Freeseas Signs Definitive Agreement for $10 Million Investment

Freeseas Signs Definitive Agreement for $10 Million Investment

Athens, Greece, Nov. 4, 2013 (GLOBE  NEWSWIRE) -- Athens, Greece, November  4, 
2013 -  FreeSeas Inc.  (Nasdaq CM:  FREE) ("FreeSeas''  or the  "Company"),  a 
transporter of dry-bulk cargoes through the ownership and operation of a fleet
of six Handysize vessels and one Handymax vessel, announced today that it  has 
entered into a definitive agreement with Crede CG III, Ltd. (the  "Investor"), 
a wholly-owned subsidiary of  Crede Capital Group, LLC,  for an investment  of 
$10 million  through the  private  placement of  two series  of  zero-dividend 
convertible preferred stock (collectively, the "Preferred Stock") and Series A
and B Warrants (collectively,  the "Warrants"), subject  to certain terms  and 

Mr. Ion G. Varouxakis, Chairman, President and CEO, commented: "The agreement,
which follows our recently announced elimination of approximately $30  million 
of indebtedness,  provides the  Company  with the  capital necessary  to  help 
further strengthen its balance  sheet and position itself  to grow its  fleet, 
generating future income and earnings growth. Most importantly, this agreement
also marks  the beginning  of a  special relationship  with Crede,  a  leading 
institutional investor. We look forward with excitement at the period ahead of

At the first closing  (the "Initial Closing"), which  is expected to occur  on 
November 5, 2013, the Investor will purchase for $1.5 million 15,000 shares of
Series B  Convertible  Preferred  Stock  (the  "Series  B  Preferred  Stock"), 
together with the Warrants. The Series B Preferred Stock will be  convertible 
into shares of the Company's common stock  at the lower of (i) $0.40 and  (ii) 
the closing  bid price  of the  Company's  common stock  on the  first  (1^st) 
trading day  immediately  following the  effective  date of  the  Registration 
Statement described below.

The Series A Warrants will be  initially exercisable for 25,000,000 shares  of 
the Company's common stock at an initial exercise price of $0.52 per share and
will have a 5-year term. The  Series B Warrants will be initially  exercisable 
for 12,500,000 shares  of the Company's  common stock at  an initial  exercise 
price of $0.52 per  share and will expire  on the earlier to  occur of (1)  90 
days after the effective  date of the Registration  Statement and (2) the  one 
year anniversary of the Initial Closing.

Two trading days after the Registration Statement is declared effective by the
Securities  and  Exchange   Commission  (the  "SEC"),   and  subject  to   the 
satisfaction of other customary closing  conditions, the Company will sell  to 
the Investor 85,000  shares of  the Company's Series  C Convertible  Preferred 
Stock (the  "Series  C  Preferred  Stock") for  $8.5  million.  The  Series  C 
Preferred Stock to  be issued will  be convertible into  the Company's  common 
stock at the same price at which the Series B Preferred Stock is convertible.

The Investor may exercise the  Warrants by paying cash  for the shares of  the 
Company's common  stock  or by  exchanging  the  Warrants for  shares  of  the 
Company's common stock  having a value  equal to the  Black-Scholes value  set 
forth therein. In the event that the Company's common stock trades at or above
$0.65 for a period  of 20 consecutive trading  days, the average daily  dollar 
volume of the Company's  common stock equals at  least $1 million during  such 
period and various equity  conditions are also  satisfied during such  period, 
the Company  may,  at its  election,  require  the Investor  to  exercise  the 
Warrants for cash.

The convertibility  of  the Preferred  Stock  and the  exercisability  of  the 
Warrants each may be limited if, upon conversion or exercise (as the case  may 
be), the holder thereof or any  of its affiliates would beneficially own  more 
than 9.9% of the Company's common stock. The Preferred Stock and the Warrants
contain customary weighted-average anti-dilution protection.

Simultaneously with  the  Initial  Closing,  the Company  will  enter  into  a 
Registration Rights Agreement with the Investor, pursuant to which the Company
will  be  required  to  file  a  registration  statement  (the   "Registration 
Statement") with the SEC, within 20  days of the Initial Closing, to  register 
for resale by the Investor the common stock underlying the Preferred Stock and
the Warrants issued and to  be issued to the  Investor. The Company shall  pay 
$22,500 per  month for  each  month that  the  Registration Statement  is  not 
declared effective 90 days after the Initial Closing, but such penalties  such 
cease after six months if the Investor  is eligible to sell shares under  Rule 
144 without restriction.

In addition,  the  Company will  reimburse  the Investor  for  legal  expenses 
incurred  by  it  or  its  affiliates  in  connection  with  the  transactions 
contemplated by the transaction  documents in an amount  equal to $75,000.  In 
addition, the Company  will also  pay to the  Investor non-refundable  amounts 
equal to $75,000  upon occurrence  of the  Initial Closing  and $425,000  upon 
occurrence of the  second closing,  in each  case, as  an unallocated  expense 

The Investor  has  the  right  to  participate on  the  same  terms  as  other 
investors, up to  25% of the  amount of any  subsequent financing the  Company 
enters into, for a period of (i) one  year from the second closing or (ii)  if 
parties' obligations to consummate the second closing are terminated  pursuant 
to Section 8 of  the Purchase Agreement,  then (A) one  year from the  Initial 
Closing if the Company is not in material breach of its obligations under  the 
transaction documents at the  time of such termination  or (B) two years  from 
the Initial Closing if  the Company is in  material breach of its  obligations 
under the  transaction  documents  at  the  time  of  such  termination.  Such 
prohibition will  not  apply  to issuances  pursuant  to  acquisitions,  joint 
ventures, license  arrangements, leasing  arrangements, employee  compensation 
and the like.

The foregoing descriptions  of the transaction  and the transaction  documents 
are not  complete  and are  subject  to and  qualified  in their  entirety  by 
reference to the transaction documents, all of which are filed as exhibits to,
and more fully described in,  a Report of Foreign  Private Issuer on Form  6-K 
being filed with the SEC currently herewith.

The securities to  be sold and  issuable upon conversion  or exercise  thereof 
have not been registered  under the Securities Act  of 1933, as amended,  (the 
"Securities Act"), or any state securities laws, and unless so registered, the
securities may not be offered or sold in the United States except pursuant  to 
an exemption  from, or  in  a transaction  not  subject to,  the  registration 
requirements of the Securities Act  and applicable state securities laws.  The 
securities will  be  sold to  an  accredited  investor pursuant  to  Rule  506 
promulgated under Regulation D of the Securities Act.

About FreeSeas Inc.

FreeSeas Inc.  is a  Marshall Islands  corporation with  principal offices  in 
Athens, Greece. FreeSeas is engaged  in the transportation of drybulk  cargoes 
through the ownership and operation of  drybulk carriers. Currently, it has  a 
fleet of Handysize and Handymax vessels. FreeSeas' common stock trades on  the 
Nasdaq Capital  Market under  the  symbol FREE.  Risks and  uncertainties  are 
described in  reports  filed by  FreeSeas  Inc. with  the  SEC, which  can  be 
obtained free of charge on the  SEC's website at For  more 
information  about  FreeSeas  Inc.,   please  visit  the  corporate   website,

Forward-Looking Statements

This press release contains forward-looking statements (as defined in  Section 
27A of  the  Securities Act  of  1933, as  amended,  and Section  21E  of  the 
Securities Exchange Act of 1934, as amended) concerning future events and  the 
Company's growth strategy and measures to implement such strategy. Words  such 
as  ''expects,''   ''intends,''  ''plans,''   ''believes,''   ''anticipates,'' 
''hopes,'' ''estimates,'' and variations of such words and similar expressions
are intended  to identify  forward-looking  statements. Although  the  Company 
believes that the  expectations reflected in  such forward-looking  statements 
are reasonable, no assurance can be given that such expectations will prove to
be correct. These  statements involve known  and unknown risks  and are  based 
upon a number of  assumptions and estimates, which  are inherently subject  to 
significant uncertainties  and contingencies,  many of  which are  beyond  the 
control of  the  Company. Actual  results  may differ  materially  from  those 
expressed or implied  by such forward-looking  statements. Factors that  could 
cause actual results  to differ materially  include, but are  not limited  to, 
changes in the demand for dry bulk vessels; competitive factors in the  market 
in which the Company  operates; risks associated  with operations outside  the 
United States; and  other factors listed  from time to  time in the  Company's 
filings with the  Securities and  Exchange Commission.  The Company  expressly 
disclaims any obligation  or undertaking  to release publicly  any updates  or 
revisions to any  forward-looking statements contained  herein to reflect  any 
change in the  Company's expectations with  respect thereto or  any change  in 
events, conditions or circumstances on which any statement is based.

CONTACT: FreeSeas Inc.
         Alexandros Mylonas, Chief Financial Officer
         Fax: 011-30-210-429-10-10
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