million in cash or shares of the Company, at the Company’s option, 60 days after payment of the first installment

WHEREAS the Company has made the payment of the first installment under item (i) above on January 21st, 2009, receipt whereof is hereby acknowledged by Central.

WHEREAS the Company has not to the present date made the above payments of the second and third installments under item (ii) and (iii) above, respectively.

In full and final resolution of all claims and disputes between the parties, IT IS HEREBY AGREED THAT:

(a) The Company undertakes to pay to Central the second and third installments together on the same date in the amount of USD 50 million, based on the closing price of the Company’s common stock on the Nasdaq Global Market on the trading day immediately prior to the date of issuance.

(b) The Company further undertakes that the issuance of above shares will be effected by Wednesday, 18th March 2009 or as soon as feasible thereafter.

(c) Central accepts that any issuance of shares within such framework shall be conclusively deemed to be in full and final settlement of all claims and disputes against the Company whatsoever and howsoever arising under the Agreement and shall retain no claim whatsoever.

(d) Central nominates the following Marshall Islands companies as beneficiaries of above shares:

a. Fulmonde Shipholding Ltd.

b. Granita Investments Inc.

c. Syriana Investments Inc.

d. Newmark Holdings Limited

e. Omni Holdings Limited

each to receive an equal amount of shares.

All other terms and conditions of the Agreement remain in full force and effect.

This 18^th day of March 2009

For DRYSHIPS INC.		For CENTRAL MARE INC.
/s/    George Xiradakis		/s/    Georgios Pagkalos
Name:	George Xiradakis	Name:	Georgios Pagkalos
Title:	Director	Title:	Director

EX-8.1

Exhibit 8.1

Schedule 1

Subsidiaries

	Ship-Owning Subsidiaries with Vessels in Operations	Country of Incorporation
1.	Malvina Shipping Company Limited	Malta
2.	Arleta Navigation Company Limited	Malta
3.	Selma Shipping Company Limited	Malta
4.	Samsara Shipping Company Limited	Malta
5.	Lansat Shipping Company Limited	Malta
6.	Farat Shipping Company Limited	Malta
7.	Iguana Shipping Company Limited	Malta
8.	Borsari Shipping Company Limited	Malta
9.	Onil Shipping Company Limited	Malta
10.	Fabiana Navigation Company Limited	Malta
11.	Karmen Shipping Company Limited	Malta
12.	Thelma Shipping Company Limited	Malta
13.	Celine Shipping Company Limited	Malta
14.	Lotis Traders Inc.	Marshall Islands
15.	Tempo Marine Co.	Marshall Islands
16.	Star Record Owning Company Limited	Marshall Islands
17.	Argo Owning Company Limited	Marshall Islands
18.	Rea Owning Company Limited	Marshall Islands
19.	Gaia Owning Company Limited	Marshall Islands
20.	Kronos Owning Company Limited	Marshall Islands
21.	Trojan Maritime Co.	Marshall Islands
22.	Dione Owning Company Limited	Marshall Islands
23.	Phoebe Owning Company Limited	Marshall Islands
24.	Uranus Owning Company Limited	Marshall Islands
25.	Selene Owning Company Limited	Marshall Islands
26.	Tethys Owning Company Limited	Marshall Islands
27.	Ioli Owning Company Limited	Marshall Islands
28.	Iason Owning Company Limited	Marshall Islands
29.	Orpheus Owning Company Limited	Marshall Islands
30.	Team up Owning Company Limited	Marshall Islands
31.	Iokasti Owning Company Limited	Marshall Islands
32.	Boone Star Owners Inc.	Marshall Islands
33.	Norwalk Star Owners Inc.	Marshall Islands
34.	Ionian Traders Inc.	Marshall Islands
35.	NT LLC Investors Ltd.	Marshall Islands
36.	Dalian Star Owners Inc.	Marshall Islands
37.	Aegean Traders Inc.	Marshall Islands
38.	Cretan Traders Inc.	Marshall Islands
39.	Kerkyra Traders Inc.	Marshall Islands
	Ship-Owning Subsidiaries with Vessels under Construction
40.	Roscoe Marine Ltd.	Marshall Islands
41.	Monteagle Shipping S.A.	Marshall Islands
42.	Iktinos Owning Company Limited	Marshall Islands
43.	Kallikrates Owning Company Limited	Marshall Islands
44.	Faedon Owning Company Limited	Marshall Islands
45.	Drillship Kithira Owners Inc.	Marshall Islands
46.	Drillship Skopelos Owners Inc.	Marshall Islands

	Ship-Owning Subsidiaries with Vessels Sold
47.	Felicia Navigation Company Limited	Malta
48.	Zatac Shipping Company Limited	Malta
49.	Atlas Owning Company Limited	Marshall Islands
50.	Maternal Owning Company Limited	Marshall Islands
51.	Royerton Shipping Company Limited	Malta
52.	Lancat Shipping Company Limited	Malta
53.	Paternal Owning Company Limited	Marshall Islands
54.	Fago Shipping Company Limited	Malta
55.	Hydrogen Shipping Company Limited	Malta
56.	Madras Shipping Company Limited	Malta
57.	Seaventure Shipping Limited	Marshall Islands
58.	Classical Owning Company Limited	Marshall Islands
59.	Oxygen Shipping Company Limited	Malta
60.	Human Owning Company Limited	Marshall Islands
61.	Helium Shipping Company Limited	Malta
62.	Blueberry Shipping Company Limited	Malta
63.	Platan Shipping Company Limited	Malta
64.	Silicon Shipping Company Limited	Malta
65.	Tolan Shipping Company Limited	Malta
	Ocean Rig’s Subsidiaries
66.	Ocean Rig ASA	Norway
67.	Ocean Rig Norway AS	Norway
68.	Ocean Rig AS	Norway
69.	Ocean Rig UK Ltd	United Kingdom
70.	Ocean Rig Ltd	United Kingdom
71.	Ocean Rig Ghana Ltd	Ghana
72.	Ocean Rig USA AS	Norway
73.	Ocean Rig USA LLC	United States
74.	Ocean Rig 1 AS	Norway
75.	Ocean Rig 2 AS	Norway
76.	Ocean Rig Canada Inc.	Canada
77.	Ocean Rig North Sea AS	Norway
78.	Ocean Rig 1 Inc.	Marshall Islands
79.	Ocean Rig 2 Inc.	Marshall Islands
	Other Subsidiaries
80.	Wealth Management Inc.	Marshall Islands
81.	Primelead Limited	Cyprus
82.	Primelead Shareholders Inc.	Marshall Islands
83.	Drillships Investment Inc.	Marshall Islands

EX-12.1

Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, George Economou, certify that:

1. I have reviewed this annual report on Form 20-F of DryShips Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 27, 2009

/s/ George Economou

George Economou

Chief Executive Officer & Interim Chief Financial Officer

EX-12.2

Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, George Economou, certify that:

1. I have reviewed this annual report on Form 20-F of DryShips Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 27, 2009

/s/ George Economou

George Economou

Chief Executive Officer & Interim Chief Financial Officer

EX-13.1

Exhibit 13.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of DryShips Inc. (the “Company”) on Form 20-F for the year ended December 31, 2008 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, George Economou, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: March 27, 2009

/s/ George Economou

George Economou

Chief Executive Officer & Interim Chief Financial Officer

EX-13.2

Exhibit 13.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of DryShips Inc. (the “Company”) on Form 20-F for the year ended December 31, 2008 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, George Economou, Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: March 27, 2009

/s/ George Economou

George Economou

Chief Executive Officer & Interim Chief Financial Officer

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form F-3/A No. 333-146540 and in the related Prospectus and Form F-3 No. 333-139204) of DryShips Inc. of our report dated April 27, 2007 (except for Note 5, and the 2006 financial statement schedule listed in the Index at Item 18 as to which the date is March 27, 2009), with respect to the consolidated financial statements and schedule of DryShips Inc. for the year ended December 31, 2006, included in DryShips Inc.’s Annual Report on Form 20-F for the year ended December 31, 2008.

/s/ Ernst & Young

Athens, Greece

March 27, 2009

EX-15.2

Exhibit 15.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form F-3 /A No. 333-146540 and in the related Prospectus and Form F-3 No. 333-139204) of DryShips Inc. of our report dated March 27, 2009, with respect to the consolidated financial statements of Ocean Rig ASA as of December 31, 2008 and for the period May 15, 2008 to December 31, 2008, included in this Annual Report (Form 20-F) of DryShips Inc. for the year ended December 31, 2008.

Ernst & Young AS

/s/ Ernst & Young AS

Stavanger, Norway

March 27, 2009

EX-15.3

Exhibit 15.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements No. 333-146540 on Form F-3 ASR and No. 333-139204 on Form F-3 of our reports dated March 27, 2009, relating to the financial statements and financial statement schedule of DryShips Inc. and subsidiaries (the “Company”), (which report expresses an unqualified opinion and includes explanatory paragraphs regarding substantial doubt about the Company’s ability to continue as a going concern and the Company’s change in accounting for dry-docking costs during 2008), and the effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 20-F of the Company for the year ended December 31, 2008.

/s/ Deloitte

Deloitte.

Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 27, 2009