6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of: January 2009

Commission File Number 001-33416

OceanFreight Inc.

(Translation of registrant’s name into English)

80 Kifissias Avenue, Athens 15125, Greece

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ      Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):                     

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)7:                     

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

     Attached hereto as Exhibit 1 is a summary of recent developments in the international drybulk and tanker shipping industries and their effects on the Company’s business, as well as updated information concerning the Company, its fleet and other updates related to the passage of time, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations and interim consolidated unaudited financial statements and related information and data of the Company as of and for the nine-month period ended September 30, 2008.

     Attached hereto as Exhibit 4.8 is the Company’s secured term loan facility agreement with DVB Bank SE, or DVB Bank, entered into on December 23, 2008.

     Attached hereto as Exhibit 4.9 is the Company’s amendatory agreement, entered into on January 9, 2009, to its amended and restated loan agreement with Nordea Bank Finland Plc, dated February 12, 2008 filed as Exhibit 4.5 to the Company’s annual report on Form 20-F for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on March 7, 2008.

     This Report on Form 6-K and the exhibits hereto are hereby incorporated by reference into the Company’s Registration Statement on Form F-3 (Registration No. 333-150579) that was declared effective on June 6, 2008.

(i)

FORWARD LOOKING STATEMENTS

     Matters discussed in this document may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

     We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are including this cautionary statement in connection with this safe harbor legislation. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements which reflect our current views with respect to future events and financial performance. The words “believe”, “anticipate”, “intend”, “estimate”, “forecast”, “project”, “plan”, “potential”, “may”, “should”, “expect” and similar expressions identify forward-looking statements.

     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 we believe 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, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

     In addition to these important factors and matters discussed elsewhere in this report, and in our filings with the U.S. Securities and Exchange Commission (the “Commission”), 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 fluctuations in charterhire rates and vessel values, changes in demand in the drybulk carrier and tanker markets, changes in the company’s operating expenses, including bunker prices, drydocking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities including those that may limit the commercial useful lives of drybulk carriers and tankers, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports we file with the Commission and the Nasdaq Global Market. We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to update or revise any forward-looking statements. These forward looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward looking statements.

(ii)

Exhibit 1

     Unless the context otherwise requires, as used in this report, the terms “Company,” “we,” “us,” and “our” refer to OceanFreight Inc. and all of its subsidiaries. “OceanFreight Inc.” refers only to OceanFreight Inc. and not its subsidiaries.

     We use the term deadweight tons, or dwt, in describing the size of vessels. Dwt expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. References to the Euro/Dollar equivalent are based on the conversion rate at September 30, 2008 of €1.00 to $1.44.

Our Company

     We are a Marshall Islands company with our principal executive offices located in Athens, Greece. As of January 30, 2009, we own and operate, through our subsidiaries, a fleet of 13 vessels, consisting of eight Panamax drybulk carriers, one Capesize drybulk carrier, three Aframax crude oil tankers and one Suezmax crude oil tanker, with a total carrying capacity of 1,170,633 dwt. As of January 30, 2009, the average age of our drybulk carriers was approximately 12.9 years, the average age of our tanker vessels was approximately 16.1 years and the average age of the vessels in our fleet was approximately 13.9 years. All of our vessels are chartered under long-term contracts expiring at various dates, the latest through 2012, with an average remaining duration of 20 months.

Recent Developments in the International Shipping Industry

Drybulk

We currently employ each of our nine drybulk carriers under time charter agreements with an average remaining duration of approximately 20 months as of January 30, 2009. The Baltic Dry Index (BDI), a daily average of charter rates in 26 shipping routes measured on a time charter and voyage basis covering Supramax, Panamax and Capesize drybulk carriers, declined from a high of 11,793 in May 2008 to 1004 on January 27, 2009, reaching a low of 663 in December 2008, which represents a decline of 94%. The BDI fell over 70% during the month of October alone. The general decline in the drybulk carrier charter market has resulted in lower charter rates for vessels exposed to the spot market and time charters linked to the BDI. Our drybulk carriers are presently employed under time charters and are not directly linked to the BDI. The charter rate for our Capesize drybulk carrier, the M/V Juneau, will be linked to the BDI for the last two months of its time charter during the third quarter of 2009. Please see fleet employment data below under “Vessel Employment.”

     Drybulk vessel values have also declined both as a result of a slowdown in the availability of global credit and the significant deterioration in charter rates. Charter rates and vessel values have been affected in part by the lack of availability of credit to finance both vessel purchases and purchases of commodities carried by sea, resulting in a decline in cargo shipments, and the excess supply of iron ore in China which resulted in falling iron ore prices and increased stockpiles in Chinese ports. Consistent with these trends, the market value of our drybulk carriers has declined. There can be no assurance as to how long charter rates and vessel values will remain at their currently low levels or whether they will improve to any significant degree. Charter rates may remain at depressed levels for some time which will adversely affect our revenue and profitability.

     Capesize rates, which averaged $100,000 per day in August 2008, fell to an average of approximately $10,334 per day during the fourth quarter through December 31, 2008 and reached a low of $2,535 per day in this period. Average Capesize rates for the period from January 1, 2009 to January 23, 2009 amounted to $12,215 per day. We believe that the root cause of the fall has been a sharp slowdown in Chinese steel demand and prices leading to reduced demand for iron ore. Iron ore price negotiations between BHP Billiton, Companhia Vale do Rio Doce and Chinese steel mills in the third and fourth quarter of 2008 resulted in a number of Chinese mills turning to domestic mining companies for iron ore. Additionally, the unwillingness of banks to issue letters of credit resulted in reduced financing for the purchase of commodities carried by sea which has led to a significant decline in cargo shipments.

Tanker

     Our fleet includes four double-hull crude oil tanker vessels, of which three are employed in time charter agreements and one is employed in a spot market pooling arrangement. According to industry sources, the average spot market rate for a Suezmax tanker for the benchmark Suezmax tanker route loading in West Africa and discharging in the U.S. Atlantic Coast declined from a high of $138,943 per day in July 2008 to a low of $35,018 per day in November 2008, which represents a decline of 75%. The average spot market rate for this benchmark route was $56,574 per day on December 31, 2008, which represents a decline of 59% from the high reached in July 2008. By contrast, the BDI was 774 on December 31, 2008, which represents a decline of 93% from the high of 11,793 recorded on May 20, 2008. Therefore, tanker charter rates fell by 34% less than the decline in drybulk charter rates during the period from July 16 to December 31, 2008. Average Suezmax rates for the period from January 1, 2009 to January 23, 2009 amounted to $46,642 per day. In the second half of 2008 and beginning of 2009 a slowdown in global economic growth has led to a significant decline in oil prices from a high of $145 per barrel in July 2008 to $42 per barrel on January 27, 2009 after reaching a low of $39 per barrel in November 2008. OPEC has responded by significantly reducing oil supply and may further reduce oil supply. This decline in oil supply may have an adverse effect on the demand for tankers and tanker charter rates. Consistent with this trend, the value of the tankers in our fleet has declined. However, we believe that the potential phase out by 2010 of single hull tankers, which constitute approximately 20% of the global tanker fleet, may reduce tanker supply and may therefore mitigate the adverse effect on demand for tankers and tanker charter rates resulting from reduced oil supply.

     Lower than expected fleet growth for 2008 resulted in supply and demand being relatively closely balanced throughout most of 2008 providing some support for charter rates prior to the recent downturn. According to industry sources, the average time charter equivalent earnings for Suezmax tankers were $76,626 per day for the year ended December 31, 2008, while Aframax crude oil tankers earned an average of $49,922 per day during the same period. Through December 31, 2008, newbuilding deliveries amounted to 11.7 million dwt and the total tanker newbuilding orderbook stood at 175 million dwt. In addition, low global inventories of oil and petroleum products and strong Chinese demand for oil and petroleum products resulted in increased demand through August 2008. It is expected that 64 million dwt of tankers in excess of 10,000 dwt will be delivered in 2009, while the current fleet of tankers in excess of 10,000 dwt amounts to 400 million dwt. The availability of tankers in the freight market is reduced when there is an increase in the amount of oil that is supplied from OPEC countries, or an increase in the distance that oil travels and/or an increase in the number of ships that are occupied on voyages. With most production increases coming from the Middle East and Africa, the distances traveled to oil-consuming countries in Asia, North America and Europe have lengthened, increasing ton miles.

Our Fleet

     We operate a diversified fleet in the drybulk carrier and tanker sectors of the international shipping industry. As of January 30, 2009, our fleet is comprised of the following vessels:

Vessel Name	Vessel Type	Year Built		Deadweight
				(in metric tons)
Drybulk Carriers
Trenton	Panamax		1995		75,229
Pierre	Panamax		1996		70,316
Austin	Panamax		1995		75,229
Juneau	Capesize		1990		149,495
Lansing	Panamax		1996		73,040
Helena	Panamax		1999		73,744
Topeka	Panamax		2000		74,710
Richmond	Panamax		1995		75,265
Augusta	Panamax		1996		69,053
Tanker Vessels
Pink Sands	Aframax		1993		93,723
Olinda	Suezmax		1996		149,085
Tigani	Aframax		1991		95,951
Tamara	Aframax		1990		95,793

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Our Fleet Managers

     We have contracted the day-to-day vessel management of our fleet, which includes performing the day-to-day operations and maintenance of our vessels, to two management companies, which we refer to as our Fleet Managers, which are engaged under separate vessel management agreements directly by our respective wholly-owned subsidiaries. Our vessel-specific management agreements include such services as crew management, technical management and commercial management, but do not include services such as selling and purchasing vessels, or arranging for the provision of bunker fuel. Wallem Ship Management Ltd., or Wallem, an unrelated third party technical and commercial management company, previously provided both commercial and technical management services for our eight Panamax drybulk carriers in exchange for an annual fee of $123,600 per vessel, which equals a per vessel per day fee of $339. Effective January 8, 2009, Cardiff Marine Inc., or Cardiff, a related party technical and commercial management company, assumed the commercial management of these eight Panamax drybulk carriers in exchange for a daily fee of $216 (Euro 150) per vessel. As a result, the annual fee of Wallem was reduced to $93,600 per vessel, or $256 per vessel per day for the continuing technical management of these vessels. On January 14, 2009, pursuant to an addendum to our commercial management agreements with Cardiff with respect to these vessels, we agreed to pay Cardiff, as security for the payment of vessel management fees by us, an amount equal to 90 days commercial management fees for each vessel. The security is not refundable by Cardiff in the event of (i) a change of control in the Company, as defined in the services agreement dated May 15, 2008 and (ii) any public disclosure that the Company is in default of any of its agreements including but not limited to loan agreements and charter party agreements and such default impairs the Company’s ability to continue its operations. We paid a total security payment of $138,240.

     In addition, Cardiff manages our Capesize drybulk carrier and four tanker vessels, under separate vessel management agreements directly between Cardiff and five of our vessel-owning subsidiaries. Under the October 21, 2008 amendment to these vessel management agreements, we are required to pay daily management fees of $828 (€575) for the M/V Juneau and $972 (€675) for each of the M/T Pink Sands and M/T Olinda. Under the vessel-specific management agreements with Cardiff for the M/T Tamara and M/T Tigani, we are required to pay daily management fees for each vessel of $972 (€675). Under the commercial management agreement signed with Cardiff we are required to pay a daily fee of $216 (€150) for each vessel managed by Cardiff. We are also required to provide a daily superintendent’s fee of $720 (€500) per vessel per day plus expenses for any services performed relating to evaluation of the vessel’s physical condition, supervision of shipboard activities or attendance of repairs and drydockings. At the beginning of each calendar year, these fees will be adjusted upwards according to the Greek consumer price index. On January 14, 2009, pursuant to an addendum to our management agreements with Cardiff with respect to these vessels, we agreed to pay Cardiff, as security for the payment of vessel management fees by us, an amount equal to 90 days technical and commercial management fees for each vessel. The Company also agreed to pay Cardiff an additional security equal to three months running expenses per vessel. The security payments are not refundable by Cardiff in the event of (i) a change of control in the Company, as defined in the services agreement dated May 15, 2008 and (ii) any public disclosure that the Company is in default of any of its agreements including but not limited to loan agreements and charter party agreements and such default impairs the Company’s ability to continue its operations. We paid a total security payment of $3.32 million.

     We have also entered into a services agreement with Cardiff, dated May 15, 2008 and amended on October 21, 2008, whereby Cardiff provides supervisory services for the eight vessels whose technical manager is Wallem in exchange for a fee of $144 (€100) per vessel per day. Cardiff provides other services under this agreement for which we pay additional fees, including a financing fee of 0.2% of the amount of any loan, credit facility, interest rate swap agreement, foreign currency contract and forward exchange contract arranged by Cardiff. We pay Cardiff a commission of 1% of the purchase price on sales or purchases of vessels in our fleet that are arranged by Cardiff, and pay a commission of 1.25% of charterhire agreements arranged by Cardiff. We also pay Cardiff an information technology fee of $36,000 (€25,000) per quarter. We reimburse Cardiff for any out-of-pocket expenses at cost plus 10%. In addition, as of October 1, 2008, we are required to pay Cardiff a fee of $720 (€500) per vessel per day in exchange for any vessel inspection services performed in connection with a possible purchase. On January 14, 2009, pursuant to an addendum to our services agreements with Cardiff with respect to these vessels, we agreed to pay Cardiff, as security for the payment of vessel management fees by us, an amount equal to 90 days managers’ supervision fees for each vessel. The security is not refundable by Cardiff in the event of (i) a change of control in the Company, as defined in the services agreement dated May 15, 2008 and (ii) any public disclosure that the Company is in default of any of its agreements including but not limited to loan agreements and charter party agreements and such default impairs the Company’s ability to continue its operations. We paid a total security payment of $92,160.

Vessel Employment

		Estimated Expiration of	Gross Daily
Vessel Name	Charterer	Charter	Rate
Trenton	Deiulemar Shipping S.p.A.	April 2010 to June 2010	$	26,000
Pierre	Magellano Marine C.V.	June 2010 to October 2010		23,000
Austin	Deiulemar Shipping S.p.A.	April 2010 to June 2010		26,000
Juneau (1)	SK Shipping Europe LTD	September 2009 to November 2009		48,700
Lansing	Transbulk 1904 AB (2)	May 2009 to September 2009		24,000
Helena	Classic Maritime Inc.	May 2012 to January 2013		32,000
Topeka	D’Amato di Navigazione S.p.A.	October 2010 to May 2011		23,100
Richmond	Transbulk 1904 AB	December 2009 to April 2010		29,100
Augusta	South China Lines Ltd. (3)	November 2011 to March 2012		16,000
Pink Sands	Standard Tankers Bahamas Limited	December 2010 to January 2011		27,450
Olinda	Blue Fin Tankers Inc. (4)	Spot Pool -- October 2009
Tigani	Heidmar Trading LLC (5)	September 2009 to November 2009		29,800
Tamara	Tri-Ocean Heidmar Tankers LLC (5)	November 2010 to March 2011		27,000

(1)	The charter rate is fixed at $48,700 through September 2009 and thereafter floats at 20% less than the daily average of the Capesize time charter rates published by the Baltic Exchange.
(2)	Mr. George Economou serves on the board of directors of Transbulk 1904 AB.
(3)	During the period ended September 30, 2008, and through November 18, 2008, the M/V Augusta was chartered to D’Amato di Navigazione S.p.A. Thereafter the vessel commenced its current charter with South China Lines Ltd. See “Recent Developments.”
(4)	On October 11, 2008, the charter of the M/T Olinda at a gross daily charter rate of $41,025 per day was terminated by mutual agreement between the Company and the charterer, Industrial Carriers Inc., as a result of the charterer’s insolvency. In this connection, the

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Company received nonrefundable cash compensation of approximately $1.2 million and ownership of all bunkers on board the M/T Olinda. On October 17, 2008, the M/T Olinda entered into a charter agreement with Blue Fin Tankers Inc., which is a spot pool managed by Heidmar Inc., for a minimum period of 12 months. The vessel’s earnings will be derived from the pool’s total net earnings. Heidmar Inc. is 49% owned by a company associated with Mr. George Economou, and Mr. Antonis Kandylidis, our Chief Executive Officer and Interim Chief Financial Officer, is a member of the Board of Directors of Heidmar Inc.

(5)

Heidmar Trading LLC and Tri-Ocean Heidmar Tankers LLC are controlled by Heidmar Inc.

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Corporate Structure

     OceanFreight Inc. was incorporated on September 11, 2006 under the laws of the Republic of The Marshall Islands. Our principal executive offices are at 80 Kifissias Avenue, GR — 151 25 Amaroussion, Athens, Greece. Our telephone number at that address is +30 210 614 0283. Our website is www.oceanfreightinc.com. The information on our website or accessible through our website shall not be deemed a part of this report. On September 26, 2006, we issued 1,000 common shares, par value $0.01 per share, to Basset Holdings Inc., or Basset, a company controlled by Mr. Antonis Kandylidis, in exchange for a capital contribution of $500,000. Under our Amended and Restated Articles of Incorporation, these shares were converted into 1,000 subordinated shares. Also, on April 3, 2007, our board of directors declared, effective April 5, 2007, a stock split, in the form of a share dividend, in the ratio of 1,999:1 on our subordinated shares, leaving Basset with ownership of 2,000,000 subordinated shares. These shares converted on August 15, 2008, leaving Basset with 2,000,000 common shares representing approximately 10.8% of our outstanding capital stock as of January 30, 2009.

     On April 30, 2007 we completed our initial public offering in the United States under the United States Securities Act of 1933, as amended, the net proceeds of which amounted to $216.8 million. The Company’s common shares are listed on the Nasdaq Global Market under the symbol “OCNF.”

Recent Developments

     We had previously entered into agreements with Cardiff whereby we agreed to provide a corporate guarantee to the owners of two newbuilding Aframax crude oil tankers that will be employed on bareboat charter to clients of Cardiff for a period of five years at an average rate of $20,500 per day payable to the owners of the vessels following their delivery in 2009. Under the terms of the agreements, we would have provided a performance guarantee that the charterer would perform the bareboat charter. The agreements also provided that Cardiff would provide to us a counter-guarantee guaranteeing to us the performance of the charterer under the bareboat charter. In exchange for such performance guarantee, Cardiff agreed to pay us an aggregate of $200,000 following the commencement of the bareboat charter. In September 2008, these agreements and the related counter-guarantees were cancelled and, as a result, we were released from any obligations thereunder and the amount of $200,000 is not payable to us.

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     On May 15, 2008, we entered into a services agreement with Cardiff for a term of five years covering services and fees related to the sale and purchase of vessels, chartering arrangements for vessels, manager supervision for the eight ships managed by Wallem Ship Management Ltd., financing and credit arrangement services and information technology services. This services agreement replaced our interim agreement with Cardiff dated April 11, 2007 and our agreement with Cardiff dated September 7, 2007. On May 15, 2008, we also amended our existing management agreements with Cardiff to extend the terms thereof and to provide for increased management fees in connection with the management of the vessels M/V Juneau, M/T Pink Sands and M/T Olinda, which agreements subsequently were amended on October 21, 2008, with retroactive effect as of October 1, 2008, to further increase such fees to a range of $828 to $972 (€575 to €675) per vessel per day, and provide for a daily superintendent’s fee of $720 (€500) per vessel per day plus expenses payable to Cardiff for any services performed relating to evaluation of the vessel’s physical condition, supervision of shipboard activities or attendance of repairs and drydockings. Under the vessel-specific management agreements with Cardiff for the M/T Tamara and M/T Tigani we are required to pay daily management fees for each vessel of $972 (€675). See the section entitled “Our Fleet Managers” on page 2 of this report and Note 13 to our September 30, 2008 interim consolidated unaudited financial statements for additional information.

     On June 4, 2008, we filed a shelf registration statement on Form F-3, which was declared effective on June 6, 2008, pursuant to which we may sell up to $200 million of an indeterminate number of securities. On June 19, 2008 we filed a prospectus supplement to the registration statement relating to the offer and sale of up to 4,000,000 common shares in a controlled equity offering through Cantor Fitzgerald & Co. as agent for the sale of the common shares. In the fourth quarter of 2008, we completed the sale of 4,000,000 common shares with net proceeds amounting to $50.9 million, of which 2,122,000 shares were sold subsequent to September 30, 2008 for net proceeds of $14.0 million.

     On August 7, 2008, we concluded a memorandum of agreement for the acquisition of the M/T Tamara, a 1990 built double-hull 95,793 dwt Aframax crude oil carrier from interests associated with Mr. George Economou for a purchase price of $39 million. We took delivery of the vessel on October 17, 2008. The purchase price was financed by a sellers’ unsecured credit of $12 million and the Company’s own funds. The sellers’ credit matures in April 2010 and bears interest at 9.0% per annum, and as a result of the resignation of a member of our board of directors described below, is currently payable in proceeds of new equity issuances of our common shares at any time upon two business days’ notice from the sellers. Furthermore, the Company paid to the sellers an arrangement fee of $100,000 pertaining to the granting of the sellers’ credit and $390,000 to Cardiff as a commission of 1% of the purchase price pursuant to our services agreement with Cardiff. On August 8, 2008, we entered into an agreement to time charter the M/T Tamara for a period of approximately two years to Tri-Ocean Heidmar Tankers LLC, which is 49% owned by a company associated with Mr. George Economou, at a gross daily rate of $27,000. The time charter commenced upon the vessel’s delivery to the Company on October 17, 2008. Pursuant to the memorandum of agreement, the sellers have the option, through the date the sellers’ credit is due, to elect repayment of the sellers’ credit in cash or in the form of common shares of our Company. The number of shares that would be issued is calculated based on the average closing price of the Company’s common shares on the Nasdaq Global Market for the five days before the election to receive payment in the form of common shares. Following the election to receive payment in shares, the Company is required to issue such shares within five banking days. There is no lower limit on the share price in such calculation and therefore no cap on the number of common shares potentially issuable pursuant to the sellers’ credit, with the number of shares issuable increasing with any decrease in our share price. In the case of a change of control of the Company, as defined in the memorandum of agreement, the sellers’ credit becomes immediately due and payable within three banking days from the date of the change of control. A change of control, as defined in the agreements, includes any change in the composition of the board of directors.

     On August 14, 2008, we paid a dividend in the amount of $0.77 per share in respect of the second quarter of 2008. As a result of this dividend payment, we satisfied the test under our Amended and Restated Articles of Incorporation for early conversion of all of our subordinated shares into common shares on a one-for-one basis, and this conversion occurred on August 15, 2008.

     On September 3, 2008, we filed a resale shelf registration statement on Form F-3 to register 2,085,150 common shares on behalf of the selling shareholders Basset Holdings Inc., Steel Wheel Investments Limited, and Seabert Shipping Co. This resale shelf registration

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statement was amended on October 30, 2008 and has not yet been declared effective. Basset Holdings Inc. and Steel Wheel Investments Limited are owned and controlled by Mr. Antonis Kandylidis, our Chief Executive Officer and Interim Chief Financial Officer. Seabert Shipping Co. is controlled by Mr. Michael Gregos, our Chief Operating Officer.

     On October 9, 2008, we concluded a memorandum of agreement for the acquisition of the M/T Tigani, a 1991 built double-hull 95,951 dwt Aframax crude oil carrier from interests associated with Mr. George Economou for a purchase price of $40 million. We took delivery of the vessel on October 14, 2008. The purchase price was financed by a sellers’ unsecured credit of $13 million and the Company’s own funds. The sellers’ credit matures in April 2010 and bears interest at 9.5% per annum, and as a result of the resignation of a member of our board of directors described below, is currently payable in proceeds of new equity issuances of our common shares at any time upon two business days’ notice from the sellers. Furthermore, the Company paid to the sellers an arrangement fee of $120,000 pertaining to the granting of the sellers’ credit and $400,000 to Cardiff as a commission of 1% of the purchase price pursuant to our related services agreement with Cardiff. Concurrently with delivery of the vessel, the vessel commenced time charter employment with Heidmar Trading LLC, which is 49% owned by a company associated with Mr. George Economou, for a period of approximately one year at a gross daily rate of $29,800. Pursuant to the memorandum of agreement, the sellers have the option, through the date the sellers’ credit is due, to elect repayment of the sellers’ credit in cash or in the form of common shares of our Company. The number of shares that would be issued is calculated based on the average closing price of the Company’s common shares on the Nasdaq Global Market for the five days before the election to receive payment in the form of common shares. Following the election to receive payment in shares, the Company is required to issue such shares within five banking days. There is no lower limit on the share price in such calculation and therefore no cap on the number of common shares potentially issuable pursuant to the sellers’ credit, with the number of shares issuable increasing with any decrease in our share price. In the case of a change of control of the Company, as defined in the memorandum of agreement, the sellers’ credit becomes immediately due and payable within three banking days from the date of the change of control. A change of control, as defined in the agreements, includes any change in the composition of the board of directors.

     On October 11, 2008, the charter of the M/T Olinda was terminated by mutual agreement between the Company and Industrial Carriers Inc. as a result of the charterer’s insolvency, effective upon completion of its then current voyage. In this connection, the Company received nonrefundable cash compensation of approximately $1.2 million and ownership of all bunkers on board the M/T Olinda. The M/T Olinda will be employed in the Blue Fin Tankers Inc. pool for a minimum period of 12 months. Blue Fin is a spot market pool managed by Heidmar Inc., which is 49% owned by a company associated with Mr. George Economou, and consists of Suezmax vessels. The M/T Olinda’s earnings will be derived from the pool’s total net earnings, which we believe will provide high utilization and operating efficiencies. As part of the termination of the charter for the M/T Olinda, the Company and the charterer agreed to a mutual release of claims.

     On November 6, 2008, we paid a dividend in the amount of $0.77 per share in respect of the third quarter of 2008. The declaration and payment of any dividend is subject to the discretion of our board of directors. On December 12, 2008, our board of directors determined, after careful consideration of various factors, including the recent sharp decline in charter rates and vessel values in the drybulk sector, to suspend the payment of cash dividends until such time as the board of directors shall determine in its discretion, in order to preserve capital. The timing and amount of any future dividend payments will depend on our earnings, financial condition, cash requirements and availability, the restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Please refer to the discussion of risks under the heading “Risk Factors” beginning on Page 8 of this report.

     On November 18, 2008, the M/V Augusta was delivered from its previous charterer, D’Amato di Navigazione S.p.A., to its new charterer, South China Lines. As a result of the significant decline in the drybulk market, we agreed to renegotiate the contracted time charter rate with South China Lines from $42,100 per day to $16,000 per day, and to amend the period of the time charter from a minimum of 34 months and a maximum of 37 months to a minimum of 35.5 months and a maximum of 40 months.

     Effective November 25, 2008, Harry Kerames, a member of our board of directors, resigned for personal reasons. On December 12, 2008, our board of directors appointed Mr. Panagiotis A. Korakas to the board as an independent director. Mr. Korakas was born in 1950 in Athens, Greece. Mr. Korakas has had an extensive career in the construction and construction materials industry, both as an executive and an entrepreneur. For almost ten years, Mr. Korakas was the General Manager of Korakas & Partners, a commercial construction entity, while during the last 15 years he has run a business enterprise specializing in advanced composite metal construction. Following the resignation of Mr. Kerames, which triggered the sellers’ right to early repayment of the sellers’ credit in the amount of $25 million in respect of the vessels M/T Tamara and M/T Tigani, we and the sellers, which are interests associated with Mr. George Economou, agreed that the sellers waived their right to immediate repayment as a result of the change in the composition of the board. We and the sellers have further agreed that the sellers may, at any time following our entry into the amendatory agreement to our Nordea credit facility (described below), demand prepayment of the sellers’ credit upon two business days’ notice, in whole or in part; provided that such prepayment in cash is limited to payment from proceeds of new equity offerings in accordance with the terms of the amendatory agreement. We are obligated to advise the sellers of the proceeds from the sale of new equity.

     On December 12, 2008, our board of directors determined, after careful consideration of various factors, including the recent sharp decline in charter rates and vessel values in the drybulk sector, to suspend the payment of cash dividends until such time as the board of directors shall determine in its discretion, in order to preserve capital.

     On December 23, 2008, the Compensation Committee of our board of directors granted a cash bonus of about $2.3 million to all employees and executive management of the Company, which was paid on December 29, 2008.

     On December 23, 2008, we entered into a loan agreement with DVB Bank SE for a new secured term loan facility. We have used the proceeds of the loan to make the prepayment in the amount of $25.0 million under our amendatory agreement to our Nordea credit facility (described below). The new loan is for an amount that is $29.55 million, being the lesser of $30.5 million or 55% of the aggregate charter free fair market value of the two vessels as determined within the two weeks prior to drawdown, which was fully drawn on January 14, 2009. The loan is repayable over four years from drawdown in 16 quarterly variable installments with the first four installments being $2.75 million each, followed by four installments of $2.31 million each, followed by eight installments of $1.095 million each, plus a balloon installment of $0.55 million payable together with the last installment. The loan bears interest at 3.0% over LIBOR. The loan is secured with first preferred mortgages on the two vessels, a corporate guarantee by the Company, assignment of earnings and insurances and pledge of shares of the borrowers. The loan agreement includes, among other covenants, financial covenants requiring that (i) liquidity must be at least $500,000 multiplied by the number of vessels owned, (ii) total interest bearing liabilities over the sum of total interest bearing liabilities plus shareholders’ equity adjusted to account for the market value of the vessels must not exceed 90% up to June 30, 2010, 80% up to December 31, 2010 and 70% thereafter; (iii) the ratio of EBITDA to net interest expense of any accounting period must not be less than 2.50 to 1; and (iv) the aggregate charter free fair market value of the two vessels must not be less than 140% (increasing by five percentage points each year, reaching 155% in the last year) of the aggregate outstanding balance. The Company is permitted to pay dividends under the loan of up to 50% of quarterly net profits. The Company will pay a commitment fee of 0.65% per annum on the undrawn balance of the loan. The loan agreement contains certain events of default, including a change of control, a cross-default with respect to other financial indebtedness and a material adverse change in the financial position or prospects of the borrowers or the Company. Upon signing the loan agreement, the Company paid an upfront fee of 1.5% ($457,500) of the loan amount.

      As a result of the recent developments in the drybulk and tanker markets discussed above, the market value of our drybulk carriers and tanker vessels has declined. The market value of drybulk and tanker vessels is sensitive to, among other things, changes in the drybulk and tanker charter markets, respectively, with vessel values deteriorating in times when drybulk and tanker charter rates, as applicable, are falling and improving when charter rates are anticipated to rise. The current low charter rates in the drybulk market coupled with the prevailing difficulty in obtaining financing for vessel purchases have adversely affected drybulk vessel values. The recent fall in oil prices has also led to lower tanker charter rates and tanker vessel values. These conditions have led to a significant decline in the fair market values of our vessels since September 30, 2008, particularly our drybulk carriers. As a result, we were at risk of breaching the collateral maintenance coverage ratio covenant under our $325 million senior secured credit facility with Nordea Bank Norge ASA, or Nordea, as lead arranger, which required us to maintain a fair market value of our vessels of at least 140% of our aggregate outstanding balance under the credit facility.

     In this respect, on January 9, 2009, we entered into an amendatory agreement to our Nordea credit facility which became effective on January 23, 2009. The amendatory agreement waives the breach of the collateral maintenance coverage ratio covenant contained in such credit facility resulting from the decrease in the market value of our vessels and reduces the level of the collateral maintenance coverage ratio to a level between 90% and 125% for the remaining term of the agreement, with such waiver taking effect from the date of prior breach to the effective date of the amendatory agreement. In addition the amendatory agreement (i) requires us to make a prepayment of $25.0 million of principal upon the funding of the loan with DVB Bank SE as described above, which such funding and prepayment have been made; (ii) requires us to pay interest at a 2.5% margin over LIBOR; (iii) requires us to pay an arrangement fee of $451,583 which equals 0.15% to each bank syndicate member that consented to the amendatory agreement by January 9, 2009; (iv) prohibits us from paying dividends; (v) limits our ability to make capital expenditures; (vi) imposes restrictions on making payment, in cash, of the sellers’ credit in the aggregate amount of $25.0 million in respect of the M/T Tamara and the M/T Tigani, except that we are permitted to pay the seller’s credit with the proceeds of new equity offerings made on or after January 1, 2009, or in the form of common shares, which the sellers may request at any time, provided that we may not prepay the sellers’ credit in cash if an event of default has occurred and is continuing and (vii) requires us to provide additional collateral. The amendment does not modify the other financial covenants contained in the Nordea credit facility, such as the leverage ratio, interest coverage ratio or liquidity covenants described in “Our Loan Agreement Covenants” on page 7 herein.

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Our Loan Agreement Covenants

     We currently have a $325 million senior secured credit facility with a bank syndicate led by Nordea, consisting of Tranche A, a reducing revolving credit facility of $200 million, and Tranche B, a term loan facility of $125 million. Due to the significant decline in the fair market values of our vessels, particularly our drybulk carriers, we were at risk of breaching the collateral maintenance coverage ratio covenant under this credit facility, which required us to maintain a fair market value of our vessel of at least 140% of our outstanding balance under the credit facility.

     In this respect, on January 9, 2009, we entered into an amendatory agreement to our Nordea credit facility that went effective on January 23, 2009. The amendatory agreement waives the breach of the collateral maintenance coverage ratio covenant contained in such credit facility resulting from the decrease in the market value of our vessels and reduces the level of the collateral maintenance coverage ratio from 140% to a level between 90% and 125% for the remaining term of the agreement, with such waiver taking effect from the date of prior breach to the effective date of the amendatory agreement. In addition, under the amendatory agreement (i) we are required to make a prepayment of $25 million of principal no later than January 31, 2009, which such prepayment has occurred and has reduced the final balloon payment of our term loan facility under Tranche B; (ii) we are required to pay interest at a 2.5% margin over LIBOR; (iii) we are required to pay an arrangement fee of 0.15% to each bank syndicate member under the credit facility having consented to the amendatory agreement by January 9, 2009; (iv) we are prohibited from paying dividends; (v) we are prohibited from making any capital expenditures except for those related to the ordinary course of business of our ships; (vi) we are restricted from paying, in cash, the sellers’ credit prior to maturity in the aggregate amount of $25.0 million in respect of the M/T Tamara and the M/T Tigani, except that we are permitted to pay the sellers’ credit from proceeds from one or more equity offerings made on or after January 1, 2009, or in the form of common shares, which the sellers may request at any time; provided that, we may not prepay the sellers’ credit in cash if an event of default has occurred and is continuing; and (vii) we are required to provide additional collateral in the form of second priority mortgages on the vessels M/T Tamara and M/T Tigani and third priority mortgages on the M/V Austin and M/V Trenton.

      On December 23, 2008, we entered into a new secured term loan facility with DVB Bank. We have used the proceeds of the loan to make the prepayment in the amount of $25.0 million under our amendatory agreement to our Nordea credit facility. The amount of the new credit facility is $29.55 million, being the lesser of $30,500,000 and 55% of the aggregated charter free fair market value of the above two vessels as determined within the two weeks prior to drawdown, which was fully drawn down on January 14, 2009. Upon signing of the new credit facility agreement, we paid an upfront fee of 1.50% of the loan amount and we will pay a commitment fee of 0.65% per annum calculated on the undrawn amount of the loan. The loan bears interest at 3.0% over LIBOR.

     Both of our credit facilities with Nordea and DVB Bank SE include certain events of default, such as a change of control, a cross-default with respect to financial indebtedness or a material adverse change in the financial position or prospects of the borrowers or the Company. Under the DVB credit facility agreement, the failure of our Chief Executive Officer, Mr. Antonis Kandylidis, or a company controlled by him or his immediate family, to maintain his existing beneficial ownership of all common shares he currently owns in our company, or his failure to remain a member of the board of directors, would violate an affirmative covenant. Our loan agreements also include, among other covenants, financial covenants requiring:

• (i) in the case of our Nordea credit facility, the ratio of funded debt to the sum of funded debt plus shareholders’ equity at each quarter be no greater than 0.70 to 1.00. Funded debt is defined as including all financial indebtedness and obligations under interest rate agreements, guarantees and all obligations to pay a specific price for goods and services whether or not accepted and (ii) in the case of our DVB credit facility, the ratio of interest bearing debt over the sum of the total interest bearing debt plus shareholders’ adjusted equity at each quarter be no greater than 0.90 to 1.00 up to June 30, 2010, 0.80 to 1.00 up to December 31, 2010 and 0.70 to 1.00 thereafter. For purposes of calculating DVB credit facility ratio, the shareholders’ equity will be adjusted to account for the difference between the market value and the net book value of our vessels and other assets;

• liquidity must not be less than $500,000 multiplied by the number of vessels owned. Liquidity under our DVB credit facility is defined as cash, and under our Nordea credit facility it is defined as cash, cash equivalents and undrawn availability under Tranche A with a maturity of less than 12 months;

• the ratio of EBITDA to net interest expense at each quarter end must not be less than 2.50 to 1; and

• (i) in the case of our Nordea credit facility, the aggregate fair market value of the vessels in our fleet other than the M/T Tamara and M/T Tigani, plus proceeds from a vessel’s sale or insurance proceeds from a vessel’s loss, and the excess of the fair market value of each of the M/T Tamara and M/T Tigani over the recorded amount of the first priority ship mortgage over each such vessel under our DVB credit facility, shall be not less than (a) 90% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A until June 30, 2009, (b) 100% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A from July 1, 2009 to December 31, 2009, (c) 110% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A from January 1, 2010 to March 31, 2010, (d) 115% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A from April 1, 2010 to June 30, 2010, and (e) 125% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A at all times thereafter; and (ii) in the case of our DVB credit facility, the aggregate charter free market value of the M/T Tamara and M/T Tigani must not be less than 140% of the aggregate outstanding balance under the DVB credit facility, a ratio that increases by five percentage points each year, reaching 155% in the last year.

     Under our Nordea credit facility, EBITDA is defined as consolidated earnings before interest, taxes, depreciation and amortization and drydocking expenses, adjusted for non-cash losses or gains and extraordinary gains on asset sales that have been included in the calculation of consolidated earnings. Under our new credit facility, EBITDA is defined as consolidated earnings before interest, taxes, depreciation and amortization, adjusted for non-cash losses or gains on asset sales adding back any vessels’ survey and drydocking expenses.

     Under our loan agreements, a change-of-control will be deemed to have occurred if (i) a person or entity that was not a beneficial owner of our capital stock at the respective time of our entry into such facility becomes the beneficial owner, directly or indirectly, of more than 20% of the voting or ownership interest in our company or (ii) our board of directors ceases to consist of a majority of directors existing as of the date we entered into such agreement or directors nominated by at least two-thirds of the then-existing directors. A change of control constitutes an event of default under our loan agreements and therefore entitles our lenders to declare our indebtedness under such agreements immediately due and payable.

     Under the January 9, 2009 amendatory agreement to our Nordea credit facility, which matures in October 2015, we are prohibited from paying dividends during the term of such credit facility. In the event that we are permitted to pay cash dividends under our Nordea credit facility, our DVB loan agreement contains additional restrictions. Under our DVB loan, we will be permitted, without our lender’s consent, to pay dividends of up to 50% of quarterly net profits if our Company has been profitable for the preceding four quarters and if we comply with all covenants. Dividend payments that would require use of the remaining 50% of our quarterly net profits would be subject to our lender’s consent.

     On December 12, 2008, our board of directors determined, after careful consideration of various factors, including the recent sharp decline in charter rates and vessel values in the drybulk sector, to suspend the payment of cash dividends until such time as the board of directors shall determine in its discretion, in order to preserve capital.

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     As noted above, we have amended our Nordea credit facility in order to obtain a reduction of the collateral maintenance coverage ratio in light of current vessel values. We may need to seek permission from our lenders, under the terms of this amendment or the other terms of our loan agreements, in order to engage in some corporate actions that would otherwise put us at risk of default. Our lenders’ interests may be different from ours and we may not be able to obtain our lenders’ permission or waivers when needed. This may limit our ability to continue to conduct our operations, reinstate the payment of dividends, finance our future operations, make acquisitions or pursue business opportunities.

RISK FACTORS

     Set forth below are updated or additional risk factors which should be read together with the risk factors contained in our Registration Statement on Form F-3 (Registration No. 333-150579) declared effective on June 6, 2008 and our Annual Report on Form 20-F for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on March 7, 2008.

Industry Specific Risk Factors

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The downturns in the drybulk carrier and tanker charter markets may have an adverse effect on our earnings, affect compliance with our loan covenants, and require us to raise additional capital in order to comply with our loan covenants.

     The BDI, a daily average of charter rates in 26 shipping routes measured on a time charter and voyage basis covering Supramax, Panamax and Capesize drybulk carriers, declined from a high of 11,793 in May 2008 to 1,004 on January 27, 2009, reaching a low of 663 in December 2008, which represents a decline of 94%. The BDI fell over 70% during the month of October alone. 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 follow 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.

     In the second half of 2008 and beginning of 2009, the slowdown in global economic growth led to a significant decline in oil prices from a high of $145 per barrel in July 2008 to $42 per barrel on January 27, 2009 after reaching a low of $39 per barrel in November 2008. OPEC has responded to this decrease in oil price by reducing oil supply significantly. The recent rapid decline in global oil prices has negatively impacted tanker charter rates as well as the value of our tanker vessels. According to industry sources, the average spot market rate for a Suezmax tanker for the benchmark Suezmax tanker route loading in West Africa and discharging in the U.S. Atlantic Coast declined from a high of $138,943 per day in July 2008 to a low of $35,018 per day in November 2008, which represents a decline of 75%. The average spot market rate for this benchmark route was $56,574 per day on December 31, 2008, which represents a decline of 59% from the high reached in July 2008. Although this effect has not been as severe as the decline in the drybulk market, this decline in tanker charter rates and commensurate decline in our tanker vessel values affects our cash flows, liquidity and compliance with the covenants contained in our loan agreements.

     On January 9, 2009, we entered into an amendment to our Nordea credit facility waiving the prior breach of the collateral maintenance coverage ratio contained in such credit facility resulting from the decrease in the market value of our vessels and reducing the level of the collateral maintenance coverage ratio for the remaining term of the agreement.

     If the current low charter rates in the drybulk and tanker markets continue through any significant period in 2009 and 2010, when time charters for our vessels expire and we are consequently exposed to then-prevailing charter rates, our earnings may be adversely affected. If these trends continue, in order to remain viable, we may have to extend the period in which we suspend dividend payments or reinstate dividend payments at a reduced level (subject to restrictions in our credit facilities, including a prohibition on dividend payments set forth in our amended Nordea credit facility, which matures in October 2015), sell vessels in our fleet and/or seek to raise additional capital in the equity markets. If we are able to sell additional shares at a time when the charter rates in the drybulk and tanker charter markets are low, such sales could be at prices below those at which shareholders had purchased their shares, which could, in turn, result in significant dilution of our then existing shareholders and affect our ability to pay dividends and our earnings per share. Even if we are able to raise additional capital in the equity markets, there is no assurance we will be able to comply with our loan covenants.

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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 dry bulk commodities in ports in the Asia Pacific region. As a result, negative change in economic conditions in any Asia Pacific country, but 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 position 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. Through the end of the third quarter of 2008, China’s gross domestic product was approximately 2.3% lower than it was during the same period in 2007, and 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 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, results of operations, ability to pay dividends as well as our future prospects, will likely be materially and adversely affected by a further economic downturn in any of these countries.

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

     There are strong signs that the United States and other parts of the world are experiencing significantly deteriorating economic conditions and have entered into a recession. For example, the credit markets worldwide and in the United States have experienced significant contraction, de-leveraging and reduced liquidity, and the United States federal government, state governments and foreign 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 U.S. Securities and Exchange Commission, 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 January 30, 2009, we had total outstanding indebtedness of $330.6 million consisting of $305.6 million under our existing credit facilities and a $25.0 million sellers’ credit due in connection with the acquisition of the M/T Tigani and M/T Tamara.

     We face risks attendant to changes in economic environments, changes in interest rates, and instability in certain securities markets, 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. The current market conditions may last longer than we anticipate. These recent and developing economic and governmental factors may have a material adverse effect on our results of operations, financial condition or cash flows and could cause the price of our common shares to further decline significantly.

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, with drybulk vessels and tankers particularly vulnerable to such attacks. For example, in November 2008, the M/V 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, and was released in January 2009 upon a ransom payment of $3 million. If these piracy attacks result in regions in which our vessels are deployed being characterized as “war risk” zones by insurers, 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. In addition, crew costs, including due to employing onboard security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any 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 ability to reinstate the payment of dividends.

Company Specific Risk Factors

We may not be able to comply with the collateral maintenance coverage ratio covenants in our credit facilities, which may affect our ability to conduct our business if we are unable to obtain waivers or covenant modifications from our lenders.

     Our two credit facilities, with Nordea Bank Norge ASA and DVB Bank SE, respectively, require us to maintain a minimum ratio of the fair market value of our vessels mortgaged thereunder to our aggregate outstanding balance under each respective credit facility (please see “Our Loan Agreement Covenants” on page 7 herein). The market value of drybulk and tanker vessels is sensitive to, among other things, changes in the drybulk and tanker charter markets, respectively, with vessel values deteriorating in times when drybulk and tanker charter rates, as applicable, are falling and improving when charter rates are anticipated to rise. The current low in charter rates in the drybulk market coupled with the prevailing difficulty in obtaining financing for vessel purchases have adversely affected drybulk vessel values. The recent fall in oil prices has also led to lower tanker charter rates and tanker vessel values. These conditions have led to a significant decline in the fair market values of our vessels since September 30, 2008, particularly our drybulk carriers.

     On January 9, 2009, we entered into an amendatory agreement to our Nordea credit facility which became effective on January 23, 2009. The amendatory agreement waives the breach of the collateral maintenance coverage ratio covenant contained in such credit facility resulting from the decrease in the market value of our vessels and reduces the level of the collateral maintenance coverage ratio to a level between 90% and 125% for the remaining term of the agreement, with such waiver taking effect from the date of prior breach to the effective date of the amendatory agreement. Although we expect to be in compliance with the collateral maintenance coverage ratio covenants under our two credit facilities, in the future we may fall out of compliance if our vessel values experience further declines. If this were to occur, under the terms of our two credit facilities, our lenders could require us to post additional collateral or pay down our indebtedness to a level where we are in compliance with our loan covenants and, if we are unable to post this collateral, make these prepayments or obtain a waiver, our lenders could accelerate our indebtedness, which would impair our ability to continue to conduct our business. In such an event, our auditors may give either an unqualified opinion with an explanatory paragraph relating to the disclosure in the notes to our financial statements as to the substantial doubt of our ability to continue as a going concern, or a qualified, adverse or disclaimer of opinion, which could lead to additional defaults under our loan agreements.

     If the current low charter rates in the drybulk market and the tanker market and low vessels values continue or decrease further, our ability to comply with various other covenants in our loan agreements may be adversely affected. In such event, we may have to seek additional covenant modifications or waivers. Any default by or the failure of our charterers to honor their obligations to us under our charter agreements would reduce the likelihood that our lenders would be willing to provide waivers or covenant modifications or other accommodations. If our indebtedness is accelerated in full or in part, 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.

     Furthermore, if the current low charter rates in the drybulk market and the tanker market continue or decrease further, we may have to record impairment adjustments to our financial statements (please see “Vessel Lives and Impairment” on page 18 herein), which would adversely affect our financial results and further hinder our ability to raise capital. If we find it necessary to sell our vessels at a time when vessel prices are low, we will recognize losses and a reduction in our earnings which could affect our ability to raise additional capital necessary to comply with our loan covenants.

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We depend upon a few significant customers for a large part of our revenues and the loss of one or more of these customers could adversely affect our financial performance.

     We derive a significant part of our revenue from a small number of customers, with 59% of our revenues for the nine-month period ended September 30, 2008 generated from four charterers. Our fleet is employed under fixed rate period charters or pooling arrangements to nine customers or their affiliates. If one or more of these customers is unable to perform under one or more charters with us and we are not able to find a replacement charter, or if a customer exercises certain rights to terminate the charter, we could suffer a loss of revenues that could materially adversely affect our business, financial condition and results of operations.

     We could lose a customer or the benefits of a time charter if, among other things:

• the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise;

• the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or if we are otherwise in default under the charter; or

• the customer terminates the charter because the vessel has been subject to seizure for more than a specified number of days.

     If we lose a key customer, we may be unable to obtain charters on comparable terms or may become subject to the volatile spot market, which is highly competitive and subject to significant price fluctuations. The time charters on which we deploy 12 of the vessels in our fleet provide for charter rates that are significantly above current market rates, particularly spot market rates that most directly reflect the current depressed levels of the drybulk and tanker charter markets. If it were necessary to secure substitute employment, in the spot market or on time charters, for any of these vessels due to the loss of a customer in these market conditions, such employment would be at a significantly lower charter rate than currently generated by such vessel, or we may be unable to secure a charter at all, in either case, resulting in a significant reduction in revenues. For example, we had entered into a time charter for one of our tanker vessels, the M/T Olinda at a rate of $41,025 per day with Industrial Carriers Corp. and on October 11, 2008, the charter was terminated by mutual agreement as a result of the charterer’s insolvency. We have since deployed the vessel in the Blue Fin Tankers Inc. spot market pool where the vessel generates revenues based on spot market charter rates. The loss of any of our customers, time charters or vessels, or a decline in payments under our charters, could have a material adverse effect on our business, results of operations and financial condition and our ability to pay dividends, if any, in the future.

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

     Twelve of our vessels are currently employed under time charters with ten customers, with 59% of our revenues for the nine months ended September 30, 2008 generated from four customers chartering our drybulk carriers. The ability and willingness of each of our counterparties to perform its obligations under a time charter agreement 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 and tanker industries and the overall financial condition of the counterparty. In addition, in depressed market conditions, there have been reports of charterers renegotiating their charters or defaulting on their obligations under charters and our customers may fail to pay charterhire or attempt to renegotiate charter rates. For example, we recently agreed to reduce the contracted charter rate for one of our drybulk vessels, the M/V Augusta, from $42,100 per day to $16,000 per day. The time charters on which we deploy 12 of the vessels in our fleet, including the M/V Augusta, provide for charter rates that are significantly above current 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, and any new charter arrangements we secure in the spot market or on time charters would be at lower rates given currently decreased charter rate levels, particularly in the drybulk carrier market. For example, we had entered into a time charter for one of our tanker vessels, the M/T Olinda, at a rate of $41,025 per day with Industrial Carriers Corp. and on October 11, 2008, the charter was terminated by mutual agreement as a result of the charterer’s insolvency. We have since deployed the vessel in the Blue Fin spot market pool where the vessel generates revenues based on spot market charter rates. 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.

Our earnings may be adversely affected if we do not successfully employ our vessels.

     Our strategy is to employ our vessels on fixed rate period charters, three of which expire in 2009. In addition, one of our vessels, the M/T Olinda, is employed in a spot market pool. Current charter rates have sharply declined from historically high levels and the charter market remains volatile. In the past, charter rates for vessels have declined below operating costs of vessels. If our vessels become available for employment in the spot market or under new period charters during periods when charter rates are at depressed levels, we may have to employ our vessels at depressed charter rates which would lead to reduced or volatile earnings. We cannot assure you that future charter rates will be at a level that will enable us to operate our vessels profitably or to reinstate dividend payments or repay our debt.

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

     In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. As of January 30, 2009, our fleet has an average age of 13.9 years. 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, safety or other equipment standards related to the age of vessels may 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. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

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 two interest rate swaps for purposes of managing our exposure to fluctuations in interest rates applicable to indebtedness under our Nordea credit facility which was 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. Since 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 such 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, including under our new DVB credit facility, 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 September 30, 2008, the fair value of our interest rate swaps was an unrealized gain of $1.2 million. Due to the decline in interest rates since September 30, 2008, the fair value of our interest rate swaps at December 17, 2008, which is the most recent date for which the Company has received a fair value estimate, amounted to an unrealized loss of approximately $17.0 million. See Note 7 to our interim consolidated unaudited financial statements as of and for the nine month period ended September 30, 2008.

Investors may experience significant dilution as a result of the financing of recent vessel acquisitions and future offerings.

     Pursuant to the sellers’ credit aggregating $25 million with which we financed a portion of the acquisition cost for the M/T Tamara and the M/T Tigani in October 2008, the sellers of such vessels, which are interests associated with Mr. George Economou, can elect to receive payment for such credit in our common shares at any time, which would increase the number of our outstanding common shares. The number of shares potentially issuable pursuant to the sellers’ credit is calculated based on the average closing price of our common shares on the Nasdaq Global Market for the five days before the election to receive payment in the form of common shares. There is no lower limit on the share price in such calculation and therefore no cap on the number of common shares potentially issuable pursuant to the sellers’ credit, with the number of shares issuable increasing with any decrease in our share price. Assuming that election was made with respect to the aggregate of $25 million and assuming such average share price equals $3.83, which was the last reported sale price for our common shares on The Nasdaq Global Market on January 29, 2009, we would issue 6,527,415 common shares, representing an approximate 35.2% increase in our issued and outstanding common shares. As our loan agreements contain provisions providing that a change-of-control will be deemed to have occurred if a person or entity, that was not a beneficial owner of our capital stock at the respective times of our entry into such agreements, becomes the beneficial owner, directly or indirectly, of more than 20% of the voting or ownership interest in our company, such issuances of common shares could result in a change-of-control constituting an event of default under these loan agreements that entitles our lenders to declare all of our indebtedness thereunder immediately due and payable.

     In addition the proceeds raised by the sale of our shares in any particular offering we may undertake may not be sufficient to meet our capital needs, particularly if the charter rates in the drybulk and tanker charter markets remain low for a prolonged period of time and we may have to attempt to sell additional shares. As we seek to satisfy our capital needs, lenders may be unwilling to provide future financing or will provide future financing at significantly increased rates.

      If we are able to sell shares in the future, the prices at which we sell these shares will vary, and these variations may be significant. Purchasers of the shares we sell pursuant to future offerings, as well as our existing shareholders, will experience significant dilution if we sell these future shares at prices significantly below the price at which previous shareholders invested.

Our board of directors has recently determined to suspend the payment of cash dividends as a result of market conditions in the international shipping industry, and until such market conditions significantly improve, it is unlikely that we will reinstate the payment of dividends and if reinstated, it is likely that any dividend payments would be at reduced levels.

     We previously paid regular cash dividends on a quarterly basis from our operating surplus, in amounts substantially equal to our available cash from operations in the previous quarter, less any cash reserves for dry-dockings and working capital, as determined by our board of directors. Our board of directors has recently determined to suspend the payment of cash dividends as a result of market conditions in the international shipping industry and in particular the sharp decline in charter rates and vessel values in the drybulk sector. Until such market conditions significantly improve, it is unlikely that we will reinstate the payment of dividends and if reinstated, it is likely that any dividend payments would be at reduced levels. Furthermore, the amendatory agreement to our Nordea credit facility, which matures in October 2015, prohibits us from paying dividends. In addition, in the event that we are permitted to pay cash dividends under our Nordea credit facility, our DVB loan agreement contains additional restrictions. Specifically, we will be required to obtain our lender’s consent for dividend payments in excess of 50% of our quarterly net profit. Accordingly, pursuant to the restrictions on dividend payments contained in our DVB credit facility, had it been in effect when we declared our dividend of $0.77 per share in respect of the third quarter of 2008, we would have been required to obtain the consent of our lender thereunder in order to pay a dividend above $0.31 per share, or reduce our dividend by 60.0%, on a per share basis, to $0.31 per share.

     As a result of deteriorating market conditions and restrictions imposed by our lenders, we will not reinstate the payment of dividends until our Nordea credit facility matures in October 2015 or the prohibition on our payment of dividends is removed from our amended Nordea credit facility agreement. If reinstated, it is likely that any dividend payments would be at reduced levels.

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PER SHARE MARKET PRICE INFORMATION

     Our common shares have traded on the NASDAQ Global Market under the symbol “OCNF” since April 30, 2007.

     The table below sets forth the high and low closing prices for each of the periods indicated for our common shares.

2007	High		Low
April 30, 2007 to June 30, 2007	$	20.70	$	19.14
3rd Quarter ended September 30, 2007		24.40		18.80
4th Quarter ended December 31, 2007		30.45		16.88
2007 Annual		30.45		16.88

2008	High		Low
1st Quarter ended March 31, 2008	$	24.65	$	15.30
2nd Quarter ended June 30, 2008		26.70		21.48
3rd Quarter ended September 30, 2008		22.76		12.29
4th Quarter ended December 31, 2008		13.60		1.87
2008 Annual		26.70		1.87

Most Recent Six Months	High		Low
July 2008	$	22.76	$	19.41
August 2008		20.15		17.05
September 2008		18.63		12.29
October 2008		13.60		6.05
November 2008		6.58		1.87
December 2008		5.11		2.33
January 1 to 29, 2009		5.23		3.27

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise specified herein, references to “OceanFreight Inc.” or the “Company” or “we” shall include OceanFreight Inc. and its applicable subsidiaries. The following management’s discussion and analysis is intended to discuss our financial condition, changes in financial condition and results of operations, and should be read in conjunction with our interim consolidated unaudited financial statements and their notes included therein.

This discussion contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995, as codified in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward looking statements 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 among which are the following: (i) charter demand and/or charter rates, (ii) production or demand for the types of drybulk and petroleum products that are transported by the Company’s vessels, or (iii) operating costs including but not limited to changes in crew salaries, insurance, provisions, repairs, maintenance and overhead expenses. For additional information on the Company’s financial condition and results of operation please refer to our Annual Report on Form 20-F for the year ended December 31, 2007 filed with the Securities and Exchange Commission on March 7, 2008.

Operating Results

We generate revenues by charging customers for the transportation of drybulk and crude oil cargoes using our vessels. Twelve of our thirteen vessels are currently employed under time charters to well-established and reputable charterers. One vessel, the M/T Olinda, is employed in the Blue Fin Tankers Inc. spot market pool and we may employ additional vessels under spot market charters in the future. A time charter is a contract for the use of a vessel for a specific period of time during which the charterer pays substantially all of the voyage expenses, including port and canal charges and the cost of bunkers (fuel oil), but the vessel owner pays the vessel operating expenses, including the cost of crewing, insuring, repairing and maintaining the vessel, the costs of spares and consumable stores and tonnage taxes. Under a spot market charter, the vessel owner pays both the voyage expenses (less specified amounts covered by the voyage charterer) and the vessel operating expenses. Under both types of charters we pay commissions to ship brokers and to in-house brokers associated with the charterer, depending on the number of brokers involved with arranging the charter. Vessels operating in the spot-charter market generate revenues that are less predictable than time charter revenues but may enable us to capture increased profit margins during periods of improvement in drybulk and tanker rates. However, we are exposed to the risk of declining drybulk and tanker rates when operating in the spot market, which may have a materially adverse impact on our financial performance. As of September 30, 2008, our charters had remaining terms ranging between two months and 51 months.

Factors Affecting our Results of Operations

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

• Calendar days. Calendar days are the total days the vessels were in our possession for the relevant period including off hire days.

• Voyage days. Total voyage days are the total days the vessels were in our possession for the relevant period net of off hire days.

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

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• TCE rates. Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. TCE is a non-GAAP measure. Our method of calculating TCE is consistent with industry standards and is determined by dividing gross 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 is a standard shipping industry performance measure that we use because we believe it is useful in comparing 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 our calendar days, voyage days, fleet utilization and daily TCE rate for the nine-month period ended September 30, 2008.

	Drybulk
	Carriers			Tankers			Fleet
Calendar days		2,466			532			2,998
Voyage days		2,458			532			2,990
Fleet utilization		99.7	%		100	%		99.7	%
Time charter equivalent (TCE) daily rate	$	33,985		$	42,065		$	35,423

The following table reflects the calculation of our TCE daily rates for the nine-month period ended September 30, 2008:

(Dollars in thousands except for Daily TCE rate)

	Drybulk
	Carriers			Tankers			Fleet
Voyage revenues and imputed deferred revenue	$	87,805		$	30,766		$	118,571
Voyage expenses		(4,270	)		(8,387	)		(12,657	)
Time charter equivalent revenues	$	83,535		$	22,379		$	105,914
Total voyage days for fleet		2,458			532			2,990
Daily TCE rate	$	33,985		$	42,065		$	35,423

• Spot Charter Rates. Spot charterhire rates are volatile and fluctuate on a seasonal and year-to-year basis. The 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.

• Voyage and Time Charter Revenue. Our revenues will be driven primarily by the number of vessels in our fleet, the number of days during which our vessels operate and the amount of daily charterhire rates that our vessels earn under charters, which, in turn, will be affected by a number of factors, including:

• the duration of our charters;

• 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 and crude oil shipping industries; and

• other factors affecting spot market charterhire rates for drybulk and tanker vessels.

With the exception of the M/T Olinda, all of our vessels are employed under time charters, which, as of September 30, 2008 had a remaining duration of a minimum of two months and a maximum of 51 months. We believe that these long-term charters provide better stability of earnings than spot market rates and consequently increase our cash flow visibility to our shareholders.

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The M/T Olinda is employed in a spot market pool. Under the pooling agreement, the vessel will earn charterhire in accordance with the pool point formula as defined in the pool agreement. The pooling agreement provides that charterhire will be paid 30 days in arrears and bunkers on board at the time of delivery will be paid with the first hire payment. Preliminary charterhire will be based on the pool’s then current earnings, and is not a guaranteed minimum rate obligation of the pool company. Hire is inclusive of overtime, communication, and victualling. The preliminary charterhire may be adjusted either up or down as necessary by the pool committee depending on the prevailing market condition of the pool. Each vessel’s earnings will be adjusted quarterly according to their actual operating days in the pool with surplus funds, if any, distributed based on each vessel’s rating as defined in the pool point formula.

Imputed Deferred Revenue

We record any identified assets or liabilities associated with the acquisition of a vessel at fair market value, determined by reference to market data. We value any asset or liability arising from the fair market value of assumed time charters as a condition of the original purchase of a vessel at the date when such vessel is initially deployed on its charter. The value of the asset or liability is based on the difference between the current fair market value of a charter with similar characteristics as the time charter assumed and the net present value of contractual cash flows of the time charter assumed, to the extent the vessel capitalized cost does not exceed its fair market value without a time charter contract. When the present value of contractual cash flows of the time charter assumed is greater than its current fair market value, the difference is recorded as imputed prepaid revenue. When the opposite situation occurs, the difference is recorded as imputed deferred revenue. Such assets and liabilities are amortized as a reduction of, or an increase in, revenue, respectively, during the period of the time charter assumed. The Trenton, Austin, Pierre and Topeka were acquired with an existing time charter at a below market rate.

Voyage Expenses

By employing our vessels on spot market voyage charters, we incur voyage expenses that include port and canal charges and bunker expenses, unlike under time charter employment, where such expenses are assumed by the charterers.

As is common in the drybulk and crude oil shipping industries, we pay commissions ranging from 1.25% to 6.25% of the total daily charterhire rate of each charter to ship brokers associated with the charterers.

Vessel Operating Expenses

Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses. They additionally include management fees for the technical management of our fleet, which includes managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging the employment and transportation of officers and crew, arranging and supervising drydocking and repairs, purchasing of spares and other consumable stores and other duties related to the operation of our vessels.

Our total vessel operating expenses will increase in the future with the enlargement of our fleet and the operation of our existing fleet for the full year. 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.

General and Administrative Expenses

Our general and administrative expenses include the salaries and other related costs of the executive officers and other employees, our office rents, legal and auditing costs, regulatory compliance costs, other miscellaneous office expenses, long-term compensation costs, and corporate overhead.

The total unrecognized compensation cost at September 30, 2008 amounted to $592,000 and is expected to be recognized until September 24, 2009. The number of restricted subordinated shares that vested during the nine-month period ended September 30, 2008 was 82,575 shares.

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Vessel Lives and Impairment

The carrying value of each of the Company’s vessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years from the date such vessel was originally delivered from the shipyard. The actual life of a vessel may be different. The carrying values of the Company’s vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Historically, both charter rates and vessel values tend to be cyclical. The Company records impairment losses only when events occur that cause the Company to believe that future cash flows for any individual vessel will be less than its carrying value. The carrying amounts of vessels held and used by the Company are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular vessel may not be fully recoverable. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the vessel and its eventual disposition is less than the vessel’s carrying amount. This assessment is made at the individual vessel level as separately identifiable cash flow information for each vessel is available.

In developing estimates of future cash flows, the Company must make assumptions about future charter rates, ship operating expenses, vessels’ residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective.

Depreciation

We depreciate our vessels based on a straight line basis over the expected useful life of each vessel, which is 25 years from the date of their initial delivery from the shipyard. Depreciation is based on the cost of the vessel less its estimated residual value at the date of the vessel’s acquisition, which is estimated at U.S. $200 per lightweight ton, which we believe is common in the drybulk and tanker shipping industries. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful lives. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its useful life is adjusted to end at the date such regulations become effective.

Drydocking

We expense the total costs associated with drydocking and special surveys in the period that they are incurred. Regulations or incidents may change the estimated dates of the next drydocking for our vessels.

Interest and Finance Costs

We have historically incurred interest expense and financing costs in connection with debt incurred to partially finance the acquisition of our vessels. As of September 30, 2008, we had $316.5 million of indebtedness outstanding under our $325 million senior secured credit facility. Fees incurred for obtaining new loans or refinancing existing ones, including related legal and other professional fees, are deferred and amortized to interest expense over the life of the related debt. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing occurs.

Gain on Derivative Instruments

On January 29, 2008, we entered into two interest rate swap agreements with Nordea Bank Finland Plc to partially hedge our exposure to fluctuations in interest rates on $316.5 million of our long-term debt discussed in Note 5 to the interim consolidated unaudited financial statements, by converting our variable rate debt to fixed rate debt. Under the terms of the interest rate swap agreement we and the bank agreed to exchange, at specified intervals, the difference between paying a fixed rate at 3.55% and a floating rate interest amount calculated by reference to the agreed principal amounts and maturities. The gain derived from the derivative valuation movement is separately reflected in the interim consolidated unaudited statement of income.

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Fleet Employment Profile

Please see the information under “Vessel Employment” on page 2 of this report.

RESULTS OF OPERATIONS

We began operations in early June 2007 and therefore our ability to present a meaningful comparison of our results of operations for the nine-month period ended September 30, 2008 with the same period in 2007 is limited due to our limited operations from June 2007 through September 30, 2007. The Company commenced operations in June 2007 when it acquired its first four vessels and, therefore, until that date it was a development stage enterprise in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 7 “Accounting and Reporting By Development Stage Companies.”

As discussed in our interim consolidated unaudited financial statements, we have two reportable segments, the drybulk carrier segment and the tanker segment.

Nine-Month Period Ended September 30, 2008 Compared to the Nine-Month Period Ended September 30, 2007

Voyage Revenues

Voyage revenue for the first nine months of 2008 was $110.8 million. Of our revenues, $80.1 million was earned from our drybulk carriers and $30.7 million was earned from our tanker vessels. For the same period of 2007, voyage revenue was $15.6 million. The increase in revenues is due to the increase in the number of vessels from seven in the first nine months of 2007 to 11 in the same period of 2008, and the increase in voyage days from 582 days in the first nine months of 2007 to 2,990 days in the same period of 2008. This resulted in a TCE rate of $32,839 per day and $25,265 per day for 2008 and 2007, respectively. Beginning at the end of the second quarter, drybulk rates began to steadily decline and then rapidly declined in September 2008 through the fourth quarter of 2008.

Imputed Deferred Revenue

The amortization of imputed deferred revenue for the first nine months of 2008 amounted to $7.7 million compared to $2.4 million for the same period in 2007. This increase is attributable to the increase in voyage days as a result of the four vessels acquired in June and August 2007 being operational for the full nine-month period ended September 30, 2008.

Voyage Expenses

In the first nine months of 2008, our voyage expenses were $12.7 million, of which $8.4 million relates to our tanker vessels and $4.3 million relates to our drybulk carriers, and which consisted of bunker expenses of $5.8 million, port, canal and other charges of $1.7 million and commissions of $5.2 million. Voyage expenses for the first nine months of 2007 amounted to $0.9 million, all of which related to our drybulk carriers. This increase in voyage expenses is attributable to the increase in the number of vessels from seven drybulk carriers in the first nine months of 2007 to eight drybulk carriers and three tankers in the same period of 2008, increasing the voyage days from 582 days in the 2007 period to 2,990 days in the 2008 period.

Vessel Operating Expenses

For the first nine months of 2008, our vessel operating expenses were $19.7 million of which $14.7 million relates to our drybulk carriers and $5 million relates to our tanker vessels. The average daily operating expenses on a fleet basis were $6,576 per vessel ($5,952 per day per drybulk carrier and $9,468 per day per tanker vessel).

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For the first nine months of 2007, our vessel operating expenses were $4.9 million, all of which relates to our drybulk carriers. The average daily operating expenses on a fleet basis were $7,576 per vessel.

The increased daily operating costs for drybulk carriers in the 2007 period as compared to the 2008 period is attributable to repairs made during the drydocking of the M/V Juneau in 2007 that were charged to operating expenses.

General and Administrative Expenses

For the first nine months of 2008, we incurred $5.6 million of general and administrative expenses, consisting of $1.2 million payroll costs and board of directors’ fees, $2.7 million compensation cost, $1.3 million legal and audit fees and $0.4 million office and other expenses.

For the first nine months of 2007, we incurred $2.3 million of general and administrative expenses, consisting of $0.9 million payroll costs and board of directors’ fees, $0.7 million compensation cost, $0.4 million legal and audit fees and $0.3 million office and other expenses.

The increase in general and administrative expense is mainly attributable to the increase in the Company’s operating days which resulted in increased payroll cost, directors’ fees and office expenses and the increase of compensation cost by $2.0 million, including the compensation cost of shares issued to the former Chief Executive Officer of $1.1 million, and the cost of $0.9 million related mainly to the vesting of shares issued to the current Chief Executive Officer as a result of the conversion of the subordinated shares.

Depreciation

For the first nine months of 2008, we recorded $31.0 million of vessel depreciation charges, consisting of $24.6 million vessel depreciation charges relating to our drybulk carriers and $6.4 million relating to our tanker vessels.

For the first nine months of 2007, we recorded $6.3 million of vessel depreciation charges, all of which relates to our drybulk carriers.

The increase in vessel depreciation charges is attributable to the increase in the number of vessels from seven vessels in the first nine months of 2007 to eleven vessels in the same period of 2008. We expect depreciation to remain stable on a period-by-period basis assuming that we do not acquire additional vessels, which would cause depreciation charges to increase.

Drydocking

We did not incur any drydocking costs in the first nine months of 2008. In the first nine months of 2007 we incurred $1.7 million in drydocking costs, all related to the M/V Juneau.

Vessel Lives and Impairment:

Our current fleet consists of nine drybulk carriers and four tanker vessels. With the exception of the M/T Olinda, which is currently employed through a pooling arrangement, we employ all of our vessels on medium- to long-term time charters.

The Company evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, management reviews certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions. The Company determines undiscounted projected net operating cash flows for each vessel and compares it to the vessel’s carrying value. The projected net operating cash flows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the unfixed days

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over the remaining estimated life of the vessel, net of vessel estimated operating expenses. If the Company’s estimate of undiscounted future cash flows for any vessel is lower than the vessel’s carrying value, the carrying value is written down, by recording a charge to operations, to the vessel’s fair market value if the fair market value is lower than the vessel’s carrying value. As vessel values are volatile, the actual fair market value of a vessel may differ significantly from estimated fair market values within a short period of time.

Management’s current analysis indicates that there is no impairment of individual long lived assets. However, there can be no assurance as to how long charter rates and vessel values will remain at their currently low levels or whether they will improve to any significant degree. Charter rates may remain at depressed levels for some time which could adversely affect our revenue and profitability, and future assessments of vessel impairment.

Interest and Finance Costs

For the first nine months of 2008, interest expenses under our Nordea senior secured credit facility amounted to $11.6 million (including realized and accrued interest payable on the swap agreements of $1.3 million) and the interest paid amounted to $8.6 million. Effective April 1, 2008, we have fixed the rates applicable to our outstanding borrowings under our Nordea senior secured credit facility to 4.85% inclusive of margin (see “Quantitative and Qualitative Disclosures about Market Risk-Interest Rate Risk” below). The total amortization of finance cost in the first nine months of 2008 amounted to $0.4 million. For the first nine months of 2007, interest expense under our Nordea senior secured credit facility amounted to $1.8 million.

Gain on Derivative Instruments

The total fair value of the derivative instruments as at September 30, 2008 amounted to $1.2 million and is reflected in Gain on derivative instruments in the interim consolidated unaudited statement of income. The current portion of the total fair value results in a loss of $1.1 million and is included in current liabilities as Derivative liability, while the non-current portion results in a gain of $2.3 million and is included in other non-current assets as Derivative asset in the September 30, 2008 interim consolidated unaudited balance sheet. The fair value of the derivative instruments is determined in accordance with SFAS 157 “Fair Value Measurements.” As of September 30, 2008, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in our interim consolidated unaudited financial statements. See Note 7 to our Interim Consolidated Unaudited Financial Statements.

Liquidity and Capital Resources

Our principal sources of funds are equity provided by our shareholders, operating cash flows and long-term borrowings. Our principal use of funds has been capital expenditures to establish and grow our fleet, maintain the quality of our fleet, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, make principal repayments on outstanding loan facilities, and pay dividends. We expect to rely upon operating cash flows, long-term borrowings, as well as equity financings to implement our growth plan. In the beginning of the third quarter of 2008, we commenced the offer and sale of common stock under the Sales Agreement discussed in Notes 6 and 13 to our September 30, 2008 interim consolidated unaudited financial statements, or the controlled equity offering. In the fourth quarter of 2008, we completed the sale of 4,000,000 common shares pursuant to the controlled equity offering with net proceeds of $50.9 million, of which 2,122,000 shares were sold in the fourth quarter of 2008 for net proceeds of $14.0 million.

We have financed our capital requirements with the issuance of equity in connection with our initial public offering and controlled equity offering, cash from operations, and borrowings under our long-term arrangements.

As of September 30, 2008, we had an outstanding indebtedness of $316.5 million and our aggregate payments of principal due within one year amounted to $58.4 million. Our loans contain a minimum cash requirement of $500,000 per vessel, which, on our fleet of 13 vessels, amounted to $6.5 million as of January 30, 2009.

19

On December 23, 2008, we entered into a loan agreement with DVB Bank SE for a new secured term loan facility. We have used the proceeds of the loan to make the prepayment in the amount of $25.0 million under our amendatory agreement to our Nordea credit facility (described below). The new loan is for $29.55 million, being the lesser of $30.5 million or 55% of the aggregate charter free fair market value of the two vessels as determined within the two weeks prior to drawdown, which was fully drawn on January 14, 2009. The loan is repayable over four years from drawdown in 16 quarterly variable installments with the first four installments being $2.75 million each, followed by four installments of $2.31 million each, followed by eight installments of $1.095 million each, plus a balloon installment of $0.55 million payable together with the last installment. The loan bears interest at 3.0% over LIBOR. The loan is secured with first preferred mortgages on the two vessels, a corporate guarantee by the Company, assignment of earnings and insurances and pledge of shares of the borrowers. The loan agreement includes, among other covenants, financial covenants requiring that (i) liquidity must be at least $500,000 multiplied by the number of vessels owned, (ii) total interest bearing liabilities over the sum of total interest bearing liabilities plus shareholders’ equity adjusted to account for the market value of the vessels must not exceed 90% up to June 30, 2010, 80% up to December 31, 2010 and 70% thereafter; (iii) the ratio of EBITDA to net interest expense of any accounting period must not be less than 2.50 to 1; and (iv) the aggregate charter free fair market value of the two vessels must not be less than 140% (increasing by five percentage points each year, reaching 155% in the last year) of the aggregate outstanding balance. The Company is permitted to pay dividends under the loan of up to 50% of quarterly net profits. The Company will pay a commitment fee of 0.65% per annum on the undrawn balance of the loan. The loan agreement contains certain events of default, including a change of control, a cross-default with respect to other financial indebtedness and a material adverse change in the financial position or prospects of the borrowers or the Company. Upon signing the loan agreement, the Company paid an upfront fee of 1.5% ($457,500) on the loan amount.

As a result of the recent developments in the drybulk and tanker markets discussed above, the market value of our drybulk carriers and tanker vessels has declined. The market value of drybulk and tanker vessels is sensitive to, among other things, changes in the drybulk and tanker charter markets, respectively, with vessel values deteriorating in times when drybulk and tanker charter rates, as applicable, are falling and improving when charter rates are anticipated to rise. The current low charter rates in the drybulk market coupled with the prevailing difficulty in obtaining financing for vessel purchases have adversely affected drybulk vessel values. The recent fall in oil prices has also led to lower tanker charter rates and tanker vessel values. These conditions have led to a significant decline in the fair market values of our vessels since September 30, 2008, particularly our drybulk carriers. As a result, we requested a waiver and amendment of the collateral maintenance coverage ratio covenant under our $325 million senior secured credit facility with Nordea Bank Norge ASA, or Nordea, as lead arranger, which required us to maintain a fair market value of our vessels of at least 140% of our aggregate outstanding balance under the credit facility.

In this respect, on January 9, 2009, we entered into an amendatory agreement to our Nordea credit facility which became effective on January 23, 2009. The amendatory agreement waives the breach of the collateral maintenance coverage ratio covenant contained in such credit facility resulting from the decrease in the market value of our vessels and reduces the level of the collateral maintenance coverage ratio to a level between 90% and 125% for the remaining term of the agreement, with such waiver taking effect from the date of prior breach to the effective date of the amendatory agreement. In addition the amendatory agreement (i) requires us to make a prepayment of $25.0 million of principal upon the funding of the loan with DVB Bank SE as described above, which such funding and prepayment have been made; (ii) requires us to pay interest at a 2.5% margin over LIBOR; (iii) requires us to pay an arrangement fee of $451,583 which equals 0.15% to each bank syndicate member that consented to the amendatory agreement by January 9, 2009; (iv) prohibits us from paying dividends; (v) limits our ability to make capital expenditures; (vi) imposes restrictions on making payment, in cash, of the sellers’ credit in the aggregate amount of $25.0 million in respect of the M/T Tamara and the M/T Tigani, except that we are permitted to pay the seller’s credit with the proceeds of new equity offerings made on or after January 1, 2009, or in the form of common shares, which the sellers may request at any time, provided that we may not prepay the sellers’ credit in cash if an event of default has occurred and is continuing; and (vii) requires us to provide additional collateral. The amendment does not modify the other financial covenants contained in the Nordea credit facility, such as the leverage ratio, interest coverage ratio or liquidity covenants described in “Our Loan Agreement Covenants” on page 7 herein.

Our practice has been to acquire drybulk and tanker carriers using a combination of our operating cash flows, funds received from equity investors and bank debt secured by mortgages on our vessels. We also used a sellers’ credit aggregating $25.0 million, payable in cash or common shares, to fund part of the acquisition price for the M/T Tamara and the M/T Tigani which were delivered to us in October 2008. Pursuant to an agreement reached with the sellers, the sellers may, at any time, following our entry into the amendatory agreement to our Nordea credit facility, demand prepayment of the sellers’ credit upon two business days’ notice, in whole or in part; provided that such prepayment in cash is limited to payment from proceeds of new equity offerings in accordance with the terms of the amendatory agreement. At any time, the sellers may also request payment in common shares, upon five business days notice. 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 vessels and the selective sale of older vessels. These acquisitions will be principally subject to management’s expectation of future market conditions as well as our ability to acquire drybulk carriers or tankers on favorable terms.

Our dividend policy will also impact our future liquidity position. Historically, our dividend policy has been to pay a regular quarterly dividend to shareholders while reinvesting a portion of our operating surplus in our business. We paid a partial dividend in the amount of $0.39 per share to shareholders in August 2007 in respect of the second quarter of 2007, a dividend in the amount of $0.5125 per share to shareholders in November 2007 and dividends in the amount of $0.77 per share to shareholders in February 2008, May 2008, August 2008 and November 2008. Our board of directors has recently determined to suspend the payment of cash dividends as a result of market conditions in the international shipping industry and in particular the sharp decline in charter rates and vessel values in the drybulk sector, and until such market conditions significantly improve, it is unlikely that we will reinstate the payment of dividends and if reinstated, it is likely that any dividend payments would be at reduced levels. Furthermore, the amendment to our Nordea credit facility described above prohibits us from paying dividends. In addition, in the event that we are permitted to pay cash dividends under our Nordea credit facility, our new loan agreement with DVB Bank SE contains additional restrictions. Specifically, we are required to obtain our lender’s consent for dividend payments in excess of 50% of our quarterly net profit. The aggregate amount of dividends paid in respect of the first nine months of 2008 represents 87.8% of net income for such nine-month period. Accordingly, pursuant to the restrictions on dividend payments contained in our DVB credit facility, had it been in effect when we declared our dividend of $0.77 per share in respect of the third quarter of 2008, we would have been required to obtain the consent of our lender thereunder in order to pay a dividend above $0.31 per share, or reduce our dividend by 60.0%, on a per share basis, to $0.31 per share. The declaration and payment of any dividend is subject to the discretion of our board of directors. In addition, the timing and amount of any future dividend payments will depend on our earnings, financial condition, cash requirements and availability, the restrictions in our loan agreements and the provisions of Marshall Islands law affecting the payment of dividends and other factors.

Cash Flows

The following table presents cash flow information for the nine-month periods ended September 30, 2007 and 2008. The information was derived from our consolidated statements of cash flows and is expressed in thousands of U.S. Dollars.

	2007			2008
Net cash provided by operating activities	$	10,664		$	69,339
Net cash used in investing activities		(321,424	)		(65,831	)
Net cash provided by financing activities		327,929			52,696
Increase in cash and cash equivalents		17,169			56,204
Cash and cash equivalents beginning of period		499			19,044
Cash and cash equivalents end of period	$	17,668		$	75,248

Net cash provided by operating activities for the nine-month period ended September 30, 2008 was $69.3 million compared to $10.7 million for the same period in 2007. This increase is attributable to the increase in the number of vessels from seven in the first nine months of 2007 to 11 in the same period of 2008, which resulted in the increase in voyage days from 582 days in the first nine months of 2007 to 2,990 days in the same period of 2008. Substantially all our cash from operating activities is from revenues generated under our charter agreements.

Net cash used in investing activities for the nine-month period ended September 30, 2008 was $65.8 million, which represents the amounts we paid to acquire the M/T Olinda. Net cash used in investing activities for the nine-month period ended September 30, 2007 was $321.4 million, which represents the amounts we paid to acquire the M/V Trenton, M/V Pierre, M/V Austin, M/V Juneau, M/V Lansing, M/V Helena and M/V Topeka as well as the advances we paid for the acquisition of the M/V Richmond and M/T Augusta which were delivered to us during the fourth quarter of 2007.

Net cash provided by financing activities for the nine-month period ended September 30, 2008 was $52.7 million. During the nine-month period ended September 30, 2008, (a) we generated $36.9 million from our controlled equity offering, (b) we drew down $63.4 million under our long-term debt arrangements to partially finance the acquisition of M/T Olinda, (c) we paid the first installment of our long-term debt of $7.5 million, (d) we paid dividends of $34.5 million, (e) we paid financing costs of $0.1 million, and (f) we classified $5.5 million as restricted cash to comply with liquidity requirements of our credit facility with Nordea Bank. Net cash provided by financing activities for the nine-month period ended September 30, 2007 was $327.9 million. During the nine-month period ended September 30, 2007, (a) we generated $216.8 million from our initial public offering, (b) we drew down $118.0 million under our long-term debt arrangements to partially finance the acquisition of eight drybulk carriers, (c) we paid dividends of $5.6 million and (d) we paid financing costs of $1.2 million.

20

EBITDA

EBITDA represents net income before interest, taxes, depreciation and amortization and other non-cash items. We use EBITDA because we believe that EBITDA is a basis upon which liquidity can be assessed and because we believe that EBITDA presents useful information to investors regarding our ability to service and/or incur indebtedness. We also use EBITDA in our credit agreement to measure compliance with covenants.

EBITDA is a non-GAAP measure and has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of OceanFreight’s results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA does not reflect changes in, or cash requirements for, working capital needs, and (ii) although depreciation and amortization are non-cash charges, the assets that are depreciated and amortized may need to be replaced in the future, and EBITDA does not reflect any cash requirement for such capital expenditures. Because of these limitations, EBITDA should not be considered as a principal indicator of OceanFreight’s performance.

21

The following table reconciles net cash provided by operating activities to EBITDA for the nine-month period ended September 30, 2008:

(Dollars in thousands)
Net cash provided by operating activities	$	69,339
Net increase in current assets, excluding cash and cash equivalents		1,648
Net increase in current liabilities, excluding derivative liability, current portion of long-term debt and imputed deferred revenue current portion		(6,537	)
Net interest expense		11,443
Amortization of imputed deferred revenue		7,724
Gain on derivative instruments		1,186
Amortization of stock based compensation		(2,686	)
Amortization of deferred financing costs included in Net Interest expense		(356	)
EBITDA	$	81,761

Working Capital Position

On September 30, 2008, our current assets totaled $78.6 million while current liabilities totaled $83.8 million (including the required prepayment of $25 million under our amended Nordea credit facility), resulting in a negative working capital position of $5.2 million. We believe that our existing fleet employment, with 12 of our vessels employed under fixed-rate charters and one vessel employed in a spot market pool and our new $29.55 million DVB credit facility, entered into on December 23, 2008, will provide sufficient cash to fund the required prepayment of $25 million under our amended Nordea credit facility, the required principal and interest payments on our outstanding indebtedness and provide for the normal working capital requirements for at least one year after September 30, 2008. Our charter agreements, however, are subject to the performance by our counterparties, and any failure of our counterparties to meet their obligations to us, or any failure by us to comply with our loan covenants as a result of such counterparty failure, deteriorating charter markets or otherwise, could significantly adversely affect our working capital position. See “Risk Factors.”

Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

We generate all of our revenues in U.S. dollars, but incur approximately 7.91% of our expenses in currencies other than U.S. dollars. For accounting purposes, expenses incurred in Euros are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. At September 30, 2008, the outstanding accounts payable balance denominated in currencies other than the U.S. dollar was not material.

Inflation Risk

We do not consider inflation to be a significant risk to operating or voyage costs in the current economic environment. However, in the event that inflation becomes a significant factor in the global economy, inflationary pressures would result in increased operating, voyage and financing costs.

Interest Rate Risk

The shipping industry is a capital intensive industry, 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 the financial markets. Increasing interest rates could adversely impact future earnings.

22

The table below provides information about our long-term debt and derivative financial instruments and other financial instruments at September 30, 2008 that are sensitive to changes in interest rates. See notes 5 and 7 to our interim consolidated unaudited financial statements, which provide additional information with respect to our existing debt agreements and derivative financial instruments. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For derivative financial instruments, the table presents average notional amounts and weighted average interest rates by expected maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contracts. Weighted average interest rates are based on implied forward rates in the yield curve at the reporting date.

							Expected maturity date
Long-term debt	2008			2009			2010			2011			2012			Thereafter
							( in thousands except for percentages)
Repayment amount (1)	$	8,500		$	60.889		$	35,889		$	35,889		$	35,889		$	139.444
Variable interest rate ($US)		2.23	%		2.94	%		3.48	%		4.15	%		4.42	%		4.48	%
Average interest rate		3.55	%		3.55	%		3.55	%		3.55	%		3.55	%		3.55	%
Interest rate derivatives
Swap notional amount(2)	$	313,677		$	286,612		$	250,761		$	214,932		$	179,053		$	157,651
Average pay rate(2)		3.55	%		3.55	%		3.55	%		3.55	%		3.55	%		3.55	%
Average receive rate(2)		2.23	%		2.94	%		3.48	%		4.15	%		4.42	%		4.48	%

(1)

See note 5 to our interim consolidated unaudited financial statements for a description of our Nordea credit facility. The above amounts are presented after giving effect to the prepayment of $25.0 million under our amended Nordea credit facility which is described in Note 13(l) to our interim consolidated unaudited financial statements.

(2)

On January 29, 2008, we entered into two interest rate swap agreements with Nordea Bank Norge ASA, our lending bank, to partially hedge our exposure to fluctuations in interest rates on an aggregate notional amount of $316.5 million, decreasing in accordance with the debt repayments, other than the $25.0 million prepayment under our amendatory agreement, by converting the variable rate of our debt to fixed rate for a period for five years, effective April 1, 2008. Under the terms of the interest rate swap agreement, the Company and the bank agreed to exchange, at specified intervals, the difference between paying a fixed rate at 3.55% and a floating rate interest amount calculated by reference to the agreed notional amounts and maturities. These instruments have not been designated as cash flow hedges, under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, and consequently, the changes in fair value of these instruments are recorded through earnings. The swap agreements expire in April 2013.

Research and Development, Patents And Licenses

We incur from time to time expenditures relating to inspections for acquiring new vessels that meet our standards. Such expenditures are insignificant and they are expensed as they incur.

Concentration of Credit Risk

For the nine-month period ended September 30, 2008, four charterers accounted for 10% or more of the Company’s revenues as follows:

Charterer	%	Reportable segment
A	21.0	Drybulk carriers
B	13.1	Drybulk carriers
C	12.8	Drybulk carriers
D	12.1	Drybulk carriers

23

Contractual obligations:

The following table sets forth our contractual obligations and their maturity dates going forward as of September 30, 2008:

			One to		Three to		More than
	Within		Three		Five		Five
	One Year		Years		Years		Years		Total
			(in thousands of U.S. dollars)
Long term debt (1)	$	58,389	$	71,778	$	71,778	$	114,555	$	316,500
Vessels Acquisitions (2)	$	79,000	$	—	$	—	$	—	$	79,000
IT services (3)	$	144	$	288	$	234	$	—	$	666
Manager supervision (4)	$	420	$	840	$	680	$	—	$	1,940
Office lease (5)	$	76	$	152	$	146	$	—	$	374
Total	$	138,029	$	73,058	$	72,838	$	114,555	$	398,480

(1)	As further discussed in our September 30, 2008 interim consolidated unaudited financial statements the outstanding balance of our long-term debt at September 30, 2008, was $316.5 million. The loan bears interest at LIBOR plus a margin. Estimated interest payments are not included in the table above. The table above also does not include (i) the amount of $29.55 million drawn down under our DVB credit facility; or (ii) the upfront fee of $457,500 paid in respect of the DVB credit facility; or (iii) the arrangement fee of $451,583 which equals 0.15% paid to each bank syndicate member that consented to the amendatory agreement of January 9, 2009. See “Our Loan Agreement Covenants” and Note 13(l) to our interim consolidated unaudited financial statements.
(2)	As further discussed in our September 30, 2008 interim consolidated unaudited financial statements (notes 4 and 13(i)), in October 2008 we took delivery of the M/T Tigani and M/T Tamara at the price of $40 million and $39 million, respectively. We financed the purchase of the M/T Tigani in part with a sellers’ credit in the amount of $13 million and the purchase of the M/T Tamara in part with a sellers’ credit in the amount of $12 million. The sellers’ credits mature in April 2010. Pursuant to our agreement with the sellers, the sellers may, at any time after the date of our amendatory agreement with Nordea, demand full or partial repayment of the $25 million sellers’ credit upon two business days’ notice from proceeds from new equity issuances. At any time, the sellers may also request payment in common shares, upon five business days’ notice.
(3)	As further discussed in our September 30, 2008 interim consolidated unaudited financial statements, we have entered into a services agreement with Cardiff Marine Inc., or Cardiff, for a period of five years. Pursuant to this agreement Cardiff provides, among other services, services in connection with Information Technology (IT) support.
(4)	As further discussed in our September 30, 2008 interim consolidated unaudited financial statements, pursuant to our five-year services agreement, Cardiff provides manager supervision for the vessels Austin, Pierre, Trenton, Helena, Lansing, Topeka, Richmond and Augusta.
(5)	As further explained in our September 30, 2008 interim consolidated unaudited financial statements, we have entered into two lease agreements for our office facilities in Athens. The first lease agreement concerns the current office space leased from Mr. George Economou, which terminates upon mutual agreement of the parties. The second lease, which expires in August 2013, relates to office facilities that are currently under renovation.

24

OCEANFREIGHT INC.
INDEX TO INTERIM CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

	Page
Consolidated Balance Sheets as of December 31, 2007 and September 30, 2008 (Unaudited)		F-2
Consolidated Unaudited Statements of Income for the nine-month periods ended September 30, 2007 and 2008		F-3
Consolidated Unaudited Statements of Stockholders’ Equity for the nine-month periods ended September 30, 2007 and 2008		F-4
Consolidated Unaudited Statements of Cash Flows for the nine-month periods ended September 30, 2007 and 2008		F-5
Notes to Interim Consolidated Unaudited Financial Statements		F-6

F-1

OCEANFREIGHT INC.
Consolidated Balance Sheets
December 31, 2007 and September 30, 2008 (Unaudited)
(Expressed in thousands of U.S. Dollars — except for share and per share data)

	December 31,			September 30,
	2007			2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	19,044		$	75,248
Receivables		226			343
Inventories		678			887
Prepayments and other		763			2,085
Total current assets		20,711			78,563
FIXED ASSETS, NET:
Vessels, net of accumulated depreciation of $13,210 and $44,224, respectively		485,280			520,011
Other		61			132
Total fixed assets, net		485,341			520,143
OTHER NON CURRENT ASSETS:
Deferred financing fees, net of accumulated amortization of $1,159 and $1,515, respectively		1,860			1,642
Derivative asset		—			2,253
Restricted Cash		—			5,500
Other		13			13
Total assets	$	507,925		$	608,114
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt		16,000			58,389
Accounts payable		2,427			1,312
Due to related parties		742			781
Accrued liabilities		2,909			8,137
Unearned revenue		1,488			3,873
Derivative liability		—			1,067
Imputed deferred revenue, current portion		10,318			10,290
Total current liabilities		33,884			83,849
NON-CURRENT LIABILITIES
Imputed deferred revenue, net of current portion		16,031			8,335
Long-term debt, net of current portion		244,600			258,111
Total non-current liabilities		260,631			266,446
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred shares, par value $0.01; 5,000,000 shares authorized, none issued		—			—
Common Shares, par value $0.01; 95,000,000 shares authorized, 12,394,079 and 16,422,493 shares issued and outstanding at December 31, 2007 and September 30, 2008, respectively		124			164
Subordinated Shares, par value $0.01; 10,000,000 shares authorized, 2,063,158 and 0 shares issued and outstanding at December 31, 2007 and September 30, 2008, respectively		21			0
Additional paid-in capital		218,263			257,863
Accumulated deficit		(4,998	)		(208	)
Total stockholders’ equity		213,410			257,819
Total liabilities and stockholders’ equity	$	507,925		$	608,114

The accompanying notes are an integral part of these interim consolidated unaudited financial statements.

F-2

OCEANFREIGHT INC.
Consolidated Unaudited Statements of Income
For the nine-month periods ended September 30, 2007 and 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)

	2007			2008
REVENUES:
Voyage revenue	$	15,556		$	110,847
Imputed deferred revenue		2,404			7,724
		17,960			118,571
EXPENSES:
Voyage expenses		852			12,657
Vessels’ operating expenses		4,947			19,707
General and administrative expenses		2,275			5,632
Survey and dry-docking costs		1,685			—
Depreciation		6,337			31,029
Operating income/(loss )		1,864			49,546
OTHER INCOME (EXPENSES):
Interest income		1,887			685
Interest and finance costs		(1,969	)		(12,128	)
Gain on derivative instruments		—			1,186
Total other income (expenses)		(82	)		(10,257	)
Net Income	$	1,782		$	39,289
Earnings per common share, basic and diluted	$	0.22		$	2.98
Earnings per subordinated share, basic and diluted	$	0.12		$	—
Weighted average number of common shares, basic and diluted		6,991,532			13,168,675
Weighted average number of subordinated shares, basic and diluted		2,035,628			—

The accompanying notes are an integral part of these interim consolidated unaudited financial statements.

F-3

OCEANFREIGHT INC.
Consolidated Unaudited Statements of Stockholders’ Equity
For the nine-month periods ended September 30, 2007 and 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)

			Common Shares					Subordinated Shares
														Additional
	Comprehensive		# of			Par		# of			Par			Paid-in		Accumulated
	Income		shares			value		shares			value			Capital		Deficit			Total
BALANCE, December 31, 2006				—		$	—		2,000,000		$	20		$	576	$	(105	)	$	491
- Net income	$	1,782															1,782			1,782
- Proceeds from Initial Public Offering, net of related costs		—		12,362,500			124		—			—			216,670		—			216,794
- Stock based compensation		—		31,579			—		63,158			1			694		—			695
- Capital contribution of executive management services and rent		—		—			—		—			—			96		—			96
- Cash dividends		—		—			—		—			—			—		(5,638	)		(5,638	)
- Comprehensive income	$	1,782		—			—		—			—			—		—			—
BALANCE, September 30, 2007				12,394,079		$	124		2,063,158		$	21		$	218,036	$	(3,961	)	$	214,220
BALANCE, December 31, 2007				12,394,079		$	124		2,063,158		$	21		$	218,263	$	(4,998	)	$	213,410
- Net income	$	39,289															39,289			39,289
- Proceeds from controlled equity offering		—		1,878,000			19		—			—			36,914		—			36,933
- Stock based compensation expense		—		52,105			—		85,150			1			2,685		—			2,686
- Cancellation of stock		—		(7,894	)		—		(42,105	)		(1	)		1		—			—
- Conversion of subordinated stock		—		2,106,203			21		(2,106,203	)		(21	)		—		—			—
- Cash dividends																	(34,499	)		(34,499	)
- Comprehensive income	$	39,289
BALANCE, September 30, 2008				16,422,493		$	164		—		$	—		$	257,863	$	(208	)	$	257,819

The accompanying notes are an integral part of these consolidated unaudited financial statements.

F-4

OCEANFREIGHT INC.
Consolidated Unaudited Interim Statements of Cash Flows
For the nine-month periods ended September 30, 2007 and 2008
(Expressed in thousands of U.S. Dollars)

	2007			2008
Cash Flows from Operating Activities:
Net income/(loss):	$	1,782		$	39,289
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		6,337			31,029
Amortization of financing costs		48			356
Amortization of imputed deferred revenue		(2,404	)		(7,724	)
Amortization of stock based compensation		696			2,686
Gain on derivative instruments		—			(1,186	)
Executive management compensation and rent		96			—
(Increase) / Decrease in
Receivables		(30	)		(117	)
Inventories		(522	)		(209	)
Prepayments and other		(1,023	)		(1,322	)
Accounts payable		2,609			(1,115	)
Due to related parties		32			39
Accrued liabilities		2,146			5,228
Unearned revenue		897			2,385
Net Cash provided by Operating Activities		10,664			69,339
Cash Flows from Investing Activities:
Advances for vessel acquisitions		(10,860	)		—
Additions to vessel cost		(310,564	)		(65,745	)
Other		—			(86	)
Net Cash used in Investing Activities		(321,424	)		(65,831	)
Cash Flows from Financing Activities:
Proceeds from Initial Public Offering, net of related costs		216,796			—
Proceeds from Controlled Equity Offering, net of related expenses		—			36,933
Proceeds from long-term debt		118,000			63,400
Repayment of long-term debt		—			(7,500	)
Cash dividends		(5,638	)		(34,499	)
Increase in restricted cash		—			(5,500	)
Payment of financing costs		(1,229	)		(138	)
Net Cash provided by Financing Activities		327,929			52,696
Net increase in cash and cash equivalents		17,169			56,204
Cash and cash equivalents at beginning of period		499			19,044
Cash and cash equivalents at end of period	$	17,668		$	75,248
SUPPLEMENTAL INFORMATION
Cash financing activities:
Cash paid during the period for interest	$	1,787		$	8,642

The accompanying notes are an integral part of these interim consolidated unaudited financial statements.

F-5

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 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 interim consolidated unaudited financial statements include the accounts of OceanFreight Inc. (“OceanFreight”) and its wholly owned subsidiaries (collectively, the “Company”). OceanFreight was incorporated on September 11, 2006 under the laws of the Republic of The Marshall Islands. In late April 2007, OceanFreight completed its initial public offering in the United States under the United States Securities Act of 1933, as amended, the net proceeds of which amounted to $216,794. The Company’s common shares are listed on the Nasdaq Global Market. The Company started generating revenue from its planned principal operations of seaborne transportation of commodities in early June 2007 when it took delivery of four drybulk carriers. Accordingly, during the period from its inception to the date it commenced operations, the Company was a development stage enterprise in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 7 “Accounting and Reporting By Development Stage Companies.”

The Company is engaged in the marine transportation of drybulk and crude oil cargoes through the ownership and operation of drybulk and tanker vessels.

The Company has contracted the day-to-day technical management of its fleet to two managers which have been engaged under separate management agreements. The eight Panamax drybulk carriers are managed by Wallem Ship Management Ltd. (“Wallem”), a technical and commercial management company, and the Capesize drybulk carrier M/V Juneau and the tanker vessels are managed by a related party, Cardiff Marine Inc. (“Cardiff”) (Note 3).

The accompanying interim consolidated unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and notes required by U.S. generally accepted accounting principles for complete financial statements. These statements and the accompanying notes should be read in conjunction with the Company’s financial statements for the year ended December 31, 2007 included in the Company’s Annual Report on Form 20-F filed with the Securities Exchange and Commission on March 7, 2008. These interim consolidated unaudited financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. Operating results for the nine-month period ended September 30, 2008 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2008.

F-6

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 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):

The Company is the ultimate owner of all outstanding shares of the following ship owning subsidiaries, each of which is domiciled in the Republic of The Marshall Islands:

		Deadweight
		Tonnage
Company name	Vessel name	(in metric tons)		Year Built		Acquisition date
Oceanship Owners Limited	M/V Trenton		75,229		1995	June 4, 2007
Oceanwealth Owners Limited	M/V Pierre		70,316		1996	June 6, 2007
Oceanventure Owners Limited	M/V Austin		75,229		1995	June 6, 2007
Oceanresources Owners Limited	M/V Juneau		149,495		1990	June 29, 2007
Oceanstrength Owners Limited	M/V Lansing		73,040		1996	July 4, 2007
Oceanenergy Owners Limited	M/V Helena		73,744		1999	July 30, 2007
Oceantrade Owners Limited	M/V Topeka		74,710		2000	August 2, 2007
Oceanprime Owners Limited	M/V Richmond		75,265		1995	December 7, 2007
Oceanclarity Owners Limited	M/T Pink Sands		93,723		1993	December 7, 2007
Kifissia Star Owners Inc.	M/V Augusta		69,053		1996	December 17, 2007
Oceanfighter Owners Inc.	M/T Olinda		149,085		1996	January 17, 2008
Ocean Faith Owners Inc.	M/T Tigani		95,951		1991	October 14, 2008 (Note 13)
Ocean Blue Spirit Owners Inc.	M/T Tamara		95,793		1990	October 17, 2008 (Note 13)

For the nine-month periods ended September 30, 2007 and 2008 the following charterers accounted for 10% or more of the Company’s revenues as follows:

Charterer	%		Reportable segment (Note 12)
	2007	2008
A	—	21.0	Drybulk
B	—	13.1	Drybulk
C	19.6	12.8	Drybulk
D	—	12.1	Drybulk
E	17.3	—	Drybulk
F	13.7	—	Drybulk
G	12.0	—	Drybulk

F-7

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

2. Recent Accounting Pronouncements

The Company has adopted the following new accounting pronouncements in the current fiscal year.

(a) In September, 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157 (SFAS 157), “Fair Value Measurements,” which defines, and provides guidance as to the measurement of, fair value. This statement creates a hierarchy of measurement and indicates that, when possible, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. SFAS No. 157 applies when assets or liabilities in the financial statements are to be measured at fair value, but does not require additional use of fair value beyond the requirements in other accounting principles. The statement was effective for the Company as of January 1, 2008, excluding certain non-financial assets and non-financial liabilities, for which the statement is effective for fiscal years beginning after November 15, 2008 and its adoption did not have a significant impact on the Company’s financial position or results of operations (See Note 7 - Financial Instruments).

(b) In February, 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 159 (SFAS 159), “The Fair Value Option for Financial Assets and Financial Liabilities,” which permits companies to report certain financial assets and financial liabilities at fair value. SFAS 159 was effective for the Company as of January 1, 2008 at which time the Company could elect to apply the standard prospectively and measure certain financial instruments at fair value. The Company has evaluated the guidance contained in SFAS 159, and has elected not to report any existing financial assets or liabilities at fair value that are not already reported; therefore, the adoption of the statement had no impact on its financial position and results of operations. The Company retains the ability to elect the fair value option for certain future assets and liabilities acquired under this new pronouncement.

3. Transactions with Related Parties:

(a)

Basset Holdings Inc. (“Basset”): The sole shareholder of Basset, which as of September 30, 2008 is the holder of 2,000,000 common shares of the Company, is Antonis Kandylidis, the Company’s Chief Executive Officer (CEO) and Interim Chief Financial Officer (CFO). The mother of the CEO, Mrs. Chryssoula Kandylidis, and his uncle Mr. George Economou control Cardiff Marine Inc. as further discussed in (b) below. Also, the father of the CEO and husband of Mrs. C. Kandylidis, Mr. Konstandinos Kandylidis, is one of the Company’s directors.

(b)

Cardiff Marine Inc. (“Cardiff”): The Company uses the services of Cardiff, a ship management company with offices in Greece. The issued and outstanding capital stock of Cardiff is beneficially owned (a) 30% by Prestige Finance S.A., the beneficial owner of which is Mrs. Chryssoula Kandylidis and (b) 70% by Entrepreneurial Spirit Foundation, a foundation controlled by Mr. George Economou. Mrs. C. Kandylidis is the sister of Mr. G. Economou and the wife of one of the Company’s directors, Mr. Konstandinos Kandylidis.

     As of September 30, 2008, the Company had concluded the following agreements with Cardiff:

(i) On April 11, 2007, the Company entered into an interim management agreement with Cardiff for a period of six months commencing on April 24, 2007, with the Company’s option to extend the agreement for another six months. According to this interim management agreement, Cardiff provided services in connection with the acquisition of the vessels Trenton, Pierre, Austin, Juneau, Lansing, Helena and Topeka and ensured the smooth commencement of the Company’s operations for a total fee of $200. This agreement was renewed on September 11, 2007 for six months and expired on April 23, 2008 (see (vii) below). The related expense for the nine-month periods ended September 30, 2007 and 2008 amounted to $175.8 and $124.2, respectively, and is included in Vessels’ operating expenses in the accompanying consolidated unaudited statements of income.

F-8

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

3. Transactions with Related Parties — (continued):

(ii)	On June 21, 2007, the Company entered into a management agreement with Cardiff to provide technical and commercial management services associated with the vessel Juneau for an annual management fee of $123.6. The initial management agreement commenced on June 29, 2007, the date the Company took delivery of the vessel, and ended on December 31, 2007. Thereafter the management agreement continues until terminated by either party giving to the other two months notice in writing. Fees charged by Cardiff for the nine-month period ended September 30, 2007 and 2008 amounted to $31.6 and $196.3, respectively, and are included in Vessels’ operating expenses in the accompanying consolidated unaudited statements of income. On May 15, 2008, the Company’s Board of Directors approved the increase of the annual management fee payable to Cardiff under the agreement to $289 (Euro 200.8), an additional annual fee of $78.8 (Euro 54.8) for commercial support and the extension of the term of the management agreement to December 31, 2010, with all other terms remaining unchanged. This agreement was amended on October 21, 2008 (Note 13e).
(iii)	On September 7, 2007, the Company entered into an agreement with Cardiff whereby it was agreed that (a) Cardiff will receive a commission fee of 1% of the value of each sale or purchase transaction of any of the ships sold or purchased by the Company, provided that Cardiff is directly or indirectly the sale or purchase broker and, (b) Cardiff will receive a commission fee of 1.25% of the voyage revenue of the relevant charterhire as earned by the Company provided Cardiff is directly or indirectly the chartering broker. The agreement took effect with the acquisition of the M/V Augusta in December 2007 and was terminated on May 15, 2008, see (vii) below. In connection with the acquisition of the M/V Augusta and M/T Olinda, Cardiff charged the Company with a fee of $616 and $650, respectively. Both amounts have been included in Vessels, net in the accompanying consolidated balance sheets.
(iv)	On November 28, 2007, the Company entered into a management agreement with Cardiff to provide technical and commercial management services associated with the vessel Pink Sands for an annual management fee of $182.5. The initial management agreement commenced on December 7, 2007, the date the Company took delivery of the vessel, and ends on December 31, 2008. Thereafter the management agreement will continue until terminated by either party giving to the other a two-month notice in writing. The fee charged by Cardiff for the nine-month period ended September 30, 2008 amounted to $239.6 and is included in Vessels’ operating expenses in the accompanying 2008 interim consolidated unaudited statement of income. On May 15, 2008, the Company’s Board of Directors approved the increase of the annual management fee payable to Cardiff under the agreement to $341.6 (Euro 237.3), an additional annual fee of $78.8 (Euro 54.8) for commercial support and the extension of the term of the management agreement to December 31, 2010, with all other terms remaining unchanged. This agreement was amended on October 21, 2008 (Note 13e).
(v)	On January 4, 2008, the Company entered into a management agreement with Cardiff to provide technical and commercial management services associated with the vessel M/T Olinda for an annual management fee of $182.5. The management agreement commenced on January 17, 2008, the date the Company took delivery of the vessel, and ends on December 31, 2008. Thereafter the management agreement will continue until terminated by either party giving to the other two months’ notice in writing. The fee charged by Cardiff for the nine-month period ended September 30, 2008 amounted to $231.2 and is included in Vessels’ operating expenses in the accompanying 2008 consolidated unaudited statement of income. On May 15, 2008, the Company’s Board of Directors approved the increase of the annual management fee payable to Cardiff under the agreement to $341.6 (Euro 237.3), an additional annual fee of $78.8 (Euro 54.8) for commercial support and the extension of the term of the management agreement to December 31, 2010, with all other terms remaining unchanged. This agreement was amended on

F-9

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

3. Transactions with Related Parties — (continued):

	October 21, 2008 (Note 13e).
(vi)	On March 15, 2008, the Company entered into an agreement with Cardiff whereby the Company agreed to provide a corporate guarantee to the owners of two newbuilding Aframax crude oil tankers to be delivered in 2009 that will be employed on bareboat charter to clients of Cardiff. The Company received a counter guarantee from Cardiff guaranteeing to the Company the performance by the charterers of their obligations under the bareboat charter agreement. The above agreements as well as the counter guarantees were cancelled on September 11, 2008.
(vii)	On May 15, 2008 the Company’s Board of Directors approved the termination of the interim agreement with Cardiff dated April 11, 2007 discussed in (i) above, and the Agreement with Cardiff dated September 7, 2007 discussed in (iii) above, and their replacement with a services agreement for a period of five years for the manager supervision of the eight vessels managed by Wallem for a fixed daily fee per vessel of $0.144 (Euro 0.1). In addition to the fixed daily fee, Cardiff charges the Company with the following items under the new agreement: (a) chartering commission of 1.25% on the value of relevant charterhire as earned by the Company for each respective charter arranged by Cardiff, (b) commission of 1% of the value of each sale or purchase transaction of a vessel, (c) arrangement fee of 0.2% for services relating to the arrangement of credit or other financing facilities arranged by Cardiff, (d) information technology services for $36 (Euro 25) per quarter, (e) a fee of $0.576 (Euro 0.4) plus expenses, for any day a superintendent is away from the office to visit the Company’s vessels and (f) all out of pocket expenses pertaining to the above services plus a mark-up of 10%. For the nine-month period ended September 30, 2008 the fees charged under this new agreement amounted to $228.9 and are included in Vessels’ operating expenses in the accompanying 2008 consolidated unaudited statement of income. This agreement was amended on October 21, 2008 (Note 13f).

At December 31, 2007 and September 30, 2008, an amount of $742 and $781, respectively, is payable to Cardiff, and is reflected in the accompanying consolidated balance sheets as Due to related parties. In addition, an amount of $1,724 and $887 due to Cardiff as at December 31, 2007 and September 30, 2008, respectively, relating to the operations of the vessels under Cardiff’s management, is included in Accounts Payable in the accompanying consolidated balance sheets. The fees charged by Cardiff under the agreements discussed above during the nine months ended September 30, 2007 and 2008 amounted to $207 and $1,020, respectively, and are included in Vessel operating expenses in the accompanying interim consolidated unaudited statements of income. In addition Vessels, net in the accompanying consolidated balance sheets at December 31, 2007 and September 30, 2008, includes $616 and $1,266, respectively, which represents commission fees charged by Cardiff of 1% of the purchase price of the vessels Augusta and Olinda.

(c)

Transbulk 1904 AB (“Transbulk”): On July 4, 2007, upon delivery to the Company, the vessel Lansing commenced a time charter with Transbulk for a period of 22 to 26 months at a gross charter rate of $24 per day. Also on June 29, 2007 the Company concluded a time charter agreement with Transbulk for the vessel Richmond for a period of 24 to 28 months at a gross rate of $29 per day. Transbulk is a company based in Gothenburg, Sweden. Transbulk has been in the drybulk cargo chartering business for a period of approximately 30 years. Mr. George Economou serves on its board of directors.

(d)

Heidmar Inc. (“Heidmar”): As further explained in Note 13 (c), Heidmar is the agent of the Pool in which the M/T Olinda has entered. Antonis Kandylidis, the Company’s Chief Executive Officer and Interim Chief Financial Officer, is a member of Heidmar’s Board of Directors.

F-10

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

3. Transactions with Related Parties — (continued):

(e)

Lease agreement: The Company has leased office space in Athens, Greece, from Mr. George Economou. The lease commenced on April 24, 2007, with a duration of six months and the option for the Company to extend it for another six months. The monthly rental amounts to Euro 680 ($1.0 at the September 30, 2008 exchange rate). This agreement has been renewed with the same monthly rental and will be terminated upon mutual agreement of the parties. The rent charged for the nine-month periods ended September 30, 2007 and 2008 amounted to $4.8 and $9.4, respectively and is included in General and Administrative expenses in the accompanying consolidated unaudited statements of income.

(f)

Vessel Acquisitions: As further discussed in note 4 below, during August and September 2008, the Company’s Board of Directors authorized the acquisition of two tankers from interests associated with Mr. George Economou.

4. Vessels, Net:

The amount in the accompanying September 30, 2008 consolidated unaudited balance sheet is analyzed as follows:

			Accumulated			Net Book
	Cost		Depreciation			Value
Balance December 31, 2007	$	498,490	$	(13,210	)	$	485,280
Additions		65,745		(31,014	)		34,731
Balance September 30, 2008	$	564,235	$	(44,224	)	$	520,011

During the year ended December 31, 2007, the Company acquired and took delivery of eight Panamax drybulk carriers: the Austin, Pierre, Trenton, Helena, Lansing, Topeka, Richmond and Augusta, a Capesize drybulk carrier named the Juneau, and an Aframax tanker named the Pink Sands, for a total consideration of $467,143. The acquisition of the Company’s vessels was financed from the proceeds of the bank loans discussed in Note 5, the net proceeds from the Company’s initial public offering discussed in Note 1 and own funds. The memoranda of agreement associated with the acquisition of four of the above vessels, Austin, Pierre, Trenton and Topeka stipulated that the vessels were delivered to the Company with their current charter parties, expiring in 2010. The assumed charters were below market charter rates at the time of the delivery and, accordingly, a portion of the consideration paid for the vessels was allocated to the assumed charters to the extent the vessel capitalized cost would not exceed its fair market value without a time charter contract.

The Company recorded imputed deferred revenue totaling $31,346, with a corresponding increase in the vessels’ purchase price, which is being amortized to revenue on a straight-line basis during the remaining duration of the corresponding charter. The amortization of imputed deferred revenue for the nine-month period ended September 30, 2007 and 2008 amounted to $2,404 and $7,724, respectively and is separately reflected in the accompanying consolidated unaudited statements of income.

In January 2008, the Company acquired and took delivery of a Suezmax tanker vessel, the Olinda, for a total consideration of $65,665.

F-11

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

4. Vessels, Net — (continued):

On August 7, 2008, the Company’s Board of Directors authorized the acquisition of M/T Tamara, a 1990 built double hull 95,793 dwt Aframax crude oil carrier from interests associated with Mr. George Economou for a price of $39,000 according to the related memorandum of agreement. The purchase price will be financed by a sellers’ unsecured credit of $12,000 and the Company’s own funds. The sellers’ credit is payable 18 months after the physical delivery of the vessel and bears interest at 9.0 % per annum. At the sellers’ option, the repayment of the sellers’ credit will be made in cash at the date it becomes due, or in the Company’s common stock at any date including the date it becomes due as defined in the memorandum of agreement. Furthermore, the Company will pay the sellers an arrangement fee of $100 pertaining to the granting of the sellers’ credit and $390 to Cardiff, representing 1% commission on the vessel’s purchase price. On August 8, 2008, the Company entered into an agreement to time charter the M/T Tamara with Heidmar Trading LLC, which is 49% owned by a company associated with Mr. George Economou, for a period of approximately two years at a gross daily rate of $27 (Note 13b).

On September 26, 2008, the Company’s Board of Directors authorized the acquisition of the M/T Tigani, a 1991 built double hull 95,951 dwt Aframax crude oil carrier from interests associated with Mr. George Economou for a price of $40,000 according to the related memorandum of agreement. The purchase price will be financed by a sellers’ unsecured credit of $13,000 and the Company’s own funds. The sellers’ credit is payable 18 months after the physical delivery of the vessel and bears interest at 9.5 % per annum. At the sellers’ option, the repayment of the sellers’ credit will be made in cash at the date it becomes due, or in the Company’s common stock at any date including the date it becomes due as defined in the memorandum of agreement. Furthermore, the Company will pay the sellers an arrangement fee of $120 pertaining to the granting of the sellers’ credit and $400 to Cardiff, representing 1% commission on the vessel’s purchase price (Note 13a).

Pursuant to the memoranda of agreement for the M/T Tamara and M/T Tigani, discussed above, the sellers have the option, through the date the sellers’ credit is due, to elect repayment of the sellers’ credit in cash or in the form of common shares of the Company. The number of shares that would be issued is calculated based on the average closing price of the Company’s common shares on the Nasdaq Global Market for the five days before the election to receive payment in the form of common shares. Following the election to receive payment in shares, the Company is required to issue such shares within five banking days. In the case of a change-of-control of the Company, as defined in the memoranda of agreement, the sellers’ credit becomes immediately due and payable within three banking days from the date of the change of control. (See Note 13(i)).

The Company’s vessels have been pledged as collateral to secure the bank loan discussed in Note 5.

5. Long-term Debt:

On September 18, 2007, the Company entered into an agreement with Nordea Bank Norge ASA (“Nordea”), for a $325,000 senior secured credit facility (the “Credit Facility”) for the purpose of refinancing the then outstanding balance of the credit facility with Fortis Bank and financing the acquisition of additional vessels. The Company and Nordea Bank completed the syndication of the Credit Facility on February 15, 2008 which resulted in certain amendments to repayment terms and financial covenants, increased interest margins and commitment fees on the undrawn portion of the Credit Facility.

The amended syndicated Credit Facility is comprised of the following two Tranches and bears interest at LIBOR plus a margin:

F-12

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

5. Long-term Debt — (continued):

Tranche A, a reducing revolving credit facility in a maximum amount of $200,000. As of September 30, 2008 the Company had utilized $199,000 to repay the outstanding balance of the credit facility with Fortis of $118,000, to partially finance the acquisition of the M/V Richmond and M/T Pink Sands by $47,000 and $30,000, respectively and $4,000 for working capital purposes. The first semi-annual installment payment for Tranche A was made on April 1, 2008 in an amount of $7,500. As of September 30, 2008, the balance of Tranche A will be reduced or repaid in 15 consecutive semi-annual installments, the first due on October 1, 2008 in an amount of $8,500, the following 13 in the amount of $11,000 each and the 15^th installment in an amount of $40,000.

Tranche B, a Term Loan Facility in a maximum amount of $125,000 to be used for the financing of up to 100% of the purchase price of additional vessels. As of September 30, 2008 the Company had utilized $125,000, to partially finance the acquisition of the M/V Augusta and M/T Olinda, respectively. Tranche B is repayable in 14 equal consecutive semi-annual installments in the amount of $6,944 each plus a 15^th installment in the amount of $27,778. The first installment is due on January 1, 2009.

The Credit Facility is secured with first priority mortgages over the vessels, first priority assignment of vessels’ insurances and earnings, specific assignment of the time-charters, first priority pledges over the operating and retention accounts, corporate guarantee and pledge of shares. The Company is required to pay a commitment fee of 0.45% per annum payable quarterly in arrears on the un-drawn portion of the Credit Facility.

The loan agreement includes among other covenants, financial covenants requiring (i) the ratio of funded debt to the sum of funded debt plus shareholders’ equity not to be greater than 0.70 to 1.00; (ii) effective July 1, 2008, the liquidity must not be less than $500 multiplied by the number of vessels owned (iii) effective December 31, 2007, the ratio of EBITDA to net interest expense at each quarter end must not be less than 2.50 to 1; (iv) the aggregate fair market value of the vessels must not be less than 140% of the aggregate outstanding balance under the loan plus any unutilized commitment under Tranche A. The Company will be permitted to pay dividends under the loan so long as an event of default has not occurred and will not occur upon the payment of such dividends. (see Note 13(l))

The table below shows the repayment schedule of the loan balance as of September 30, 2008 on a calendar year-end basis. (see Note 13(l))

	Tranche A		Tranche B		Total
2008		8,500		—		8,500
2009		22,000		38,889		60,889
2010		22,000		13,889		35,889
2011		22,000		13,889		35,889
2012		22,000		13,889		35,889
2013 and thereafter		95,000		44,444		139,444
		191,500		125,000		316,500

Total interest expense on long-term debt for the nine-month periods ended September 30, 2007 and 2008 amounted to $1,882 and $11,563, respectively, and is included in Interest on long-term debt in Interest and finance costs (Note 11) in the accompanying consolidated statements of income. The Company’s weighted average interest rates (including the margin) for the nine-month periods

F-13

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

ended September 30, 2007 and 2008 were 6.55% and 4.14%, respectively.

6. Share Capital:

Stockholders’ Rights Agreement: On April 17, 2008, the Company approved a Stockholders Rights Agreement with American Stock Transfer & Trust Company, as Rights Agent, effective as of April 30, 2008. Under this Agreement, the Company 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 OceanFreight Inc. Class A common stock, par value U.S. $0.01 per share. The Rights will separate from the common stock and become exercisable after (1) the 10^th day after public announcement that a person or group acquires ownership of 20% or more of the Company’s common stock or (2) the 10^th 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 20% or more of the Company’s common stock. On the distribution date, each holder of a right will be entitled to purchase for $100 (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 (an “Acquiring Person”) acquires more than 20% 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 20% 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) May 12, 2018 or (2) the exchange or redemption of the Rights as described above. The Company can redeem the Rights at any time on or prior to the earlier of a public announcement that a person has acquired ownership of 20% or more of the Company’s common stock, or the expiration date. 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 that 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.

Controlled Equity Offering — Sales Agreement (“Agreement”): On June 4, 2008, the Company filed a shelf registration statement on Form F-3, which was declared effective on June 6, 2008, pursuant to which the Company may sell up to $200,000 of an indeterminate number of securities. On June 19, 2008 the Company filed a Prospectus Supplement to the registration statement relating to the offer and sale of up to 4,000,000 of common shares, par value $0.01 per share, from time to time through Cantor Fitzgerald & Co., as its agent for the offer and sale of the common shares, pursuant to the Agreement by and between the Company and Cantor Fitzgerald & Co. concluded on June 19, 2008. The Company pays to Cantor Fitzgerald & Co. a commission of up to 1.75% on the gross sale proceeds. The Controlled Equity Offering commenced at the beginning of the third quarter of 2008. As of September 30, 2008, 1,878,000 shares had been sold and issued with net proceeds amounting to $36,933.

Subordinated Shares (Class B common shares): Following the dividend payment on August 14, 2008 in the amount of $0.77 per share in respect of the second quarter of 2008, the Company satisfied the provisions under its Amended and Restated Articles of Incorporation for the early conversion of all of its issued and outstanding Class B common shares into Class A common shares on a one-for-one basis. Accordingly, on August 15, 2008 the then issued and outstanding 2,085,150 Class B common shares were converted into Class A common shares on a one-for-one basis.

Resale Shelf Registration Statement for Selling Shareholders. On September 3, 2008, we filed a resale shelf registration statement on
form F-3 to register 2,085,150 common shares on behalf of the selling shareholders Basset Holdings Inc., Steel Wheel Investments Limited, and Seabert Shipping Co. This resale shelf registration statement has not yet been declared effective. Basset Holdings Inc. and Steel Wheel Investments Limited are owned and controlled by Mr. Antonis Kandylidis, our Chief Executive Officer

F-14

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

and Interim Chief Financial Officer. Seabert Shipping Co. is controlled by Mr. Michael Gregos, our Chief Operating Officer. This resale shelf registration statement was amended on October 30, 2008.

7. Financial instruments:

On January 29, 2008, the Company entered into two interest rate swap agreements with Nordea, the Company’s lending bank, to partially hedge its exposure to fluctuations in interest rates on a notional amount of $316,500, decreasing in accordance with the debt repayments, by converting the variable rate of its debt to fixed rate for a period for 5 years, effective April 1, 2008. Under the terms of the interest rate swap agreement the Company and the bank agreed to exchange at specified intervals, the difference between paying a fixed rate at 3.55% and a floating rate interest amount calculated by reference to the agreed notional amounts and maturities. These instruments have not been designated as cash flow hedges under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, and consequently, the changes in fair value of these instruments are recorded through earnings. The fair value of these instruments at September 30, 2008, is determined based on observable Level 2 inputs, as defined in SFAS No. 157 “Fair Value Measurements” (SFAS 157), derived principally from or corroborated by observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined. The fair value of these instruments at September 30, 2008 amounted to $1,186 and is reflected in Gain on derivative instruments in the accompanying consolidated unaudited statement of income for the nine-month period ended September 30, 2008. The current portion of the total fair value resulted in a loss of $1,067 and is included in current liabilities as “Derivative liability” while the non-current portion results in a gain of $2,253 and is included in other non-current assets as “Derivative asset” in the accompanying consolidated unaudited balance sheet as of September 30, 2008. The realized interest and accrued interest payable on the swaps for the nine-month period ended September 30, 2008 amounted to $682 and $607, respectively, and is included in Interest and finance costs (Note 11) in the accompanying consolidated unaudited statements of income. As of September 30, 2008, no fair value measurements for assets under Level 1 and Level 3 of the SFAS 157 input hierarchy were recognized in the Company’s interim consolidated unaudited financial statements.

8. Stock based compensation:

The Company as of the closing date of its Initial Public Offering granted to its former Chief Executive Officer and former Chief Financial Officer 63,158 subordinated shares and 31,579 restricted common shares, respectively, representing $1,800 at the initial price of the stock to the public of $19.00 per share. These shares were vesting at various dates as defined in the employment agreements signed with the executives. On November 30, 2007, following the departure of the Chief Executive Officer and the Chief Financial Officer from the Company, the Company’s Board of Directors compensated the former Chief Executive Officer with 21,053 restricted subordinated shares that had already been vested and the former Chief Financial Officer with 23,685 restricted common shares of which 15,790 vested on January 2, 2008 and 7,895 on April 30, 2008. On April 22, 2008, within the context of the settlement agreement discussed in Note 10, the 21,053 restricted subordinated shares were exchanged for 21,053 common shares and 52,105 new common shares were issued to the former Chief Executive Officer. The remaining 42,105 restricted subordinated shares and 7,894 common restricted shares, initially granted to the former Chief Executive Officer and former Chief Financial Officer, respectively, were cancelled on January 30, 2008. The related compensation expense of $850 has been included in General and Administrative expenses in the 2007 consolidated statement of income for the year ended December 31, 2007 with an offsetting entry to common stock par value, subordinated stock par value and in additional paid-in capital in the consolidated statement of stockholders’ equity for the year ended December 31, 2007.

On September 24, 2007, the Company reserved 5,150 restricted subordinated shares, vesting 25% semi-annually, to Seabert Shipping Co., a company providing consulting services to the Company in connection with the duties of the Chief Operating Officer which is controlled by the Chief Operating Officer. The shares were issued on March 13, 2008.

On February 12, 2008 the Company granted 80,000 restricted subordinated shares, vesting 25% annually, to Steel Wheel Investments Limited, a company providing consulting services to the Company in connection with the duties of the Chief Executive Officer/ Interim Chief Financial Officer, which is controlled by the Chief Executive Officer/ Interim Chief Financial Officer, subject to contractual restrictions, including applicable vesting period. The shares were issued on March 27, 2008.

F-15

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

8. Stock based compensation — (continued):

Following the conversion of the Company’s subordinated shares into common shares (Note 6) the aggregate of 85,150 restricted subordinated shares mentioned above vested immediately as provided in the related agreements.

Compensation cost recognized in the period amounted to $1,562.

The total unrecognized compensation cost at September 30, 2008 amounted to $59.2 and is expected to be recognized until September 24, 2009. The number of restricted subordinated shares that vested during the nine-month period ended September 30, 2008 was 85,150 shares.

9. Earnings per Share:

The components for the calculation of earnings/losses per common and subordinated share, basic and diluted, for the nine-month periods ended September 30, 2007 and 2008, are as follows:

	2007			2008
Net income	$	1,782		$	39,289
- Less dividends paid
Common shares		(4,834	)		(34,499	)
Subordinated shares		(804	)		—
Undistributed (losses)/earnings	$	(3,856	)	$	4,790
Allocation of undistributed (losses)/earnings
Common Shares:
-12,394,079 as of September 30, 2007 and 16,422,493 as of September 30, 2008	$	(3,306	)	$	4,790
Subordinated shares
- 2,063,158 as of September 30, 2007 and 0 as of September 30, 2008		(550	)		—
	$	(3,856	)	$	4,790

F-16

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

9. Earnings per Share — (continued):

Basic and diluted per share amounts:

	2007
	Common			Subordinated
	Shares			Shares
Distributed earnings		0.69			0.39
Undistributed (losses)/earnings		(0.47	)		(0.27	)
Total		0.22			0.12
Weighted average number of shares basic and diluted		6,991,532			2,035,628

	2008
	Common		Subordinated
	Shares		Shares
Distributed earnings		2.62		—
Undistributed earnings		0.36		—
Total		2.98		—
Weighted average number of shares basic and diluted		13,168,675		—

Due to the conversion of the subordinated shares into common shares during August 2008 (Note 6), the basic and diluted per share amounts are presented only for common shares for the nine-month period ended September 30, 2008.

10. Commitments and Contingencies:

Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of 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. 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 interim consolidated unaudited financial statements.

The Company accrues for 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 claim or contingent liabilities which should be disclosed, or for which a provision should be established in the accompanying interim consolidated unaudited financial statements. 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.

The Company’s former Chairman, President and Chief Executive Officer had asserted a claim for breach of his employment agreement and for unidentified post-employment conduct by the Company. On April 7, 2008, the Company and the former Chairman, President and Chief Executive Officer reached a settlement agreement resolving all claims asserted by him. In connection with this agreement, the Company issued to the former Chairman, President and Chief Executive Officer 21,053 common shares in exchange for 21,053 restricted subordinated shares, plus an additional 52,105 common shares both of which took effect on April 22, 2008. The related expense was approximately $1,100 and is included in General and Administrative expenses in the accompanying consolidated unaudited statement of income for the nine months ended September 30, 2008. The Company also granted to Mr. Cowen certain registration rights for the 52,105 common shares held by him.

F-17

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

10. Commitments and Contingencies — (continued):

On August 13, 2007, the Company entered into a six-year lease for office facilities in Athens, which expires in August 2013 with the Company’s option to extend the agreement through October 1, 2017. The monthly lease payment is Euro 4.4 ($6.34 based on the Euro to USD exchange rate at September 30, 2008) and is adjusted on January 1 of each year based on the inflation rate announced by the Greek State as defined in the agreement. The future minimum lease payments are $19.0 for the remainder of the year 2008, $76.1 for each of the years 2009, 2010, 2011, and 2012 and $50.7 for the year 2013.

11. Interest and Finance Cost:

The amounts in the accompanying consolidated unaudited statements of income are analyzed as follows:

	2007		2008
Interest on long-term debt	$	1,830		11,551
Amortization and write-off of financing fees		49		356
Long-term debt commitment fees		52		12
Other		38		209
Total	$	1,969		12,128

12. Segment Information:

The table below includes information about the Company’s reportable segments as of September 30, 2008 and for the nine-month period then ended. The accounting policies followed in the preparation of the reportable segments are the same as those followed in the preparation of the Company’s interim consolidated unaudited financial statements.

	Drybulk
	carriers		Tankers		Other			Total
Revenues from external customers		87,805		30,766		—			118,571
Interest expense and finance costs		8,686		3,414		28			12,128
Interest Income		—		—		685			685
Gain on derivative instruments		—		—		1,186			1,186
Depreciation		24,604		6,410		15			31,029
Segment profit/(loss)		35,492		7,491		(3,694	)		39,289
Total assets		415,719		107,395		85,000			608,114

13. Subsequent Events:

a) On October 14, 2008, the Company took delivery of the M/T Tigani, a 1991 built double-hull 95,951 dwt Aframax crude oil carrier. Concurrently with the delivery of the vessel, it commenced her time charter employment with Heidmar Trading LLC, which is 49% owned by a company associated with Mr. George Economou, for a period of approximately one year at a gross daily rate of $29 (Note 4). The vessel is owned by Ocean Faith Owners Inc., a company established in the Republic of The Marshall Islands on October 9, 2008.

F-18

OCEANFREIGHT INC.
Notes to Interim Consolidated Unaudited Financial Statements
September 30, 2008
(Expressed in thousands of United States Dollars, except for share and per share data, unless otherwise stated)

13. Subsequent Events — (continued):

b)	On October 17, 2008, the Company took delivery of the M/T Tamara, a 1990 built double-hull 95,793 dwt Aframax crude oil carrier. Concurrently with the delivery of the vessel, it commenced her time charter employment with Tri-Ocean Heidmar Tankers LLC, which is 49% owned by a company associated with Mr. George Economou, for a period of approximately 26 to 27 months at a gross daily rate of $27 (Note 4).
c)	On October 11, 2008, the charter of the M/T Olinda was terminated by mutual agreement between the Company and Industrial Carriers Inc. as a result of the charterer’s insolvency. In this connection, the Company received nonrefundable cash compensation of approximately $1,200 and ownership of all bunkers on board the M/T Olinda. The M/T Olinda will be entered into the Blue Fin Tankers Inc. Pool, which is managed by Heidmar Inc., which is 49% owned by a company associated with Mr. George Economou, and the Company’s Chief Executive Officer and Interim Chief Financial Officer is a member of its Board of Directors, for a minimum period of 12 months. The vessel’s earnings will be derived from the pool’s total net earnings.
d)	On October 20, 2008, the Company’s Board of Directors declared a dividend of $0.77 per share, paid on November 6, 2008 to shareholders of record as of October 31, 2008.
e)	On October 21, 2008, the management agreements of vessels M/V Juneau, M/T Pink Sands and M/T Olinda entered into with Cardiff (Note 3), were amended and the management fees per day were increased to $0.828 (Euro 0.575) per day for M/V Juneau and $0.972 (Euro 0.675) per day for each of M/T Pink Sands and M/T Olinda. Furthermore, in connection with the above mentioned vessels, Cardiff will earn a daily fee of $0.72 (Euro 0.5) per vessel plus superintendents’ expenses for any services performed relating to the evaluation of vessels’ physical condition, and/or supervision of shipboard activities, and/or attendance of repairs and dry-dockings. The amendments have retroactive effect as of October 1, 2008.
f)	On October 21, 2008, the services agreement signed between the Company and Cardiff (Note 3), was amended to include a daily fee to be earned by Cardiff of $0.720 (Euro 0.5) per vessel per day, plus superintendents’ expenses, in exchange for any vessel inspection services performed in connection with a possible purchase. The amendment has retroactive effect as of October 1, 2008.
g)	The Company’s Controlled Equity Offering of up to 4,000,000 common shares (Note 6) was completed on November 10, 2008. During the fourth quarter of 2008 2,122,000 common shares were issued with net proceeds amounting to $14.0 million.
h)	On November 18, 2008, the M/V Augusta was delivered from its previous charterer, D’Amato di Navigazione S.p.A., to its new charterer, South China Lines. As a result of the significant decline in the drybulk market, the Company agreed to renegotiate its contracted time charter rate with South China Lines from $42,100 per day to $16,000 per day, and to amend the period of the time charter from a minimum of 34 months and a maximum of 37 months to a minimum of 35.5 months and a maximum of 40 months.
i)	Effective November 25, 2008, Harry Kerames, a member of our board of directors, resigned for personal reasons. On December 12, 2008, our board of directors appointed Mr. Panagiotis A. Korakas to the board as an independent director. Mr. Korakas was born in 1950 in Athens, Greece. Mr. Korakas has had an extensive career in the construction and construction materials industry, both as an executive and an entrepreneur. For almost ten years, Mr. Korakas was the General Manager of Korakas & Partners, a commercial construction entity, while during the last 15 years he has run a business enterprise specializing in advanced composite metal construction. Following the resignation of Mr. Kerames, which triggered the sellers’ right to early repayment of the sellers’ credit in the amount of $25 million in respect of the vessels M/T Tamara and M/T Tigani, the Company and the sellers, which are interests associated with Mr. George Economou, agreed that the sellers waived their right to immediate repayment as a result of the change in the composition of the board. The Company and the sellers further agreed that the sellers may, at any time following the Company’s entry into the amendatory agreement to its Nordea credit facility (described in Note 13(l) below), demand prepayment of the sellers’ credit upon two business days’ notice, in whole or in part; provided that such prepayment in cash is limited to payment from proceeds of new equity offerings in accordance with the terms of the amendatory agreement. The Company is obligated to advise the sellers of the proceeds from the sale of new equity. At any time, the Sellers may also request payment in common shares, upon five business days notice.
j)	On December 12, 2008, our board of directors determined, after careful consideration of various factors, including the recent sharp decline in charter rates and vessel values in the drybulk sector, to suspend the payment of cash dividends until such time as the board of directors shall determine in its discretion, in order to preserve capital.
k)	On December 23, 2008, the Company entered into a loan agreement with DVB Bank SE for a new secured term loan facility. The Company will use the proceeds of the loan to make the prepayment in the amount of $25.0 million under its amendatory agreement to its Nordea credit facility (described below). The new loan is for an amount that is $29.55 million, being the lesser of $30.5 million or 55% of the aggregate charter free fair market value of the two vessels as determined within the two weeks prior to drawdown, which was fully drawn on January 14, 2009. The loan is repayable over four years from drawdown in 16 quarterly variable installments with the first four installments being $2.75 million each, followed by four installments of $2.31 million each, followed by eight installments of $1.095 million each, plus a balloon installment of $0.55 million payable together with the last installment. The loan bears interest at 3.0% over LIBOR. The loan is secured with first preferred mortgages on the two vessels, a corporate guarantee by the Company, assignment of earnings and insurances and pledge of shares of the borrowers. The loan agreement includes, among other covenants, financial covenants requiring that (i) liquidity must be at least $500,000 multiplied by the number of vessels owned, (ii) total interest bearing liabilities over the sum of total interest bearing liabilities plus shareholders’ equity adjusted to account for the market value of the vessels must not exceed 90% up to June 30, 2010, 80% up to December 31, 2010 and 70% thereafter; (iii) the ratio of EBITDA to net interest expense of any accounting period must not be less than 2.50 to 1; and (iv) the aggregate charter free fair market value of the two vessels must not be less than 140% (increasing by five percentage points each year, reaching 155% in the last year) of the aggregate outstanding balance. The Company is permitted to pay dividends under the loan of up to 50% of quarterly net profits. The Company will pay a commitment fee of 0.65% per annum on the undrawn balance of the loan. The loan agreement contains certain events of default, including a change of control, a cross-default with respect to other financial indebtedness and a material adverse change in the financial position or prospects of the borrowers or the Company. Upon signing the loan agreement, the Company paid an upfront fee of 1.5% ($457,500) on the loan amount.
l)	As of September 30, 2008, the Company had an outstanding indebtedness of $316.5 million and aggregate payments of principal due within one year amounted to $33.4 million under the $325 million Credit Facility with Nordea. As discussed in Note 5, the Credit Facility contains various financial covenants, which the Company was in compliance with at September 30, 2008.
	The current recession in the shipping market has led to a significant decline in the fair market values of the Company’s vessels since September 30, 2008 and particularly the drybulk carriers. As a result, the Company was at risk of breaching the collateral maintenance coverage ratio covenant under its $325 million Credit Facility with Nordea, which required the Company to maintain a fair market value of its vessels of at least 140% of its aggregate outstanding balance under the Credit Facility.
	Under the terms of the Credit Facility, the bank has the right to require the Company, within 30 business days of the date of a written demand by the bank, to either prepay the loan in such amount as may be necessary to cause the aggregate fair market value of the vessels to equal or exceed the collateral maintenance ratio or provide such additional collateral as may be acceptable to the bank to bring the Company into compliance with the required collateral maintenance coverage ratio.
	In this respect, on January 9, 2009, the Company entered into an amendatory agreement to its Nordea Credit Facility that went effective on January 23, 2009. The amendatory agreement waives the breach of the collateral maintenance coverage ratio covenant contained in such credit facility resulting from the decrease in the market value of the Company’s vessels and reduces the level of the collateral maintenance coverage ratio to a level between 90% and 125% for the remaining term of the agreement, with such waiver taking effect from the date of prior breach to the effective date of the amendatory agreement. In addition the amendatory agreement: (i) requires the Company to make a prepayment of $25.0 million of principal upon the funding of the loan with DVB Bank SE as described in 13(k) above, but in any case, no later than January 31, 2009, which such funding and prepayment have occurred; (ii) requires, under the reduced collateral maintenance coverage ratio, that the aggregate fair market value of the vessels in the Company’s fleet other than the M/T Tamara and M/T Tigani, plus proceeds from a vessel’s sale or insurance proceeds from a vessel’s loss, and the excess of the fair market value of each of the M/T Tamara and M/T Tigani over the recorded amount of the first priority ship mortgage over each such vessel under the Company’s DVB credit facility, be not less than (a) 90% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A until June 30, 2009, (b) 100% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A from July 1, 2009 to December 31, 2009, (c) 110% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A from January 1, 2010 to March 31, 2010, (d) 115% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A from April 1, 2010 to June 30, 2010, and (e) 125% of the aggregate outstanding balance under the credit facility plus any unutilized commitment in respect of Tranche A at all times thereafter; (iii) requires the Company to pay interest at an increased margin over LIBOR; (iv) requires the Company to pay an arrangement fee of $451,583 which is equal to 0.15% to each bank syndicate member that consented to the proposed amendment by January 9, 2009; (v) prohibits the Company from paying dividends; (vi) limits the Company’s ability to make capital expenditures; (vii) imposes restrictions on making payment, in cash, of the sellers’ credit in the aggregate amount of $25.0 million in respect of the M/T Tamara and the M/T Tigani, except that the Company is permitted to pay the seller’s credit with the proceeds of new equity offerings or, common shares, which the seller may request at any time and (viii) requires the Company to provide additional collateral. The amount of $25 million discussed in (i) above has been classified as current liabilities as of September 30, 2008, in addition to the required scheduled payments (Note 4).
	As a result of the debt covenant relief obtained in the amendatory agreement, the Company is in compliance with all of the applicable debt covenants as of the date of issuance of the September 30, 2008 interim consolidated unaudited financial statements, and based upon projected operating results, and assuming no further deterioration in the prospective fair value of its vessels, management believes it is probable that the Company will meet the financial covenants of its credit agreement and the related amendatory agreement at future covenant measurement dates. As a result, in accordance with EITF 86-30, Classification of Obligations When a Violation Is Waived by the Creditor, all amounts not due within the next twelve months have been classified as long-term liabilities.
m)	Effective January 8, 2009, Cardiff assumed the commercial management of the eight Panamax drybulk carriers previously under the commercial management of Wallem, for a daily fee of $0.216 (Euro 0.150) per vessel. As a result, the scope of Wallem’s management of such vessels is limited to technical management, at a reduced fee of $93 per vessel, or $0.256 per vessel per day.
n)	On January 14, 2009, the Company signed an addendum to the management agreements with Cardiff for the vessels under Cardiff’s combined commercial and technical management, providing for a security payment from the Company to Cardiff equal to 90 days technical and commercial management fees for each vessel. The Company also agreed to pay Cardiff an additional security equal to three months running expenses per vessel. The security payments are not refundable by Cardiff in the event of (i) a change of control in the Company, as defined in the services agreement dated May 15, 2008 (Note 3(vii)) and (ii) any public disclosure that the Company is in default of any of its agreements including but not limited to loan agreements and charter party agreements and such default impairs the Company’s ability to continue its operations. The amount paid in this respect amounted to $3,323.
o)	On January 14, 2009, the Company signed an addendum to the commercial management agreement with Cardiff with respect to the eight Panamax drybulk carriers under Wallem’s technical management (see (m) above), providing for a security payment from the Company to Cardiff equal to 90 days commercial management fees for each vessel. The security is not refundable by Cardiff in the event of (i) a change of control in the Company, as defined in the services agreement dated May 15, 2008 (Note 3(vii)) and (ii) any public disclosure that the Company is in default of any of its agreements including but not limited to loan agreements and charter party agreements and such default impairs the Company’s ability to continue its operations. The amount paid in this respect amounted to $138.
p)	On January 14, 2009, the Company signed an addendum to the services agreement with Cardiff for the managers’ supervision of vessels under Wallem’s technical management (see (m) above), providing for a security payment from the Company to Cardiff equal to 90 days manager’s supervision fees for each vessel. The security is not refundable by Cardiff in the event of (i) a change of control in the Company, as defined in the services agreement dated May 15, 2008 (Note 3(vii)) and (ii) any public disclosure that the Company is in default of any of its agreements including but not limited to loan agreements and charter party agreements and such default impairs the Company’s ability to continue its operations. The amount paid in this respect amounted to $92.
q)	On December 23, 2008, the Compensation Committee granted a cash bonus of about $2.3 million to all employees and executive management of the Company, which was paid on December 29, 2008.

F-19

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: January 30, 2009		OCEANFREIGHT INC.
		(Registrant)
	By:	/s/ Antonis Kandylidis Antonis Kandylidis
		Chief Executive Officer
		and Interim Chief Financial Officer

EX-4.8

Exhibit 4.8

Date 23 December 2008

OCEAN BLUE SPIRIT OWNERS INC.

- and -

OCEAN FAITH OWNERS INC.
as joint and several Borrowers

- and -

DVB BANK SE
as Lender

LOAN AGREEMENT

relating to a loan facility of up to US$30,500,000
to refinance part of the acquisition cost of
the m.ts. “TAMARA” and “TIGANI”

WATSON, FARLEY & WILLIAMS
Piraeus

INDEX

Clause		Page
1	INTERPRETATION		1
2	FACILITY		14
3	DRAWDOWN		14
4	INTEREST		15
5	INTEREST PERIODS		16
6	DEFAULT INTEREST		16
7	REPAYMENT AND PREPAYMENT		17
8	CONDITIONS PRECEDENT		19
9	REPRESENTATIONS AND WARRANTIES		19
10	GENERAL UNDERTAKINGS		21
11	CORPORATE UNDERTAKINGS		24
12	INSURANCE		25
13	SHIP COVENANTS		30
14	SECURITY COVER		33
15	PAYMENTS AND CALCULATIONS		34
16	APPLICATION OF RECEIPTS		35
17	APPLICATION OF EARNINGS		36
18	EVENTS OF DEFAULT		37
19	FEES AND EXPENSES		40
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		46
26	VARIATIONS AND WAIVERS		46

Clause		Page
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			56

THIS AGREEMENT is made on 23 December 2008

BETWEEN

(1)	OCEAN BLUE SPIRIT OWNERS INC. and OCEAN FAITH OWNERS INC., 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)	DVB BANK SE, acting through its branch at 80 Cheapside, London EC2V 6EE, 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 the lesser of (i) US$30,500,000 and (ii) 55 per cent, of the aggregate Initial Market Value of the Ships for the purpose of refinancing part of the acquisition cost of the m.ts. “TAMARA” and “TIGANI” acquired by Ocean Blue Spirit Owners Inc. and Ocean Faith Owners Inc. respectively 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 each of the Earnings Accounts and the Retention Account and, in the plural, means all of them;
	“Account Bank” means EFG Eurobank Ergasias S.A. acting through its branch at 83 Akti Miaouli, Piraeus 185 38, Greece or any other first class bank or financial institution which may be approved by the Lender as the bank or financial institution with which the Accounts will be opened and maintained;
	“Account Pledge” means, in relation to each Account, the deed of pledge in respect of that Account to be executed by the relevant Borrower or, in the case of the Retention Account Pledge, by the Borrowers in favour of the Lender in such form as the Lender may approve or require and in the plural means all of them;
	“Alternative Interest Rate” means the aggregate of (i) the rate the Lender selects from whatever sources available to it (which selection shall be conclusive, final and binding on the Borrowers without prejudice to the other provisions of Clause 4), including but not limited to rates provided through broker’s quotes to be the interest rate on the Loan during the Disruption Period and (ii) the Margin.
	“Approved Charter” means, in relation to:

(a)	“TAMARA”, the time charterparty dated 7 August 2008 made between the Corporate Guarantor and the relevant Approved Charterer as amended and supplemented by an amendment No.l dated 17 October 2008 made between the Corporate Guarantor, that Approved Charterer and Ocean Blue pursuant to which the Corporate Guarantor nominated Ocean Blue as the owner of that Ship; and
(b)	“TIGANI”, the time charterparty dated 9 October 2008 made between Ocean Faith and the relevant Approved Charterer,

and, in the plural, means both of them;

“Approved Charterer” means, in relation to:

(a)	“TAMARA”, Tri-Ocean Heidmar Tankers LLC; and
(b)	“TIGANI”, Heidmar Trading LLC,

each a corporation incorporated and existing under the laws of the Marshall Islands and, in the plural, means both of them;

“Approved Manager” means, in relation to each Ship, Cardiff Marine Inc., a corporation incorporated in the Republic of Liberia and maintaining an office (in accordance with Greek law 89) at Omega Building, 80 Kifissias Avenue, Maroussi 151 25, Greece or any other company which the Lender may approve from time to time as the manager of either 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;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

(a)	31 January 2008 (or such later date as the Lender may agree with the Borrowers); or
(b)	if earlier, the Drawdown Date or the date on which the Lender’s obligation to advance the Loan is cancelled or terminated;

“Balloon Instalment” has the meaning ascribed to it in Clause 7.1(b);

“Borrower” means each of Ocean Blue and Ocean Faith and, in the plural, means both of them;

“Business Day” means a day on which banks are open in London, Frankfurt, 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;

“Change of Control” shall occur in relation to the Corporate Guarantor of:

(a)	any person (as such term is used in Section 13(d) and 14(d) of the Exchange Act) who as at the date of this Agreement is not a beneficial owner of the Corporate Guarantor becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, of more than 20 per cent, of the total voting power or ownership interest of the Corporate Guarantor; or
(b)	the board of directors of the Corporate Guarantor ceases to consist of a majority of the directors existing as of the date of this Agreement or directors nominated by at least two-thirds (2/3) of the then existing directors;

“Charterparty Assignment” means, in relation to either Approved Charter or any time charterparty or contract of affreightment in respect of a Ship of at least 12 months in duration or any bareboat charter in respect of a Ship and any guarantee of any such charter or other contract of employment, an assignment of the rights of the Borrower who owns the relevant Ship under any such Approved Charter, charterparty or contract of affreightment and (if applicable) the guarantee in respect thereof executed or to be

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executed by that Borrower in favour of the Lender, in each case, in such form as the Lender may approve or require and, in the plural, means all of them;

“Commitment” means $30,500,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement;

“Contractual Currency” has the meaning given in Clause 20.4;

“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 Ocean Freight 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 Mortgage relative to that Ship in such form as the Lender may approve or require and, in the plural, means both of them;

“Disruption Period” means the interest period to be selected by the Lender (which selection shall be conclusive, final and binding on the Borrowers without prejudice to the other provisions of Clause 4), which shall commence on the date on which the Lender notifies the Borrowers of the Applicable Interest Rate in accordance with Clause 4.6 and shall end on the date on which the Lender notifies the Borrowers that the circumstances referred to in Clause 4.4 have ceased to apply, during which the interest rate applicable to the Loan will be the Alternative Interest rate and not LIBOR plus the Margin as a result of the occurrence of any of the circumstances referred to in Clause 4.4;

“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 that 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;

“Earnings Account” means:

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(a)	in the case of “TAMARA”, an earnings account in the name of Ocean Blue with the Account Bank in Piraeus designated “Ocean Blue Spirit Owners Inc. —Earnings Account”; and
(b)	in the case of “TIGANI”, an earnings account in the name of Ocean Faith with the Account Bank in Piraeus designated “Ocean Faith Owners Inc. — Earnings Account”

or, in either case, any other account (with that or another office of the Account Bank) which is designated by the Lender as the Earnings Account for the relevant 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
(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 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;

“Exchange Act” means The Securities Exchange Act of 1934, as amended;

“Finance Documents” means:

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(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 Undertakings;
(h)	the Shares Pledges;
(i)	any Charter Assignment; and
(J)	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;
(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;

“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 and each Shareholder) from time to time during the Security Period and “member of the Group” shall be construed accordingly;

5

“Initial Market Value” means, in relation to a Ship, the Market Value of such Ship determined by the valuations referred in paragraph 4 of Schedule 2, Part B;

“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 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,

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;

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“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 DVB Bank SE, acting through its branch at 80 Cheapside, London EC2V 6EE, England;

“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 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 or the Lender determines that the rate quoted on Reuters BBA Page LIBOR 01 is lower than the refinancing rates available to the Lender in its ordinary course of business, including, but not limited to, rates quoted to the Lender by brokers (such determination being conclusive, final and binding on the Borrowers) for deposits in Dollars at the relevant time, the applicable rate shall be the rate the Lender selects from whatever sources available to it (which selection shall be conclusive, final and binding on the Borrowers), including but not limited to rates provided through broker’s quotes;

“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;

“Management Agreement” means, in relation to each Ship, an agreement made or to be made between (i) the Borrower who is the owner of that Ship and (ii) the relevant Approved Manager in respect of the commercial or, as the case may be, the technical management of the Ship and, in the plural, means all of them;

“Margin” means 3 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;

“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 “TAMARA”, the memorandum of agreement dated 7 August 2008 entered into between the Corporate Guarantor as buyer and the relevant Seller as

7

	seller as amended and supplemented by an addendum No. 1 dated 7 August 2008 made between the Corporate Guarantor, the relevant Seller and Ocean Blue pursuant to which the Corporate Guarantor nominated Ocean Blue as the buyer of that Ship; and
(b)	in relation to “TIGANI”, the memorandum of Agreement date 7 August 2008 entered into between the Corporate Guarantor as buyer and the relevant Seller as amended and supplemented by an addendum No. 1 dated 9 October 2008 made between the Corporate Guarantor, the relevant Seller and Ocean Faith, pursuant to which the Corporate Guarantor nominated Ocean Faith as the buyer of that Ship,

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;

“Ocean Blue” means Ocean Blue Spirit 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;

“Ocean Faith” means Ocean Faith Owners Inc., a corporation incorporated under the laws of Republic of Marshall Islands with its registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“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:

8

(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

“Recommendation” means, in relation to “TIGANI” a class recommendation appearing on that Ship’s current class records regarding a temporary repair of the ballast eductor in the pump room which is required to be permanently repaired by 30 June 2009;

“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”;

“Retention Account” means an account in the joint names of the Borrowers with the Account Bank in Piraeus (or any other office of the Account Bank) which is designated by the Lender in writing as the Retention Account with respect to the Borrowers for the purposes of this Agreement);

“Retention Account Pledge” means a pledge agreement creating security in respect of the Retention Account to be executed by the Borrowers in favour of the Lender in such form as the Lender may approve or require;

“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, the Shareholders 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;

10

(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 in relation to:

(a)	“TAMARA”, Tulip Navigation Limited, a company existing and organised under the laws of Malta whose registered office is at 5/2 Merchant Street, Valletta, Malta; and
(b)	“TIGANI”, Avir Shipping Company Limited a company existing and organised under the laws Malta whose registered office is at 5/2 Merchant Street, Valletta, Malta,

and in the plural means both of them;

“Shareholder” means, in relation to:

(a)	in relation to Ocean Blue, Ocean Blue Spirit Shareholders Inc.;
(b)	in relation to Ocean Faith, Ocean Faith Shareholders Inc.,

each being the registered owner of all of the issued share capital of the relevant Borrower and a corporation incorporated and existing under the laws of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 and, in the plural, means both of them;

“Shares Pledge” means, in relation to each Borrower, a shares pledge over all of the issued share capital of that Borrower to be executed by the relevant Shareholder in such form as the Lender may approve or require and in the plural means all of them;

“Ship” means each of “TAMARA” and “TIGANI” and in the plural means both of them;

“TAMARA” means the 1990-built Aframax tanker of 52,511 gross registered tons and 24,977 net registered tons, having IMO Number 9002142 registered in the ownership Ocean Blue under Maltese flag with the name “TAMARA”;

“TIGANI” means the 1991-built Aframax tanker of 52,603 gross registered tons and 24,933 net registered tons, having IMO Number 9002154 registered in the ownership Ocean Faith under the Maltese flag with the name “TIGANI”;

“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

11

	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

“Underlying Documents” means, together, the MOAs, the Management Agreements and the Approved Charters.

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;

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“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

“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:

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(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;
(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 $30,500,000 to be drawn in a single advance.
2.2	Purpose of 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 Loan. Subject to the following conditions, the Borrowers may request the Loan to be advanced by ensuring that the Lender receives a completed Drawdown Notice not later than 11.00 a.m. (London time) 2 Business Days prior to the intended Drawdown Date (which shall be a Business Day during the Availability Period).
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 amount and any amount undrawn under the Loan shall be cancelled and may not be borrowed by the Borrowers at a later date; and

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(c) the Loan shall not exceed the lesser of:

(i)	$30,500,000; and
(ii)	55 per cent. of the aggregate Initial Market Value of the Ships.

3.3	Drawdown Notice irrevocable. The Drawdown Notice must be signed by a director, officer or a duly authorised signatory of each Borrower; and once served, the 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.
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 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) 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 the Loan is advanced, the Lender’s obligation to advance the Loan shall be suspended while the circumstances referred to in the Lender’s notice continue.
4.6	Notification of alternative rate of interest. If the Lender’s notice under Clause 4.4 is served after the Loan (or any part thereof) is advanced and in respect of that part of the Loan which has been advanced, the Lender shall promptly notify the Borrowers of the Alternative Interest Rate which will apply during the Disruption Period.
4.7	Application of Alternative Interest Rate. The Alternative Interest Rate shall take effect on the date on which the Lender notifies the Borrowers of the Alternative Interest Rate and this rate will apply to the Loan at all times during the applicable Disruption Period.
4.8	Notice of prepayment. If the Borrowers do not agree with the Applicable Interest Rate set by the Lender under Clause 4.6, the Borrowers may give the Lender not less than 15 Business Days’ notice of their intention to prepay the Loan at the end of the Disruption Period.
4.9	Prepayment. A notice under Clause 4.8 shall be irrevocable; and on the last Business Day of the interest period set by the Lender, the Borrowers shall prepay, subject to the provisions of clause 7.11, the Loan, together with accrued interest thereon at the applicable rate plus the Margin.

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4.10	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 the Loan shall commence on the Drawdown Date 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)	3, 6, 9 or 12 months as notified by the Borrowers to the Lender not later than 11.00 a.m. (London 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. (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).
6.3	Calculation of default rate of interest. The rates referred to in Clause 6.2 are:

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(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 the Loan by
(a)	16 consecutive three-monthly instalments of (i) in the case of the first to fourth (inclusive) instalments, in the amount of $2,750,000 each, (ii) in the case of the fifth to eighth (inclusive) instalments, in the amount of $2,312,500 each and (iii) in the case of the ninth to the sixteenth (inclusive) instalments, in the amount of $1,093,750; and
(b)	a balloon payment of $1,500,000 (the “Balloon Instalment”),
	Provided that if the Loan advanced to the Borrower on the Drawdown Date is less than $30,500,000, the undrawn balance shall be applied first in reducing the Balloon Instalment and any balance shall be applied in reducing each repayment instalment in inverse order of maturity.
7.2	Repayment Dates. The first repayment instalment shall be repaid on 15 March 2009, 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 fourth 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;

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(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. 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 90 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 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 first against the Balloon Instalment and thereafter against the repayment instalments specified in Clause 7.1 outstanding at the time of the partial prepayment in inverse order of maturity; and
(b)	Clause 7.7 in reducing pro rata against the repayment instalments specified in Clause 7.1 outstanding at the time of the prepayment and the Balloon instalment.
7.10	No reborrowing. No amount prepaid may be reborrowed.
7.11	Prepayment fee. The Borrowers shall pay to the Lender a fee in respect of each prepayment made pursuant to this Agreement (other than any prepayment made pursuant to Clause 7.4 if the Loan or any part thereof is refinanced by the Lender, Clause 7.7(b) or Clause 14.2(b)) as follows:
(a)	where a prepayment is made within the first 24 months following the Drawdown Date (the “Initial Period”), the fee shall be equal to 1.50 per cent. of the amount prepaid; and

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(b)	where a prepayment is made within 24 months after the Initial Period, the fee shall be equal to 1.00 per cent. of the amount prepaid.
8	CONDITIONS PRECEDENT
8.1	Documents, fees and no default. The Lender’s obligation to advance 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, on or before service of the Drawdown Notice, the Lender has received:

(i)	the upfront fee referred to in Clause 19.1(a); and
(ii)	any accrued commitment fee due and payable pursuant to Clause 19.1(b);

(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; 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;

(e)	that, if the ratio set out in Clause 14.1 were applied immediately following the advance of the Loan, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and
(f)	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 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 5 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.

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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 relevant Shareholder.
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)	to execute the Approved Charter to which each Borrower is a party;
(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 that 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.

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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 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	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.
9.15	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.
9.16	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.
9.17	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).
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:

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(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 120 days after the end of each financial year of the Borrowers and the Corporate Guarantor (commencing with the financial year ending on 31 December 2008), the:

(i)	unaudited prepared individual financial statements of the Borrower for that financial year; and
(ii)	audited consolidated financial statements of the Corporate Guarantor for that financial year; and

(b)	as soon as possible, but in no event later than 90 days after the end of each 3-month period in each financial year of the Corporate Guarantor ending on 31 March, 30 June, 30 September and 31 December (commencing with the 3-month period ending on 31 December 2008) the interim unaudited consolidated financial statements of the Corporate Guarantor for that 3-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 and its subsidiaries 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 and its subsidiaries.

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10.8	Shareholders and creditor notices. If an Event of Default or Potential Event of Default has occurred and is continuing, 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 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.
10.13	Principal place of business. Each Borrower will maintain its place of business, and keep its corporate documents and records, at the address which has been disclosed by the Borrowers to the Lender in writing on or prior to the date of this Agreement 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

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(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, the Approved Charterers 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.
10.17	Minimum Liquidity. The Borrowers shall maintain with the Account Bank, throughout the Security Period in each Earnings Account, an amount of at least $500,000 in respect of each Ship in freely available cash deposits.
10.18	“Know your customer” requirements. The Borrowers shall provide to the Lender such documentation and evidence as may be required by it from time to time to comply with applicable law and regulations and its own internal guidelines in relation to the opening of bank accounts and the identification of its customers.
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.
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;

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(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;
(d)	freight demurrage and defence risks;
(e)	loss of hire risks; and
(f)	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)	not later than 15 Business Days prior to the Drawdown Date;
(b)	in Dollars;
(c)	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 amount of the Loan and (ii) the Market Value of such Ship; and
(d)	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;
(e)	in relation to protection and indemnity and freight demurrage and defence risks, in respect of the relevant Ship’s full tonnage;
(f)	in relation to loss of hire, in such amounts and for such periods as shall be acceptable to the Lender in its sole discretion;
(g)	on approved terms; and
(h)	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.

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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
(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

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	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 Borrower 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.

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12.11	Restrictions on employment. Neither 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;
(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
(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.

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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 peril insurances. The Lender shall be entitled from time to time to effect, maintain and renew all or any of the following insurances, 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 a Ship or a liability of that Ship or of the relevant Borrower, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a non-payment (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 the relevant Borrower, of any operator, charterer, manager or sub-manager of the Ship or of any officer, employee or agent of that Borrower 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 the relevant Borrower, any other person referred to in paragraph (i) above, or of any officer, employee or agent of that Borrower or of such a person, including the casting away or damaging of the Ship owned by it and/or the Ship owned by it 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;

(b)	a mortgagee’s interest additional perils policy in an amount equal to 120 per cent. of the Loan as may be required by the Lender 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 a Ship, the imposition of any Security Interest over that 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 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

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	(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.
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)	shall advise the Lender in writing by not later than 15 Business Days prior to the Drawdown Date of the classification society in respect of each Ship;
(b)	consistent with first-class ship ownership and management practice;
(c)	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 (save for the Recommendation which the Borrowers undertake to ensure that is lifted and satisfied by 30 June 2009 and to provide the Lender with evidence that the Recommendation has been lifted and satisfied) and requirements affecting such Ship’s class; and
(d)	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

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	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 the expense of the Borrowers and 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 the Borrowers acknowledge and agree that it is a condition that the first such inspection will be carried out either prior to, or no later than 3 months after, the Drawdown Date).
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 (including, but not limited to, IAAPC) 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;

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(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. Neither Borrower shall;
(a)	let the Ship owned by it on demise charter for any period;
(b)	(save under any Approved Charter) 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;

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(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	Charter Assignment. If any Borrower enters into any charter in respect of its Ship which is of 12 months or more in duration, or is capable of exceeding 12 months in duration or into any bareboat charter that Borrower shall execute in favour of the Lender a Charterparty Assignment in respect of that charter, and shall deliver to the Lender such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Schedule 5, Part A as the Lender may require.
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 the Relevant Percentage of the Loan:
	In this Clause 14.1, “Relevant Percentage” means:

(i)	for the period commencing on the date of this Agreement and ending on the first anniversary thereof (the “First Anniversary”), 140 per cent.;
(ii)	for the period commencing on the day after the First Anniversary and ending on the second anniversary of the date of this Agreement (the “Second Anniversary”), 145 per cent.;
(iii)	for the period commencing on the day after the Second Anniversary and ending on the third anniversary of the date of this Agreement, 150 per cent.; and
(iv)	at all times thereafter, 155 per cent.

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

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(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 an independent sale and purchase shipbroker which the Lender has appointed 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; 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 either by way of a valuation complying with the requirements of Clause 14.3.
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 14.4 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.
14.7	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 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.
14.8	Application of prepayment. Clause 7 shall apply in relation to any prepayment pursuant to Clause 14.2(b).
14.9	Frequency of Valuations. The Borrowers acknowledge and agree that the Lender may commission valuations of the Ships at such time as it shall deem necessary and, in any event, not less often than once during each six-month period of the Security Period.
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. (London 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

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	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 HSBC Bank, New York for credit to the account of the Lender (Account No. 000140139 ref: Oceanfreight FP 3036053), 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 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

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	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.
17.2	Monthly retentions. The Borrowers undertake with the Lender to ensure that, throughout the Security Period commencing on the date falling one month after the Drawdown Date and on the same day in each subsequent month, there is transferred to the Retention Account out of the Earnings received in the Earnings Accounts during the preceding calendar month:
(a)	one-third of the amount of the repayment instalment falling due under Clause 7.1 (a) on the next Repayment Date; and
(b)	the relevant fraction of the aggregate amount of interest on the Loan 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 the then current Interest Period (or, if the period is shorter, the number of months from the later of the commencement of the current Interest Period or the last due date for payment of interest to the next due date for payment of interest under this Agreement).
17.3	Shortfall in Earnings. If, the aggregate Earnings received in the Earnings Accounts are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 17.2, the Borrowers shall make up the amount of the insufficiency on demand from the Lender.
17.4	Application of retentions. The Lender shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with Clause 15.1 so much of the balance on the Retention Account as equals:
(a)	the repayment instalment due on that Repayment Date; or

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(b)	the amount of interest payable on that interest payment date,
	in discharge of the Borrowers’ liability for that repayment instalment or that interest.
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 relevant Earnings Account or the Retention Account (or any of them); and
(b)	execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over the Earnings Accounts or the Retention Account (or any of them).
17.6	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.
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 clauses 11.15 and 11.17 of the Corporate Guarantee; 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
(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

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(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 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

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(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 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 written consent, a Change of Control has occurred after the date of this Agreement; or
(l)	it appears to the Lender that, without its prior written 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
(m)	without the prior written consent of the Lender, Mr Anthony Kandylidis or a company controlled by him or by a member of his family fails to maintain at least 2,080,000 shares in the Corporate Guarantor or he ceases to remain a member of the board of directors of the Corporate Guarantor; or
(n)	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
(o)	the security constituted by a Finance Document is in any way imperilled or in jeopardy; 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 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,

	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:

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(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 (other than an Approved Manager who is not a member of the Group) 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
19.1	Upfront and commitment fees. The Borrowers shall pay to the Lender:
(a)	on the date of this Agreement an upfront fee of $457,500 (representing 1.50 per cent, of the Commitment); and

40

(b)	a commitment fee at the rate of 0.65 per cent, per annum on the undrawn balance of the Loan during the period from (and including) the date of this Agreement up to and including (i) the Drawdown Date and (ii) the last day of the Availability Period, such commitment fee to be payable every 3 months in arrears and on the earlier of the dates referred in (i) and (ii) above.
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;

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(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); and
(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; and
(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,

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	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, 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

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(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 effect of complying with any law or 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; or
(b)	the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (the “Basel II Accord”) or any other law or regulation implementing the Basel II Accord or any of the approaches provided for and allowed to be used by banks under or in connection with the Basel II Accord in each case as from time to time implemented by the Lender,
	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;

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(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.
	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).

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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.
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, the Ships, 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

46

(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.
26.3	Capital Markets. In the event the Borrowers and/or the Corporate Guarantor and/or any other member of the Group or any other affiliate pursues any securities offerings (except for the current “controlled equity offering” signed in July 2008 with Cantor Fitzgerald), the Lender or any of its affiliates, will be entitled to act as co-managing underwriter, or equivalent title, on each such securities offering for which it will be paid 5 per cent, of the aggregate gross underwriting discounts, commissions and placement fees, until such time as the Lender, or its affiliate, has received a minimum net payment of $250,000 in respect of such securities offerings.
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 Corporate Guarantor Omega Building 80 Kifissias Avenue 151 25 Maroussi Greece
		Fax No: (+30) 210 8090 275 Attn: Mr. Michael Gregos or Mr. Anthony Kandylidis
(b)	to the Lender:	DVB Bank SE 80 Cheapside London EC2V 6EE England
		Fax No:+44 20 7618 9750

	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

47

(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	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

48

(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.
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.

49

	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 Limited, 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.
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.

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SCHEDULE 1

DRAWDOWN NOTICE

To:	DVB Bank SE 80 Cheapside London EC2V 6EE England
	Attention: [l]

2008

DRAWDOWN NOTICE

1	We refer to the loan agreement (the “Loan Agreement”) dated [l] 2008 and made between us, as Borrowers, and you, as Lender, in connection with a facility of up to US$30,500,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
2	We request to borrow the Loan as follows:
(a)	Amount: US$30,500,000;
(b)	Drawdown Date:           2008;
(c)	Duration of the first Interest Period shall be [          ] months;
(d)	Payment instructions: [                                 ]
3	We represent and warrant that:
(a)	the representations and warranties in Clause 9 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing;
(b)	no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Loan.
4	This notice cannot be revoked without the prior consent of the Lender.
5	We authorise you to deduct the upfront fee and all accrued commitment fee referred to in Clause 19.1 from the amount of the Loan.

for and on behalf of

OCEAN BLUE SPIRIT OWNERS INC. and
OCEAN FAITH OWNERS INC.

51

SCHEDULE 2

CONDITION PRECEDENT DOCUMENTS

PART A

The following are the documents referred to in Clause 8.1(a).

1	A duly executed original of each Finance Document (and of each document required to be delivered under each of them), other than those referred to in Part B.
2	Copies of the certificate of incorporation and constitutional documents of each Borrower and each Security Party.
3	Copies of resolutions of the shareholders and directors of each Borrower and each Security Party authorising the execution of each of the Finance Documents to which that Borrower or that Security Party is a party and, in the case of each Borrower, authorising named officers to execute the Drawdown Notices and any other notices under this Agreement and additionally ratifying the execution of the MOA which that Borrower is a party.
4	The original of any power of attorney under which any Finance Document is executed on behalf of either Borrower or a Security Party.
5	Copies of all consents which each Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document to which it is or is to be a party.
6	Copies of each Underlying Document and of all documents signed or issued by the Borrowers, the Seller or any Approved Charterer (as the case may be) under or in connection therewith.
7	Evidence that satisfactory to the Lender the Accounts have been opened by the Borrowers with the Account Bank.
8	Such documents as the Lender may require for its “know your customer” and other customary money laundering checks.
9	Evidence satisfactory to the Lender that each Borrower is a direct wholly-owned subsidiary of the relevant Shareholder and an indirect wholly-owned subsidiary of the Corporate Guarantor.
10	Documentary evidence that the agent for service of process named in Clause 30.4 has accepted its appointment.
11	Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Marshall Islands, Malta and such other relevant jurisdictions as the Lender may require.
12	If the Lender so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Lender.

52

PART B

The following are the documents referred to in Clause 8. l(b).

1	A duly executed original of the Mortgage, the Deed of Covenant, the General Assignment and the Charter Assignment of the relevant Approved Charter (and of each document to be delivered under each of them) in respect of each Ship.
2	Documentary evidence that:
(a)	each Ship is definitively and permanently registered in the name of the relevant Borrower under the Maltese flag;
(b)	each Ship is in the absolute and unencumbered ownership of the relevant Borrower which is the owner thereof save as contemplated by the Finance Documents;
(c)	each Ship maintains the class specified in Clause 13.3(c) free of all recommendations and conditions (other than the Recommendation) of the relevant classification society;
(d)	the Mortgage relative to each Ship has been duly registered against that Ship as a valid first priority ship mortgage in accordance with the laws of Malta; and
(e)	each Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.
3	Documents establishing that each Ship will, as from its delivery date, be managed by the Approved Manager on terms acceptable to the Lender, together with:
(a)	the Approved Manager’s Undertaking in respect of that Ship; and
(b)	copies of the document of compliance (DOC), the safety management certificate (SMC) and the ISSC referred to in paragraph (a) of the definition of the ISM Code Documentation in respect of each Ship certified as true and in effect by the Borrower which is the owner thereof.
4	two valuations in respect of each Ship prepared by independent sale and purchase ship brokers appointed by the Lender, stated to be for the purposes of this Agreement and prepared in accordance with Clause 14.3 which shows the value of that Ship in an amount acceptable to the Lender.
5	A favourable opinion (at the cost of the Borrowers) from an independent insurance consultant acceptable to the Lender on such matters relating to the insurances of the each Ship as the Lender may require.
6	A confirmation from Nordea Bank Finland plc (“Nordea”), acting in its capacity as agent for the banks and financial institutions referred to in paragraph (ii) below, satisfactory to the Lender that all the parties to the loan agreement dated 12 February 2008 entered into between (i) the Corporate Guarantor as borrower, (ii) the banks and financial institutions listed in schedule 1 thereto as lenders, (iii) Nordea Bank Norge ASA as lead arranger and bookrunner, (iv) Nordea as administrative agent and security trustee in respect of a senior secured credit facility of up to (originally) $325,000,000 have agreed to amend and supplement such Loan Agreement in writing to incorporate the amendments set out in the terms and conditions (excluding the requirement to adjust pricing) as outlined in Exhibit 1 hereto, which have been provided by the Borrowers to the Lender in an email exchange made between the Lender and the Borrowers on 8 December 2008.

53

7 Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Republic of Malta and such other relevant jurisdictions as the Lender may require.

Every copy document delivered under this Schedule shall be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of the relevant Borrower or the legal counsel of the Borrowers.

54

EXHIBIT 1

55

From: Management@OceanFreight Inc. <management@oceanfreightinc.com>
To: Urban, Cornelia
Cc: finance@cardiff.gr <finance@cardiff.gr>; Management@OceanFreight
Inc. <management@oceanfreightinc.com>; Illingworth, Peter
Sent: Wed Dec 10 11:26:19 2008
Subject: RE: OCNF — NORDEA LOAN

Dear Conny,

Please find attached one-page agreement reached with Nordea.

As you will notice we will need consent from DVB to register 2nd mortgages to the Tamara and Tigani in favor of the syndicate.

Trust this will not be a problem.

As we need this consent in order to approach the syndicate please confirm to us this is ok as soon as possible in order to prepare the relevant coordination agreement.

Feel free to speak with Nordea directly on this. Suggest you speak with Mr. Ronny Bjornadal (Global Head of Syndication for Nordea) at +4722485281.

Brgds

Anthony Kandylidis
President and CEO
OceanFreight Inc.

Address: 80. Kifissias Av., GR
151 25, Amaroussion, Greece
Tel: +30 2106140283
Fax: +30 2106140284
www.oceanfreightinc.com

The information contained in this email (including any attachments) is confidential and may contain proprietary information; some or all of which may be legally privileged. It is intended solely for the use of the named addressee. Access, copying or re-use of the email or any information contained therein by any other person is not authorized. If you are not the intended recipient please notify us immediately by returning the email to the originator and delete the message. The Information is not to be relied upon and is not warranted, including, but not limited, as to completeness, timeliness or accuracy and is subject to change without notice. All representations and warranties are expressly disclaimed.

We have taken precautions to minimize the risk of transmitting software viruses, but we advise you to carry out your own virus checks on any attachment to this message. We cannot accept liability for any loss or damage caused by software viruses

DVB Bank SE
London Branch
80 Cheapside
London EC2V 6EE
www.dvbbank.com

Incorporated with limited liability in the Federal Republic of Germany

Registered Head Office: Frankfurt/Main, Germany
Local Court: Frankfurt/Main, Germany
Reg.-No. HRB 83980

Registered as a branch in England and Wales
Company No: FC021590, Branch No: BR004786
VAT Registration No. GB 722 8632 35

Board of Managing Directors:
Wolfgang F. Driese, Chairman,
Bertrand Grabowski, Dagfinn Lunde
Chairman of the Supervisory Board:
Dr.Thomas Duhnkrack

This message and any attachments are confidential and may also contain privilege information. If you are not the intended recipient of this e-mail or if you have received it in error, please notify us immediately by reply e-mail and then delete this message completely from your system. Any unauthorized copying, disclosure or other use of the information contained in this e-mail for any purposes is strictly forbidden. Please be aware that this e-mail or its attachments (if any) may contain viruses or other harmful code which have not been detected by our anti-virus system.

OceanFreight Inc.
$325 Million Credit Facility

Draft Amendment

Repayments:	•   Extraordinary repayment of $25 million upon closing of the DVB financing, however no later than January 31, 2009.
Collateral Maintenance Ratio:	•   Waived until extraordinary repayment of $25 million has been made, however no later than January 31, 2009
	•   90% from date of extraordinary repayment of $25 million until June 29, 2009
	•   100% from June 30, 2009 until December 30, 2009
	•   110% from December 31, 2009 until March 30, 2010
	•   115% from March 31, 2010 until June 29, 2010
	•   125% thereafter
Additional Financial Covenants:	•   No dividend payments or any other return of capital to shareholders including stock buyback.
	•   No repayment of seller’s credit related to the vessels Tigani and Tamara until the date falling 18 months after delivery of the vessels under the MOA, and subject to compliance with covenants and no event of default having occurred, provided however that seller’s credit may be repaid by proceeds from new equity raised after the date hereof or if the Seller requests payment in OCNF shares.
	•   No new investments or capital expenditures (other than maintenance of existing vessels in the ordinary course of business) unless funded with new equity which may be levered up to 1:1.
Additional Security:	•   2nd Priority Mortgages on the vessels Tigani and Tamara behind a $30 million 1st priority loan by DVB Bank, subject to a satisfactory co-ordination agreement by all parties.
Margin:	Increase from 130 bps to 200 bps.

EXECUTION PAGE

BORROWERS
SIGNED by	)	/s/ Alexandros Mylonas
	)
for and on behalf of	)
OCEAN BLUE SPIRIT OWNERS INC.	)
in the presence of:	)

CHRISTOFOROS BISMPIKOS
SOLICITOR
WATSON, FARLEY & WILLIAMS
2, DEFTERAS MERARCHIAS
PIRAEUS 185 36 — GREECE

SIGNED by	)	/s/ Alexandros Mylonas
	)
for and on behalf of	)
OCEAN FAITH OWNERS INC.	)
in the presence of:	)

CHRISTOFOROS BISMPIKOS
SOLICITOR
WATSON, FARLEY & WILLIAMS
2, DEFTERAS MERARCHIAS
PIRAEUS 185 36 — GREECE

LENDER
SIGNED by	)	/s/ George Daleokrassas
GEORGE DALEOKRASSAS	)
for and on behalf of	)
DVB BANK SE	)
in the presence of:	)

CHRISTOFOROS BISMPIKOS
SOLICITOR
WATSON, FARLEY & WILLIAMS
2, DEFTERAS MERARCHIAS
PIRAEUS 185 36 — GREECE

56 

EX-4.9

Exhibit 4.9

EXECUTION VERSION

Date: as of January 9, 2009

OCEANFREIGHT INC.
as Borrower

KIFISSIA STAR OWNERS INC.
OCEANCLARITY OWNERS LIMITED, OCEANENERGY OWNERS LIMITED,
OCEANFIGHTER OWNERS INC., OCEANPRIME OWNERS LIMITED,
OCEANRESOURCES OWNERS LIMITED, OCEANSHIP OWNERS LIMITED,
OCEANSTRENGTH OWNERS LIMITED, OCEANTRADE OWNERS LIMITED,
OCEANVENTURE OWNERS LIMITED AND
OCEANWEALTH OWNERS LIMITED
as Joint and Several Guarantors

THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders

NORDEA BANK FINLAND PLC,
acting through its New York branch,
as Administrative Agent and Security Trustee

-and-

NORDEA BANK FINLAND PLC,
acting through its New York branch,
as Swap Bank

FIRST AMENDATORY AGREEMENT

Amending and Supplementing the Amended and Restated Loan Agreement dated February 12, 2008

WATSON, FARLEY & WILLIAMS (NEW YORK) LLP
100 Park Avenue
New York, New York 10017

     FIRST AMENDATORY AGREEMENT dated as of January 9, 2009 (this “Agreement”)

AMONG

(1) OCEANFREIGHT INC., a corporation duly existing and incorporated under the laws of the Republic of The Marshall Islands, as borrower (the “Borrower”);

(2) KIFISSIA STAR OWNERS INC., OCEANCLARITY OWNERS LIMITED, OCEANENERGY OWNERS LIMITED, OCEANFIGHTER OWNERS INC., OCEANPRIME OWNERS LIMITED, OCEANRESOURCES OWNERS LIMITED, OCEANSHIP OWNERS LIMITED, OCEANSTRENGTH OWNERS LIMITED, OCEANTRADE OWNERS LIMITED, OCEANVENTURE OWNERS LIMITED and OCEANWEALTH OWNERS LIMITED, each a corporation duly existing and incorporated under the laws of the Republic of The Marshall Islands, as joint and several guarantors (the “Guarantors”, and each separately a “Guarantor”);

(3) THE BANKS AND FINANCIAL INSTITUTIONS NAMED ON THE SIGNATURE PAGES HERETO, as lenders (collectively, the “Lenders”);

(4) NORDEA BANK FINLAND PLC, acting through its New York branch, as administrative agent for the Lenders (in such capacity, the “Agent”) and security trustee for the Lenders and the Swap Bank (in such capacity, the “Security Trustee”); and

(5) NORDEA BANK FINLAND PLC, acting through its New York branch, as swap bank (in such capacity, the “Swap Bank”).

WITNESSETH THAT:

WHEREAS, the Borrower, the Guarantors, the Agent and others are parties to an amended and restated loan agreement dated as of February 12, 2008 (the “Amended and Restated Loan Agreement”);

WHEREAS, as of the date hereof the Obligors are in breach of the Collateral Maintenance Ratio required by Clause 10.3(d) of the Amended and Restated Loan Agreement; and

WHEREAS, upon the terms and conditions stated herein, the parties hereto have agreed pursuant to Clause 20.1(b) of the Amended and Restated Loan Agreement to:

(a) waive the Obligors’ breach of the Collateral Maintenance Ratio; and

(b) amend certain terms of the Amended and Restated Loan Agreement.

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. DEFINITIONS

1.1 Defined terms. Capitalized terms used but not defined herein shall have the meaning assigned such terms in the Amended and Restated Loan Agreement. In addition:

“DVB Financing” means a loan facility in the amount of $30,500,000 being made available to Ocean Faith and Ocean Blue (each as defined in Clause 3.1(c) below) by DVB Bank SE to finance the TAMARA and the TIGANI (each as defined in Clause 3.1(c) below);

“Effective Date” means the first date on which each of the conditions precedent set forth in Clause 4.1 below have been satisfied or waived by the Agent; and

“Extraordinary Prepayment” means a prepayment by the Borrower in the amount of $25,000,000 to be applied solely in prepayment of the 15^th installment due in respect of the Tranche B Loan notwithstanding the otherwise applicable requirements of Clause 7.5 of the Amended and Restated Loan Agreement, which Extraordinary Prepayment shall not effect the respective reduction and repayment schedules of Tranche A and Tranche B as provided in Clauses 7.1, 7.2 and 7.3 of the Amended and Restated Loan Agreement.

2 BREACH AND WAIVER; EXTRAORDINARY PREPAYMENT

2.1 Breach of Clause 10.3(d). The Obligors acknowledge and agree that, since December 9, 2008 and as of the date of this Agreement, the Obligors have been and are in breach of the Collateral Maintenance Ratio required by Clause 10.3(d) of the Amended and Restated Loan Agreement.

2.2 Waiver of Breach. Pursuant to Clause 20.1(b) of the Amended and Restated Loan Agreement, the Agent, for and on behalf of the Credit Parties and upon the instructions of the Majority Lenders, waives as of the Effective Date, subject to the terms and conditions of Clauses 2.3 and 2.4 hereof, the Obligors’ breach of Clause 10.3(d) with effect from the date of the initial breach of such Clause 10.3 (d).

2.3 Extraordinary Prepayment. In consideration of the waiver granted in Clause 2.2 above, the Borrower hereby agrees to make the Extraordinary Prepayment upon the earlier of (a) the date of funding under the DVB Financing and (b) January 31, 2009. In connection with such Extraordinary Prepayment, it shall not be necessary for the Borrower to comply with Clauses 7.6, 7.7, 7.8, 7.10, 7.16 or 7.17 of the Amended and Restated Loan Agreement.

2.4 Failure to make Extraordinary Prepayment. If the Borrower fails to make the Extraordinary Prepayment as required by Clause 2.3 above, the Obligors acknowledge and agree that the waiver made in Clause 2.2 hereof and the amendments made in Clause 3 hereof shall be null, void and of no effect whatsoever and that the Credit Parties shall be entitled to all rights and to exercise all remedies afforded to them under the terms of the Amended and Restated Loan Agreement (all of which are expressly reserved) as if (a) such waiver had not been made and (b) the Amended and Restated Loan Agreement had not been amended by this Agreement.

2

3. AMENDMENTS TO AMENDED AND RESTATED LOAN AGREEMENT

3.1 Amendments. Pursuant to Clause 20.1(b) of the Amended and Restated Loan Agreement, the Borrower, the Guarantors and the Agent, for and on behalf of the Credit Parties and upon the instructions of the Majority Lenders, agree to amend the Amended and Restated Loan Agreement as follows with effect on and from the Effective Date:

(a) The definition of “Finance Documents” in Clause 1.1 is amended to read as follows:

““Finance Documents” means:

(a) this Agreement;

(b) the Notes;

(c) the Master Agreement (if executed);

(d) the Charter Assignments;

(e) the Earnings Account Pledges;

(f) the Earnings Assignments;

(g) the Insurance Assignments;

(h) the Mortgages and any related Deed of Covenant, together with any amendments thereto;

(i) the Ocean Blue Guarantee;

(j) the Ocean Faith Guarantee;

(k) the Second Statutory Mortgages;

(l) the Share Pledges;

(m) the Third Statutory Mortgages;

(n) the TAMARA Second Mortgage;

(o) the TAMARA Second Priority Insurance Assignment;

(p) the TIGANI Second Mortgage;

(q) the TIGANI Second Priority Insurance Assignment;

(r) the Intercreditor Deed; and

(s) any other document (whether creating a Security Interest or not) which is executed at any time by any Obligor or any other person as security for, or to establish any form

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of subordination or priorities arrangement in relation to, any amount payable to or for the benefit of a Credit Party under this Agreement or any of the documents referred to in this definition;”

(b) The definition of “Margin” in Clause 1.1 is amended to read as follows:

““Margin” means, in respect of each Tranche of the Loan, 2.50 percent per annum commencing on and at all times after the date the First Amendatory Agreement dated as of January 9, 2009 in respect of this Agreement becomes effective pursuant to its terms;”

(c) The following definitions are added to Clause 1.1:

““Intercreditor Deed” means an intercreditor deed among Ocean Faith and Ocean Blue, as Owners, DVB Bank SE, as First Mortgagee, and the Security Trustee, as Second Mortgagee, in respect of the TAMARA and the TIGANI, in form and substance satisfactory to the Agent acting with the consent of the Majority Lenders;”

““Ocean Blue” means Ocean Blue Spirit Owners Inc., a corporation duly existing and incorporated under the laws of the Republic of The Marshall Islands;

““Ocean Blue Guarantee” means a guarantee by Ocean Blue of the Secured Liabilities of the Borrower, in form and substance satisfactory to the Agent;”

““Ocean Faith” means Ocean Faith Owners Inc., a corporation duly existing and incorporated under the laws of the Republic of The Marshall Islands;

““Ocean Faith Guarantee” means a guarantee by Ocean Faith of the Secured Liabilities of the Borrower, in form and substance satisfactory to the Agent;”

““TAMARA” means the 1990-built tanker of 95,793 deadweight tons registered in the ownership of Ocean Blue under Maltese flag with the name “TAMARA” and IMO Number 9002154;”

““TAMARA MoA” means the Memorandum of Agreement dated August 7, 2008 and the additional clauses thereto between Tulip Navigation Limited as Sellers and the Borrower as Buyers in respect of the TAMARA;”

““TAMARA Second Mortgage” means the second priority statutory Maltese Mortgage on the TAMARA and the deed of covenants supplemental thereto, each in form and substance satisfactory to the Agent;”

““TAMARA Second Priority Insurance Assignment” means the second priority assignment of the Insurances of the TAMARA, in form and substance satisfactory to the Agent;”

““Third Statutory Mortgage” means a third priority Cypriot mortgage and related deed of covenants on each of the AUSTIN and TRENTON, in form and substance satisfactory to the Agent;

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““TIGANI” means the 1991-built tanker of 95,951 deadweight tons registered in the ownership of Ocean Faith under Maltese flag with the name “TIGANI” and IMO Number 9002142;”

““TIGANI MoA” means the Memorandum of Agreement dated October 9, 2008 and the additional clauses thereto between Avir Shipping Company Limited as Sellers and the Borrower as Buyers in respect of the TIGANI;”

““TIGANI Second Mortgage” means the second priority statutory Maltese Mortgage on the TIGANI and the deed of covenants supplemental thereto, each in form and substance satisfactory to the Agent;” and

““TIGANI Second Priority Insurance Assignment” means the second priority assignment of the Insurances of the TIGANI, in form and substance satisfactory to the Agent;”

(d) Clause 4.5(b) is amended to read as follows:

“at least one (1) Business Day before the start of an Interest Period, Lenders having Commitments amounting to more than 30% 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 Ratable Portion (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”

(e) Clause 10.1(g) is amended to read as follows:

“the Borrower shall procure and deliver to the Agent a written appraisal report setting forth the Fair Market Value of each Ship, as well as the TAMARA and the TIGANI, as follows:

(i) at the Borrower’s expense, for inclusion with each Compliance Certificate required to be delivered under Clauses 10.1(f)(i) and 10.1(f)(ii);

(ii) at the Borrower’s expense, once each Financial Year upon the request of the Agent or the Majority Lenders; and

(iii) at the Lenders’ expense, at all other times upon the request of the Agent or the Majority Lenders, unless an Event of Default has occurred and is continuing, in which case the Borrower shall procure it at its expense as often as requested;”

(f) Clause 10.2(l) is amended to read as follows:

“except in connection with the financing of the Ships and the maintenance of the Ships in the ordinary course of business, none of the Obligors will make any capital expenditures, or any loan or advance to, or any investment in, or enter into any working capital maintenance or similar agreement with respect to, any person (other than an Obligor) or project, whether by acquisition of stock or indebtedness, by loan, guarantee or otherwise, provided that an Obligor may make a capital expenditure, or a loan or advance to, or an investment in, or enter

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into a working capital maintenance or similar agreement with respect to, any person or project with the proceeds derived from an equity offering made by such Obligor, which proceeds may be matched by proceeds of Financial Indebtedness incurred by such Obligor on a 1:00 to 1:00 basis to the extent the incurrence of such Financial Indebtedness is permitted and not otherwise prohibited by this Agreement;”

(g) Clause 10.2(t) is amended to read as follows:

“the Borrower shall not declare or pay any dividends or return any capital to its equity holders or authorize or make any other distribution, payment or delivery of property or cash to its equity holders, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any interest of any class of its capital stock or other form of equity interest (or require any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding, or repay any subordinated loans or set aside any funds for any of the foregoing purposes”

(h) An additional Clause 10.2(u) is added to read as follows:

“subject to the following sentence of this Clause 10.2(u), none of Ocean Blue, Ocean Faith, any of the Obligors or any Affiliate or subsidiary of any of the Obligors shall make any repayment or prepayment in respect of:

(i) the principal of the Seller’s Credit described in Clause 18(a) of the TAMARA MoA until the date which is 18 months after the date the TAMARA is delivered in accordance with the terms of the TAMARA MoA; or

(ii) the principal of the Seller’s Credit described in Clause 18(a) of the TIGANI MoA until the date which is 18 months after the date the TIGANI is delivered in accordance with the terms of the TIGANI MoA,

provided that in each case repayment may be made only if no Event of Default has occurred and is continuing and nothing herein shall prevent or prohibit the repayment of interest as and when due under each Seller’s Credit. Notwithstanding the foregoing sentence, provided that no Event of Default has occurred and is continuing, Ocean Blue, Ocean Faith, an Obligor or an Affiliate or subsidiary of an Obligor may repay or prepay, without the Lenders’ consent, either Seller’s Credit referred to above, either in whole or in part, by means of (1) cash derived from the proceeds of one or more equity offerings made by the Borrower on or after January 1, 2009 or (2) Borrower common stock in the manner described in Clause 18(a) of the TAMARA MoA or TIGANI MoA, as the case may be;”

(i) Clause 10.3(d) is amended to read as follows:

“Until all Commitments have terminated and all amounts payable hereunder have been paid in full, the aggregate Fair Market Value of the Ships (as confirmed by the most recent Fair Market Value appraisal report delivered to the Agent under Clause 10.1(g)), plus

(x) deposits as per Clause 7.9(b) (including in respect of insurance proceeds receivable, on a pro forma basis before such proceeds are deposited with the Security Trustee); and

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(y) the excess of the aggregate Fair Market Value of the TIGANI and the TAMARA over the outstanding principal amount of the loan facility under the DVB Financing at the date of determination of such Fair Market Value,

shall be not less than:

(i) 90% of the Loan plus any unutilized Commitment in respect of the Tranche A Loan until June 30, 2009;

(ii) 100% of the Loan plus any unutilized Commitment in respect of the Tranche A Loan from July 1, 2009 to December 31, 2009;

(iii) 110% of the Loan plus any unutilized Commitment in respect of the Tranche A Loan from January 1, 2010 to March 31, 2010;

(iv) 115% of the Loan plus any unutilized Commitment in respect of the Tranche A Loan from April 1, 2010 to June 30, 2010; and

(v) 125% of the Loan plus any unutilized Commitment in respect of the Tranche A Loan at all times thereafter (each, the “Collateral Maintenance Ratio”).

If, at any time, the Collateral Maintenance Ratio shall be less than as required above, the Agent (acting upon the instruction of the Majority Lenders) shall have the right to require the Borrower and/or the Obligors, within 30 Business Days of the date of the written demand of the Agent, to either (at the Borrower’s option):

(1) prepay the Loan in such amount as may be necessary to cause such aggregate Fair Market Value of the Ships to equal or exceed the Collateral Maintenance Ratio;

(2) provide such additional Collateral as may be acceptable to the Agent in its sole reasonable discretion (acting upon the instruction of the Majority Lenders) so that aggregate Fair Market Value of the Ships and such additional Collateral equals or exceeds the Collateral Maintenance Ratio,

and the Obligors hereby agree to comply with any such written demand made by the Agent.

As an alternative to (1) or (2) of this Clause 10.3(d), the Agent may agree with the Borrower to reduce any unutilized Commitment in respect of the Tranche A Loan in such amount as may be necessary to cause such aggregate Fair Market Value of the Ships plus deposits as per Clause 7.9(b) (including in respect of insurance proceeds receivable, on a pro forma basis before such proceeds are deposited with the Security Trustee) to equal or exceed the Collateral Maintenance Ratio.”

3.2 References. Each reference in the Amended and Restated Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the “Loan Agreement” in any of the other Finance Documents, shall mean and refer to the Amended and Restated Loan Agreement as amended hereby.

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3.3 Effect of Amendments. Subject to the terms of this Agreement, with effect on and from the Effective Date, the Amended and Restated Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended upon the terms and conditions stated herein and, as so amended, the Amended and Restated Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended. In addition, each of the Finance Documents (other than the Third Statutory Mortgages, the TAMARA Second Mortgage, the TIGANI Second Mortgage and the Intercreditor Deed) shall be, and shall be deemed by this Agreement to have been, amended as follows:

(a) the definition of, and references throughout each of such Finance Documents to, the “Loan Agreement” and any of the other Finance Documents shall be construed as if the same referred to the Amended and Restated Loan Agreement and those Finance Documents as amended or supplemented by this Agreement; and

(b) by construing references throughout each of the Finance Documents to “this Agreement”, “hereunder” and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement.

3.4 Finance Documents to remain in full force and effect. Except as amended hereby, all terms and conditions of each of the Finance Documents shall remain in full force and effect and are hereby ratified and confirmed in all respects. Without limiting the foregoing, each of the Guarantors acknowledges and agrees that the Guarantee remains in full force and effect.

3.5 No Other Amendments. Except as amended hereby, all other terms and conditions of the Amended and Restated Loan Agreement remain unchanged and the Amended and Restated Loan Agreement is hereby ratified and confirmed.

4 CONDITIONS PRECEDENT

4.1 Conditions Precedent. The conditions precedent are that:

(a) The Agent shall have received:

(i) an original of:

(1) this Agreement, duly executed by the parties hereto;

(2) the Ocean Blue Guarantee;

(3) the Ocean Faith Guarantee; and

(4) the Intercreditor Deed, duly executed by the parties thereto;

(ii) in respect of each Obligor, documents of the kind specified in Schedule 3, Part A, paragraphs 2, 3, 4, 5 and 6 of the Amended and Restated Loan Agreement, updated with appropriate modifications, each to be in form and substance satisfactory to the Agent;

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(iii) in respect of each of Ocean Blue and Ocean Faith, documents of the kind specified in Schedule 3, Part A, paragraphs 2, 3, 4, 5, 6 and 7 of the Amended and Restated Loan Agreement, each to be in form and substance satisfactory to the Agent;

(iv) documentary evidence that the agent for service of process named in Section 17(d) of each of the Ocean Blue Guarantee and the Ocean Faith Guarantee has accepted its appointment in respect of each of Ocean Blue and Ocean Faith;

(v) a duly executed original of an addendum to the Mortgage in respect of each of the Marshall Islands registered AUGUSTA, HELENA, LANSING, PIERRE and RICHMOND, each such addendum to be in form and substance satisfactory to the Agent;

(vi) a duly executed original of each Third Statutory Mortgage in respect of each of the Cypriot registered AUSTIN and TRENTON, each such Third Statutory Mortgage to be in form and substance satisfactory to the Agent;

(vii) a duly executed original of the TAMARA Second Mortgage and the TIGANI Second Mortgage, each to be in form and substance satisfactory to the Agent, and a copy of the first priority mortgage in favor of DVB Bank SE in respect of each of the TAMARA and the TIGANI;

(viii) a duly executed original of the TAMARA Second Priority Insurance Assignment and the TIGANI Second Priority Insurance Assignment, each to be in form and substance satisfactory to the Agent, and a copy of the first priority insurance assignment in favor of DVB Bank SE in respect of the Insurances of each of the TAMARA and the TIGANI;

(ix) documentary evidence that the relevant Mortgage addendum has been duly recorded according to the laws of the Republic of The Marshall Islands against each of the AUGUSTA, HELENA, LANSING, PIERRE and RICHMOND;

(x) documentary evidence that the relevant Third Statutory Mortgage has been duly recorded according to the laws of the Republic of Cyprus against each of the AUSTIN and TRENTON;

(xi) documentary evidence that each of the TAMARA Second Mortgage and the TIGANI Second Mortgage has been duly recorded according to the laws of the Republic of Malta;

(xii) documentary evidence that the TAMARA is registered in the name of Ocean Blue under Maltese flag, free of all recorded liens and encumbrances, save as contemplated by the Finance Documents (which shall be established by a Certificate of Ownership and Encumbrance (or similar instrument) issued by the appropriate authority of the laws of the Republic of Malta stating that such vessel is owned by Ocean Blue and that there are on record no other mortgages, liens or other encumbrances on such vessel except for a first priority mortgage in favor of DVB Bank SE and the TAMARA Second Mortgage);

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(xiii) documentary evidence that the TIGANI is registered in the name of Ocean Faith under Maltese flag, free of all recorded liens and encumbrances, save as contemplated by the Finance Documents (which shall be established by a Certificate of Ownership and Encumbrance (or similar instrument) issued by the appropriate authority of the laws of the Republic of Malta stating that such vessel is owned by Ocean Faith and that there are on record no other mortgages, liens or other encumbrances on such vessel except for a first priority mortgage in favor of DVB Bank SE and the TIGANI Second Mortgage);

(xiv) documentary evidence that the TAMARA is insured in compliance with the terms of the TAMARA Second Mortgage (which insurance shall include mortgagee’s interest insurance with additional perils pollution);

(xv) documentary evidence that the TIGANI is insured in compliance with the terms of the TIGANI Second Mortgage (which insurance shall include mortgagee’s interest insurance with additional perils pollution);

(xvi) a certificate by the president or the secretary (or equivalent officer) of Ocean Blue, or a certificate of the Approved Manager (technical), identifying and giving the address and other communication details of the ISM Responsible Person(s) for the TAMARA;

(xvii) a certificate by the president or the secretary (or equivalent officer) of Ocean Faith, or a certificate of the Approved Manager (technical), identifying and giving the address and other communication details of the ISM Responsible Person(s) for the TIGANI;

(xviii) copies of the Document of Compliance and Safety Management Certificate referred to in paragraph (a) of the definition of the ISM Code Documentation for each of the TAMARA and the TIGANI, certified as true and in effect by the president or the secretary (or equivalent officer) of each of Ocean Blue or Ocean Faith (as the case may be) or the Approved Manager (technical);

(xix) certification by the president or the secretary (or equivalent officer) of each of Ocean Faith and Ocean Blue that:

(i) the relevant vessel owned by such company has and will maintain for the duration of the Security Period a valid International Ship Security Certificate (and a true copy of such International Ship Security Certificate shall be attached to such certification);

(ii) the security system of the relevant vessel owned by such company and associated security equipment complies with, and at all times during the Security Period will comply with, the applicable requirements of Chapter XI-2 of SOLAS and Part A of the ISPS Code; and

(iii) an approved ship security plan is in place and will be maintained at all times during the Security Period;

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(xx) a certificate of the president or secretary of each Intermediate Holding Company dated the date of this Agreement:

(1) certifying as to (a) there being no amendments to its constitutional documents since the date such documents were delivered previously to the Agent, (b) the absence of any proceedings for the dissolution or liquidation of such party, (c) the veracity of the representations and warranties contained in the Share Pledge made by such party, (d) the absence of any material misstatement of fact in any information provided by such party to the Agent and that such information did not omit to state any material fact necessary to make statements therein, in light of the circumstances under which they were made, not misleading, and (e) the absence of a Potential Event of Default or an Event of Default; and

(2) acknowledging the execution of this Agreement by the Obligors and confirming that such Intermediate Holding Company’s Share Pledge remains in full force and effect;

(xiii) an original or a copy of any consents, agreements and other documents in connection with this Agreement and the Finance Documents that the Agent may request by notice to the Obligors prior to the Effective Date;

(xiv) a favorable opinion of Seward & Kissel LLP, special New York, Marshall Islands and Liberian counsel to the Obligors, in form, scope and substance satisfactory to the Credit Parties; and

(xv) a favorable opinion of each of special Cypriot and Maltese counsel to the Credit Parties, in form, scope and substance satisfactory to the Credit Parties;

(b) No Event of Default or Potential Event of Default shall have occurred and be continuing and there shall have been no material adverse change in the financial condition, operations or business prospects of the Obligors since the date of the Amended and Restated Loan Agreement; and

(c) On or before the Effective Date, the Obligors shall have paid to each Lender that has approved this Agreement on or before January 9, 2009 an amendment fee of 0.15% of the Commitment of such Lender.

4.2 Waiver. The Agent, with the consent of the Majority Lenders, may waive one or more of the conditions referred to in Clause 4.1 provided that the Borrower delivers to the Agent a written undertaking to satisfy such conditions within ten (10) Business Days after the Agent grants such waiver (or such longer period as the Agent may specify).

5 MISCELLANEOUS

5.1 Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.

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5.2 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

5.3 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating or affecting the validity or enforceability of such provision in any other jurisdiction.

5.4 Payment of Expenses. The Obligors agree to pay or reimburse each of the Credit Parties for all reasonable expenses in connection with the preparation, execution and carrying out of this Agreement and any other document in connection herewith or therewith, including but not limited to, reasonable fees and expenses of any counsel whom the Credit Parties may deem necessary or appropriate to retain, any duties, registration fees and other charges and all other reasonable out-of-pocket expenses incurred by any of the Credit Parties in connection with the foregoing.

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     WHEREFORE, the parties hereto have caused this First Amendatory Agreement to be executed as of the date first above written.

OCEANFREIGHT INC., as Borrower
By:
	Name
	Title
OCEANENERGY OWNERS LIMITED, as Guarantor
By:
	Name
	Title
OCEANRESOURCES OWNERS LIMITED, as Guarantor
By:
	Name
	Title
OCEANSHIP OWNERS LIMITED, as Guarantor
By:
	Name
	Title
OCEANSTRENGTH OWNERS LIMITED, as Guarantor
By:
	Name
	Title

NORDEA BANK FINLAND PLC, acting through its New York branch, as Agent and Security Trustee
By:
	Name
		Title
By:
	Name
	Title
NORDEA BANK FINLAND PLC, acting through its New York branch, as Swap Bank
By:
	Name
	Title
By:
	Name
	Title
NORDEA BANK NORGE ASA, acting through its Grand Cayman branch, as Lender
By:
	Name
	Title
By:
	Name
	Title

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OCEANTRADE OWNERS LIMITED, as Guarantor
By:
	Name
		Title
OCEANVENTURE OWNERS LIMITED, as Guarantor
By:
	Name
	Title
OCEANWEALTH OWNERS LIMITED, as Guarantor
By:
	Name
	Title
KIFISSIA STAR OWNERS INC., as Guarantor
By:
	Name
	Title
OCEANCLARITY OWNERS LIMITED, as Guarantor
By:
	Name
	Title

14

OCEANFIGHTER OWNERS INC., as Guarantor
By:
	Name
	Title
OCEANPRIME OWNERS LIMITED, as Guarantor
By:
	Name
	Title

15

BANK OF SCOTLAND PLC, as Lender
By:
	Name:
	Title:

16

PIRAEUS BANK A.E., as Lender
By:
	Name:
	Title:

17

SKANDINAVISKA ENSKILDA BANKEN AB, as Lender
By:
	Name:
	Title:

18

COMMERZBANK AG, as Lender
By:
	Name:
	Title:

19

DRESDNER BANK AG IN HAMBURG, as Lender
By:
	Name:
	Title:

20

FBB-FIRST BUSINESS BANK S.A., as Lender
By:
	Name:
	Title:

21

BANK OF AMERICA, N.A., as Lender
By:
	Name:
	Title:

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