SECTION 1. DEFINITIONS

(f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities so long as such subsequent Holders agree to the transfer restrictions set forth in Section 7(a)(i) hereof; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof.

(g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. TIME IS OF THE ESSENCE IN THIS AGREEMENT.

(j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(k) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

(i) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker-Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business. As a condition to its participation in the Exchange Offer, each

Holder of Transfer Restricted Securities (other than any Initial Purchaser) shall furnish to the Company an executed agreement substantially in the form of Exhibit A hereto. As a condition to its participation in the Exchange Offer each Holder using the Exchange Offer to participate in a distribution of the Exchange Securities shall acknowledge and agree that, if the resales are of Exchange Securities obtained by such Holder in exchange for Initial Securities acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters, and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K promulgated by the Commission.

(ii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company shall provide a supplemental letter to the Commission (A) stating that the Company is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993 and (B) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the Exchange Securities to be received in the Exchange Offer and that, to the best of the Company’s information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Securities in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Securities received in the Exchange Offer.

(i) comply with all the provisions of Section 7(c) below and use its commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and

(ii) issue, upon the request of any Holder or purchaser of Initial Securities covered by any Shelf Registration Statement contemplated by this Agreement; provided that such Holder provides all documentation reasonably requested by the Company in connection with such issuance, a number of Exchange Securities equal to the number of Initial Securities sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Exchange Securities on the Shelf Registration Statement for this purpose and issue the Exchange Securities to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate.

(i) not less than five Business Days prior to the filing of any Registration Statement or any Prospectus, and not less than two Business Day prior to the filing of any amendment to a Registration Statement or amendment or supplement to a Prospectus or any document which is to be incorporated by reference into a Registration Statement or Prospectus after the initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, one counsel on behalf of all of the Holders) and make such representatives of the Company as shall be reasonably requested by the Initial Purchasers or their counsel;

(ii) use its commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Sections 3 or 4 hereof, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file as promptly as practicable an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use their respective commercially reasonable efforts to cause such amendment to be declared effective as soon as practicable;

(iii) prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with the applicable provisions of Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

(iv) advise the Holders as promptly as practicable and, if requested by such Holders, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to

the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, and (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided, however, that no advice by the Company shall be required pursuant to this clause (D) in the event that the Company either promptly files a Prospectus supplement to update the Prospectus or a Form 6-K or other appropriate Exchange Act report that is incorporated by reference into such Registration Statement, which, in either case, contains the requisite information with respect to such event or facts that results in such Registration Statement no longer containing any untrue statement of material fact or omitting to state a material fact necessary to make the statements contained therein not misleading). If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or blue sky laws, the Company shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest practicable time;

(v) subject to Section 7(c)(ii), if any fact or event contemplated by Section 7(c)(iv)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus, as of its date, will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(vi) in the case of a Shelf Registration Statement, furnish to each Holder named in any such Registration Statement in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Holders shall reasonably object in writing within five Business Days after the receipt thereof. A Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act. Notwithstanding the foregoing, the Company shall not be required to take any actions under this Section 7(c)(vi) that are not, in the reasonable opinion of counsel for the Company, in compliance with applicable law;

(vii) in the case of a Shelf Registration Statement, not less than five Business Days prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus in connection with such exchange or sale, if any, provide copies of such document to the Holders named in any such Registration Statement;

(viii) make available, at reasonable times, for inspection by the Holders named in any applicable Registration Statement and legal counsel or accountant retained by such Holders, all financial and other records and pertinent corporate documents of the Company reasonably requested by any such Persons, subject to negotiation, execution and delivery of customary confidentiality agreements, in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness;

(ix) in the case of a Shelf Registration Statement, if requested by any Holders named in any such Registration Statement in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement, document incorporated by reference or post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the “Plan of Distribution” of the Transfer Restricted Securities, information with respect to the number of Transfer Restricted Securities being sold, the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment;

(x) in the case of a Shelf Registration Statement, upon request, furnish to each Holder named in any such Registration Statement in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, (without all documents incorporated by reference therein and exhibits thereto, unless requested);

(xi) in the case of a Shelf Registration Statement, upon request, deliver to each Holder named in any such Registration Statement without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; provided that if no Registration Statement is effective or no Prospectus is usable in accordance with the provisions of Section 7(b) hereof, the Company shall deliver to each Holder named in any such Registration Statement a notice to that effect; the Company hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto;

(xii) in the case of a Shelf Registration Statement, upon the reasonable request of any Holder named in any such Registration Statement, enter into such agreements (including underwriting agreements containing customary terms) and make such customary representations and warranties and take all such other customary actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to such Registration Statement as may be reasonably requested by any such Holder in connection with any sale or resale pursuant to such Registration Statement. In such connection, the Company shall:

(xiii) prior to any public offering of Transfer Restricted Securities, use its commercially reasonable efforts to cooperate with the Holders named in the applicable Registration Statement and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the state securities or blue sky laws of such jurisdictions as such Holders may reasonable request and use its commercially reasonable efforts to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation in any jurisdiction where it is not now so subject;

(xiv) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to enable such Transfer Restricted Securities to be registered in such denominations and such names as the selling Holders may request at least three Business Days prior to such sale of Transfer Restricted Securities;

(xv) use its commercially reasonable efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities other than as set forth in Section 7(c)(xiii) hereof;

(xvi) maintain a transfer agent and registrar (“Transfer Agent and Registrar”) for the Class A Common Stock with offices in the United States;

(xvii) not later than the effective date of any Registration Statement, the Company shall provide a CUSIP number for the Initial Securities or the Exchange Securities, as the case may be, registered under such Registration Statement and provide the Transfer Agent and Registrar with printed certificates for such Securities or Exchange Securities, in a form eligible for trading through the facilities of The Depository Trust Company;

(xviii) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 under the Act (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); and

(i) if to a Holder, at the address set forth on the records of the Transfer Agent and Registrar for the Company’s Class A Common Stock; and

(ii) if to the Company:

(A) to the extent reasonably requested by any Holder named in any such Registration Statement, furnish (or in the case of paragraphs (2) and (3), use their respective commercially reasonable efforts to cause to be furnished) to each Holder, upon the effectiveness of the Shelf Registration Statement:

(B) deliver such other documents and certificates as may be reasonably requested by the Holders named in any such Registration Statement and as are customarily delivered in similar offerings to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in any agreement entered into by the Company pursuant to this clause (B);

(1) a certificate in customary form, dated such date, signed on behalf of the Company by two officers of the Company;

(2) an opinion in customary form, dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Company; and

(3) a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s independent registered public accounting firm, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with primary underwritten offerings; and

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K4Ws/Kwbz2DkrhkcAnG41x1eE+Q71+7Rrdg8QeYV1/z4hFmyrpeKbeKZfdt3yE2N xI7NT7ZkB3Psg/LhlqQZWw== 0001047469-07-004761.txt : 20070604 0001047469-07-004761.hdr.sgml : 20070604 20070604143921 ACCESSION NUMBER: 0001047469-07-004761 CONFORMED SUBMISSION TYPE: F-1 PUBLIC DOCUMENT COUNT: 29 FILED AS OF DATE: 20070604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Paragon Shipping Inc. CENTRAL INDEX KEY: 0001401112 IRS NUMBER: 000000000 STATE OF INCORPORATION: 1T FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-143481 FILM NUMBER: 07896968 BUSINESS ADDRESS: STREET 1: VOULA CENTER, 102-104 V. PAVLOU STREET STREET 2: VOULA 16673 CITY: ATHENS STATE: J3 ZIP: 00000 BUSINESS PHONE: 011-30-210-891-4600 MAIL ADDRESS: STREET 1: VOULA CENTER, 102-104 V. PAVLOU STREET STREET 2: VOULA 16673 CITY: ATHENS STATE: J3 ZIP: 00000 F-1 1 a2178205zf-1.htm F-1
QuickLinks -- Click here to rapidly navigate through this document

As filed with the Securities and Exchange Commission on June 4, 2007

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

PARAGON SHIPPING INC.
(Exact name of Registrant as specified in its charter)

Marshall Islands (State or other jurisdiction of incorporation or organization	4412 (Primary Standard Industrial Classification Code Number) Voula Center 102-104 V. Pavlou Street Voula 16673 Athens, Greece (011) (30) (210) 891 4600	Inapplicable (I.R.S. Employer Identification No.)
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Seward & Kissel LLP Attn: Gary J. Wolfe, Esq. One Battery Park Plaza New York, New York 10004 (212) 574-1200 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of communications to:
Gary J. Wolfe, Esq.
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ý

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered		Amount to be Registered(2)	Proposed Maximum Aggregate Price Per Unit(1)	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee


Class A Common Shares, par value $0.001 per share, to be sold by selling shareholders		11,097,187	$9.11	$101,095,373.57	$3,103.63

Warrants to be sold by selling shareholders		1,849,531	$4.46	$ 8,248,908.26	$ 253.24

	Total			$109,344,281.83	$3,356.87

(1): Bona fide estimate pursuant to Rule 457(a) solely for the purpose of computing the amount of the registration fee.
(2): Includes common shares issuable on exercise of Warrants.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION DATED JUNE 4, 2007

1,849,531 Warrants
and
11,097,187 Class A Common Shares

This prospectus relates to the resale by the selling shareholders named herein of the Warrants and the Class A Common Shares, including the Class A Common Shares issuable to the selling shareholders on exercise of the Warrants. This prospectus also covers the Class A Common Shares issuable on exercise of the Warrants by persons other than the selling shareholders identified in this prospectus that will be identified in one or more supplements to this prospectus.

We will receive no proceeds from the sale of any of our Class A Common Shares or Warrants by the selling shareholders. We will receive proceeds to the extent the Warrants are exercised. However, the holders of the Warrants are under no obligation to do so.

Our Class A Common Shares are not currently traded on any securities exchange or on the OTC Bulletin Board. We will apply to have our Class A Common Shares and Warrants qualified for trading on the OTC Bulletin Board following the effectiveness of the registration statement of which this prospectus is a part.

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF RISKS THAT YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN OUR CLASS A COMMON SHARES OR IN OUR WARRANTS.

The initial offering price for our Class A Common Shares will be $9.11 and for our Warrants will be $4.46 Once a public market is established for our Class A Common Shares and Warrants, the offering price of our Class A Common Shares and our Warrants by the selling shareholders will be based on prevailing market or privately negotiated prices.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this Prospectus is , 2007.

DRYBULK SHIPPING INDUSTRY DATA

The discussions contained under the heading "The International Drybulk Shipping Industry" have been reviewed by Drewry Shipping Consultants, Ltd., or Drewry, which has confirmed to us that they accurately describe the international drybulk shipping market as of the date of this prospectus.

The statistical and graphical information we use in this prospectus has been compiled by Drewry from its database. Drewry compiles and publishes data for the benefit of its clients. Its methodologies for collecting data, and therefore the data collected, may differ from those of other sources, and its data does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the market.

FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this prospectus pertaining to our operations, cash flows and financial position, including, in particular, the likelihood of our success in developing and expanding our business, include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "may," "should," and similar expressions are forward-looking statements.

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

•: our future operating or financial results;
•: global and regional political conditions;
•: our pending acquisitions, our business strategy and expected capital spending or operating expenses, including drydocking and insurance costs;
•: competition in the shipping industry;
•: statements about shipping market trends, including charter rates and factors affecting supply and demand;
•: our financial position and liquidity, including our ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate activities; and
•: our expectations of the availability of vessels to purchase and the time it may take to construct new vessels, or vessels' useful lives.

Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict and are subject to risks and uncertainties that are described more fully under the "Risk Factors" section of this registration statement. Any of these factors or a combination of these factors could materially affect future results of operations and the ultimate accuracy of the forward-looking statements. Factors that might cause future results to differ include, but are not limited to, the following:

•: changes in governmental rules and regulations or actions taken by regulatory authorities;
•: changes in economic and competitive conditions affecting our business;
•: potential liability from future litigation;
•: length and number of off-hire periods and dependence on third party managers; and
•: other factors discussed under the "Risk Factors" section of this registration statement.

You should not place undue reliance on forward-looking statements contained in this registration statement, because they are statements about events that are not certain to occur as described or at all. All forward-looking statements in this registration statement are qualified in their entirety by the cautionary statements contained in this registration statement. 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.

Except to the extent required by applicable law or regulation, we undertake no obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date of this registration statement or to reflect the occurrence of unanticipated events.

TABLE OF CONTENTS

		PAGE
PROSPECTUS SUMMARY		1
THE OFFERING		8
RISK FACTORS		11
USE OF PROCEEDS		25
CAPITALIZATION		31
OUR DIVIDEND POLICY		32
SELECTED FINANCIAL AND OTHER DATA		34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		36
INDUSTRY		49
BUSINESS		62
MANAGEMENT		75
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS		79
RELATED PARTY TRANSACTIONS		81
SELLING SHAREHOLDERS		82
PLAN OF DISTRIBUTION		86
DESCRIPTION OF OUR CAPITAL STOCK AND WARRANTS		88
MARSHALL ISLANDS COMPANY CONSIDERATIONS		95
MATERIAL U.S. AND MARSHALL ISLANDS INCOME TAX CONSIDERATIONS		99
OTHER EXPENSES OF DISTRIBUTION		108
LEGAL MATTERS		109
EXPERTS		109
WHERE YOU CAN FIND ADDITIONAL INFORMATION		109
ENFORCEABILITY OF CIVIL LIABILITIES		110
GLOSSARY OF SHIPPING TERMS		111
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1

iii

PROSPECTUS SUMMARY

This section summarizes some of the key information and financial statements that appear later in this prospectus. You should review carefully the risk factors and the more detailed information and financial statements included in this registration statement. Unless the context otherwise requires, when used in this registration statement, the terms "Paragon," the "Company," "we," "our" and "us" refer to Paragon Shipping Inc. and its subsidiaries. Unless otherwise indicated, all references to currency amounts in this registration statement are in U.S. dollars.

Our Company

We were incorporated in the Republic of the Marshall Islands in April 2006 to provide drybulk shipping services worldwide. We acquired our initial fleet of three Handymax and three Panamax drybulk carriers with the net proceeds of a private placement that closed in the fourth quarter of 2006, together with drawings under our senior secured credit facility and the proceeds of the sale by us of Class A Common Shares and Warrants to Innovation Holdings, S.A., or Innovation Holdings, a company beneficially owned by our founder and chief executive officer, Michael Bodouroglou, and members of his family. Accordingly, we have a limited history of operations. Allseas Marine S.A., or Allseas, a company controlled by Mr. Bodouroglou, provides the commercial and technical management of our vessels.

Our policy is to charter our vessels on time charters with durations of one to two years from the date of delivery, although we could engage in spot (voyage) charters or time charters with longer durations depending on our assessment of market conditions. From inception until December 31, 2006, our vessels achieved daily time charter equivalent rates of $25,460, and we generated net revenues of $4,729,160 and recorded net income of $461,764. We refer you to the section of this prospectus entitled "Forecasted Cash Available For Dividends, Reserves And Extraordinary Expenses For 2007" for information regarding the cash that we expect to have available to us during this period from the completion or our acquisition of our initial fleet.

Michael Bodouroglou, our founder and chief executive officer, has been involved in the shipping industry in various capacities for more than 25 years. Since 1993, Mr. Bodouroglou has co-owned and managed 30 vessels, including the six vessels in our initial fleet. Mr. Bodouroglou served as co-managing director of Eurocarriers S.A., or Eurocarriers, and Allseas, two ship management companies he co-founded in 1994 and 2000, respectively. Mr. Bodouroglou disposed of his interest in Eurocarriers in 2006. Since January 2006, Mr. Bodouroglou has been the sole managing director, and since September 2006 the sole owner, of Allseas, which currently manages eleven drybulk carriers, including the six vessels in our initial fleet.

We currently intend to pay quarterly dividends to the holders of our Class A Common Shares in February, May, August and November of each year in amounts substantially equal to our available cash from operations during the previous quarter, less cash expenses for that quarter and any reserves our board of directors determines we should maintain for reinvestment in our business. Our board of directors has declared a dividend in the amount of $0.4375 per Class A Common Share to shareholders of record on May 21, 2007 in respect of the period from the commencement of our operations through March 31, 2007.

From the closing of the private placement until the completion of a public offering of our Class A Common Shares that we may conduct in the future resulting in gross proceeds to us of at least $50 million, which we refer to as the subordination period, dividends will be declared on our Class B Common Shares in the same amount as on our Class A Common Shares but will not be payable on our Class B Common Shares until the later of (i) the conversion of our Class B Common Shares into Class A Common Shares and (ii) the payment date for dividends that were declared on the Class A Common Shares at the same time as dividends that were declared on the Class B Common Shares.

Accordingly, Innovation Holdings, as the holder of our Class B Common Shares, will receive the $0.4375 divided once its shares convert. For a more detailed summary of our dividend policy, please see "Our Dividend Policy" below.

Our Fleet

We purchased the six secondhand Panamax and Handymax drybulk carriers in our initial fleet for an aggregate purchase price of $210.35 million, excluding certain pre-delivery expenses. We funded the acquisition of our initial fleet with the net proceeds of our private placement together with the net proceeds from the sale of Class A Common Shares and Warrants to Innovation Holdings, together with funds drawn under our senior secured credit facility. Please see "Business—our Fleet" for additional information regarding our fleet.

We have initially employed the vessels in our initial fleet under fixed rate time charters for approximately one to two-year periods from their respective delivery dates. The following table summarizes information about our initial fleet as of the date of this prospectus:

						Re-Delivery from Charterer(3)
Vessel Name	Vessel Type	Year Built	Charterer Name	Charter Rate ($ per day)(1)	Vessel Delivery Date	Re-Delivery from Charterer(3)
Vessel Name	Vessel Type	Year Built	Charterer Name	Charter Rate ($ per day)(1)	Vessel Delivery Date	Earliest	Latest
Blue Seas	Handymax	1995	STX Pan Ocean	26,100	October 4, 2006(2)	Aug. 21, 2007	Nov. 20, 2007(4)
Clean Seas	Handymax	1995	AS Klaveness	20,000	Jan. 8, 2007	Oct. 24, 2008	Feb. 24, 2009
Crystal Seas	Handymax	1995	San Juan Navigation	24,000	Jan 10, 2007	Feb. 9, 2008	July 8, 2008
Deep Seas	Panamax	1999	Morgan Stanley	28,175	October 12, 2006(2)	Aug. 28, 2007	Nov. 28, 2007
Calm Seas	Panamax	1999	Morgan Stanley	25,150	Dec. 28, 2006	Nov. 14, 2007	Feb. 13, 2008
Kind Seas	Panamax	1999	Express Sea Transport	23,600	Dec. 21, 2006	Sept. 4, 2008	Feb. 18, 2009

(1): This table shows gross charter rates and does not reflect commissions payable by us to third party chartering brokers and Allseas ranging from 2.5% to 6.25% including the 1.25% to Allseas.
(2): The date shown represents the date our affiliate entities, Elegance Shipping Limited and Icon Shipping Limited, acquired the vessels. We acquired the vessels from our affiliates on December 28, 2006.
(3): The date range provided represents the earliest and latest date on which the charterer may redeliver the vessel to us upon termination of the charter.
(4): Upon the expiration of the current charter to STX Pan Ocean, Blue Seas is scheduled to be chartered to Korea Line Corp. at a gross daily rate of $28,500. The redelivery range for the charter to Korea Line Corp. is July 6, 2008 to February 14, 2009.

Please see "Business—Chartering" for additional information regarding our chartering arrangements.

Pursuant to separate management agreements that we have entered into with Allseas for each of our vessels, the terms of which have been approved by a majority of our independent directors, we are obligated to pay Allseas a technical management fee of $650 (based on a Euro/U.S. dollar exchange rate of 1.268:1.00) per vessel per day on a monthly basis in advance, pro rata for the calendar days the vessel is owned by us. The management fee is adjusted quarterly based on the Euro/U.S. dollar exchange rate as published by EFG Eurobank Ergasias S.A. two days prior to the end of the previous calendar quarter. The management fee will be increased commensurate with inflation on an annual basis, commencing on January 1, 2008 by reference to the official Greek inflation rate for the previous year, as published by the Greek National Statistical Office. We also pay Allseas a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Allseas also earned a fee equal to 1.0% calculated on the price as stated in the relevant memorandum of agreement for any vessel bought or sold on our behalf, with the exception of the two vessels in our initial fleet that we acquired from entities affiliated with our founder and chief executive officer. Additional drybulk carriers that we may acquire in the future may be managed by Allseas or unaffiliated management companies. As of December 31, 2006, we have incurred $170,750 in management fees and $6,661 and $825,000 in chartering and vessel commissions, respectively, resulting in aggregate amount paid to Allseas by us during 2006 of $1,002,411.

We refer you to "Business—Our Fleet" and "Chartering" for additional information about the vessels in our fleet.

Our Competitive Strengths

We believe that we possess a number of competitive strengths in our industry, including:

•: Experienced management team. Our chief executive officer has more than 25 years of experience in the shipping industry, and our chief financial officer has over 20 years of experience in ship finance and has been the chief financial officer of American Stock Exchange and Nasdaq Global Market listed shipping companies. Our chief operating officer and commercial development officer each have 19 years of experience in shipping and have been working with our chief executive officer for the last ten years and four years, respectively.
•: Efficient and dependable manager. We believe Allseas has established its reputation as an efficient and dependable vessel operator, without compromising on safety, maintenance and operating performance. To our knowledge no vessel has suffered a total or constructive loss or suffered material damage while managed by Allseas. Mr. Bodouroglou, while at Allseas or Eurocarriers, has managed or co-managed 30 vessels since its inception.
•: Strong customer relationships. Our manager, Allseas, has established relationships with leading charterers and a number of chartering, sales and purchase brokerage houses around the world. Since its founding, Allseas and its affiliates have maintained relationships with major national and private industrial users, commodity producers and traders, including Cargill International and Glencore International, which have repeatedly chartered vessels managed by Allseas or by Eurocarriers. We intend to keep our vessels fully employed and to secure repeat business with charterers by providing well-maintained vessels and dependable service.
•: Established banking relationships. Our founder and chief executive officer has current banking relationships with some of the leading banks in ship finance, including HSH Nordbank, HSBC and HVB Bank. This is evidenced by the fact that the Company has closed a $109.5 million senior secured loan facility with HSH Nordbank to finance the acquisition of the initial fleet. All the banks named above expressed in writing their interest in financing a portion of the acquisition of our initial fleet.

Our Business Strategy

Our strategy is to invest in the drybulk carrier industry, to generate stable cash flow through time charters and to grow through acquisitions that we expect to be accretive to our cash flow. As part of our strategy, we intend to:

•: Focus on all segments of the drybulk carrier sector. We intend to develop a diversified fleet of drybulk carriers in various size categories, including Capesize, Panamax, Handymax and Handysize, although we have initially focused on the Panamax and Handymax sectors. Larger drybulk carriers, such as Capesize and Panamax vessels, have historically experienced a greater degree of freight rate volatility, while smaller drybulk carriers, such as Handymax and Handysize vessels, have historically experienced greater charter rate stability. Furthermore, a diversified drybulk carrier fleet will enable us to serve our customers in both major and minor bulk trades, and to gain a worldwide presence in the drybulk carrier market by assembling a fleet capable of servicing virtually all major ports and routes used for the seaborne transportation of key commodities and raw materials. Our vessels are able to trade worldwide in a multitude of trade routes carrying a wide range of cargoes for a number of industries.
•: Generate stable cash flow through time charters. Our strategy is to employ our vessels primarily under one and two-year time charters from the date of delivery that we believe provide us with a stable cash flow base during the term of these charters. As of May 1, 2007, the current average remaining duration of our charters ranges from 13 to 17 months based on the earliest and latest redelivery dates. We believe that factors governing the supply of and demand for drybulk carriers may cause charter rates for drybulk carriers to strengthen in the near term, thereby providing us opportunities to renew our time charters or enter into new time charters at similar or higher rates following the expiration of their respective terms. When our vessels are not employed on time charters, we may enter into short term spot charters.
•: Disciplined growth through accretive secondhand vessel acquisitions. We intend to grow our fleet through timely and selective acquisitions of secondhand drybulk carriers. We will seek to identify potential secondhand vessel acquisition candidates among various size categories of drybulk carriers. We intend to use our cash flow from operations, the proceeds of future equity offerings and senior secured credit facilities to acquire additional drybulk carriers that we believe will be accretive to our cash flow. We believe that secondhand vessels, when operated in a cost efficient manner, currently provide better returns as compared with more expensive newbuilding vessels.

Our ability to successfully implement our business strategy is dependant on our ability to manage a number of risks relating to our industry and our operations. These risks include the following:

•: Cyclical nature of charter hire rates. The cyclical nature of the drybulk shipping industry and the volatility in charter hire rates for our vessels, which may affect our ability to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations or to pay dividends. Charter rates are affected by, among other factors, the supply of drybulk vessels in the global fleet, which is expected to increase by approximately 20% by 2010 based on current newbuilding orders. Although charter hire rates and vessel values decreased slightly during 2005 and the first half of 2006, since July 2006, charter rates have risen sharply and are currently at or near their historical highs and the value of second hand vessels is currently at record high levels.
•: Our operations are subject to international laws and regulations. Our business and the operation of our vessels are materially affected by applicable government regulation in the form of international conventions and national, state and local laws and regulations. Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of

complying with them or with additional regulations that may be applicable to our operations that are adopted in the future.

•: Servicing our current and future debt limits funds available for other purposes, including the payment of dividends. To finance our future fleet expansion, we expect to incur additional secured debt. We must dedicate a portion of our cash flow from operations to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital, capital expenditures and other purposes and may limit funds available for other purposes, including distributing cash to our shareholders, and our inability to service debt could lead to acceleration of our debt payments and foreclosure on our fleet.
•: We are a recently-formed company with a limited operating history. We are a recently-formed company and have a limited performance record, operating history and limited financial information upon which you can evaluate our operations or our ability to implement and achieve our business strategy or our ability to pay dividends.

Prospective investors in our Class A Common Shares and Warrants should also carefully consider the factors set forth in the section of this prospectus entitled "Risk Factors" beginning on page 11.

Drybulk Shipping Industry Trends

The maritime shipping industry is fundamental to international trade with ocean-going vessels representing the most efficient and often the only method of transporting large volumes of many essential commodities, finished goods and crude and refined petroleum products between the continents and across the seas. It is a global industry whose performance is closely tied to the level of economic activity in the world.

The drybulk shipping industry involves the carriage of bulk commodities. According to Drewry Shipping Consultants, Ltd., or Drewry, since the fourth quarter of 2002, the drybulk shipping industry has experienced the highest charter rates and vessel values in its modern history due to the favorable imbalance between the supply of drybulk carriers and demand for drybulk transportation service. Although charter hire rates and vessel values decreased slightly during 2005 and the first half of 2006, since July 2006, charter rates have risen sharply and are currently at or near their historical highs and the value of second hand vessels is currently at record high levels.

Corporate Structure

We were incorporated under the laws of the Republic of the Marshall Islands on April 26, 2006. Innovation Holdings currently holds 2,003,288 of our Class B Common Shares, representing approximately 15% of the aggregate of our total outstanding Class A Common Shares (excluding 185,656 Class A Common Shares issued to Cantor Fitzgerald & Co., CRT Capital Group LLC and Oppenheimer & Co., to whom we refer as the initial purchasers, as described below) and our total outstanding Class B Common Shares. We sold 9,062,000 of our Class A Common Shares and 1,812,400 of our Warrants, which were offered as a single unit, or a Unit, consisting of one Class A Common Share and one-fifth of one Warrant, at a price of $10.00 per Unit in our private placement. We completed the initial closing of our private placement on November 21, 2006 relating to the sale of 7,562,000 Units. Subsequent to the initial closing, the initial purchasers exercised an option we granted to them to purchase an additional 1,500,000 Units, which was completed on December 18, 2006. We received net proceeds from the private placement and the sale to Innovation Holdings in the amount of $109.5 million, after deducting offering fees and expenses of $3.6 million. In connection with our private placement, Innovation Holdings purchased an aggregate of 2,250,000 Units, consisting of 2,250,000 Class A Common Shares and 450,000 Warrants, at the same price per Unit paid by investors in the private placement. We also issued 185,656 Units, consisting of 185,656 Class A Common Shares and 37,131 Warrants, to the initial purchasers in the private placement for which we did not receive any

cash consideration. In addition, we issued 40,000 restricted Class A Common Shares pursuant to our equity incentive plan to certain individuals at the closing of the private placement. As a result of these transactions, Innovation Holdings owns approximately 31.5% of the aggregate of our total outstanding shares. Innovation Holdings also owns 450,000 Warrants to purchase our Class A Common Shares.

Our Class B Common Shares, which have not been issued to any shareholder other than Innovation Holdings, are subordinated to our Class A Common Shares until our completion of a public offering of our Class A Common Shares resulting in gross proceeds to us of at least $50 million, which we refer to as a qualified pubic offering. During the subordination period, dividends are declared on our Class B Common Shares in the same amount as on our Class A Common Shares but are not payable on our Class B Common Shares until the later of (i) the conversion of Class B Common Shares into Class A Common Shares and (ii) the payment date for dividends that were declared on the Class A Common Shares at the same time as dividends that were declared on the Class B Common Shares. The Class B Common Shares have no voting rights, and are subordinated to the Class A Common Shares with respect to ranking upon liquidation. Our Class B Common Shares will convert into Class A Common Shares upon the termination of the subordination period. Innovation Holdings acquired the Class B Common Shares for nominal consideration. We refer you to "Description of Capital Stock—Class B Common Shares" for additional information regarding the terms of our Class B Common Shares.

We maintain our principal executive offices at Voula Center, 102-104 V. Pavlou Street, Voula 16673, Athens, Greece. Our telephone number at that address is (011) (30) (210) 891 4600.

Our Dividend Policy

We intend to pay quarterly dividends to the holders of our Class A Common Shares in February, May, August and November of each year in amounts substantially equal to our available cash flow from operations during the previous quarter, less cash expenses for that quarter (principally vessel operating expenses and interest expense) and any reserves our board of directors determines we should maintain for reinvestment in our business. These reserves may cover, among other things, drydocking, intermediate and special surveys, liabilities and other obligations, interest expense and debt amortization, acquisitions of additional assets and working capital.

Our board of directors declared a dividend in the amount of $0.4375 per Class A Common Share to shareholders of record on May 21, 2007 in respect of the period from the commencement of our operations through March 31, 2007 which we paid to holders of our Class A Common Shares on May 31, 2007. Our board of directors has also declared a dividend with respect to the Class B Common Shares in the same amount as on our Class A Common Shares. However, we will not pay a dividend on our Class B Common Shares until the later of (i) the conversion of Class B Common Shares into Class A Common Shares and (ii) the payment date for dividends that were declared on the Class A Common Shares at the same time as dividends that were declared on the Class B Common Shares.

The declaration and payment of any dividend is subject to the discretion of our board of directors. The timing and amount of dividend payments will depend on our earnings, financial condition, cash requirements and availability, the restrictions in our senior secured credit facility, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Because we are a holding company with no material assets other than the shares of our subsidiaries, which will directly own the vessels in our fleet, our ability to pay dividends will depend on the earnings and cash flow of our subsidiaries and their ability to pay dividends to us. We cannot assure you that, after the expiration or earlier termination of our charters, we will have any sources of income from which dividends may be paid. We refer you to "Our Dividend Policy" for additional information regarding our dividend policy.

Senior Secured Credit Facility

We have entered into a senior secured credit facility with HSH Nordbank AG of up to $109.5 million of which we drew down $108.25 million. Pursuant to the terms of the senior secured credit facility, we are permitted to draw up to 50% of the market value of the vessels in our initial fleet, up to the facility limit, to fund a portion of the acquisition of our initial fleet. The senior secured credit facility has a term of 3.5 years from the initial draw down date of December 21, 2006 and the amounts we draw under the senior secured credit facility are repayable in one balloon installment that are due 3.5 years from the initial borrowing date. The senior secured credit facility is secured by a first priority mortgage on our vessels as well as a first assignment of all earnings, insurances and cross default with each of our vessel owning subsidiaries. We refer you to "Senior Secured Credit Facility" for additional information regarding our senior secured credit facility.

THE OFFERING

Outstanding Class A Common Shares offered by selling shareholders(1)		Up to 9,247,656 Class A Common Shares
Warrants offered by Selling Shareholders		Up to 1,849,531 Warrants
Class A Common Shares to be outstanding immediately after this offering(1)		11,497,656 Class A Common Shares
Warrants to be outstanding immediately after this offering(1)		2,299,531 Warrants
Use of proceeds		All of the shares of Class A Common Shares and Warrants offered hereby are being sold by the selling shareholders. We will not receive any proceeds from the sale of Class A Common Shares or Warrants by the selling shareholders. We will receive proceeds to the extent the Warrants are exercised. We intend to apply proceeds from those exercises, if any, to acquisitions, working capital and other corporate purposes.

(1): Assuming the sale of all Class A Common Shares and Warrants covered by this prospectus, and assuming no exercise of Warrants.

Paragon Shipping Inc. Summary Financial Data

The following table sets forth summary consolidated financial data and other operating data of Paragon Shipping Inc. The summary financial data in the table as of and for the period from inception (April 26, 2006) to December 31, 2006, is derived from the audited consolidated financial statements of Paragon Shipping Inc. We refer you to the footnotes to our consolidated financial statements for a discussion of the basis upon which our consolidated financial statements are presented. The data should be read in conjunction with the consolidated financial statements, related notes and other financial information included herein.

		Period from inception (April 26, 2006) to December 31, 2006
INCOME STATEMENT DATA
Net revenue		$	4,729,160
Voyage expenses			18,970
Vessel operating expenses			559,855
Management fees charged by a related third party			170,750
Depreciation			1,066,527
General and administrative expenses (including share based compensation of $1,476,717)(1)			1,782,429

	Operating Income		1,130,629
Interest and finance costs			(951,798	)
Unrealized loss on interest rate swap			(117,965	)
Interest income			404,409
Foreign currency losses			(3,511	)

	Net Income	$	461,764

Income allocable to Class B common shares			(259,036	)
Income available to Class A common shares		$	202,728

Earnings per Class A common share, basic		$	0.14
Earnings per Class A common share, diluted		$	0.14
Earnings per Class B common share, basic and diluted		$	0.00
Weighted average number of Class A common shares, basic			1,441,887
Weighted average number of Class A common shares, diluted			1,442,639
Weighted average number of Class B common shares, basic and diluted			1,842,381
BALANCE SHEET DATA		As of December 31, 2006
Current assets, including cash		$	33,410,044
Total assets			188,239,859
Current liabilities			4,249,625
Long-term debt			77,437,500
Obligations for warrants			10,266,969
Shareholders' equity			96,285,765
Net cash provided by operating activities			1,621,892
Net cash used in investing activities			(155,355,447	)
Net cash provided by financing activities			186,065,403
FLEET DATA
Average number of vessels(2)			0.74
Total voyage days for fleet(3)			185
Total calendar days for fleet(4)			185
Fleet utilization(5)			100%

AVERAGE DAILY RESULTS
Time charter equivalent(6)	$	25,460
Vessel operating expenses(7)		3,026
Management fees		923
General and administrative expenses(8)		9,635

(1): We paid salaries and consulting fees to our senior management and remuneration to our non-executive directors that in total amounted $175,627 for the year ended December 31, 2006. The share based compensation from inception (April 26, 2006) through December 31, 2006 amounted to $1,476,717 and is included in the general and administrative expenses.
(2): Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
(3): Total voyage days for fleet are the total days the vessels were in our possession for the relevant period net of off hire days associated with major repairs, drydocks or special or intermediate surveys.
(4): Calendar days are the total days the vessels were in our possession for the relevant period including off hire days associated with major repairs, drydockings or special or intermediate surveys.
(5): 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.
(6): Time charter equivalent, or TCE, is a measure of the average daily revenue performance of the vessels in our fleet. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage net revenue less 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 used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.
(7): Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
(8): Daily general and administrative expense is calculated by dividing general and administrative expense by fleet calendar days for the relevant time period.

RISK FACTORS

You should carefully consider the following material risk factors and all other information contained in this prospectus before deciding to invest in our Class A Common Shares or Warrants. If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected.

Industry Specific Risk Factors

Charter hire rates for drybulk carriers may decrease in the future, which may adversely affect our earnings

The drybulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability. The degree of charter hire rate volatility among different types of drybulk carriers has varied widely. Although charter hire rates decreased slightly during 2005 and the first half of 2006, since July 2006, charter rates have risen sharply and are currently at or near their historical highs. Because we generally charter our vessels pursuant to one-year time charters, we are exposed to changes in spot market rates for drybulk carriers and such changes may affect our earnings and the value of our drybulk carriers at any given time. We cannot assure you that we will be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations or to pay dividends to our shareholders. Because the factors affecting the supply and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.

Factors that influence demand for vessel capacity include:

•: demand for and production of drybulk products;
•: global and regional economic and political conditions;
•: the distance drybulk is to be moved by sea;
•: environmental and other regulatory developments; and
•: changes in seaborne and other transportation patterns.

The factors that influence the supply of vessel capacity include:

•: the number of newbuilding deliveries;
•: port and canal congestion;
•: the scrapping rate of older vessels;
•: vessel casualties; and
•: the number of vessels that are out of service.

We anticipate that the future demand for our drybulk carriers will be dependent upon continued economic growth in the world's economies, including China and India, seasonal and regional changes in demand, changes in the capacity of the global drybulk carrier fleet and the sources and supply of drybulk cargo to be transported by sea. The capacity of the global drybulk carrier fleet seems likely to increase and there can be no assurance that economic growth will continue. Adverse economic, political, social or other developments could have a material adverse effect on our business and operating results.

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

The market supply of drybulk carriers has been increasing, and the number of drybulk carriers on order are near historic highs. These newbuildings were delivered in significant numbers starting at the

beginning of 2006 and are expected to continue to be delivered in significant numbers through 2007. As of September 2006, newbuilding orders had been placed for an aggregate of more than 20.0% of the current global dry bulk fleet, with deliveries expected during the next 36 months. An over-supply of drybulk carrier capacity may result in a reduction of charter hire rates. If such a reduction occurs, upon the expiration or termination of our vessels' current charters, such as during 2007, when the charters under which our vessels will be employed expire, we may only be able to recharter our vessels at reduced or unprofitable rates or we may not be able to charter these vessels at all.

An economic slowdown in the Asia Pacific region could have a material adverse effect on our business, financial position and results of operations

We anticipate a significant number of the port calls made by our vessels will involve the loading or discharging of drybulk commodities in ports in the Asia Pacific region. As a result, a negative change in economic conditions in any Asia Pacific country, but particularly in China, may have an 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. We cannot assure you that such growth will be sustained or that the Chinese economy will not experience negative growth in the future. Moreover, any slowdown in the economies of the United States, the European Union or certain Asian countries may adversely affect economic growth in China and elsewhere. Our business, financial position, results of operations, ability to pay dividends as well as our future prospects, will likely be materially and adversely affected by an economic downturn in any of these countries.

The market values of our vessels may decrease, which could limit the amount of funds that we can borrow under our senior secured credit facility or cause us to breach covenants in our senior secured credit facility and adversely affect our operating results

The fair market values of drybulk carriers have generally experienced high volatility. The market prices for secondhand drybulk carriers declined from historically high levels during 2005 and the first half of 2006, and have rose sharply in 2006 nearing historical highs and have remained firm in 2007. You should expect the market value of our vessels to fluctuate depending on general economic and market conditions affecting the shipping industry and prevailing charter hire rates, competition from other shipping companies and other modes of transportation, types, sizes and ages of vessels, applicable governmental regulations and the cost of newbuildings. If the market value of our fleet declines, we may not be able to draw down the full amount of our senior secured credit facility that we have entered into and we may not be able to obtain other financing or incur debt on terms that are acceptable to us or at all. Further, while we believe that the current aggregate market value of our drybulk vessels will be in excess of amounts required under the senior secured credit facility that we have entered into, a decrease in these values could cause us to breach some of the covenants that are contained in our senior secured credit facility and in future financing agreements that we may enter into from time to time. If we do breach such covenants and we are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on our fleet. In addition, if the book value of one of our vessels is impaired due to unfavorable market conditions or a vessel is sold at a price below its book value, we would incur a loss that could adversely affect our operating results. Please see the section of this prospectus entitled "The International Drybulk Shipping Industry" for information concerning historical prices of drybulk carriers.

World events could affect our results of operations and financial condition

Terrorist attacks such as those in New York on September 11, 2001, the bombings in Spain on March 11, 2004 and in London on July 7, 2005 and the continuing response of the United States to these attacks, as well as the threat of future terrorist attacks in the United States or elsewhere,

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

Our operating results will be subject to seasonal fluctuations, which could affect our operating results and the amount of available cash with which we can pay dividends

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter to quarter volatility in our operating results, which could affect the amount of dividends that we pay to our shareholders from quarter to quarter. The drybulk carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, revenues of drybulk carrier operators in general have historically been weaker during the fiscal quarters ended June 30 and September 30, and, conversely, been stronger in fiscal quarters ended December 31 and March 31. While this seasonality is not likely to materially affect our operating results, it could materially affect our operating results and cash available for distribution to our shareholders as dividends in the future.

We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income and could subject us to increased liability under applicable law or regulation

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

The operation of our vessels is affected by the requirements set forth in the United Nations' International Maritime Organization's International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

The operation of drybulk carriers has certain unique operational risks which could affect our earnings and cash flow

The operation of certain ship types, such as drybulk carriers, has certain unique risks. With a drybulk carrier, the cargo itself and its interaction with the vessel can be an operational risk. By their nature, drybulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, drybulk carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach to the sea. Hull breaches in drybulk carriers may lead to the flooding of the vessels' holds. If a drybulk carrier suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel's bulkheads leading to the loss of a vessel. If we are unable to adequately maintain our vessels we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition, results of operations and ability to pay dividends. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

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

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

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

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

Company Specific Risk Factors

We are a recently-formed company with no history of operations on which investors may assess our performance or our ability to pay dividends

We are a recently-formed company and have no performance record, operating history or historical financial statements upon which you can evaluate our operations or our ability to implement and achieve our business strategy or our ability to pay dividends. We cannot assure you that we will be successful in implementing our business strategy.

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

We employ our drybulk carriers on one and two-year time charters. Period charters provide relatively steady streams of revenue, but vessels committed to period charters may not be available for spot voyages during periods of increasing charter hire rates, when spot voyages might be more profitable. Charter hire rates for drybulk carriers are volatile, and in the past charter hire rates for drybulk carriers 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 market prices have fallen, we may have to employ our vessels at depressed market prices, which would lead to reduced or volatile earnings. We cannot assure you that future charter hire rates will enable us to operate our drybulk carriers profitably.

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

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

Our charterers may terminate or default on their charters, which could adversely affect our results of operations and cash flow

Our charters may terminate earlier than the dates indicated in this registration statement. The terms of our charters vary as to which events or occurrences will cause a charter to terminate or give the charterer the option to terminate the charter, but these generally include a total or constructive total loss of the related vessel, the requisition for hire of the related vessel or the failure of the related vessel to meet specified performance criteria. In addition, the ability of each of our charterers to perform its obligations under a charter will depend on a number of factors that are beyond our control. These factors may include general economic conditions, the condition of the drybulk shipping industry, the charter rates received for specific types of vessels and various operating expenses. The costs and delays associated with the default by a charterer of a vessel may be considerable and may adversely affect our business, results of operations, cash flows and financial condition and our ability to pay dividends.

We cannot predict whether our charterers will, upon the expiration of their charters, recharter our vessels on favorable terms or at all. If our charterers decide not to re-charter our vessels, we may not be able to recharter them on terms similar to the terms of our current charters or at all. In the future, we may also employ our vessels on the spot charter market, which is subject to greater rate fluctuation than the time charter market.

If we receive lower charter rates under replacement charters or are unable to recharter all of our vessels, the amounts available, if any, to pay dividends to our shareholders may be significantly reduced or eliminated.

We may be unable to effectively manage our growth

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

•: locating and acquiring suitable drybulk carriers;
•: identifying and consummating acquisitions or joint ventures;
•: integrating any acquired business successfully with our existing operations;
•: enhancing our customer base;
•: managing our expansion; and
•: obtaining required financing.

Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced in obtaining additional qualified personnel and managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection therewith.

The expansion of our fleet may impose significant additional responsibilities on our management and staff, and the management and staff of Allseas, and may necessitate that we, and they, increase the number of personnel. Allseas may have to increase its customer base to provide continued employment for our fleet, and such costs will be passed on to us by Allseas.

We may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of our management and our results of operations

Our success depends to a significant extent upon the abilities and efforts of our management team. We have entered into employment agreements with each of our founder and chief executive officer, Michael Bodouroglou, our chief operating officer, George Skrimizeas, and our chief financial officer, Christopher Thomas, for work performed in Greece and separate consulting agreements with companies owned by each of them for work performed outside of Greece. Our success will depend upon our ability to hire and retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining personnel could adversely affect our business, results of operations and ability to pay dividends. We do not intend to maintain "key man" life insurance on any of our officers.

We are entirely dependent on Allseas to manage and charter our fleet

The only employees we currently have are Mr. Bodouroglou, our chief executive officer, George Skrimizeas, our chief operating officer, Christopher Thomas, our chief financial officer, and Anthony Smith, our commercial development officer, and we currently have no plans to hire additional employees. We currently subcontract the commercial and technical management of our fleet, including crewing, maintenance and repair, to Allseas, the loss of Allseas' services or its failure to perform its obligations to us could materially and adversely affect the results of our operations. Although we may have rights against Allseas if it defaults on its obligations to us, you will have no recourse directly against Allseas. Further, we expect that we will need to seek approval from our lenders to change our commercial and technical manager. Allseas will also be providing similar services for vessels owned by other shipping companies including companies with which they are affiliated. These responsibilities and relationships could create conflicts of interest between Allseas' performance of its obligations to us, on the one hand, and Allseas' performance of its obligations to its other clients on the other hand. These conflicts may arise in connection with the crewing, supply provisioning and operations of the vessels in our fleet versus vessels owned by other clients of Allseas. In particular, Allseas may give preferential

treatment to vessels owned by other clients whose arrangements provide for greater economic benefit to Allseas. These conflicts of interest may have an adverse effect on our results of operations.

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

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

Our founder and chief executive officer has affiliations with Allseas which may create conflicts of interest

Our founder and chief executive officer is the beneficial owner of all of the issued and outstanding capital stock of Allseas. These responsibilities and relationships could create conflicts of interest between us, on the one hand, and Allseas, on the other hand. These conflicts may arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus vessels managed for other companies affiliated with Allseas and Mr. Bodouroglou. Allseas may give preferential treatment to vessels that are beneficially owned by related parties because Mr. Bodouroglou and members of his family may receive greater economic benefits. In particular, Allseas currently provides management services to five drybulk carriers, other than the vessels in our initial fleet, that are owned by entities affiliated with Mr. Bodouroglou, and such entities may acquire additional vessels that will compete with our vessels in the future. Mr. Bodouroglou has granted to us the right to purchase the remaining five vessels for which Allseas provides management services as well as a right of first refusal over future vessels that he or entities affiliated with him may seek to acquire in the future. However, we may not exercise our right to acquire all or any of these vessels in the future, and such vessels may compete with our fleet. These conflicts of interest may have an adverse effect on our results of operations.

In the highly competitive international drybulk shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources

We employ our vessels in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than we do. Competition for the transportation of drybulk cargoes can be intense and depends on price, location, size, age, condition and the acceptability of the vessel and its managers to the charters. Due in part to the highly fragmented market, competitors with greater resources could enter and operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets than we are able to offer.

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

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydocking repairs are unpredictable and can be substantial. We may have to pay drydocking costs that our insurance does not cover. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings.

Purchasing and operating previously owned, or secondhand, drybulk carriers may result in increased operating costs and off-hire days for our vessels, which could adversely affect our earnings

Our inspection of secondhand vessels prior to purchase does not provide us with the same knowledge about their condition and cost of any required (or anticipated) repairs that we would have

had if these vessels had been built for and operated exclusively by us. While we normally inspect secondhand vessels prior to purchase, this does not provide us with the same knowledge about their condition that we would have had if these vessels had been built for and operated exclusively by us, and accordingly, we may not discover defects or other problems with such vessels prior to purchase. If this were to occur, such hidden defects or problems, when detected, may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may become liable to third parties. Generally, we do not receive the benefit of Warranties on secondhand vessels.

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 drybulk carrier in good operating condition increase with the age of the vessel. The average age of the vessels comprising our initial fleet is approximately 9.2 years. Older vessels are typically less fuel-efficient and more costly to maintain than more recently constructed drybulk carriers due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.

Rising fuel prices may adversely affect our profits

The cost of fuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geo-political developments, supply and demand for oil, actions by members of the Organization of the Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns and regulations.

We cannot assure you that we will pay dividends

Our policy is to pay quarterly dividends in February, May, August and November of each year as described in "Our Dividend Policy." However, we may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. Our loan agreements, including our senior secured credit facility, may also prohibit our declaration and payment of dividends under some circumstances.

In addition, the declaration and payment of dividends will be subject at all times to the discretion of our board of directors. The timing and amount of dividends will depend on our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends. There can be no assurance that dividends will be paid in the anticipated amounts and frequency set forth in this registration statement or at all.

We are a holding company, and we will depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations or to make dividend payments

We are a holding company and our subsidiaries, all of which are, wholly-owned by us either directly or indirectly, will conduct all of our operations and own all of our operating assets. We will have no significant assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to make dividend payments depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, our board of directors may exercise its discretion not to pay dividends.

Anti-takeover provisions in our amended and restated articles of incorporation could make it difficult for our shareholders to replace or remove our current board of directors or could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common shares

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

These provisions include those that:

•: authorize our board of directors to issue "blank check" preferred stock without shareholder approval;
•: provide for a classified board of directors with staggered, three-year terms;
•: prohibit cumulative voting in the election of directors;
•: authorize the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66²/3% of the outstanding common shares entitled to vote for those directors; and
•: restrict business combinations with interested shareholders.

These anti-takeover provisions could substantially impede the ability of shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common shares and your ability to realize any potential change of control premium.

Servicing future debt would limit funds available for other purposes such as the payment of dividends

To finance our future fleet expansion, we expect to incur additional secured debt. While we do not intend to use operating cash to pay down principal, we must dedicate a portion of our cash flow from operations to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital, capital expenditures and other purposes. We will have to incur debt in order to acquire and later expand our fleet, which could increase our ratio of debt to equity. The need to service our debt may limit funds available for other purposes, including distributing cash to our shareholders, and our inability to service debt could lead to acceleration of our debt and foreclosure on our fleet.

Our senior secured credit facility contains restrictive covenants that may limit our liquidity and corporate activities

Our senior secured credit facility imposes operating and financial restrictions on us. These restrictions may limit our ability to:

•: incur additional indebtedness;
•: create liens on our assets;
•: sell capital stock of our subsidiaries;
•: make investments;
•: engage in mergers or acquisitions;
•: pay dividends;
•: make capital expenditures;

•: compete effectively to the extent our competitors are subject to less onerous financial restrictions;
•: change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and
•: sell our vessels.

Therefore, our discretion is limited because we may need to obtain consent from our lenders in order to engage in certain corporate actions. Our lenders' interests may be different from ours, and we cannot guarantee that we will be able to obtain our lenders' consent when needed. This may prevent us from taking actions that are in our shareholders' best interest.

Our senior secured credit facility imposes certain conditions on the payment of dividends

The terms of our senior secured credit facility contain a number of financial covenants and general covenants that require us to, among other things, maintain vessel market values of at least 140% and in case of a dividend declaration at least 145% (a ratio which we will determine quarterly and at each dividend payment date) of the outstanding facility amount, minimum cash balances and insurance including, but not limited to, hull and machinery insurance in an amount at least equal to the fair market value of the vessels financed, as determined by third party valuations. We are not be permitted to pay dividends under our senior secured credit facility if we are in default of any of these loan covenants or if we do not meet a specified debt coverage ratio.

Our ability to obtain additional debt financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost may materially affect our results of operation and our ability to implement our business strategy.

We may not have adequate insurance to compensate us if we lose our vessels or to compensate third parties

We are insured against tort claims and some contractual claims (including claims related to environmental damage and pollution) through memberships in protection and indemnity associations or clubs, or P&I Associations. We also procure hull and machinery insurance and war risk insurance for our fleet. We insure our vessels for third party liability claims subject to and in accordance with the rules of the P&I Associations in which the vessels are entered. We can give no assurance that we will be adequately insured against all risks. We may not be able to obtain adequate insurance coverage for our fleet in the future. The insurers may not pay particular claims. Our insurance policies contain deductibles for which we will be responsible and limitations and exclusions which may increase our costs or lower our revenue.

We cannot assure you that we would be able to renew our insurance policies on the same or commercially reasonable terms, or at all, in the future. For example, more stringent environmental regulations have led in the past to increased costs for, and in the future may result in the lack of availability of, protection and indemnity insurance against risks of environmental damage or pollution. Any uninsured or underinsured loss could harm our business and financial condition. In addition, our insurance may be avoidable by the insurers as a result of certain of our actions, such as our ships failing to maintain certification with applicable maritime self-regulatory organizations. Further, we cannot assure you that our insurance policies will cover all losses that we incur. Any claims covered by

insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material.

Innovation Holdings, which is beneficially owned by our founder and chief executive officer and members of his family, holds approximately 30.9% of our total outstanding common shares, which may limit your ability to influence our actions

Our founder and chief executive officer, Michael Bodouroglou, and members of his family, beneficially own through, their ownership of Innovation Holdings, approximately 30.9% of our outstanding Class A Common Shares and Class B Common Shares and, following the conversion of the Class B Common Shares into Class A Common Shares, will have the power to exert considerable influence over our actions. We cannot assure you that the interests of our existing shareholder will coincide with the interests of other shareholders.

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

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

We currently do not believe that we qualify for this statutory tax exemption. We may, however, qualify for this exemption once our Class A Common Shares are qualified for trading on the OTC Bulletin Board. In addition, if we were able to substantiate that more than 50% of our stock is owned by residents of "qualified foreign countries" within the meaning of the applicable Treasury Regulations interpreting Section 883, then we would be able to qualify for exemption. Due to the factual nature of the issues involved, we can give no assurances on our tax-exempt status or that of any of our subsidiaries. See "Tax Considerations—United States Federal Income Taxation of Our Company" for additional information about the requirements of this exemption.

If we or our subsidiaries are not entitled to exemption under Section 883 for any taxable year, we or our subsidiaries could be subject for those years to an effective 4% U.S. federal income tax on the shipping income these companies derive during the year that are attributable to the transport of cargoes to or from the United States. The imposition of this taxation would have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

Dividends on our common shares will not be eligible to qualify for certain preferential U.S. federal income tax rates until our common shares are readily tradable on an established securities market in the United States

"Qualified dividend income" derived by noncorporate shareholders that are subject to U.S. federal income tax is subject to U.S. federal income taxation at certain reduced rates. Dividends on our common shares will not be eligible to qualify for such reduced rates unless our common shares come to be readily tradable on an established securities market in the United States (such as the Nasdaq Global Market). The OTC Bulletin Board does not qualify as an established securities market in the United States for these purposes. Even if our common shares came to be treated as readily tradable on an established securities market in the United States for these purposes, proposed legislation in the United States would, if enacted, make it unlikely that our dividends would qualify for the reduced rates. As of the date hereof, it is not possible to predict whether such proposed legislation will be enacted.

U.S. tax authorities could treat us as a "passive foreign investment company," which could have adverse U.S. federal income tax consequences to U.S. holders

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

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

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

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

Because we will generate all of our revenues in U.S. dollars but will incur a portion of our expenses in other currencies, exchange rate fluctuations could have an adverse impact on our results of operations

We will generate substantially all of our revenues in U.S. dollars but we expect that certain of our future expenses will be incurred in currencies other than the U.S. dollar. This difference could lead to fluctuations in net income due to changes in the value of the U.S. dollar relative to these other currencies, in particular the Euro. Expenses incurred in foreign currencies against which the U.S. dollar falls in value could increase, decreasing our revenues. For example, during 2006, the value of the U.S. dollar declined by approximately 11.27% as compared to the Euro.

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

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

Because our seafaring employees are covered by industry-wide collective bargaining agreements, failure of industry groups to renew those agreements may disrupt our operations and adversely affect our earnings

Our vessel owning subsidiaries employ approximately 200 seafarers. All of the seafarers employed on the vessels in our fleet are covered by industry-wide collective bargaining agreements that set basic standards. We cannot assure you that these agreements will prevent labor interruptions. Any labor interruptions could disrupt our operations and harm our financial performance.

If Allseas is unable to perform under its vessel management agreements with us, our results of operations may be adversely affected

As we expand our fleet, we will rely on Allseas to recruit suitable additional seafarers and to meet other demands imposed on Allseas. We cannot assure you that Allseas will be able to meet these demands as we expand our fleet. If Allseas' crewing agents encounter business or financial difficulties, they may not be able to adequately staff our vessels. If Allseas is unable to provide the commercial and technical management service for our vessels, our business, results of operations, cash flows and financial position and our ability to pay dividends may be materially adversely affected.

Our operations outside the United States will expose us to global risks that may interfere with the operation of our vessels

We operate as an international company and primarily conduct our operations outside the United States. Changing economic, political and governmental conditions in the countries where we are engaged in business or where our vessels are registered affect us. In the past, political conflicts, particularly in the Arabian Gulf, resulted in attacks on vessels, mining of waterways and other efforts to disrupt shipping in the area. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea. Following the terrorist attack in New York City on September 11, 2001, and the military response of the United States, the likelihood of future acts of terrorism may increase, and our vessels may face higher risks of being attacked in the Middle East region. In addition, future hostilities or other political instability in regions where our vessels trade could affect our trade patterns and adversely affect our operations and performance.

It may not be possible for investors to enforce U.S. judgments against us

We and all our subsidiaries are incorporated in jurisdictions outside the United States and substantially all of our assets and those of our subsidiaries are located outside the United States. In addition, most of our directors and officers are or will be non-residents of the United States, and all or

a substantial portion of the assets of these non-residents are or will be located outside the United States. As a result, it may be difficult or impossible for United States investors to serve process within the United States upon us, our subsidiaries or our directors and officers or to enforce a judgment against us for civil liabilities in United States courts. In addition, you should not assume that courts in the countries in which we or our subsidiaries are incorporated or where our or the assets of our subsidiaries are located (1) would enforce judgments of United States courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable United States federal and state securities laws or (2) would enforce, in original actions, liabilities against us or our subsidiaries based on those laws.

We may be unable to provide the required quarterly and other financial information in a timely manner

As a privately-held company, we did not adopt the financial reporting timelines required of a publicly traded company. Implementation of these timelines could disrupt our business, distract our management and employees and increase our costs. Any such delays or deficiencies may limit our ability to obtain financing, either in the public capital markets or from private sources, and thereby impede our ability to implement our growth strategy. In addition, any such delays or deficiencies may result in failure to meet the requirements for qualification for trading on the OTC Bulletin Board following the completion of the registration under the 1933 Act of all of our private placement securities, which would adversely affect the liquidity of our common shares.

USE OF PROCEEDS

All of the Class A Common Shares and Warrants offered hereby are being sold by the selling shareholders. We will not receive any proceeds from the sale of Class A Common Shares or Warrants by the selling shareholders.

Proceeds received by us in connection with any exercise of the Warrants will be used for acquisitions, working capital or other corporate purposes.

FORECASTED CASH AVAILABLE FOR DIVIDENDS, RESERVES
AND EXTRAORDINARY EXPENSES FOR 2007

All of the information set forth below is for illustrative purposes only. Our underlying assumptions may prove to be incorrect. Actual results will almost certainly differ, and the variations may be material. The information set forth below has not been prepared in accordance with United States generally accepted accounting principles. We may have materially lower revenues, set aside substantial reserves or incur a material amount of extraordinary expenses. You should not assume or conclude that we will pay any dividends in any period.

We have prepared the forecasted financial information to present the cash that we expect to have available to us during the twelve month period after we complete the acquisition and delivery of our initial fleet, which we call our first full operating year, for:

•: dividends;
•: expenses and reserves for vessel upgrades, repairs and drydocking;
•: expenses and reserves for further vessel acquisitions;
•: principal payments on our senior secured credit facility;
•: reserves required by our lenders; and
•: reserves as our board of directors may from time to time determine are required for contingent and other liabilities and general corporate purposes.

We call these items "dividends, reserves and extraordinary expenses."

The Company does not as a matter of course make public projections as to future sales, earnings, or other results. However, the management of the Company has prepared the prospective financial information set forth below to present the forecasted cash available for dividends, reserves and extraordinary expenses for 2007. The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants or Public Company Accounting Oversight Board (United States) with respect to prospective financial information, but, in the view of the Company's management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management's knowledge and belief, the expected course of action and the expected future financial performance of the Company. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this prospectus are cautioned not to place undue reliance on the prospective financial information.

Neither the Company's independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

The actual results achieved during our first full operating year will vary from those set forth in the forecasted financial information, and those variations may be material. In addition, investors should not assume that the forecasted available cash for our first full operating year may be extrapolated to any other period. As disclosed under "Risk Factors," our business and operations are subject to substantial risks which increase the uncertainty inherent in the forecasted financial information. Many of the factors disclosed under "Risk Factors" could cause actual results to differ materially from those expressed in the forecasted financial information. The forecasted financial information assumes the successful implementation of our business strategy. No assurance can be given that our business

strategy will be effective or that the benefits of our business strategy will be realized during our first full operating year, if ever.

The forecasted financial information should be read together with the information contained in "Risk Factors," "Use of Proceeds," "Selected Financial and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and our financial statements contained herein.

During the first full operating year, we intend to, but are not required to, pay quarterly dividends beginning in May 2007. The timing and amount of dividend payments will depend upon our earnings from the drybulk carriers in our fleet, financial condition, cash requirements and availability, Marshall Islands law affecting the payment of dividends and other factors discussed below. We intend to declare these dividends in amounts equal to our available cash flow, which is equal to (x) the sum of our total revenues from vessel operations less (y) the sum of our total cash expenses and any reserves we set aside each quarter. These reserves may cover among other things, acquisitions of additional vessels, principal payments on our senior secured credit facility, drydocking costs, repairs, claims and other liabilities and obligations.

Based upon and subject to the assumptions and forecasts contained in this section, we intend to pay our first dividend, which we estimate will be in the amount of $0.4375 per Class A Common Shares and accrue dividends on the Class B Common Shares, in May 2007, in respect of the period from the commencement of our operations through March 31, 2007.

We expect that our revenues during the first full operating year will be limited to the time charter revenues from our vessels.

The following table contains information based on assumptions regarding our initial fleet and the charter rates earned by our vessels during the first full year of our operations. The charter rates provided in the following table are based on the charters that we have entered into for each of the vessels in our initial fleet. However there can be no assurance that each of our charterers will fully perform under the respective charters or that we will actually receive the amounts anticipated. As a result, there can be no assurance that the vessels in our initial fleet will earn daily charter rates during our first full year of operation that are equal to those provided in the table below. Furthermore, some of the charters expire during the first full year of operation and no assurance can be given that we can renew the charters at the same daily charter rate.

Vessel Name	Charter Rate ($ per day)(1)	Charter Commissions(2)
Deep Seas	28,175	5.00	%
Blue Seas	26,100	6.25	%
Clean Seas	20,000	5.00	%
Calm Seas	25,150	2.50	%
Kind Seas	23,600	6.25	%
Crystal Seas	24,000	5.00	%

(1): This column shows gross charter rates and does not reflect commissions payable to third party chartering brokers and Allseas.
(2): Charter commissions include third party chartering brokers and 1.25% of our voyage revenues payable to Allseas.

We expect that our expenses during the first full operating year will consist of:

•: Estimated vessel operating expenses for our initial fleet of $3,850 per vessel per calendar day.

•

Management fees for all of our vessels payable to Allseas, which are fixed at $650 (based on a Euro/U.S. dollar exchange rate of 1.268:1.00) per vessel per calendar day.

•

Capital maintenance expenditure is expected to be $0.75 million.

•

Interest expense on our senior secured credit facility. We have assumed that:

•: we will have outstanding, during our first full operating year, an aggregate principal amount of $108.25 million under our senior secured credit facility; and
•: the interest rate on our senior secured credit facility, including margin, will be 6.50%.

•

General and administrative expenses including salaries payable to our officers and employees and directors' fees, office rent, travel, communications, insurance, legal, auditing and investor relations, professional expenses, as well as the costs associated with the filing of a registration statement and completion of our exchange offer, but excluding expenses related to this offering, which we expect will equal $3.00 million.

We do not expect to incur ordinary cash expenses other than those listed above, which we call our ordinary cash expenses.

We may, however, have unanticipated extraordinary cash expenses, which could include major vessel repairs and drydocking costs that are not covered by our management agreements, vessel upgrades or modifications that are required by new laws or regulations, other capital improvements, costs of claims and related litigation expenses or contingent liabilities.

For the first full operating year, we expect to incur certain expenses in U.S. dollars. However, part of our general administrative expenses and salaries will be incurred in Euros. Moreover, unanticipated extraordinary cash expenses may be incurred in foreign currencies. This difference could lead to fluctuations in net income due to changes in the value of the U.S. dollar relative to the Euro and other currencies. Expenses incurred in foreign currencies against which the U.S. dollar falls in value can increase, which would result in a decrease in our net income.

The table below sets forth the amount of cash that would be available to us for dividends, reserves and extraordinary expenses in the aggregate based on the assumptions listed below. This amount is not an estimate of the amounts we expect to be available in later quarters, since some of our revenues and expenses may change in future quarters.

Our assumptions for the first full operating year include the following:

•: We have received $109.54 million in net proceeds in connection with this offering and the sale of units to Innovation Holdings.
•: The aggregate purchase price of our initial fleet was $210.35 million.
•: We have borrowed $108.25 million under our senior secured credit facility to pay the balance of the purchase price of our initial fleet, fund working capital and pay certain expenses.
•: The currency exchange rate between the Euro and the U.S. dollar will remain at 1.268:1.00 U.S. dollars per Euro.
•: Each of the vessels in our initial fleet upon delivery to us will earn daily time charter revenue described in the table above for 357.7 days and our charterers will timely pay charter hire to us when due.
•: We will not receive any insurance proceeds or other income.
•: We will not sell any vessels and none of the vessels will suffer a total loss or constructive total loss or suffer any reduced hire or off-hire time.

•: We will have no other cash expenses or liabilities other than our estimated ordinary cash expenses.
•: We will remain in compliance with the terms of the senior secured credit facility that we expect to enter into.
•: We will not pay any taxes.
•: We will not draw any further amounts under the senior secured credit facility that we expect to enter into.

Other than our management fee payable to Allseas, vessel operating expenses, interest expenses on our senior secured credit facility, directors' fees, and officers' and employees' salaries, which will be fixed for our first full operating quarter, none of our fees or expenses are fixed.

Forecasted Cash Amount Available for Dividends,
Reserves and Extraordinary Expenses During Our First Full Fiscal Year

		First Full Fiscal Year
		(in thousands of U.S. dollars, except for per share data)
Forecasted Revenue
	Time charter revenue	$	52,591
	Charter commissions		(2,627	)

	Net charter revenue	$	49,964
Forecast Cash Expenses
	Vessel operating expenses	$	8,432
	Management fees		1,424
	General and administrative expenses		3,000
	Interest expense payable to lenders		7,036
	Maintenance capital expenses		750

	Total cash expenses	$	20,642

Forecasted Available Cash(1)		$	29,322

Forecasted Available Cash per Class A and B common share(1)(2)		$	2.17

(1): We cannot assure you that we will have available cash in the amounts presented above, or at all, or that our senior lenders will allow all of our available cash to be distributed.
(2): Forecasted Available Cash per Class A and Class B Common Share assumes the conversion of all Class B Common Shares outstanding as of the closing of the offering into Class A Common Shares. Total number of shares outstanding is 13,500,944 nd does not include the exercise of the warrants or options.

The table below illustrates the sensitivity of our annual Forecasted Available Cash per Class A and Class B Common Share to changes in charter rates.

We have assumed the applicability of such charter rates for the entire first full operating year beginning on January 1, 2007 and through the earliest or latest redelivery date for each vessel from its respective charterer. Three vessels, namely Deep Seas, Blue Seas and Calm Seas may be redelivered from their present charterers within the first full operating year. The Blue Seas has been recharted for a minimal period of eleven months following the expiration of its current charter.

We have assumed a sensitivity of Panamax and Handymax charter rates outlined in the table above for the applicable calendar days ranging from a decrease of 20.0% to an increase of 20.0%, in 10.0% increments. We have assumed, for the purpose of constructing the table, that the charterers of the three vessels redeliver the vessels to us at the earliest redelivery dates as contained within the charters.. The table below is not a projection or forecast of the actual or estimated results from an investment in our Class A Common Shares.

Charterer Redelivery at Earliest Redelivery Date

		% Change in Daily Charter Rates
		-20%			-10%			0%			10%			20%
Forecasted Available Cash per Class A and B Common Share		$	2.06		$	2.11		$	2.17		$	2.22		$	2.27

CAPITALIZATION

The following table sets forth our capitalization at December 31, 2006, on a historical basis and as adjusted to give effect to certain subsequent events.

As at December 31, 2006, the adjustments that we have made for subsequent events include:

Vessel Acquisitions from Unaffiliated Third-Parties. Through two wholly owned subsidiaries, we entered into two separate memoranda of agreement with unaffiliated third parties on October 13, 2006 and December 22, 2006 for the acquisition of Clean Seas and Crystal Seas, respectively. The aggregate acquisition cost was $58.35 million, which was partially funded through borrowings of $30.8 million under our senior secured credit facility. The Clean Seas was delivered to us on January 8, 2007 and Crystal Seas was delivered to us on January 10, 2007.

Amendment in Warrants' Exercise Features: The Company and the majority of the Warrant Holders agreed to amend the exercise features of the Warrants on May 7, 2007, which agreement is binding to all Warrant Holders. The Warrants, as amended, may only be exercised through physical settlement, removing the prior exercise terms which allow the Warrant Holders to receive Class A Common Shares with an aggregate market value equal to the difference between such market value per Class A Common Share and the $10.00 exercise price of the Warrant (or such lesser amount of the exercise price as set forth in the Warrant Agreement) multiplied by the number of such Class A Common Shares, or at the Warrant Holders' option, the cash equivalent there of.

As a result of the foregoing amendment, the obligations for warrants have been reclassified into permanent equity as of the amendment date since the warrants, as amended, no longer allow for net cash or net share settlement. This reclassification has been reflected in the "as adjusted for subsequent events" column.

		December 31, 2006
		Actual			As Adjusted for Subsequent Events
		(in thousands of U.S. dollars)
Debt:
	Current portion of long term debt	$	—		$	—
	Total long term debt, net of current portion	$	77,438		$	108,250
	Obligation for warrants		10,267			0

	Total debt	$	87,705		$	108,250

Shareholders' equity:
Preferred share, $0.001 par value; 25,000,000 authorised, none issued and outstanding			—			—
Class A Common Share, $0.001 par value; 120,000,000 shares authorized; 11,497,656 shares issued and outstanding, as of December 31. 2006 and as adjusted			12			12
Class B Common Share, $0.001 par value, 5,000,000 shares authorized; 2,003,288 issued and outstanding as of December 31, 2006 and as adjusted			2			2
Additional paid-in capital			98,738			109,005
Retained earnings			(2,466	)		(2,466	)

	Total shareholders' equity		96,286			106,553

	Total capitalization		183,991			214,803

The issuance of 40,000 restricted Class A Common Shares and 570,000 stock options pursuant to our equity incentive plan to certain of our directors and executive officers is not reflected in the above table.

OUR DIVIDEND POLICY

We will apply to have our Class A Common Shares and Warrants qualified for trading on the OTC Bulletin Board. Unless and until our common shares are readily tradable on an established securities market in the United States, dividends paid on our common shares will be taxable at ordinary income rates to a U.S. Holder. The OTC Bulletin Board is not an established securities market for this purpose. If our common shares come to be listed and readily tradable on an established securities market in the United States, dividends paid on our common shares to a U.S. Holder who is an individual, trust or estate (a "U.S. Individual Holder") will generally be treated as "qualified dividend income" that is taxable to such U.S. Individual Holders at preferential tax rates (through 2010) provided that (1) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be) and (2) the U.S. Individual Holder has owned the common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the common shares becomes ex-dividend. There is no assurance that any dividends paid on our common shares will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Legislation has been recently introduced in the U.S. Senate which, if enacted in its present form, would preclude our dividends from qualifying for such preferential rates prospectively from the date of the enactment. This legislation was referred to the Senate Finance Committee and no further action has been taken with respect to it. Any dividends paid by us which are not eligible for these preferential rates will be taxed at ordinary income tax rates to a U.S. Individual Holder. Please see the section of this offering memorandum entitled "Tax Considerations" for additional information relating to the tax treatment of our dividend payments.

In addition, the declaration and payment of dividends will depend on the provisions of Marshall Islands law affecting the payment of dividends. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends. Our ability to pay dividends will also be subject to our satisfaction of certain financial covenants contained in our senior secured credit facility. There can be no assurance that dividends will be paid in the anticipated amounts and frequency set forth in this offering memorandum or at all. Our board of directors will continually review our dividend policy and make adjustments that it believes appropriate.

SELECTED FINANCIAL AND OTHER DATA

			Period from inception (April 26, 2006) to December 31, 2006
INCOME STATEMENT DATA
Net revenue			$	4,729,160
Voyage expenses				18,970
Vessel operating expenses				559,855
Management fees charged by a related third party				170,750
	Depreciation			1,066,527
General and administrative expenses (including share based compensation of $1,476,717)(1)				1,782,429

		Operating Income		1,130,629
Interest and finance costs				(951,798	)
Unrealized loss on interest rate swap				(117,965	)
Interest income				404,409
Foreign currency losses				(3,511	)

		Net Income	$	461,764

Income allocable to Class B common shares				(259,036	)
Income available to Class A common shares			$	(202,728	)

Earnings per Class A common share, basic			$	0.14
Earnings per Class A common share, diluted			$	0.14
Earnings per Class B common share, basic and diluted			$	0.00
Weighted average number of Class A common shares, basic				1,441,887
Weighted average number of Class A common shares, diluted				1,442,639
Weighted average number of Class B common shares, basic and diluted				1,842,381
BALANCE SHEET DATA			As of December 31, 2006
Current assets, including cash			$	33,410,044
Total assets				188,239,859
Current liabilities				4,249,625
Long-term debt				77,437,500
Obligations for warrants				10,266,969
Shareholders' equity				96,285,765
Net cash provided by operating activities			$	1,621,892
Net cash used in investing activities				(155,355,447	)
Net cash provided by financing activities				186,065,403
FLEET DATA
Average number of vessels(2)				0.74
Total voyage days for fleet(3)				185
Total calendar days for fleet(4)				185
Fleet utilization(5)				100%

(1): We paid salaries and consulting fees to our senior management and remuneration to our non-executive directors that in total amounted $175,627 for the year ended December 31, 2006. The share based compensation from inception (April 26, 2006) through December 31, 2006 amounted to $1,476,717 and is included in the general and administrative expenses.
(2): Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
(3): Total voyage days for fleet are the total days the vessels were in our possession for the relevant period net of off hire days associated with major repairs, drydocks or special or intermediate surveys.
(4): Calendar days are the total days the vessels were in our possession for the relevant period including off hire days associated with major repairs, drydockings or special or intermediate surveys.
(5): 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.
(6): Time charter equivalent, or TCE, is a measure of the average daily revenue performance of the vessels in our fleet. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage net revenue less 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 used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.
(7): Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
(8): Daily general and administrative expense is calculated by dividing general and administrative expense by fleet calendar days for the relevant time period.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of our financial condition and results of operations for the period April 26, 2006 (the date of our incorporation) to December 31, 2006. You should read the following discussion and analysis together with the financial statements and related notes included elsewhere in this prospectus. This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements. For a discussion of some of those risks and uncertainties, see the sections of this prospectus entitled "Forward-Looking Statements" and "Risk Factors."

Overview

We are a recently-formed, private company incorporated in the Republic of the Marshall Islands on April 26, 2006, accordingly we have a limited history of operations. We are a provider of international seaborne transportation services, carrying various drybulk cargoes including among others, iron ore, coal, grain, bauxite, phosphate and fertilizers. As of December 31, 2006 our fleet consisted of four drybulk vessels, comprised of three panamax and one handymax drybulk carriers, with a total carrying capacity of 265,085 deadweight tons, or dwt. The Blue Seas and the Deep Seas were delivered to our affiliate entities Icon Shipping Limited & Elegance Shipping Limited in October of 2006, the Kind Seas and the Calm Seaswere delivered to us in December of 2006.

In October and December 2006 we agreed to acquire two additional handymax drybulk carriers. These two vessels were delivered to us on January 8^th and 10^th 2007, respectively. As of January 10, 2007 our fleet consisted of three panamax and three handymax drybulk carriers with a total carrying capacity of 354,947 dwt.

Vessel Management

Allseas is responsible for all commercial and technical management functions for the fleet. Allseas is an affiliate of our founder and chief executive officer, Michael Bodouroglou.

We primarily employ our vessels on time or period charters. We may also employ our vessels in the spot charter market, on voyage charters or trip time charters, which generally last from 10 days to three months. A spot market voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed upon total amount. Under spot market voyage charters, we pay voyage expenses such as port, canal and fuel costs. A spot market trip time charter and a period time charter are generally contracts to charter a vessel for a fixed period of time at a set daily rate. Under trip time charters and period time charters, the charterer pays voyage expenses such as port, canal and fuel costs. Whether our drybulk carriers are employed in the spot market or on time charters, we pay for vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs. We are also responsible for each vessel's intermediate and special survey costs.

Future Results of Operations

Our revenues consist of earnings under the charters that we employ our vessels on. We believe that the important measures for analyzing trends in the results of our operations consist of the following:

•: Calendar days. We define calendar days as the total number of days in a period during which each vessel in our fleet was owned including off-hire days associated with major repairs, drydockings or special or intermediate surveys. Calendar days are an indicator of the size of the

fleet over a period and affect both the amount of revenues and the amount of expenses that are record during that period.

•: Voyage days. We define voyage days as the total number of days in a period during which each vessel in the fleet was owned net of off-hire days associated with major repairs, drydockings or special or intermediate surveys. The shipping industry uses voyage days (also referred to as available days) to measure the number of days in a period during which vessels actually generate revenues.
•: Fleet utilization. We calculate fleet utilization by dividing the number of voyage days during a period by the number of calendar days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades, drydockings or special or intermediate surveys.
•: Charter contracts. 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 bunkers (fuel) expenses, but the vessel owner pays the vessel operating expenses and commissions on gross voyage revenues. In the case of a spot market charter, the vessel owner pays both voyage expenses (less specified amounts, if any, covered by the voyage charterer), commissions on gross revenues and vessel operating expenses. Time charter rates are usually fixed during the term of the charter. Prevailing time charter rates fluctuate on a seasonal and year to year basis and may be substantially higher or lower from a prior time charter contract when the subject vessel is seeking to renew that prior charter or enter into a new charter with another charterer. Fluctuations in charter rates 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. Fluctuation in time charter rates are influenced by changes in spot charter rates.

Lack of Historical Operating Data for Vessels Before their Acquisition

Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, neither we nor our affiliated entities conduct any historical financial due diligence process when we acquire vessels. Accordingly, neither we nor our affiliated entities have obtained the historical operating data for the vessels from the sellers because that information is not material to our decision to make acquisitions, nor do we believe it would be helpful to potential investors in assessing our business or profitability. Most vessels are sold under a standardized agreement, which, among other things, provides the buyer with the right to inspect the vessel and the vessel's classification society records. The standard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating data of the vessel. Prior to the delivery of a purchased vessel, the seller typically removes from the vessel all records, including past financial records and accounts related to the vessel. In addition, the technical management agreement between the seller's technical manager and the seller is automatically terminated and the vessel's trading certificates are revoked by its flag state following a change in ownership.

Consistent with shipping industry practice, we treat the acquisition of vessels, (whether acquired with or without charter) from unaffiliated parties as the acquisition of an asset rather than a business. Although vessels are generally acquired free of charter, we may, in the future, acquire some vessels with time charters attached. Where a vessel has been under a voyage charter, the vessel is delivered to the buyer free of charter, and it is rare in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as the first charterer of the vessel in the hands of the buyer. In most cases, when a vessel is under time charter and the buyer wishes to assume that charter, the vessel cannot be acquired without the charterer's consent and the buyer's entering into a separate direct

agreement with the charterer to assume the charter. The purchase of a vessel itself does not generally transfer the charter, because it is a separate service agreement between the vessel owner and the charterer.

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

•: obtain the charterer's consent to us as the new owner;
•: obtain the charterer's consent to a new technical manager;
•: obtain the charterer's consent to a new flag for the vessel;
•: arrange for a new crew for the vessel;
•: replace all hired equipment on board, such as gas cylinders and communication equipment;
•: negotiate and enter into new insurance contracts for the vessel through our own insurance brokers;
•: register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;
•: implement a new planned maintenance program for the vessel; and
•: ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.

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

Our business is comprised of the following main elements:

•: employment and operation of our vessels; and
•: management of the financial, general and administrative elements involved in the conduct of our business and ownership of our vessels.

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

•: vessel maintenance and repair;
•: crew selection and training;
•: vessel spares and stores supply;
•: contingency response planning;
•: onboard safety procedures auditing;
•: accounting;
•: vessel insurance arrangement;
•: vessel chartering;
•: vessel hire management;
•: vessel surveying; and
•: vessel performance monitoring.

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

•: management of our financial resources, including banking relationships, such as the administration of bank loans and bank accounts;
•: management of our accounting system and records and financial reporting;
•: administration of the legal and regulatory requirements affecting our business and assets; and
•: management of the relationships with our service providers and customers.

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

•: rates and periods of charter hire;
•: levels of vessel operating expenses;
•: depreciation expenses;
•: financing costs; and
•: fluctuations in foreign exchange rates.

Time Charter Revenues

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

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

Time Charter Equivalent (TCE)

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

The average daily TCE rate for the fleet of four vessels acquired and delivered as of December 31, 2006 was $25,460.

Vessel Operating Expenses

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

Depreciation and Amortization

We depreciate our vessels on a straight-line basis over their estimated useful lives determined to be 25 years from the date of their initial delivery from the shipyard. Depreciation is based on cost less estimated residual value. We defer the total costs associated with a drydocking and amortize these costs on a straight-line basis over a period of 30 months, which generally coincides with the relevant certificates obtained from the classification societies.

Period from inception (April 26, 2006) through December 31, 2006

•: As of December 31, 2006 we had four vessels operating in our fleet namely: "Deep Seas", "Blue Seas", "Calm Seas" and "Kind Seas" delivered in 2006. The analysis that follows is a result of the delivery of these four vessels.
•: Time charter revenues—Time charter revenues for the period from inception (April 26, 2006) through December 31, 2006 was $4,949,426 as a result of the delivery of four vessels. After deducting commissions of $220,266 we derive at net revenue of $4,729,160.
•: Voyage expenses—Voyage expense excluding commissions, which primarily consists of port, canal and fuel costs that are unique to a particular voyage which would otherwise be paid by the charterer under a timecharter contract, as well as commissions for the period from inception (April 26, 2006) through December 31, 2006, amounted to $18,970.
•: Vessel operating expenses—Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, for the period from inception (April 26, 2006) through December 31, 2006 amounted to $559,855.
•: Management fees charged by a related party—The Company was charged a management fee by Allseas Marine SA of $650 per day per vessel, according to the management agreement for the management services provided since the delivery of vessels to the Company. Those fees amounted to $14,950. In addition, $950 per day per vessel was charged for two vessels, that were initially delivered to an affiliate company for 78 and 86 days respectively, until their final delivery to the Company. That resulted in $155,800 management fees and in total the management fees for the period from inception (April 26, 2006) through December 31, 2006 amounted to $170,750.
•: Depreciation—Depreciation includes depreciation of vessels, for the period from inception (April 26, 2006) through December 31, 2006 amounted to $1,066,527.
•: General and administrative expenses—General and administrative expenses includes the share based compensation from inception (April 26, 2006) through December 31, 2006 amounted to $1,476,717. In addition, the cost of remuneration to directors and officer, legal, audit and other expenses incurred for the establishment and in the operation of the Company, amounted to $305,712.
•: Interest and finance costs—Interest and finance cost for the period from inception (April 26, 2006) through December 31, 2006 amounted to $951,798.
•: We anticipate that all of the foregoing expenses will increase in 2007 primarily as a result of all six vessels within our fleet operating for a full year.

•: Unrealized loss on interest rate swap—Unrealized loss on interest rate swap represent the fair value of interest rate swap for the period from inception (April 26, 2006) through December 31, 2006 amounted to $117,965.
•: Interest income—Interest income for the period from inception (April 26, 2006) through December 31, 2006 was $404,409.
•: Foreign currency losses—We incurred a $3,511 foreign currency loss for the period from inception (April 26, 2006) through December 31, 2006.
•: Net income—Net income for the period from inception (April 26, 2006) through December 31 amounted to $461,764.

Conversion Feature of Class B Common Shares

The Company's Class B common shares, which are all held by Innovation Holdings S.A., an entity beneficially owned by Mr. Bodouroglou, our founder and CEO, along with family members, will automatically convert, on a one-for-one basis, into Class A common shares upon the successful completion of a future public offering raising at least $50 million in gross proceeds or the occurrence of a change in control (as defined in the Amended and Restated Articles of Incorporation). The number of Class B Common Shares that will be converted into Class A Common Shares will be reduced by one percentage point of the aggregate outstanding Class A and Class B Common Shares (excluding the 186,656 Class A Common Shares that were issued to the initial purchasers in connection with the private placement) subject to a total reduction of up to five percentage points, or 741,954 Class B Common Shares, for each 30-day period beginning 180 days after the closing of the private placement that a registration statement relating to an exchange offer for the units sold to investors in the private placement has not been declared effective by the Commission, or in the case of a shelf registration statement, the Company has not complied with its obligation to use its commercially reasonable efforts to file and cause the shelf registration to be declared effective. Any Class B Common Shares not converted into Class A Common Shares shall be cancelled and any accrued but unpaid dividends thereon will be forfeited.

The conversion feature of the Class B common shares represents share-based compensation expense to Michael Bodouroglou for his services as an employee of the Company in ensuring timely registration of the Class A common shares issued through the private placement and the successful completion of a future public offering raising at least $50 million in gross proceeds. In this regard, there are two share-based payments awards—one attributable to the 1,738,588 outstanding Class B common shares on November 21, 2006 (date of the private placement) after adjustment for the 15% provision, and the second one on December 18, 2006 for the issuance of the 246,700 Class B common shares.

In determining the compensation expense attributable to the conversion feature, we utilized the fair value of our Class B common shares based on the fact that substantially all of the value of our Class B common shares is inherent in the conversion feature. Without the conversion feature, the Class B common shareholders would not be entitled to voting rights nor receive dividends. We valued the Class B common shares using the fair value of our Class A common shares of $9.11 per share. We determined the fair value of our Class A common shares by deducting the fair value of ¹/5 of one warrant of $.89 (see Note 12) from the $10 price per unit in our private placement. In estimating the value of the Class B shares, we did not consider the probability of occurrence of the successful completion of a future public offering raising at least $50 million in gross proceeds in accordance with paragraph 48 of SFAS No. 123(R). Accordingly, we have measured the maximum compensation expense to be recorded to be $18.25 million ($9.11 × 2,003,288 shares). This amount may be reduced on a graduated basis by up to $6.76 million ($9.11 × 741,954 shares) depending on the amount of time that passes before the successful registration of the Class A common shares issued in the private placement.

Additionally, since the conversion of Class B common shares to Class A common shares will only occur upon the successful completion of a future public offering raising at least $50 million in gross proceeds, we will not recognize any compensation expense until such public offering occurs.

Liquidity and Capital Resources

Our principal source of funds is equity provided by our shareholders, expected operating cash flows and long-term borrowings. Our principal use of funds are capital expenditures to establish and grow our fleet, maintain the quality of our drybulk carriers, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, make principal repayments on outstanding loan facilities, and pay dividends. We expect to rely upon operating cash flows, long-term borrowings, as well as future equity offerings to implement our growth plan. If we do not acquire any additional vessels beyond the initial fleet, we believe that our forecasted operating cash flows will be sufficient to meet our liquidity needs for the next two to three years assuming the charter market does not deteriorate to the low rate environment that prevailed subsequent to the Asian financial crisis in 1999. If we do acquire additional vessels, we will rely on new debt, proceeds from future equity offerings and revenues from operations to meet our liquidity needs going forward.

Our practice will be to acquire drybulk vessels using a combination of funds received from equity offerings and bank debt secured by mortgages on our drybulk vessels. Our business is capital intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition of newer drybulk vessels and the selective sale of older drybulk vessels. These acquisitions will be principally subject to management's expectation of future market conditions as well as our ability to acquire drybulk carriers on favorable terms. We have entered into a senior secured credit facility with HSH Nordbank for $108.25 million to fund a portion of the acquisition cost of our initial fleet. See "Business—Senior Secured Credit Facility."

Our dividend policy will also impact our future liquidity position. We currently intend to pay quarterly dividends in amounts that are substantially equal to our available cash from operations during the previous quarter, after expenses and any reserves that our board of directors determines we should maintain for reinvestment in our business. We expect that our funds on hand will be sufficient to meet our needs over the next twelve months.

The Warrants currently attached to our Class A Common Shares will be detached from our Class A Common Shares and become freely tradable upon the registration of our Class A Common Shares and Warrants pursuant to a registration statement. The Warrants, as amended on May 7, 2007, may be exercised for payment of an exercise price of $10.00 per Class A Common Share. However, there is no obligation on the holder of a Warrant to do so.

Cash Flows

•: There was $32,331,848 in cash at December 31, 2006. Working capital is current assets plus other assets minus current liabilities. Working capital surplus was 29,536,314, as of December 31, 2006, primarily as a result of the $32,331,848 in cash and cash equivalents which includes part of the proceeds from the private placement and over allotment.
•: Net cash from operating activities—was $1,621,892. This is primarily attributable to net income of $461,764, a decrease in trade accounts payables, deferred income, an increase in dues to the management company and accrued expenses and mitigated by other receivables, inventories and to other assets.
•: Net cash used in investing activities—was $155,355,447, which mainly reflects the acquisition of the four vessels and deposits placed for the remaining two vessels that were delivered in

January 2007, mitigated by the deferred revenue from the valuation of the charter agreement attached, to one of the vessels acquired in 2006.

•: Net cash from financing activities—was $186,065,403, which is a result of the net proceeds received from the private placement and the senior secured credit facility, mitigated by deferred financing costs.

Senior Secured Credit Facility

We have entered into a senior secured credit facility with HSH Nordbank AG for an amount of $109.5 million, of which we drew down an amount of $108.25 million with a term of 3.5 years. The senior secured credit facility is secured by a first priority mortgage on our vessels as well as a first assignment of all earnings, insurances and cross default with each of our vessel owning subsidiaries, and contains financial and other covenants and conditions to draw downs. Our senior secured credit facility does not prohibit us from paying dividends so long as an event of default has not occurred and we are not, and after giving effect to the payment of the dividend would not be, in breach of a covenant. We will undertake tests of the financial covenants contained in our senior secured credit facility each calendar quarter and on each dividend payment date. Please see "Business—Senior Secured Credit Facility," below, for additional information regarding our senior secured credit facility.

Quantitative and Qualitative Disclosure of Market Risk

Interest Rate Risk

The international 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 senior secured credit facility contains an interest rate that fluctuates with the London inter-bank offered rate, or LIBOR. Increasing interest rates could adversely impact future earnings. We drew down $108.25 million under our senior secured credit facility to fund a portion of the purchase price of our initial fleet.

The senior secured credit facility agreement requires us to enter into an interest rate swap or similar hedging arrangements to hedge at least 50% of the balance borrowed under the credit facility through the maturity of the debt. On December 21, 2006 we entered into an interest rate collar derivative with HSH Nordbank. The terms of the derivative are: if 3 month LIBOR is greater than 6% we pay 6%. If 3 month LIBOR is between 4.11% and 6% we pay 3 month LIBOR. If 3 month LIBOR is equal to or less than 4.11% we pay 4.11%. The term of the derivative is 3.5 years and coincides with the maturity of the senior secured credit facility.

Our interest expense under our senior secured credit facility is affected by changes in the general level of interest rates. As an indication of the extent of our sensitivity to interest rate changes, an increase of 100 basis points would result in an increase of $1.08 million in annual payments.

Foreign Exchange Rate Risk

We generate all of our consolidated revenues in U.S. dollars. However, we incur some of our consolidated expenses in other currencies, in particular the Euro. The amount and frequency of some of these expenses (such as vessel repairs, supplies and stores) may fluctuate from period to period. Depreciation in the value of the U.S. dollar relative to other currencies will increase the U.S. dollar cost to us of paying such expenses. The portion of our business conducted in other currencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations.

Capital Expenditures

Our capital expenditures have thus far related solely to the purchase of the vessels in our initial fleet. We funded the aggregate purchase price of our initial fleet with a portion of the net proceeds of

the private placement, the over allotment and the proceeds from the sale of units to Innovation Holdings upon closing of our private placement and the delivery dates of the Blue Seas and the Deep Seas, together with a draw down of $108.25 million under our senior secured credit facility.

Contractual Obligations

The following table presents our contractual obligations as of December 31, 2006:

		Payments due by period
Obligations		Total contractual obligations	1 year	2–3 years	4–5 years	More than 5 years
		(in thousands of U.S. dollars)
Senior Secured Credit Facility(1)		77,438	0	0	77,438	0
Management Agreements(2)		5,764	1,186	2,376	2,202	0
Rental Agreements(3)		7	7	0	0	0
Vessel purchase agreements		58,350	58,350	0	0	0
Interest Payments(1)		16,940	4,840	9,680	2,420	0

	Total	158,499	64,383	12,056	82,060	0

(1): On December 18, 2006 we entered into a loan agreement with a HSH Nordbank that, subject to certain conditions, provided us with an amount of up to $95.3 million. On January 9, 2007 the loan agreement was supplemented to include the part finance of an additional vessel and an increase in the loan amount of $109.5 million.
: During December 2006 and January 2007, we drew down $108.25 million, in the aggregate, under our senior secured credit facility to fund a portion of the aggregate purchase price of the vessels in our initial fleet. Interest Payments refer to our expected interest payments over the debt based on an interest rate of 6.25%.
(2): The vessels in our initial fleet entered into management agreements with Allseas upon their delivery to us. Each of the management agreements has a five-year renewable term. The agreements will be terminable upon the occurrence of certain events as specified in the agreements and will not be subject to any severance payable by us upon termination. The amounts indicated in the above table are the minimum contractual obligations based on a management fee of $650 per day, per vessel, exclusive of an additional fee of 1.25% of gross revenues which will be paid to Allseas. The fixed management fee of $650 per day per vessel is based on a Euro/U.S. dollar exchange rate of 1.268:1.00. The management fee will be adjusted quarterly based on the Euro/U.S. dollar exchange rate as published by EFG Eurobank Ergasias S.A. two days prior to the end on the previous calendar quarter. The management agreements also provide for an annual inflationary increase based on the official Greek inflation rate (as published by the Greek National Statistical Office) for the previous year. Management does not believe that these amendments will impact our future results of operations in any material respect. We will also pay Allseas a fee equal to 1.0% of the purchase price of any vessel bought or sold on our behalf, calculated in accordance with the relevant memorandum of agreement, with the exception of the two vessels in our initial fleet we have entered agreements to acquire from entities affiliated with our founder and chief executive officer, Michael Bodouroglou.
(3): We lease office space in Athens, Greece. The term of the lease that was originally expiring on September 30, 2006 has been extended to September 30, 2007. at a rate of 7,200 Euros per year assuming a Euro/U.S. dollar exchange rate of 1.268:1.00.

Inflation

We do not expect inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.

Off-Balance Sheet Arrangements

As of the date of this prospectus, we do not have any off-balance sheet arrangements.

Subsequent Events

Since December 31, 2006 the following subsequent events occurred:

•: Vessel Acquisitions from Unaffiliated Third-Parties: We entered into two separate memoranda of agreement with unaffiliated third parties on October 13, 2006 and on December 22, 2007 for the acquisition of two dry-bulk vessels for $58.35 million, in the aggregate, which were delivered on January 08, 2007 and on January 10, 2007. We funded the acquisition cost with drawings under our senior secured credit facility and the proceeds of our private placement. Upon delivery, the vessels were provided as collateral to secure the senior secured credit facility.
•: Senior Secured Credit Facility: On January 9, 2007 our senior secured credit facility was supplemented to include the partial financing of Crystal Seas and an increase in the facility to $109.5 million. At dates coinciding with the delivery of the vessels in (a) above, and pursuant to our senior secured credit facility, we drew an amount of $108.25 million in total to fund a portion of the acquisition of all six vessels.
•: Amendment in Warrants' Exercise Features: The Company and the majority of the Warrant Holders agreed to amend the exercise features of the Warrants on May 7, 2007; which agreement is binding to all Warrant Holders. The Warrants, as amended, may only be exercised through physical settlement, removing the prior exercise terms which allow the Warrant Holders to receive Class A Common Shares with an aggregate market value equal to the difference between such market value per Class A Common Share and the $10.00 exercise price of the Warrant (or such lesser amount of the exercise price as set forth in the Warrant Agreement) multiplied by the number of such Class A Common Shares, or at the Warrant Holders' option, the cash equivalent thereof (see Note 12).

As a result of the foregoing amendment, the obligations for warrants will be reclassified into permanent equity as of the amendment date since the warrants, as amended, no longer allow net cash or net share settlement. Additionally, any future changes in the fair value of the warrants will not be recognized in the financial statements.

•: Contingent compensation awards: On May 15, 2007, the Company's board of directors approved a conditional compensation award to the directors, executive officers and certain employees of Allseas consisting of an aggregate 46,500 restricted shares, 50% of which would vest one year after issuance, and the balance of which would vest on the second anniversary of issuance and an aggregate payment of Euro 1.07 million to the Company's senior executive officers. The granting of any portion of the restricted shares and the payment of Euros is contingent upon the completion of a successful public offering resulting in gross proceeds to us of at least $50 million.

Leases

We lease office space in Athens, Greece. The initial term of our lease was expiring on September 30, 2006 and has been extended to September 30, 2007 at a rate of 7,200 Euros per year.

Critical Accounting Policies

Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies that will involve a high degree of judgment and the methods of their application. For a description of all of our significant accounting policies that we have adopted, see Note 2 to our financial statements.

Impairment of long-lived assets. We review for impairment long-lived assets (namely our vessels) held and used or disposed of whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss for an asset held for use should be recognized when the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount. In developing estimates of future cash flows, we will make assumptions about future charter rates, vessel operating expenses, and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations. Measurement of the impairment loss if any will be based on the appraised fair value of the asset. We regularly review our vessels for impairment on a vessel by vessel basis. The carrying values of our vessels may not represent their fair value, as determined by third party valuations, at any point in time since the market prices of secondhand 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.

Deferred drydock costs. Vessels are required to be drydocked for major repairs and maintenance that cannot be performed while the vessel is operating approximately every 30 months. Costs associated with drydocks as they are incurred are deferred and amortized on a straight line basis over the period between drydocks. Costs deferred as part of the drydock include certain actual costs incurred at the drydock yard solely as a result of the regulatory requirement to have the vessels inspected, including but not limited to, services for vessel preparation, coating, steelworks, piping works and valves, machinery works and electrical works. Routine repair and maintenance costs incurred at the dry-docking yard are expensed. We believe that these criteria are consistent with industry practice, and that the policy of deferment reflects the economics and market values of the vessels

Vessel lives. The value of vessels is recorded at their respective costs (which include acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation. Vessels are depreciated on a straight-line basis over their estimated useful lives, after taking into account their respective estimated residual values, calculated at $150 per lightweight ton. Vessels are depreciated on an estimated useful life of 25 years for our drybulk carriers from the date of their initial delivery from the shipyard to their original owners. However, the basis which estimates the remaining useful lives of the vessels may change as a result of new regulations that may be imposed by the International Maritime Organization in the future. Acquired secondhand vessels are depreciated from the date of their acquisition over their remaining estimated useful life. A decrease in the useful life of the vessel or in the residual value would have the effect of increasing the annual depreciation charge.

Revenue recognition. Revenues are generated from the hire that we receive under time or period charters, although we may also generate revenues from freights in respect of voyage charters that we may enter. Time charter revenues are recognized over the term of the charter as service is provided. Under a voyage charter, the revenues are recognized ratably over the duration of the voyage from load port to discharge port. The relevant voyage costs are recognized as incurred. Probable losses on voyages are provided for in full at the time such losses become apparent and can be estimated. A voyage is deemed to commence upon the issuance of notice of readiness at the loading port and is deemed to end upon the completion of discharge of the current cargo. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated

time in the voyage charter and is recorded when earned. Vessel operating expenses are accounted for on the accrual basis.

Derivatives. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value, with changes in the derivatives' fair value recognized currently in earnings unless specific hedge accounting criteria are met.

Share-based Compensation. On December 16, 2004, Statement of Financial Accounting Standards No. 123 (revised 2004) ("SFAS No. 123(R)"), "Share-Based Payment," was issued. SFAS No. 123(R) is a revision of SFAS No. 123 and supersedes APB No. 25. The approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company early adopted SFAS No. 123(R).

In the year ended December 31, 2006 the Company issued restricted stock under its 2006 Stock Incentive Plan. Restricted stock is issued on the grant date and is subject to forfeiture under certain circumstances. All restricted stock currently outstanding is subject to forfeiture only if employment is not continued through the vesting date. The Company pays dividends on all restricted stock, regardless of whether it has vested and there is no obligation of the employee to return the dividend when employment ceases.

SFAS No. 123(R) describes two generally accepted methods of accounting for restricted stock awards with a graded vesting schedule for financial reporting purposes: 1) the "accelerated method", which treats an award with multiple vesting dates as multiple awards and results in a front-loading of the costs of the award and 2) the "straight-line method" which treats such awards as a single award and results in recognition of the cost ratably over the entire vesting period.

Management has selected the straight-line method with respect to the restricted stock because it considers each restricted stock award to be a single award and not multiple awards, regardless of the vesting schedule. Additionally, the "front-loaded" recognition of compensation cost that results from the accelerated method implies that the related employee services become less valuable as time passes, which management does not believe to be the case.

Recent accounting pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections, a Replacement of APB Opinion No. 20 and FAS 3" ("SFAS 154"). SFAS 154 requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable. APB Opinion No. 20, "Accounting Changes", previously required most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 is effective for the Company as of December 31, 2006, and did not have a material impact on the Company's financial statements.

In September, 2006 the FASB issued SFAS No. 157, "Fair Value Measurement" ("SFAS 157"). SFAS 157 addresses standardizing the measurement of fair value for companies that are required to use a fair value measure of recognition for recognition or disclosure purposes. The FASB defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure date." SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact, if any, of SFAS 157 on its financial position, results of operations and cash flows.

In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), which supplements SFAS No. 109, "Accounting for Income Taxes", by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is "more-likely-than-not" to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized.

Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. The Company estimates that this statement will not have a significant impact on its financial position.

In September 2006, the FASB Staff issued FSP No. AUG AIR-1, "Accounting for Planned Major Maintenance Activities," ("FSP No. AUG AIR-1"). FSP No. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods, if no liability is required to be recorded for an asset retirement obligation based on a legal obligation for which the event obligating the entity has occurred. FSP No. AUG AIR-1 also requires disclosures regarding the method of accounting for planned major maintenance activities and the effects of implementing the FSP. The guidance in FSP No. AUG AIR-1 is effective for the Company as of January 1, 2007 and will be applied retrospectively for all financial statements presented. No planned major maintenance activities took place during the period from inception (April 26, 2006) to December 31, 2006. The adoption of FSP No. AUG AIR-1 will not have a material impact on the financial position, results of operation or cash flows of the Company.

On September 13, 2006, the SEC released staff accounting bulleting ("SAB") No. 108, which provides guidance on materiality. SAB No. 108 states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement, contains guidance on correcting errors under the dual approach, and provides transition guidance for correcting errors existing in prior years. If prior-year errors that had been previously considered immaterial (based on the appropriate use of the registrant's prior approach) now are considered material based on the approach in the SAB, the registrant need not restate prior period financial statements. SAB No. 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. This statement is effective for the Company for the fiscal year ending December 31, 2006. SAB No. 108 did not have a material effect on the financial position and results of operations of the Company.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"), which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Earlier adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, "Fair Value Measurements." The Company is currently evaluating the impact of SFAS 159, but does not expect the adoption of SFAS 159 to have a material impact on its financial consolidated position, results of operations or cash flows.

INDUSTRY

The information and data in this section relating to the international dry bulk shipping industry has been provided by Drewry Shipping Consultants (Drewry), and is taken from Drewry databases and other sources available in the public domain. Drewry has advised us that it accurately describes the international dry bulk shipping industry, subject to the availability and reliability of the data supporting the statistical and graphical information presented. Drewry's methodologies for collecting information and data, and therefore the information discussed in this section, may differ from those of other sources, and does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the dry bulk shipping industry. The source of all tables and charts is Drewry unless otherwise indicated.

Introduction

The marine industry is a vital link in international trade, with oceangoing vessels representing the most efficient, and often the only means of transporting large volumes of basic commodities and finished products. Seaborne cargo is categorized as dry cargo or liquid cargo. Dry cargo includes dry bulk cargo, container cargo and non container cargo. Container cargo is shipped in 20 or 40 foot containers and includes a wide variety of finished products. Non-container cargo includes other dry cargo that cannot be shipped in a container due to size, weight or handling requirements, such as large manufacturing equipment or large industrial vehicles. Liquid cargo, includes crude oil, refined oil products, liquefied gases, chemicals and associated products, all of which are shipped in tankers.

In 2006, approximately 4.52 billion tons of dry cargo was transported by sea, of which dry bulk cargo accounted for 2.77 billion tonnes. The following table presents the breakdown of the global trade by type of cargo in 2006:

World Seaborne Trade—2006*

			Tons (Millions)	% Total Seaborne Trade
All Cargo
	Dry Cargo		4,508	55.4
	Liquid Cargo		3,627	44.6
	Total		8,135	100.0
Dry Cargo
	Dry Bulk		2,765	34.0
		Major Bulks	1,681	20.7
		Coal	699	8.6
		Iron Ore	723	8.9
		Grain	262	3.2
		Minor Bulks	1,081	13.3
	Container Cargo		1,170	14.4
	Non Container/General Cargo		573	7.0
	Total		4,508	55.4

=* Provisional
Source: Drewry

Dry bulk cargo can be further defined as either major bulk cargo or minor bulk cargo, all of which is shipped in bulk carriers. Major bulk cargo includes, among other things, iron ore, coal and grain. Minor bulk cargo includes agricultural products, mineral cargo (including metal concentrates), cement, forest products and metal products. Dry bulk cargo is normally shipped in large quantities and can be easily stowed in a single hold with little risk of cargo damage.

Dry Bulk Carrier Demand

The demand for dry bulk carriers is determined by the volume and geographical distribution of seaborne dry bulk trade, which in turn is influenced by trends in the global economy. During the 1980s and 1990s seaborne dry bulk trade increased by slightly more than 2% per annum. However, between 2001 and 2006, seaborne dry bulk trade increased from 2.14 to 2.77 billion tons, an increase of 29%.

The following chart illustrates the changes in seaborne trade between the major and minor bulks in the period 2000 to 2006.

Dry Bulk Trade Development
(Million tons)

P = provisional
Source: Drewry

The international drybulk sector provides seaborne transportation of certain dry commodities in bulk form used in many basic industries and in construction. The most important of these are iron ore, coal and grain (includes wheat, coarse grains and soybeans) which together account for an estimated 61% in 2006 of total drybulk seaborne trade and are referred to as major bulks. Other key cargoes, referred to as minor bulks, include agricultural products (e.g. fertilizers), steel products, forest products, metals, cement, and a wide range of other minerals such as petcoke, bauxite, alumina and phosphate rock. Shipping companies provide seaborne transportation to customers that include power utilities, steelmakers, grain houses, commodity traders and government agencies. Seaborne drybulk trade growth has increased substantially in recent years.

There are certain main trading routes for major drybulk commodities between exporting and consuming regions. Coal is mainly shipped from Australia and Canada to the Far East and Europe, whereas iron ore is mainly shipped from Australia and Brazil to China, Japan and Europe. Grain is mainly shipped from the U.S. Gulf, Brazil or Argentina to Europe and the Far East.

Drybulk Carrier Seaborne Trade

Metric Tons (millions)	2001	2002	2003	2004	2005	2006P
Coal	565	570	619	650	675	699
Iron Ore	452	484	524	587	660	723
Grain	235	245	240	248	253	262
Minor Bulks	890	920	957	1,002	1,041	1,081

Total	2,142	2,219	2,340	2,487	2,629	2,765

Ton Miles (billions)	2001	2002	2003	2004	2005	2006P
Coal	2,532	2,531	2,852	3,319	3,565	3,707
Iron Ore	2,580	2,741	3,050	3,463	3,905	4,250
Grain	1,319	1,218	1,251	1,277	1,301	1,347
Minor Bulks	3,292	3,481	3,610	3,831	3,992	4,238

Total	9,723	9,971	10,763	11,890	12,763	13,542

Annual Growth Rates		2001		2002		2003		2004		2005		2006P
Metric Tons		1.6	%	3.6	%	5.5	%	6.3	%	5.7	%	5.1	%
Ton Miles		1.2	%	2.6	%	7.9	%	10.5	%	7.3	%	6.1	%

P = Provisional
Source: Drewry

Iron ore

Iron ore is used as a raw material for the production of steel, along with limestone and coking (or metallurgical) coal. Steel is the most important construction and engineering material in the world. In 2006 approximately 723 million tons of iron ore were exported worldwide, with the main importers being China, the European Union, Japan and South Korea. The main producers and exporters of iron ore are Australia and Brazil.

As the figures below indicate, Chinese imports of iron ore have grown significantly in the last few years and have been a major driving force in the drybulk sector. Chinese iron ore imports for 2006 of 325 million tons increased by approximately 18% over 2005 imports of 275 million tons, and have increased at a compound annual growth rate of 23% since 2001.

This growth rate in iron ore imports is due to increased Chinese steel production. Over the last five years, steel production in China has grown at an average annual rate of almost 23%, compared to global production increasing by an average 6.4% per annum.

Australia and Brazil together account for approximately two thirds of global iron ore exports. Although both have seen strong demand from China, Australia continues to benefit the most, accounting for 30% of every extra ton of iron ore imported by China in 2005 over 2004, compared to a corresponding figure of 20% for Brazil. However, although Brazilian exports to China have grown more slowly, the contribution to ton-mile demand has been greater due to the longer distances between origin and destination. India is also becoming a major exporter of iron ore. Unlike Australia and Brazil, which tend to export primarily in the larger Capesize vessels, much of India's exports are in smaller Panamax and Handymax vessels.

Coal

Coal is an abundant commodity. At current production rates, coal reserves would provide approximately 200 years of supply, compared with 41 years for oil and 67 years for natural gas. In addition, coal is mined in more than 50 countries, with no world dependence on any one region.

Asia's rapid industrial development has also contributed to strong demand for coal, which accounted for roughly a third of the total growth of seaborne drybulk trade between 2000 and 2006. Coal is divided into two categories: thermal (or steam) coal and coking (or metallurgical) coal. Thermal coal is used mainly for power generation. Coking coal is used to produce coke to feed blast furnaces in the production of steel.

Expansion in air-conditioned office and factory space, along with industrial use, has raised demand for electricity, of which nearly half is generated from coal-fired plants, thus increasing demand for thermal coal. In addition, Japan's domestic nuclear power generating industry has suffered from safety problems in recent years, resulting in the temporary closure of a number of nuclear power reactors and leading to increased demand for oil, gas, and coal-fired power generation. Furthermore, the high cost of oil and gas has lead to increasing development of coal fired electricity plants across the world, especially in Asia.

Metallurgical coal accounted for 8% of seaborne trade in 2006. Future prospects are heavily tied to the steel industry. It is used within the blast furnace to impart its carbon into the iron, giving the final steel product more strength and flexibility. Because coking coal is of higher quality than thermal coal (i.e. more carbon and less impurities), its price is higher and its trade more volatile.

Grain

Grains include wheat, coarse grains (corn, barley, oats, rye and sorghum), and oil seeds extracted from different crops such as soybeans and cottonseeds. In general, wheat is used for human consumption, while coarse grains are used as feed for livestock. Oil seeds are used to manufacture vegetable oil for human consumption or for industrial use, while their protein-rich residue is used as a raw material in animal feed.

Total grain production is dominated by the United States. Argentina is the second largest producer, followed by Canada and Australia. In terms of imports, the Asia/Pacific region (excluding Japan) ranks first, followed by Latin America, Africa and the Middle East.

Wheat and coarse grains are primarily used for direct human consumption or as feed for livestock. International trade fluctuates considerably. Grains have a long history of price volatility, government interventionism and weather conditions which strongly impact trade volumes. In 2005, weather had an adverse impact on wheat and corn harvests in many of the world's major growing regions. As a result, production fell roughly 3% from 2004, causing total trade to decline by 1%. Soybean trade has risen rapidly in recent years, as demand for animal feed and vegetable oil has increased. However, demand growth for wheat and course grains is fundamentally linked in the long-term to population growth and rising per capita income. With Asia experiencing rapid economic growth and increasing standards of living, it is expected that meat consumption will increase, leading to rising demand for animal feed.

International trade in grains is dominated by four key exporting regions: North America, South America, Oceania and Europe (including the Former Soviet Union). These regions collectively account for over 90% of global exports. Large importers are typically Asia, North Africa (Egypt), the Middle East and more recently India.

Minor bulks

The balance of drybulk trade, minor bulks, subdivides into two types of cargo. The first type includes secondary bulks or free-flowing cargo, such as agricultural cargoes, bauxite and alumina, fertilizers and cement. Second are the so-called neo-bulks, which include non-free flowing or part manufactured cargo that is principally forest products and steel products including scrap.

Trade in minor bulks constituted approximately 31% of total seaborne trade for drybulk carriers in 2006, in terms of ton miles. The table below shows that compound annual growth for all minor bulks was 2.3%, but those related to the steel and construction industries have grown even faster. Steel scrap trade has grown the fastest, as scrap is the key input for steel makers using the "electric arc furnace" means of production.

Historically, certain economies have acted as the "primary driver" of dry bulk trade. In the 1990s Japan was the driving force, when buoyant Japanese industrial production stimulated demand for imported bulk commodities. More recently China has been the main driver behind the recent increase in seaborne dry bulk trade as high levels of economic growth have generated increased demand for imported raw materials. The following table illustrates China's gross domestic product growth rate compared to that of the United States and the world during the periods indicated.

GDP Growth
(% change)

Years	China	US	World
1981–1985	10.1	2.6	2.4
1986–1990	7.8	2.6	2.8
1991–1995	12	2.3	1.2
1996–2000	8.3	4.1	3.5
2001–2003	7.9	1.9	3.5
2004	10.1	3.9	5.3
2005	10.2	3.2	4.7
2006(p)	10.5	3.3	5.0

P = provisional
Source: Drewry

Chinese Iron Ore Imports
(Million Tonnes)

Year	Imports	% Change
2001	92.5	32.1
2002	111.3	20.3
2003	148.2	33.2
2004	208.1	40.4
2005	275.2	32.2
2006(p)	325.2	18.2

Source: Drewry

The extent to which increases in dry bulk trade have affected demand for dry bulk carriers is shown in estimates of ton-mile demand. Ton-mile demand is calculated by multiplying the volume of cargo moved on each route by the distance of the voyage. The following chart below detail the changes in ton-mile demand for the primary dry bulk commodities.

Ton Mile Demand (Billion ton-miles)

Source: Drewry

Between 2000 and 2006, ton-mile demand in the dry bulk sector increased by 39%, equivalent to an average annual increase of 5.68%. This is however above the long term growth rate in ton mile demand in the dry bulk sector and reflects the rise in long haul movements, especially for commodities such as iron ore. Indeed, total ton mile demand in the major bulks increased from 6,300 to 9,400 billion ton miles between 2000 and 2006, equivalent to an average annual increase of 6.84%.

Annual Changes (%) Dry Bulk Trade and Tonne Mile Demand

Source: Drewry

Dry bulk carriers are one of the most versatile elements of the global shipping fleet in terms of employment alternatives. They seldom operate on round trip voyages and the norm is often triangular or multi-leg voyages. Hence, trade distances assume greater importance in the demand equation and increases in long haul shipments will have greater impact on overall vessel demand. The following map represents the major global dry bulk trade routes.

Major Dry Bulk Seaborne Trade Routes

Source: Drewry

Demand for dry bulk carrier capacity is also affected by the operating efficiency of the global fleet. In recent years the growth in trade has led to port congestion, with ships at times being forced to wait outside port to either load or discharge due to limited supply of berths at major ports. This inefficiency has been a further factor contributing to the general tightness in the market.

Dry Bulk Carrier Supply

The global dry bulk carrier fleet is divided into four categories based on a vessel's carrying capacity. These categories are:

•: Capesize. Capesize vessels have carrying capacities of more than 100,000 deadweight tons (dwt). These vessels generally operate along long haul iron ore and coal trade routes. Only the largest ports around the world possess the infrastructure to accommodate vessels of this size.
•: Panamax. Panamax vessels have a carrying capacity of between 60,000 and 100,000 dwt. These vessels carry coal, grains, and, to a lesser extent, minor bulks, including steel products, forest products and fertilizers. Panamax vessels are able to pass through the Panama Canal, making them more versatile than larger vessels.
•: Handymax. Handymax vessels have a carrying capacity of between 30,000 and 60,000 dwt. These vessels operate on a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks. Vessels below 60,000 dwt are sometimes built with on-board cranes enabling them to load and discharge cargo in countries and ports with limited infrastructure.
•: Handysize. Handysize vessels have a carrying capacity of up to 30,000 dwt. These vessels carry exclusively minor bulk cargo. Increasingly, ships of this type operate on regional trading routes. Handysize vessels are well suited for small ports with length and draft restrictions that may lack the infrastructure for cargo loading and unloading.

In April 2007, the world fleet of drybulk carriers consisted of 6,509 vessels, totaling almost 375 million dwt in capacity. The average age of drybulk carriers in service is approximately 15 years. It should be noted, however, that these figures are based on pure drybulk carriers, and exclude a small number of combinations carriers.

The following tables present the world drybulk carrier fleet and orderbook by size category as of April 2007.

Drybulk Carrier Fleet—April 2006

Size Category	Deadweight Tons	Number of Vessels	% of Total Fleet (number)		Total Capacity (million dwt)	% of Total Fleet (dwt)
Capesize	100,000 <	720	11.1		123.2	32.9
Panamax	60,000–99,999	1,425	21.9		103.8	27.7
Handymax	30,000–59,999	2,447	37.6		105.3	28.1
Handysize	10,000–29,999	1,917	29.5		43.4	11.6

Total		6,509	100.0	%	374.8	100.0	%

Source: Drewry

The supply of drybulk carriers is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss. As of April 2007, the global drybulk orderbook amounted to 110.0 million dwt, or 29.3% of the existing drybulk fleet, with most vessels on the orderbook scheduled for delivery within 36 months.

Drybulk Carrier Orderbook—April 2006

Size Category	Deadweight Tons	Number of Vessels	% of Fleet (number)		Total Capacity (million dwt)	% of Fleet (dwt)
Capesize	100,000 <	269	37.4		52.4	42.8
Panamax	60,000–99,999	315	22.1		25.5	24.6
Handymax	30,000–59,999	629	25.6		29.8	28.3
Handysize	10,000–29,999	106	5.5		2.3	5.3

Total		1,319	20.2	%	110.0	29.3	%

Source: Drewry

Dry Bulk Carrier Age Profile—April 2006

Source: Drewry

The average age at which a dry bulk carrier has been scrapped over the last five years has been 26 years. However, due to recent strength in the dry bulk shipping industry, over the last two years the average age at which dry bulk carriers have been scrapped has increased and a number of well-maintained vessels have continued to operate past the age of 30.

Dry Bulk Carrier Scrapping

	2000	2001	2002	2003	2004	2005	2006
Capesize—(Mdwt)*	0.6	0.5	1.0	0.3	0.1	0.1	0.3
Panamax—(Mdwt)*	0.7	1.9	1.2	0.5	0.1	0.2	0.5
Handymax—(Mdwt)*	1.5	1.5	0.9	1.1	0.0	0.2	0.4
Handysize—(Mdwt)*	1.2	1.4	1.6	0.6	0.1	0.1	0.4
Total Fleet (Mdwt)*	3.8	5.2	4.7	2.4	0.3	0.7	1.6

* Total fleet—end period
Source: Drewry

Drybulk Carrier Charter Rates

Dry bulk carriers are employed in the market through a number of different chartering options. The general terms typically found in these types of contracts are described below.

•: A bareboat charter involves the use of a vessel usually over longer periods of time ranging up to several years. In this case, all voyage related costs, including vessel fuel, or bunker, and port dues as well as all vessel operating expenses, such as day-to-day operations, maintenance, crewing and insurance, transfer to the charterer's account. The owner of the vessel receives monthly charter hire payments on a per day basis and is responsible only for the payment of capital costs related to the vessel.
•: A time charter involves the use of the vessel, either for a number of months or years or for a trip between specific delivery and redelivery positions, known as a trip charter. The charterer pays all voyage related costs. The owner of the vessel receives semi-monthly charter hire payments on a per day basis and is responsible for the payment of all vessel operating expenses and capital costs of the vessel.
•: A single or spot voyage charter involves the carriage of a specific amount and type of cargo on a load-port to discharge-port basis, subject to various cargo handling terms. Most of these charters are of a single or spot voyage nature, as trading patterns do not encourage round voyage trading. The owner of the vessel receives one payment derived by multiplying the tons of cargo loaded on board by the agreed upon freight rate expressed on a per cargo ton basis. The owner is responsible for the payment of all expenses including voyage, operating and capital costs of the vessel.
•: A contract of affreightment, or COA, relates to the carriage of multiple cargoes over the same route and enables the COA holder to nominate different ships to perform individual voyages. Essentially, it constitutes a number of voyage charters to carry a specified amount of cargo during the term of the COA, which usually spans a number of years. All of the ship's operating, voyage and capital costs are borne by the ship owner. The freight rate normally is agreed on a per cargo ton basis.

Charter hire rates fluctuate by varying degrees amongst the dry bulk carrier size categories. The volume and pattern of trade in a small number of commodities (major bulks) affect demand for larger vessels. Because demand for larger dry bulk vessels is affected by the volume and pattern of trade in a relatively small number of commodities, charter hire rates (and vessel values) of larger ships tend to be more volatile. Conversely, trade in a greater number of commodities (minor bulks) drives demand for smaller dry bulk carriers. Accordingly, charter rates and vessel values for those vessels are subject to less volatility. Charter hire rates paid for dry bulk carriers are primarily a function of the underlying balance between vessel supply and demand, although at times other factors, such as sentiment may play

a role. Furthermore, the pattern seen in charter rates is broadly mirrored across the different charter types and between the different dry bulk carrier categories.

In the time charter market, rates vary depending on the length of the charter period and vessel specific factors such as age, speed and fuel consumption. In the voyage charter market, rates are influenced by cargo size, commodity, port dues and canal transit fees, as well as delivery and redelivery regions. In general, a larger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally command higher rates than routes with low port dues and no canals to transit. Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region that includes ports where vessels load cargo also are generally quoted at lower rates. This is because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that is included in the calculation of the return charter to a loading area.

Within the dry bulk shipping industry, the charter hire rate references most likely to be monitored are the freight rate indices issued by the Baltic Exchange. These references are based on actual charter hire rates under charter entered into by market participants as well as daily assessments provided to the Baltic Exchange by a panel of major shipbrokers. The Baltic Panamax Index is the index with the longest history.

Baltic Exchange Freight Indices

(Index points)

The BSI replaced the BHMI on 03.01.06, although the index has been calculated since 01.07.05

Source: Baltic Exchange

The following chart illustrates one-year time charter rates for Handysize, Handymax, Panamax and Capesize dry bulk carriers between 1996 and April 2007.

Drybulk Carrier One Year Time Charter Rates
(US Dollars per day)

Source: Drewry

Drybulk Carriers—One Year Time Charter Rates (Period Averages)
(US Dollars per day)

Size Category DWT	Handysize 25–30,000	Handymax 45–50,000	Panamax 65–70,000	Capesize 150–160,000
2001	5,629	8,472	9,543	14,431
2002	4,829	7,442	9,102	13,608
2003	8,289	13,736	17,781	30,021
2004	14,413	31,313	36,708	55,917
2005	12,021	23,038	27,854	49,333
2006	12,558	21,800	22,475	45,646
April 2007	20,000	30,000	36,500	60,000

Source: Drewry

Drybulk charter rates for all vessel sizes follow a similar pattern. In 2003 and 2004, rates for drybulk carriers of all sizes strengthened appreciably to historically high levels. The driver of this dramatic upsurge in charter rates was primarily the high level of demand for raw materials into China. Rates in 2005 started out at slightly lower levels and declined further over the summer, before a rally late in the year. During the first half of 2006, rates stabilized above historically high levels. Since July 2006, rates have recovered to levels at or near the historically high levels reached in late 2004.

Drybulk Carrier Values

Vessel prices, both for newbuildings and secondhand drybulk carriers, increased significantly during 2003, 2004 and reached historically high levels in the early part of 2005, owing to the strength of the freight market and high levels of new ordering.

Despite the steep increase in newbuilding prices, the strength of the charter market was the primary influence for secondhand vessel prices. Consequently in 2005 and now again in 2007, demand for modern vessels has resulted in secondhand prices for some five year old Handysize, Handymax, Panamax and Capesize drybulk carriers exceeding comparably sized newbuilding contracts.

Newbuilding prices are determined by a number of factors, including the underlying balance between shipyard output and capacity, raw material costs, freight markets and sometimes exchange rates. In the period 2003 to 2005 high levels of new ordering were recorded across all sectors of shipping. As a result, most of the major shipyards in Japan, South Korea and China have full orderbooks until the end of 2009.

The following charts indicate the change in newbuilding prices for dry bulk carriers in the period from 1996. As can be seen newbuilding prices have increased significantly since 2003, due to tightness in shipyard capacity, high levels of new ordering and stronger freight rates.

Dry Bulk Carrier Newbuilding Prices
(Millions of US Dollars)

Source: Drewry

The following table presents the average prices for secondhand drybulk carriers for the periods indicated.

Drybulk Carrier Secondhand Prices—5 year old (Period Averages)
(Millions of US Dollars)

Size Category DWT	Handysize 25–30,000	Handymax 40–45,000	Panamax 65–75,000	Capesize 150–170,000
2001	11.2	13.7	14.8	25.3
2002	11.1	14.0	15.5	25.1
2003	12.9	16.6	19.6	30.3
2004	19.8	26.3	35.3	54.3
2005	25.8	31.2	40.3	67.0
2006	26.0	31.3	37.0	66.1
April 2007	29.0	44.0	50.0	94.0

Source: Drewry

In the secondhand market, the steep increase in newbuilding prices and the strength of the charter market have also affected values, to the extent that prices rose sharply in 2004/2005, before dipping in the early part of 2006, only to rise once more as the year came to a close. In 2007 prices have remained very firm.

Dry Bulk Carrier Secondhand Prices—5 Year Old Vessels
(Millions of US Dollars)

BUSINESS

Our Company

We were incorporated in the Republic of the Marshall Islands in April 2006 to provide drybulk shipping services worldwide. We acquired our initial fleet of three Handymax and three Panamax drybulk carriers with the net proceeds of a private placement that closed in the fourth quarter of 2006, together with drawings under our senior secured credit facility and the proceeds of the sale by us of Class A Common Shares and Warrants to Innovation Holdings, a company beneficially owned by our founder and chief executive officer, Michael Bodouroglou, and members of his family. Accordingly, we have a limited history of operations. Allseas Marine S.A., or Allseas, a company controlled by Mr. Bodouroglou, provides the commercial and technical management of our vessels.

Our policy is to charter our vessels on time charters with durations of one to two years from the date of delivery, although we could engage in spot (voyage) charters or time charters with longer durations depending on our assessment of market conditions. From inception until December 31, 2006, our vessels achieved daily time charter equivalent rates of $25,460, and we generated net revenues of $4,729,160 and recorded net income of $461,764. We refer you to the section of this prospectus entitled "Forecasted Cash Available For Dividends, Reserves And Extraordinary Expenses For 2007" for information regarding the cash that we expect to have available to us during the twelve month period from the completion of our acquisition of our initial fleet.

We currently intend to pay quarterly dividends to the holders of our Class A Common Shares in February, May, August and November of each year in amounts substantially equal to our available cash flow from operations during the previous quarter, less cash expenses for that quarter and any reserves our board of directors determines we should maintain for reinvestment in our business. Our board of directors has declared a dividend in the amount of $0.4375 per Class A Common Share to shareholders of record on May 21, 2007 in respect of the period from the commencement of our operations through March 31, 2007.

Our Fleet

Our initial fleet consists of three Panamax drybulk carriers and three Handymax drybulk carriers. Our initial fleet has an aggregate carrying capacity of 354,947 deadweight tons, or dwt, and has an average age of 10 years. Our initial fleet carries a variety of drybulk commodities, including major bulks such as iron ore, coal and grain, and minor bulks such as agricultural products, mineral cargoes, and cement.

We purchased two of the vessels in our initial fleet, the Deep Seas and the Blue Seas, from entities affiliated with our founder and chief executive officer, Michael Bodouroglou. We refer to these entities as our affiliated entities. We acquired these vessels for an aggregate purchase price of $69.5 million, which is the purchase price that our affiliated entities paid for them, plus an aggregate amount of approximately $0.40 million in actual pre-delivery and financing costs due to affiliated companies, which include arrangement and commitment fees, and expenses associated with the delivery of these vessels to our affiliated entities. We have purchased the remaining four vessels in our initial fleet from unaffiliated third parties.

Chartering

We have initially employed the vessels in our initial fleet under fixed rate time charters for approximately one to two-year periods from their respective delivery dates. The Deep Seas and Blue Seas are employed on time charters expiring between August and November, 2007. The Calm Seas is currently employed by Morgan Stanley on a time charter expiring between November 14, 2007 and February 13, 2008, at a time charter rate of $25,150 and the Kind Seas is currently employed by Express Sea Transport on a time charter expiring between Sept. 4, 2008 and Feb. 18, 2009, at a time charter rate of $23,600. We have entered into a 22 to 25-month fixed rate time charter with AS Klaveness for the Handymax drybulk carrier Clean Seas that will terminate between October 24, 2008 and Feb. 24, 2009. The Crystal Seas is employed on a time charter by San Juan Navigation at a daily charter rate of $24,000 that will terminate between February 9, 2008 and July 8, 2008.

The following table summarizes information about our initial fleet as of the date of this prospectus:

						Re-Delivery from Charterer(3)
Vessel Name	Vessel Type	Year Built	Charterer Name	Charter Rate ($ per day)(1)	Vessel Delivery Date	Re-Delivery from Charterer(3)
Vessel Name	Vessel Type	Year Built	Charterer Name	Charter Rate ($ per day)(1)	Vessel Delivery Date	Earliest	Latest
Blue Seas	Handymax	1995	STX Pan Ocean	26,100	October 4, 2006(2)	Aug. 21, 2007	Nov. 20, 2007(4)
Clean Seas	Handymax	1995	AS Klaveness	20,000	Jan. 8, 2007	Oct. 24, 2008	Feb. 24, 2009
Crystal Seas	Handymax	1995	San Juan Navigation	24,000	Jan 10, 2007	Feb. 9, 2008	July 8, 2008
Deep Seas	Panamax	1999	Morgan Stanley	28,175	October 12, 2006(2)	Aug. 28, 2007	Nov. 28, 2007
Calm Seas	Panamax	1999	Morgan Stanley	25,150	Dec. 28, 2006	Nov. 14, 2007	Feb. 13, 2008
Kind Seas	Panamax	1999	Express Sea Transport	23,600	Dec. 21, 2006	Sept. 4, 2008	Feb. 18, 2009

(1): This table shows gross charter rates and does not reflect commissions payable by us to third party chartering brokers and Allseas ranging from 2.5% to 6.25% including the 1.25% to Allseas.
(2): The date shown represents the date our affiliate entities, Elegance Shipping Limited and Icon Shipping Limited, acquired the vessels. We acquired the vessels from our affiliates on December 28, 2006.
(3): The date range provided represents the earliest and latest date on which the charterer may redeliver the vessel to us upon termination of the charter.
(4): Upon the expiration of the current charter to STX Pan Ocean, Blue Seas is scheduled to be chartered to Korea Line Corp. at a gross daily rate of $28,500. The redelivery range for the charter to Korea Line Corp. is July 6, 2008 to February 14, 2009.

Pursuant to standard terms under time charter contracts, a charterer has the right to redeliver a vessel to the vessel owner between certain dates. These dates are established in the charter contract as a minimum and a maximum number of months following the delivery of the vessel to the charterer. In the approximately one-year and two-year charters that we intend to employ our initial fleet, the minimum period is eleven months and 23 months and the maximum period is thirteen months and 25 months, respectively. Charters also have an option to redeliver the vessel within fifteen days from the relevant redelivery date. These additional fifteen days result in the minimum period being ten and a half months and the maximum period being thirteen and a half months.

Our Competitive Strengths

We believe that we possess a number of competitive strengths in our industry, including:

•: Experienced management team. Our chief executive officer has more than 25 years of experience in the shipping industry, and our chief financial officer has over 20 years of experience in ship finance and has been the chief financial officer of American Stock Exchange and Nasdaq Global Market listed shipping companies. Our chief operating officer and commercial development officer each have 19 years of experience in shipping and have been working with our chief executive officer for the last ten years and four years, respectively. We believe that our management team has the technical, financial and managerial expertise to safely and efficiently operate a large, diversified fleet of drybulk carriers, as well as successfully identify attractive vessel acquisition opportunities.
•: Efficient and dependable manager. We believe Allseas has established its reputation as an efficient and dependable vessel operator, without compromising on safety, maintenance and

operating performance. To our knowledge vessel has suffered a total or constructive loss or suffered material damage while managed by Allseas. Mr. Bodouroglous, while at Allseas or Eurocarriers, has managed or co-managed 30 vessels since its inception. Allseas strives to minimize operating expenses through comprehensive planned maintenance systems, preventive maintenance programs and retaining and training qualified crew members. We believe that Allseas maintains high standards of operation, vessel technical condition, safety and environmental protection.

•: Strong customer relationships. Our manager, Allseas, has established relationships with leading charterers and a number of chartering, sales and purchase brokerage houses around the world. Since its founding, Allseas and its affiliates have maintained relationships with major national and private industrial users, commodity producers and traders, including Cargill International and Glencore International, which have repeatedly chartered vessels managed by Allseas or by Eurocarriers. We intend to keep our vessels fully employed and to secure repeat business with charterers by providing well-maintained vessels and dependable service.
•: Established banking relationships. Our founder and chief executive officer has existing banking relationships with some of the leading banks in ship finance, including HSH Nordbank, HSBC and HVB Bank. HSH Nordbank has, on a number of occasions, entered into agreements with entities controlled by our founder and chief executive officer for the purchase and management of vessels securing non-performing loans made by the bank to their previous owners. These acquisitions were funded with equity and the assumption of new term loans extended by HSH Nordbank. We believe these transactions demonstrate the established nature of Mr. Bodouroglou's banking relationships. This is evidenced by the fact that the Company has closed a $109.25 million senior secured loan facility with HSH Nordbank to finance the acquisition of the initial fleet. All the banks named above expressed in writing their interest in financing a portion of the acquisition of our initial fleet.

Our Business Strategy

•: Focus on all segments of the drybulk carrier sector. We intend to develop a diversified fleet of drybulk carriers in various size categories, including Capesize, Panamax, Handymax and Handysize, although we have initially focused on the Panamax and Handymax sectors. Larger drybulk carriers, such as Capesize and Panamax vessels, have historically experienced a greater degree of freight rate volatility, while smaller drybulk carriers, such as Handymax and Handysize vessels, have historically experienced greater charter rate stability. Furthermore, a diversified drybulk carrier fleet will enable us to serve our customers in both major and minor bulk trades, and to gain a worldwide presence in the drybulk carrier market by assembling a fleet capable of servicing virtually all major ports and routes used for the seaborne transportation of key commodities and raw materials. Our vessels will be able to trade worldwide in a multitude of trade routes carrying a wide range of cargoes for a number of industries.
•: Generate stable cash flow through time charters. Our strategy is to employ our vessels primarily under one and two-year time charters from the date of delivery that we believe provide us with a stable cash flow base during the term of these charters. As of May 1, 2007, the current average remaining duration of our charters ranges from 13 to 17 months based on the earliest and latest redelivery dates. We believe that factors governing the supply of and demand for drybulk carriers may cause charter rates for drybulk carriers to strengthen in the near term, thereby providing us opportunities to renew our time charters or enter into new time charters at similar

or higher rates following the expiration of their respective terms. We monitor the difference in rates for short, medium and long term charters and, based on our outlook for the industry, enter into the contract term we deem appropriate for our vessels. We also evaluate the payment history, reputation and general creditworthiness of our charterers. When our vessels are not employed on time charters, we may enter into short term spot charters.

•: Disciplined growth through accretive secondhand vessel acquisitions. We intend to grow our fleet through timely and selective acquisitions of secondhand drybulk carriers. We will seek to identify potential secondhand vessel acquisition candidates among various size categories of drybulk carriers. We intend to use our cash flow from operations the proceeds of future equity offerings and senior secured credit facilities to acquire additional drybulk carriers that we believe will be accretive to our cash flow. We believe that secondhand vessels, when operated in a cost efficient manner, currently provide better returns as compared with more expensive newbuilding vessels. We therefore expect to maintain an average fleet age of between 8 to 15 years.

Our Fleet Management

Allseas is responsible for the technical and commercial management of our vessels. Allseas, which is based in Athens, Greece, was formed in 2000 as a ship management company and currently manages a fleet of eleven drybulk carriers, including the six vessels in our initial fleet and five other drybulk vessels owned by affiliates of Allseas. We believe that Allseas has established a reputation in the international shipping industry for operating and maintaining a fleet with high standards of performance, reliability and safety. Allseas will provide comprehensive management services to our vessels including technical supervision, such as repairs, maintenance and inspections, safety and quality, crewing and training, as well as supply provisioning. Allseas' commercial management services will include operations, chartering, sale and purchase, post-fixture administration, accounting, freight invoicing and collection and insurance.

Pursuant to separate management agreements that we have entered into with Allseas for each of our vessels, the terms of which have been approved by a majority of our independent directors, we are obligated to pay Allseas a technical management fee of $650 (based on a Euro/U.S. dollar exchange rate of 1.268:1.00) per vessel per day on a monthly basis in advance, pro rata for the calendar days the vessel is owned by us. The management fee is adjusted quarterly based on the Euro/U.S. dollar exchange rate as published by EFG Eurobank Ergasias S.A. two days prior to the end of the previous calendar quarter. The management fee will be increased commensurate with inflation on an annual basis, commencing on January 1, 2008 by reference to the official Greek inflation rate for the previous year, as published by the Greek National Statistical Office. We also pay Allseas a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Allseas also earned a fee equal to 1.0% calculated on the price as stated in the relevant memorandum of agreement for any vessel bought or sold on our behalf, with the exception of the two vessels in our initial fleet that we acquired from entities affiliated with our founder and chief executive officer. Additional drybulk carriers that that we may acquire in the future may be managed by Allseas or unaffiliated management companies. As of December 31, 2006, we have incurred $170,750 in management fees and $6,661 and $825,000 in chartering and vessel commissions, respectively, resulting in aggregate amount paid to Allseas by us during 2006 of $1,002,411.

Amendments to and extensions of any vessel management agreement will require approval by a majority of our independent directors. Also, we will not enter into any new management agreement with Allseas or any other affiliate of Allseas of ours without the approval of a majority of our independent directors.

Employees and Crewing

We currently have four shore based employees, our chief executive officer, Michael Bodouroglou, our chief operating officer, George Skrimizeas, our chief financial officer, Christopher Thomas, and our commercial development officer, Anthony Smith. In addition, we employee through our wholly-owned vessel owning subsidiaries approximately 200 seafarers that crew our vessels. Allseas is responsible for recruiting, either directly or through a crewing agent, the senior officers and all other crew members for our vessels. We believe the streamlining of crewing arrangements helps to ensure that all our vessels will be crewed with experienced seamen that have the qualifications and licenses required by international regulations and shipping conventions.

Our Customers

When the Deep Seas and the Blue Seas were delivered to us we assumed related time charters that have been entered into with Morgan Stanley and STX Pan Ocean for Deep Seas and Blue Seas, respectively. We also entered into a 22 to 25 month fixed rate time charter with Klaveness to charter the Clean Seas. Klaveness is a leading provider of commercial management services to owners of Handymax and Panamax drybulk carriers and has more than 50 years of experience in the shipping industry. The Calm Seas is currently employed by Morgan Stanley on a time charter expiring between November 14, 2007 and February 13, 2008, at a time charter rate of $25,150 and the Kind Seas is currently employed by Express Sea Transport on a time charter expiring between September 4, 2008 and February 18, 2009, at a time charter rate of $23,600 Competition. The Crystal Seas is employed on a time charter by San Juan Navigation at a daily charter rate of $24,000 that will terminate between February 9, 2008 and July 8, 2008

We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location, size, age and condition of the vessel, as well as on our reputation. Allseas will arrange our charters through the use of brokers, who negotiate the terms of the charters based on market conditions. We compete primarily with other owners of drybulk carriers, many of which may have more resources than us and may operate vessels that are newer, and therefore more attractive to charterers, than our vessels. Ownership of drybulk carriers is highly fragmented and is divided among publicly listed companies, state controlled owners and independent shipowners. Some of our publicly listed competitors include Diana Shipping Inc. (NYSE: DSX), DryShips Inc. (Nasdaq: DRYS), Excel Maritime Carriers Ltd. (NYSE: EXM), Eagle Bulk Shipping Inc. (Nasdaq: EGLE), Genco Shipping and Trading Limited (Nasdaq: GSTL), Navios Maritime Holdings Inc. (Nasdaq: BULK) and Quintana Maritime Limited (Nasdaq: QMAR).

Entities affiliated with our founder and chief executive officer currently own drybulk carriers, and may in the future seek to acquire additional drybulk carriers. One or more of these vessels may be managed by Allseas and may compete with the vessels in our fleet. Currently, Allseas manages five drybulk vessels that are not part of our fleet. Mr. Bodouroglou and entities affiliated with him, including Allseas, might be faced with conflicts of interest with respect to their own interests and their obligations to us. Mr. Bodouroglou has entered into an agreement with us pursuant to which he and the entities which he controls will grant us a right of first refusal on any drybulk carrier that these entities may acquire in the future.

Properties

We lease office space in Athens, Greece, from our founder and chief executive officer or from Allseas. The initial term of our lease is one year. We believe that the rate of our lease (7,200 Euros per year) is no greater than would be paid to a third party in an arm's length transaction.

Environmental and Other Regulations

Government regulation significantly affects the ownership and operation of our vessels. We are subject to international conventions, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered.

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

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the drybulk shipping industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels will be in substantial compliance with applicable environmental conventions, laws and regulations applicable to us as of the date of this registration statement. However, modified or new conventions, laws and regulations may be adopted that could adversely affect our ability to operate our vessels.

International Maritime Organization

The United Nation's International Maritime Organization, or IMO, has negotiated international conventions that impose liability for oil pollution in international waters and a signatory's territorial waters. In September 1997, the IMO adopted Annex VI to the International Convention for the Prevention of Pollution from Ships to address air pollution from ships. Annex VI was ratified in May 2004, and became effective in May 2005. Annex VI set limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. Allseas has informed us that a plan to conform with the Annex VI regulations is in place and we believe we are in substantial compliance with Annex VI. Compliance with these regulations could require the installation of expensive emission control systems and could have an adverse financial impact on the operation of our vessels.

The operation of our vessels is also affected by the requirements set forth in the IMO's Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires ship owners and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a ship owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. As of the date of this prospectus, each of our vessels is ISM code-certified. However, there can be no assurance that these certifications will be maintained indefinitely.

The United States Oil Pollution Act of 1990

The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its two hundred nautical mile exclusive economic zone.

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

•: natural resources damage and the costs of assessment thereof;
•: real and personal property damage;
•: net loss of taxes, royalties, rents, fees and other lost revenues;
•: lost profits or impairment of earning capacity due to property or natural resources damage; and
•: net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

Under amendments to OPA that became effective on July 11, 2006, the liability of responsible parties is limited to the greater of $950 per gross ton or $0.8 million per drybulk vessel that is over 300 gross tons (subject to possible adjustment for inflation). These limits of liability do not apply if an incident was directly caused by violation of applicable United States federal safety, construction or operating regulations or by a responsible party's gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with oil removal activities.

We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage it could have an adverse effect on our business and results of operation.

OPA requires owners and operators of vessels to establish and maintain with the United States Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under the OPA. Current United States Coast Guard regulations require evidence of financial responsibility in the amount of $900 per gross ton for non-tank vessels, which includes the OPA limitation on liability of $600 per gross ton and the United States Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, liability limit of $300 per gross ton. We expect the United States Coast Guard to increase the amounts of financial responsibility to reflect the July 2006 increases in liability. Under the regulations, vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance or guaranty. Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessels in the fleet having the greatest maximum liability under OPA.

The United States Coast Guard's regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typically provided certificates of financial responsibility under pre-OPA laws,

including the major protection and indemnity organizations, have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or are required to waive insurance policy defenses.

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

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

The United States Clean Water Act

The U.S. Clean Water Act, or CWA, prohibits the discharge of oil or hazardous substances in navigable waters and imposes strict of September 30, 2008 and directing EPA to develop a system for regulating all discharges from vessels by that date liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and compliments the remedies available under OPA and CERCLA.

Currently, under U.S. Environmental Protection Agency, or EPA, regulations that have been in place since 1978, vessels are exempt from the requirement to obtain CWA permits for the discharge in U.S. ports of ballast water and other substances incidental to their normal operation. However, on March 30, 2005, the United States District Court for the Northern District of California ruled in Northwest Environmental Advocate v. EPA, 2005 U.S. Dist. LEXIS 5373, that EPA exceeded its authority in creating an exemption for ballast water. On September 18, 2006, the court issued an order invalidating the blanket exemption in EPA's regulations for all discharges incidental to the normal operation of a vessel as. Under the court's ruling, owners and operators of vessels visiting U.S. ports would be required to comply with the CWA permitting program to be developed by EPA or face penalties. Although EPA will likely appeal this decision, if the court's order is ultimately upheld, we will incur certain costs to obtain CWA permits for our vessels, although we do not expect that these costs would be material.

Other Environmental Initiatives

The European Union is considering legislation that will affect the operation of vessels and the liability of owners for oil pollution. It is difficult to predict what legislation, if any, may be promulgated by the European Union or any other country or authority.

The U.S. National Invasive Species Act, or NISA, was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by ships in foreign ports. The United States Coast Guard adopted regulations under NISA in July 2004 that impose mandatory ballast water management practices for all vessels equipped with ballast water tanks entering U.S. waters. These requirements can be met by performing mid-ocean ballast exchange, by retaining ballast water on board the ship, or by using environmentally sound alternative ballast water management methods approved by the United States Coast Guard. (However, mid-ocean ballast exchange is mandatory for ships heading to the Great Lakes or Hudson Bay, or vessels engaged in the foreign export of Alaskan North Slope crude oil.) Mid-ocean ballast exchange is the primary method

for compliance with the United States Coast Guard regulations, since holding ballast water can prevent ships from performing cargo operations upon arrival in the United States, and alternative methods are still under development. Vessels that are unable to conduct mid-ocean ballast exchange due to voyage or safety concerns may discharge minimum amounts of ballast water (in areas other than the Great Lakes and the Hudson River), provided that they comply with recordkeeping requirements and document the reasons they could not follow the required ballast water management requirements. The United States Coast Guard is developing a proposal to establish ballast water discharge standards, which could set maximum acceptable discharge limits for various invasive species, and/or lead to requirements for active treatment of ballast water.

At the international level, the IMO adopted an International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements (beginning in 2009), to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the Maritime Transportation Security Act of 2002, or the MTSA, came into effect. To implement certain portions of the MTSA, in July 2003, the United States Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to the International Convention for the Safety of Life at Sea, or SOLAS, created a new chapter of the convention dealing specifically with maritime security. The new chapter came into effect in July 2004 and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the newly created International Ship and Port Facilities Security Code or ISPS Code. Among the various requirements are:

•: on-board installation of automatic information systems, or AIS, to enhance vessel-to-vessel and vessel-to-shore communications;
•: on-board installation of ship security alert systems;
•: the development of vessel security plans; and
•: compliance with flag state security certification requirements.

The United States Coast Guard regulations, intended to align with international maritime security standards, exempt non-United States vessels from MTSA vessel security measures provided such vessels have on board a valid International Ship Security Certificate, or ISSC, that attests to the vessel's compliance with SOLAS security requirements and the ISPS Code. We have implemented the various security measures addressed by the MTSA, SOLAS and the ISPS Code.

Inspection by Classification Societies

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

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

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

•: Annual Surveys. For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant and where applicable for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate.
•: Intermediate Surveys. Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey.
•: Class Renewal Surveys. Class renewal surveys, also known as special surveys, are carried out for the ship's hull, machinery, including the electrical plant and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a ship owner has the option of arranging with the classification society for the vessel's hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five year cycle. At an owner's application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal.

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

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

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

Risk of Loss and Liability Insurance

General

The operation of any drybulk vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon owners,

operators and demise charterers of vessels trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the United States market.

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

Hull & Machinery and War Risks Insurance

We maintain marine hull and machinery and war risks insurance, which covers the risk of actual or constructive total loss, for all of our vessels. Our vessels are covered up to at least fair market value with deductibles of between $100,000 and $125,000 per vessel per incident. We also maintain increased value coverage for each of our vessels. Under this increased value coverage, in the event of total loss of a vessel, we will be entitled to recover amounts not recoverable under the hull and machinery policy that we have entered into due to under-insurance.

Protection and Indemnity Insurance

Our protection and indemnity insurance is provided by P&I Associations, which insures our third party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses resulting from the injury or death of crew, passengers and other third parties, the loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or "clubs." Subject to the "capping" discussed below, our coverage, except for pollution, will be unlimited.

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

Legal Proceedings

To our knowledge, we are not currently a party to any material lawsuit that, if adversely determined, would have a material adverse effect on our financial position, results of operations or liquidity. As such, we do not believe that pending legal proceedings, taken as a whole, should have any significant impact on our financial statements. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We have not been involved in any legal proceedings which may have, or have had a significant effect on our financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position, results of operations or liquidity.

Exchange Controls

Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our Class A Common Shares.

Senior Secured Credit Facility

We have entered into a senior secured credit facility with HSH Nordbank AG for an amount of $109.5 million, of which we drew down an amount of $108.25 million. The senior secured credit facility has a term of 3.5 years from the initial draw down date, and the amounts we draw under the senior secured credit facility are repayable in one balloon installment that will become due 3.5 years from the initial draw down date of December 21, 2006. The senior secured credit facility is secured by a first priority mortgage on our vessels as well as a first assignment of all earnings, insurances and cross default with each of our vessel owning subsidiaries.

Conditions for draw down include that the vessel maintain a flag and class acceptable to the lender, that the vessel be owned by a wholly owned subsidiary of ours, and that each vessel has a period employment in place with a reputable charterer with a minimum duration of 11 months to 13 months to cover operational expenses and debt service.

The senior secured credit facility contains financial covenants requiring us, among other things, to ensure that:

•: the ratio of total debt on the mortgaged vessels to EBITDA shall be not greater than 5.00 to 1.00;
•: we maintain a market adjusted net worth of at least $50.0 million;
•: we and our subsidiaries at all times maintain cash equivalents in an amount of no less than $0.5 million per vessel;
•: the ratio of indebtedness to total capitalization shall not be greater than 0.70 to 1.00;
•: the aggregate average fair market value of our vessels securing the senior secured credit facility be not less than 140% of the aggregate outstanding amount under the facility; in case of a dividend declaration the fair market value shall not be less than 145%.

In addition, the senior secured credit facility contains covenants requiring us to maintain adequate insurance coverage and to obtain the lender's consent before we change the flag, class or management of a vessel, or enter into a new line of business. The senior secured credit facility also includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation and Warranty, a cross-default to other indebtedness and non-compliance with security documents.

Our senior secured credit facility does not prohibit us from paying dividends so long as an event of default has not occurred and we are not, and after giving effect to the payment of the dividend would not be, in breach of a covenant.

MANAGEMENT

Directors and Executive Officers

Set forth below are the names, ages and positions of our directors and executive officers. Our board of directors is elected annually, and each director elected holds office for a three year term or until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office. The initial term of office of each director is follows: Ian Davis and George Skrimizeas will serve for a term expiring at the 2007 annual meeting of the shareholders, Nigel Cleave and Bruce Ogilvy will serve for a term expiring at the 2008 annual meeting of shareholders, and Michael Bodouroglou will serve for a term expiring at the 2009 annual meeting of the shareholders. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected. The business address for each director and executive officer is c/o Paragon Shipping Inc., Voula Center, 102-104 V. Pavlou Street, Voula 16673, Athens, Greece.

Name	Age	Position
Michael Bodouroglou	51	Chairman and Chief Executive Officer
George Skrimizeas	41	Chief Operating Officer and Director
Christopher J. Thomas	47	Chief Financial Officer
Anthony Smith	36	Commercial Development Officer
Nigel D. Cleave	48	Director
Bruce Ogilvy	63	Director
Ian Charles Davis	54	Director

Biographical information with respect to each of our directors and executive officers is set forth below.

Michael Bodouroglou has been our chairman and chief executive officer since June 2006. Mr. Bodouroglou has co-founded and co-managed an independent shipping group since 1993 and has served as co-managing director of Eurocarriers and Allseas, which he co-founded, since 1994 and 2000, respectively. Mr. Bodouroglou disposed of his interest in Eurocarriers in September 2006. Prior to founding Eurocarriers, Mr. Bodouroglou served from 1984 to 1992 as technical superintendent for Thenamaris (Ships Management) Inc., where he was responsible for all technical matters of a product tanker fleet. Mr. Bodouroglou served as technical superintendent for Manta Line, a dry cargo shipping company, in 1983 and as technical superintendent for Styga Compania Naviera, a tanker company, from 1981 to 1983. Mr. Bodouroglou graduated from the University of Newcastle-upon-Tyne in the United Kingdom with a Bachelor of Science in Marine Engineering, with honors, in 1977, and received a Masters of Science in Naval Architecture in 1978. Mr. Bodouroglou is a member of the Cayman Islands Shipowners' Advisory Council and is also a member of the Board of Academic Entrepreneurship of the Free University of Varna, Bulgaria.

George Skrimizeas has been our executive director and chief operating officer since June 2006. Mr. Skrimizeas has been general manager of Allseas since May 2006. From 1996 to 2006, Mr. Skrimizeas has held various positions in Allseas, Eurocarriers and their affiliates, including general manager, accounts and human resources manager, and finance and administration manager. Mr. Skrimizeas worked as account manager for ChartWorld Shipping from 1995 to 1996 and as accounts and administration manager for Arktos Investments Inc. from 1994 to 1995. From 1988 to 1994, Mr. Skrimizeas was accounts and administration manager for Candia Shipping Co. S.A. and accountant and chief accounting officer—deputy human resources manager in their Athens, Romania, Hong Kong and London offices. Mr. Skrimizeas received his Bachelor of Science degree in Business Administration from the University of Piraeus, Greece in 1988 and completed the coursework necessary to obtain his Masters of Science in Finance from the University of Leicester, in the United Kingdom,

in 2002. Mr. Skrimizeas is a member of the Hellenic Chamber of Economics and the Association of Chief Executive Officers.

Christopher J. Thomas has been our chief financial officer since October 2006. Prior to joining us, Mr. Thomas served as director, vice president, treasurer and chief financial officer of DryShips Inc., a Nasdaq-listed drybulk company. Since November 2001, Mr. Thomas has been an independent financial consultant to numerous international shipowning and operating companies. Mr. Thomas is also on the board of directors of TOP Tankers Inc., which is a publicly listed company with securities registered under the Exchange Act. From 1999 to 2004, Mr. Thomas was the chief financial officer and a director of Excel Maritime Carriers Ltd. which is also a publicly traded company currently listed on the New York Stock Exchange. Prior to joining Excel, he was Financial Manager of Cardiff Marine Inc. Mr. Thomas holds a degree in Business Administration from Crawley University, England.

Anthony Smith has served as our commercial development officer since June 2006. Prior to joining us, Mr. Smith worked as a chartering broker for Allseas since 2002 where he was responsible for negotiations with charterers and preparing market reports and research analysis for potential vessel acquisitions and sales. Between 2000 and 2002 Mr. Smith worked as a chartering broker for Nasta Chartering Multi Trading a ship management company. Between 1996 and 2000 Mr. Smith worked for Southern Maritime as a competitive broker. Prior to working for Southern Maritime, Mr. Smith was employed by Adriatic Tankers Shipping Co., who managed between 35 and 105 vessels during Mr. Smith's employment with the Company. Mr. Smith served as a chartering manager at Adriatic between 1993 and 1995. Prior to becoming a chartering manager, Mr. Smith served as a chartering broker from 1988 to 1993.

Nigel D. Cleave is a non-executive director. In 2006, Mr Cleave was appointed chief executive officer of Epic Ship Management Limited, a ship management company engaged in the provision of a complete range of ship management services on behalf of an international clientele base, with offices located in Cyprus, Singapore, Germany, the U.K. and the Philippines. Prior to this, Mr Cleave served as group managing director of Dobson Fleet Management Limited from 1993 to 2006, a ship management company based in Cyprus and, prior to his position at Dobson, Mr. Cleave was the deputy general manager for Hanseatic Shipping Company Limited from 1991 to 1993. From 1988 to 1991, Mr. Cleave held fleet operation roles with PPI Lines, including that of fleet operations manager. From 1975 to 1986, Mr. Cleave held various positions at The Cunard Steamship Company plc, including navigation cadet officer, third officer, second officer, financial and planning assistant, assistant to the group company secretary and assistant operations manager. Mr. Cleave graduated from the Riversdale College of Technology in the United Kingdom with an O.N.C. in Nautical Science in 1979. Mr. Cleave is a board member of the Marine Shipping Mutual Insurance Company Limited, and is the Chairman of the Cayman Islands Shipowners' Advisory Council. Mr. Cleave is a Fellow of the Chartered Institute of Shipbrokers, acts as a Member of the Cyprus Committee of Germanischer Lloyd and the Cyprus Technical Committee of DnV (both being advisory committees covering technical related issues with the Classification Society). Mr. Cleave also serves as the Chairman of the Mission to Seafarers Cyprus Branch.

Bruce Ogilvy is a non-executive director. From 2003 to 2005 Mr. Ogilvy served as a consultant to Stelmar Tankers (Management) Ltd. and from 1992 to 2002, he was managing director of Stelmar Tankers (U.K.) Ltd., a subsidiary of Stelmar Tankers (Management) Ltd., through which the group's commercial business, including chartering and sale and purchase activities, were carried out. In 1992, Mr. Ogilvy joined Stelios Haj-Ioannou to form Stelmar Tankers (Management) Ltd., and served on its board of directors from its inception to 2003. During his ten years with Stelmar Tankers (Management) Ltd., Stelmar Shipping Ltd. completed an initial public offering on the New York Stock Exchange in 2001 and a secondary listing in 2002. Prior to his association with Stelmar Tankers (Management) Ltd., Mr. Ogilvy served in various capacities, including chartering and sale and purchase activities with Shell International. Mr. Ogilvy graduated from Liverpool University, in the United

Kingdom, in 1963 with a degree as Ship Master. Mr. Ogilvy served on the Council of Intertanko, an industry body that represents the interests of independent tanker owners, since 1994 and on its Executive Board from 2003 until 2005. Mr. Ogilvy has been an active member of the Chartered Institute of Shipbrokers for nearly 30 years. He served as Chairman of the London Branch from 1999 to 2001 and currently serves as Chairman of the Institute.

Ian Charles Davis is a non-executive director. From 2004 to 2006 Mr. Davis served as chief financial officer of Pacific Star International Holding Company Limited, or Pacific Star, which is currently Greece's ninth largest independent shipping group by deadweight tonnage. While at Pacific Star, Mr. Davis was responsible for the negotiation, documentation and administration of approximately $650 million of on balance sheet finance. Between 2002 and 2004, Mr. Davis served as a shipping advisor to Hamburgische Landesbank, or HLB, London. While at HLB, Mr. Davis recruited to take over responsibility for approximately U.S. $1 billion portfolio extended to the Greek market. From 2000 to 2002, Mr. Davis served as the head of Clarkson Financial Services Limited where as head of the financial services team he completed successful transactions of approximately $500 million. Between 1996 and 2000, Mr. Davis served as managing director of HDS Shipping Limited, or HDS. At HDS, Mr. Davis arranged deals in both the high-yield bond market and initial public offerings. Prior to working at HDS, Mr. Davis was a partner at Daniel Steward & Company whose clients included entities such as British Aerospace and Sunrise Asian Radio along with large shipping clients such as Anangel-American Shipholdings and Essar Shipping Ltd. Mr. Davis has held various other positions in the shipping industry. Mr. Davis graduated from Christ's College Cambridge in the United Kingdom in 1974, first class honors. Mr. Davis was a research scholar in Ancient History between 1974 and 1977.

Committees of the Board of Directors

The majority of our board of directors is independent. We have established an audit committee comprised of three members, all of whom are independent, which is responsible for reviewing our accounting controls and recommending to the board of directors the engagement of our outside auditors. The members of the audit committee are Nigel Cleave, Bruce Ogilvy and Ian Davis. Mr. Davis serves as the chairman of our audit committee.

The audit committee is responsible for assisting our Board of Directors with its oversight responsibilities regarding the integrity of our financial statements, our compliance with legal and regulatory requirements, independent registered public accounting firm's qualifications and independence; and the performance of our internal audit function and independent registered public accounting firm. The board of directors has determined that Mr. Ian Davis qualifies as an "audit committee financial expert" within the meaning of regulations adopted by the Commission.

Compensation of Directors and Senior Management

We expect that the aggregate compensation that we will pay members of our senior management in 2007 will be approximately $1,410,000. This amount does not reflect additional amounts that may be paid to certain of our senior executive officers upon the completion of a successful public offering resulting in gross proceeds to us of at least $50 million. We have paid aggregate compensation of approximately $240,000 to members of our senior management in 2006. Each of our non-employee directors will receive annual compensation in the aggregate amount of $30,000 per year, plus reimbursements for actual expenses incurred while acting their capacity as a director. We do not have a retirement plan for our officers or directors.

Equity Incentive Plan

We have adopted an equity incentive plan, which we refer to as the plan, under which our officers, key employees and directors will be eligible to receive options to acquire shares of our Class A

Common Shares. We have reserved a total of 1,500,000 shares of Class A Common Shares for issuance under the plan. Our board of directors will administer the plan. Under the terms of the plan, our board of directors are able to grant new options exercisable at a price per Class A Common Share to be determined by our board of directors but in no event less than fair market value of the Class A Common Share as of the date of grant. The plan also permits our board of directors to award restricted stock, restricted stock units, stock appreciation rights and unrestricted stock. All options will expire ten years from the date of the grant. The plan will expire ten years from the completion of this offering.

Upon the completion of our private placement in November 2006, we granted our founder and chief executive officer options to purchase an aggregate of 500,000 Class A Common Shares. Of these options, 250,000 vested immediately upon the closing of the private placement, and the balance will vest upon the completion of a qualified public offering. We also granted our other executive officers and directors options to purchase an aggregate of 70,000 of our Class A Common Shares, which vest ratably of four year from the date of grant. All of the options granted at the closing of the private placement have an exercise price of $12.00 per Class A Common Share.

In addition, we granted an aggregate of 40,000 restricted Class A Common Shares to our executive officers and directors, other than our chief executive officer, and to employees of Allseas upon the completion of the initial closing of our private placement in November 2006, which also vest ratably over four years.

Employment and Consulting Agreements

We have entered into employment agreements with each of our founder and chief executive officer, Michael Bodouroglou, our chief operating officer, George Skrimizeas and our chief financial officer, Christopher Thomas for work performed in Greece and separate consulting agreements with companies owned by each of them for work performed outside of Greece.

In addition, our founder and chief executive officer, Michael Bodouroglou, has entered into a letter agreement with us which includes a provision requiring Mr. Bodouroglou to use commercially reasonable efforts to cause each company controlled by Mr. Bodouroglou to allow us to exercise a right of first refusal to acquire any drybulk carrier, after Mr. Bodouroglou or an affiliated entity of his enters into an agreement that sets forth terms upon which he or it would acquire a drybulk carrier. Pursuant to this letter agreement, Mr. Bodouroglou will notify a committee of our independent directors of any agreement that he or an affiliated entity has entered into to purchase a drybulk carrier and will provide the committee of our independent directors a seven calendar day period in respect of a single vessel transaction, or a 14 calendar day period in respect of a multi-vessel transaction, from the date that he delivers such notice to our audit committee, within which to decide whether or not to accept the opportunity and nominate a subsidiary of ours to purchase the vessel or vessels, before Mr. Bodouroglou will accept the opportunity or offer it to any of his other affiliates. The opportunity offered to us will be on no less favorable terms than those offered to Mr. Bodouroglou and his affiliates. A committee of our independent directors will require a simple majority vote to accept or reject this offer. It is noted that in addition to the two vessels that we have agreed to acquire from entities affiliated with Michael Bodouroglou, entities also affiliated with Mr. Bodouroglou currently own or operate five additional vessels that will also be offered to us in accordance with the procedures set forth above. Because these five vessels were built between 1979 and 1987, they do not meet the age characteristics that we will seek to maintain for our fleet. As a result we do not expect that the committee of our independent directors will exercise our right of first refusal over any of these vessels.

Notwithstanding the above, Mr. Bodouroglou intends to utilize the company as his main investment vehicle in the drybulk shipping sector.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information regarding the owners of more than five percent of our common shares, including common shares held as a component of our Units, outstanding as of May 4, 2007. All of our shareholders, including the shareholders listed in this table, are entitled to one vote for each Class A Common Share held, including Class A Common Shares held as a component of our Units. Our Class B Common Shares do not have voting rights but will convert into Class A Common Shares on a one-for-one basis at the end of the subordination period, to the extent not surrendered in connection with certain defaults under the registration rights agreement.

Title of Class	Identity of Person or Group	Shares Owned		Percent of Class		Shares Owned After Offering	Percent of Class after Offering
Units, consisting of one Class A Common Share, par value $0.001 per share, and one-fifth of one Warrant	Michael Bodouroglou(1)	2,250,000	(2)	19.5	%	2,500,000	19.5	%
	Trafelet Capital Management, LP(3)	3,000,000	(2)	26.0	%	—	—	%
	Citigroup Global Markets Inc.(4)	2,000,000	(2)	17.3	%	—	—	%
	Silver Point Capital Fund, LP(5)	525,000	(2)	4.5	%	—	—	%
	Silver Point Capital Offshore Fund Ltd(6)	725,000	(2)	6.3	%	—	—	%
	Kenmont Investment Management L.P.(7)	1,000,000	(2)	8.7	%	—	—	%
Class B Common Shares, par value $.001 per share	Michael Bodouroglou(8)	2,003,288		100.0	%	2,003,288	100.0	%

(1): Innovation Holdings, a company beneficially owned by our founder and chief executive officer, Mr. Michael Bodouroglou, and members of his family, owns our Class B Common Shares and owns a number of Units equal to 7% of the number of Units sold to investors in our private placement. Innovation Holdings has also purchased an aggregate of 2,250,000 Units and has been issued options to purchase an aggregate of 500,000 additional Class A Common Shares for a purchase price of $12.00 per share, of which options to purchase 250,000 Class A Common Shares are exercisable immediately. The 2,250,000 Units that were sold to Innovation Holdings did not constitute part of our private placement.
(2): Reflects the number of Class A Common Shares owned as a component of each Unit. This number does not reflect the Class A Common Shares to be issued upon the exercise of the Warrants.
(3): Delta Onshore, LP, a Delaware limited partnership, is the beneficial owner of 128,100 Units, Delta Institutional, LP, a Delaware limited partnership, is the beneficial owner of 1,016,100 Units, Delta Pleiades, LP, a Delaware limited partnership, is the beneficial owner of 126,600 units and Delta Offshore, Ltd., a Cayman Islands limited company (together with Delta Onshore, LP, Delta

Institutional, LP and Delta Pleiades, LP the "Trafelet Funds") are the beneficial owners of an aggregate of 1,729,200 Units. Trafelet Capital Management, LP is the investment advisor to each of the Trafelet Funds and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Trafelet Funds. Trafelet & Co LLC is the general partner of Trafelet Capital Management, LP and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Trafelet Funds. Mr. Remy W. Trafelet has sole investment and voting discretion over the units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Trafelet Funds.

(4): Citigroup Global Markets Inc. is a subsidiary of Citigroup Inc., a reporting company under the Securities Exchange Act of 1934, as amended.
(5): Silver Point Capital Fund L.P. (the "Fund") is the beneficial owner of 525,000 Units. Silver Point Capital, L.P. is the investment manager to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Silver Point Capital Management, L.L.C. is the general partner of Silver Point Capital, L.P., and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Messrs. Edward A. Mule and Robert J. O'Shea are each members of Silver Point Capital Management, L.L.C., by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(6): Silver Point Capital Offshore Fund Ltd. (the "Fund") is the beneficial owner of 725,000 Units. Silver Point Capital, L.P. is the investment manager to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Silver Point Capital Management, L.L.C. is the general partner of Silver Point Capital, L.P., and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Messrs. Edward A. Mule and Robert J. O'Shea are each members of Silver Point Capital Management, L.L.C., by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(7): Kenmont Special Opportunities Master Fund, L.P., is the beneficial owner of 735,000 Units, and Man Mac Miesque 10B Ltd. (together with Kenmont Special Opportunities Master Fund, L.P., the "Kenmont Funds") is the beneficial owner of 315,000 units. Kenmont Investment Management L.P. is the investment advisor to each of the Kenmont Funds and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Kenmont Funds. KIP GP, LLC is the general partner of Kenmont Investment Management L.P. and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Kenmont Funds. Mr. Donald R. Kendall, Jr. has sole investment and voting discretion over the Units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Kenmont Funds.
(8): The 2,003,288 Class B Common Shares shown in the table represent 15% of our outstanding common shares (excluding the 185,656 Class A Common Shares issued to the initial purchasers upon the closing of our private placement).

RELATED PARTY TRANSACTIONS

Commercial and Technical Management Agreements

We outsource the technical and commercial management of our vessels to Allseas pursuant to management agreements with an initial term of five years. Our founder and chief executive officer, Mr. Bodouroglou, is the sole shareholder and managing director of Allseas. These agreements automatically extend to successive five year terms, unless, in each case, at least one year's advance notice of termination is given by either party. We are obligated to pay Allseas a technical management fee of $650 (based on a Euro/U.S. dollar exchange rate of 1.268:1.00) per vessel per day on a monthly basis in advance, pro rata for the calendar days these vessels are owned by us. The management fee will be adjusted quarterly based on the Euro/U.S. dollar exchange rate as published by EFG Eurobank Ergasias S.A. two days prior to the end of the previous calendar quarter. The management fee will be increased on an annual basis, commencing on January 1, 2008, by reference to the official Greek inflation rate for the previous year, as published by the Greek National Statistical Office. We also pay Allseas 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Allseas will also earn a fee equal to 1.0% of the purchase price of any vessel bought or sold on our behalf, calculated in accordance with the relevant memorandum of agreement.

Acquisition of our Initial Fleet

We purchased the Blue Seas and the Deep Seas from corporate entities controlled by our founder and chief executive officer, Mr. Bodouroglou. The purchase price that we paid for these two vessels is equal to the price paid by the affiliated seller. We also reimbursed approximately $0.40 million to those entities for pre-delivery expenses. The amount paid over and above the carrying value of these vessels in the books of our affiliated entities at the date purchased by us is treated as a deemed dividend Innovation Holdings as explained below. We purchased the remaining four vessels in our initial fleet from unaffiliated third parties. We did not pay Allseas a 1% fee with respect to our acquisition of these two vessels, although we paid Allseas a 1% fee, which is approximately $1.4 million, with respect to the acquisition of the remaining four vessels in our initial fleet.

Registration Rights Agreement

In connection with the Class A Common Shares and Warrants sold in the private placement, we agreed to register for resale on a shelf registration statement under the Securities Act and applicable state securities laws, up to 2,250,000 of our Class A Common Shares and 450,000 Warrants held by Innovation Holdings 12 months following the registration of our Class A Common Shares pursuant to the registration statement of which this prospectus is a part. We are obligated to pay all expenses incidental to the registration, excluding underwriting discounts and commissions.

Lease of Office Space

We lease office space in Athens, Greece. The initial term of our lease was expiring on September 30, 2006 and has been extended to September 30, 2007 at a rate of 7,200 Euros per year.

Deemed Dividend

The vessels purchased from our affiliated entities will be reflected in our financial statements using the historical carrying value since the transaction is between parties under common control. The amount paid for these acquisitions in excess of the carrying value on the books of our affiliated entities is treated as a deemed dividend at the date of delivery to us to Innovation Holdings.

Compensation of Directors and Senior Management

We expect that the aggregate compensation that we will pay members of our senior management in 2007 will be approximately $1,410,000. We have paid aggregate compensation of approximately $240,000 to members of our senior management in 2006. Each of our non-employee directors will receive annual compensation in the aggregate amount of $30,000 per year, plus reimbursements for actual expenses incurred while acting in their capacity as a director. We do not have a retirement plan for our officers or directors.

SELLING SHAREHOLDERS

Based solely upon information furnished to us, the following table sets forth the identity and other information about the selling shareholders. Each of the selling shareholders obtained its Class A Common Shares and Warrants in our private placement completed during the fourth quarter of 2006.

The tabular information relating to share and percent of class ownership provided in the table below assumes the exercise of each of the Company's outstanding Warrants. The tabular information below further assumes that all of the shares registered will be offered and sold by the selling shareholders, including shares received upon exercise of the Warrants.

Selling Shareholder	Shares Owned before offering	Percent of Class owned before offering		Shares that may be sold in offering	Shares owned after offering	Percent of Class after offering
Cantor Fitzgerald & Co.(1)	77,976	0.57	%	77,976	—	—	%
CRT Capital Group LLC(2)	77,976	0.57	%	77,976	—	—	%
Oppenheimer & Co. Inc.(3)	66,835	0.48	%	66,835	—	—	%
Delta Onshore, LP(4)	153,720	1.11	%	153,720	—	—	%
Delta Institutional, LP(5)	1,219,300	8.84	%	1,219,300	—	—	%
Delta Pleiades, LP(6)	151,800	1.10	%	151,800	—	—	%
Delta Offshore, Ltd.(7)	2,075,040	15.04	%	2,075,040	—	—	%
Citigroup Global Markets Inc.(8)	2,400,000	17.39	%	2,400,000	—	—	%
Silver Point Capital Fund, LP(9)	630,000	4.57	%	630,000	—	—	%
Silver Point Capital Offshore Fund Ltd(10)	870,000	6.31	%	870,000	—	—	%
Kenmont Special Opportunities Master Fund, L.P.(11)	882,000	6.39	%	882,000	—	—	%
Man Mac Miesque 10B Ltd.(12)	378,000	2.74	%	378,000	—	—	%
Bear, Stearns International Limited(13)	780,000	5.65	%	780,000	—	—	%
Loeb Partners Corporation(14)	480,000	4.48	%	480,000	—	—	%
Harbor Drive Special Situations Master Fund, Ltd.(15)	180,000	1.30	%	180,000	—	—	%
Professional Offshore Opportunity Fund, Ltd.(16)	120,000	0.87	%	120,000	—	—	%
First Rand (Ireland) Plc.(17)	120,000	0.87	%	120,000	—	—	%
Taylor Stirling(18)	540	0.00	%	540	—	—	%
Jonathan O'Herron, Sr.(19)	1,860	0.01	%	1,860	—	—	%
Gilman Hill Fund I LLC(20)	12,000	0.09	%	12,000	—	—	%
John Hancock High Yield Fund(21)	216,000	1.57	%	216,000	—	—	%
John Hancock Funds II High Income Fund(22)	72,000	0.52	%	72,000	—	—	%
John Hancock Trust High Income Trust(23)	72,000	0.52	%	72,000	—	—	%
Mizuho International Plc.(24)	60,000	0.43	%	60,000	—	—	%

(1): Cantor Fitzgerald & Co., a New York general partnership, is the beneficial owner of 64,980 Units, consisting of 64,980 Class A Common Shares and Warrants to purchase 12,996 Class A Common Shares. CFS CF & Co. I Holdings, LP, a New York limited partnership, is the managing general partner of Cantor Fitzgerald & Co., and by virtue of such status may be deemed to be the beneficial owner of the Units held by Cantor Fitzgerald & Co. Cantor Fitzgerald Securities, a New York general partnership, is the managing general partner of CFS CF & Co. I Holdings, LP and by virtue of such status may be deemed to be the beneficial owner of the Units held by Cantor Fitzgerald & Co. CFLP CFS I Holdings, L.P., a Delaware limited partnership, is the managing general partner of Cantor Fitzgerald Securities and by virtue of such status may be deemed to be the beneficial owner of the Units held by Cantor Fitzgerald & Co. CFLP CFS Holdings, LLC, a Delaware limited liability company, is the managing general partner of CFLP CFS I Holdings, L.P. and by virtue of such status may be deemed to be the beneficial owner of the Units held by Cantor Fitzgerald & Co. Cantor Fitzgerald, L.P., a Delaware limited partnership, is the sole managing member of CFLP CFS Holding, LLC and by virtue of such status may be deemed to be the beneficial owner of the Units held by Cantor Fitzgerald & Co. CF Group Management, Inc., a New York corporation, is the managing general partner of Cantor Fitzgerald, L.P. and by virtue of such status may be deemed to be the beneficial owner of the Units held by Cantor Fitzgerald & Co. Howard W. Lutnick, a natural person, is the sole shareholder of

CF Group Management, Inc. and by virtue of such status may be deemed to be the beneficial owner of the Units held by Cantor Fitzgerald & Co.

(2): CRT Capital Group LLC is the beneficial owner of 64,980 Units, consisting of 64,980 Class A Common Shares and Warrants to purchase 12,996 Class A Common Shares. J. Christopher Young and C. Michael Vaughn Jr. are the controlling persons of CRT Capital Group LLC who have voting and dispositive power of the Units held by CRT Capital Group LLC and by virtue of such status mat be deemed to be the beneficial owners of Units held by CRT Capital Group LLC.
(3): Oppenheimer & Co. Inc. is the beneficial owner of 55,696 Units, consisting of 55,696 Class A Common Shares and Warrants to purchase 11,139 Class A Common Shares. Oppenheimer Holdings Inc. is the ultimate parent company of Oppenheimer & Co. Inc and may be deemed to have power to direct the vote and disposition of the Units held by Oppenheimer & Co. Inc. and by virtue of such status may be deemed to be the beneficial owner of the Units held by Oppenheimer & Co. Inc. Oppenheimer Holdings Inc. is a reporting company under the Securities Exchange Act of 1934, as amended.
(4): Delta Onshore, LP (the "Fund"), a Delaware limited partnership, is the beneficial owner of 128,100 Units, consisting of 128,100 Class A Common Shares and Warrants to purchase 25,620 Class A Common Shares. Trafelet Capital Management, LP is the investment advisor to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Trafelet & Co LLC is the general partner of Trafelet Capital Management, LP and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Mr. Remy W. Trafelet has sole investment and voting discretion over the Units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(5): Delta Institutional, LP (the "Fund"), a Delaware limited partnership, is the beneficial owner of 1,016,100 Units, consisting of 1,016,000 Class A Common Shares and Warrants to purchase 203,200 Class A Common Shares. Trafelet Capital Management, LP is the investment advisor to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Trafelet & Co LLC is the general partner of Trafelet Capital Management, LP and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Mr. Remy W. Trafelet has sole investment and voting discretion over the Units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(6): Delta Pleiades, LP (the "Fund"), a Delaware limited partnership, is the beneficial owner of 126,600 Units, consisting of 126,000 Class A Common Shares and Warrants to purchase 25,200 Class A Common Shares. Trafelet Capital Management, LP is the investment advisor to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Trafelet & Co LLC is the general partner of Trafelet Capital Management, LP and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Mr. Remy W. Trafelet has sole investment and voting discretion over the Units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(7): Delta Offshore, Ltd. (the Fund), a Cayman Islands limited company, is the beneficial owner of 1,729,200 Units, consisting of 1,729,200 Class A Common Shares and Warrants to purchase 345,840 Class A Common Shares. Trafelet Capital Management, LP is the investment advisor to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Trafelet & Co LLC is the general partner of Trafelet Capital Management, LP and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Mr. Remy W. Trafelet has sole investment and voting discretion over the Units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(8): Citigroup Global Markets Inc. is the beneficial owner of 2,000,000 Units, consisting of 2,000,000 Class A Common Shares and Warrants to purchase 400,000 Class A Common Shares. Citigroup Global Markets Inc. is a subsidiary of Citigroup Inc. Citigroup Inc. is a reporting company under the Securities Exchange Act of 1934, as amended.
(9): Silver Point Capital Fund L.P. (the "Fund") is the beneficial owner of 525,000 Units, consisting of 525,000 Class A Common Shares and Warrants to purchase 105,000 Class A Common Shares. Silver Point Capital, L.P. is the investment manager to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Silver Point Capital Management, L.L.C. is the general partner of Silver Point Capital, L.P., and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Messers. Edward A. Mule and Robert J. O'Shea are each members of Silver Point Capital Management, L.L.C., by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(10): Silver Point Capital Offshore Fund Ltd. (the "Fund") is the beneficial owner of 725,000 Units, consisting of 725,000 Class A Common Shares and Warrants to purchase 145,000 Class A Common Shares. Silver Point Capital, L.P. is the investment manager to the Fund and by virtue of such status may be deemed to be the

beneficial owner of the Units held by the Fund. Silver Point Capital Management, L.L.C. is the general partner of Silver Point Capital, L.P., and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Messers. Edward A. Mule and Robert J. O'Shea are each members of Silver Point Capital Management, L.L.C., by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.

(11): Kenmont Special Opportunities Master Fund, L.P. (the "Fund"), is the beneficial owner of 735,000 Units, consisting of 735,000 Class A Common Shares and Warrants to purchase 147,000 Class A Common Shares. Kenmont Investment Management L.P. is the investment advisor to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. KIP GP, LLC is the general partner of Kenmont Investment Management L.P. and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Mr. Donald R. Kendall, Jr. has sole investment and voting discretion over the Units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(12): Man Mac Miesque 10B Ltd. (the "Fund") is the beneficial owner of 315,000 Units, consisting of 315,000 Class A Common Shares and Warrants to purchase 63,000 Class A Common Shares. Kenmont Investment Management L.P. is the investment advisor to the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. KIP GP, LLC is the general partner of Kenmont Investment Management L.P. and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. Mr. Donald R. Kendall, Jr. has sole investment and voting discretion over the Units and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(13): Bear, Stearns International Limited is the beneficial owner of 650,000 Units, consisting of 650,000 Class A Common Shares and Warrants to purchase 130,000 Class A Common Shares. Bear, Stearns International Limited is owned by Bear Stearns Holdings Ltd. Bear Stearns Holdings Ltd. is owned by Bear Stearns UK Holdings Ltd., which is in turn owned by The Bear Stearns Companies Inc., a publicly trade company that is listed on the New York Stock Exchange.
(14): Loeb Partners Corporation, a Delaware corporation, is the beneficial owner of 400,000 Units, consisting of 400,000 Class A Common Shares and Warrants to purchase 80,000 Class A Common Shares. Thomas L. Kempner and Gideon J. King have sole authority to vote and to dispose of the Units, and by virtue of such authority may be deemed to be the beneficial owner, as such term is defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, of the Units held by Loeb Partners Corporation.
(15): Harbor Drive Special Situation Master Fund, Ltd. (the "Fund") is the beneficial owner of 150,000 Units, consisting of 150,000 Class A Common Shares and Warrants to purchase 30,000 Class A Common Shares. Harbor Drive Asset Management LLC is the investment manager of the Fund and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. CRT Capital Holdings LLC owns all the equity interests in and is the sole managing member of Harbor Drive Asset Management LLC and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund. C. Michael Vaughn and J. Christopher Young are the two managing members, and share control of CRT Capital Holdings LLC, and by virtue of such status may be deemed to be the beneficial owner of the Units held by the Fund.
(16): Professional Offshore Opportunity Fund, Ltd. is the beneficial owner of 100,000 Units, consisting of 100,000 Class A Common Shares and Warrants to purchase 20,000 Class A Common Shares. Messers. Howard Berger and Marc Swickle have voting and dispositive power over the Units held by Professional Offshore Opportunity Fund, Ltd. and by virtue of such status may be deemed to be the beneficial owner of the Units held by Professional Offshore Opportunity Fund, Ltd.
(17): First Rand (Ireland) Plc. Is the beneficial owner of 100,000 Units, consisting of 100,000 Class A Common Shares and Warrants to purchase 20,000 Class A Common Shares. RMB International (UK) Ltd. is the investment manger to First Rand (Ireland) Plc. and by virtue of such status may be deemed to be the beneficial owner of the Units held by First Rand (Ireland) Plc. RMB International (UK) Ltd. is a wholly owned indirect subsidiary of, and controlled by, FirstRand Ltd, a publicly traded company that is listed on the Johannesburg Stock Exchange.
(18): Taylor Stirling, a natural person, is the beneficial owner of 450 Units, consisting of 450 Class A Common Shares and Warrants to purchase 90 Class A Common Shares.
(19): Jonathan O'Herron, Sr., a natural person, is the beneficial owner of 1,550 Units, consisting of 1,550 Class A Common Shares and Warrants to purchase 310 Class A Common Shares.

(20): Gilman Hill Fund I LLC (the "Fund") is the beneficial owner of 10,000 Units, consisting of 10,000 Class A Common Shares and Warrants to purchase 2,000 Class A Common Shares. Whitney Merrill has sole authority to vote and to dispose of the Units, and by virtue of such authority may be deemed to be the beneficial owner, as such term is defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, of the Units held by the Fund.
(21): John Hancock High Yield Fund is the beneficial owner of 180,000 Units, consisting of 180,000 Class A Common Shares and Warrants to purchase 36,000 Class A Common Shares. John Hancock High Yield Fund is a registered investment company under the Investment company Act of 1940, as amended.
(22): John Hancock Funds II High Income Fund is the beneficial owner of 60,000 Units, consisting of 60,000 Class A Common Shares and Warrants to purchase 12,000 Class A Common Shares. John Hancock Funds II High Income Fund is a registered investment company under the Investment Company Act of 1940, as amended.
(23): John Hancock Trust High Income Trust is the beneficial owner of 60,000 Units, consisting of 60,000 Class A Common Shares and Warrants to purchase 12,000 Class A Common Shares. John Hancock Trust High Income Trust is a registered investment company under the Investment Company Act of 1940, as amended.
(24): Mizuho International Plc is the beneficial owner of 50,000 Units, consisting of 50,000 Class A Common Shares and Warrants to purchase 10,000 Class A Common Shares. Mizuho International Plc. is an indirect majority owned subsidiary of Mizuho Financial Group Inc. and by virtue of such status Mizuho Financial Group Inc. may be deemed to be the beneficial owner of the Units held by Mizuho International Plc. Mizuho Financial Group Inc. is a publicly held reporting company under the Securities Exchange Act of 1934, as amended.

Citigroup Global Markets Inc., Cantor Fitzgerald & Co., CRT Capital Group LLC, Oppenheimer & Co. Inc., Loeb Partners Corporation, Bear, Stearns International Limited, John Hancock High Yield Fund, John Hancock Funds II High Income Fund, John Hancock Trust High Income Trust and Mizuho International Plc. are each a broker-dealer registered pursuant to Section 15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or an affiliate of a broker-dealer registered under the Exchange Act. Each of the selling shareholders that is a broker-dealer or an affiliate of a broker-dealer has advised us that (i) it purchased the Units for the selling shareholder's own account in the ordinary course of business and (ii) at the time of purchase, the selling shareholder did not have any agreement or understanding, direct or indirect, with any other person to otherwise distribute the purchased Units. Each of Citigroup Global Markets Inc., Cantor Fitzgerald & Co., CRT Capital Group LLC, Oppenheimer & Co. Inc., Loeb Partners Corporation, Bear, Stearns International Limited, John Hancock High Yield Fund, John Hancock Funds II High Income Fund, John Hancock Trust High Income Trust and Mizuho International Plc. may be deemed to be an "underwriter" within the meaning of Section 2(11) of the Securities Act. Other selling security holders and any underwriters or broker-dealers that act in connection with the sale of securities might also be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any commissions received by such underwriters or broker-dealers and any profit on the resale of the securities sold by them while acting as principals might be deemed to be underwriting discounts or commission under the Securities Act.

PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their Class A Common Shares or Warrants on any stock exchange, market or trading facility on which the Class A Common Shares or Warrants are traded or in private transactions. The initial offering price for our Class A Common Shares will be $9.11 and for our Warrants will be $4.46. Once a public market is established for our Class A Common Shares and Warrants the offering price of our Class A Common Shares and our Warrants by the selling shareholders will be based on prevailing market or privately negotiated prices. The selling stockholders may use any one or more of the following methods when selling Class A Common Shares or Warrants:

•: ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;
•: block trades in which the broker-dealer will attempt to sell the Class A Common Shares or Warrants as agent but may position and resell a portion of the block as principal to facilitate the transaction;
•: purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
•: an exchange distribution in accordance with the rules of the applicable exchange;
•: privately negotiated transactions;
•: to cover short sales made after the date that this registration statement is declared effective by the Commission;
•: broker-dealers may agree with the selling stockholders to sell a specified number of such Class A Common Shares or Warrants at a stipulated price per share;
•: a combination of any such methods of sale; and
•: any other method permitted pursuant to applicable law.

The selling stockholders may also sell Class A Common Shares or Warrants under Rule 144 under the Securities Act, if available, rather than under this prospectus.

In connection with sales of the Class A Common Shares or Warrants or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Class A Common Shares or Warrants in the course of hedging in positions they assume. The selling stockholders may also sell their shares of our Class A Common Shares or Warrants short and deliver Class A Common Shares or Warrants covered by a prospectus filed as part of a registration statement to close out short positions and to return borrowed Class A Common Shares or Warrants in connection with such short sales. The selling stockholders may also loan or pledge their Class A Common Shares or Warrants to broker-dealers that in turn may sell such Class A Common Shares or Warrants.

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The selling stockholders may from time to time pledge or grant a security interest in some or all of the Class A Common Shares or Warrants owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Class A Common Shares or Warrants from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of

selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

Upon us being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Class A Common Shares or Warrants through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of Class A Common Shares or Warrants involved, (iii) the price at which such Class A Common Shares or Warrants were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon being notified in writing by a selling stockholder that a donee or pledgee intends to sell more than 500 Class A Common Shares or Warrants, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The selling stockholders also may transfer Class A Common Shares or Warrants in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The selling stockholders and any broker-dealers or agents that are involved in selling the Class A Common Shares or Warrants may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Class A Common Shares or Warrants will be paid by the selling stockholder and/or the purchasers. Each selling stockholder has represented and warranted to us that it acquired the Class A Common Shares or Warrants subject to this registration statement in the ordinary course of such selling stockholder's business and, at the time of its purchase of such Class A Common Shares or Warrants such selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such Class A Common Shares or Warrants.

We have advised each selling stockholder that it may not use Class A Common Shares or Warrants registered on this registration statement to cover short sales of Class A Common Shares or Warrants made prior to the date on which this registration statement shall have been declared effective by the Commission. If a selling stockholder uses this prospectus for any sale of the Class A Common Shares or Warrants, it will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling stockholders in connection with sales of their respective Class A Common Shares or Warrants under this registration statement.

We are required to pay all fees and expenses incident to the registration of the Class A Common Shares or Warrants covered by this Registration Statement, but we will not receive any proceeds from the sale of the Class A Common Shares or Warrants. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

DESCRIPTION OF OUR CAPITAL STOCK AND WARRANTS

Class A Common Shares

The following is a description of the material terms of our amended and restated articles of incorporation and bylaws in effect as of October 26, 2006.

Purpose

Our purpose, as stated in our amended and restated articles of incorporation, is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Business Corporations Act of the Marshall Islands, or the BCA. Our amended and restated articles of incorporation and bylaws do not impose any limitations on the ownership rights of our shareholders.

Authorized Capital Stock

Under our amended and restated articles of incorporation our authorized capital stock consists of 120 million Class A Common Shares, par value $0.001 per share, of which 11,497,656 shares are issued and outstanding, and five million Class B Common Shares, par value $0.001 per share, of which 2,003,288 shares are issued and outstanding, and 25 million shares of preferred stock, par value $0.001 per share, of which no shares are issued and outstanding.

Class A Common Shares

Each outstanding Class A Common Share entitles the holder to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of Class A Common Shares are entitled to receive ratably all dividends, if any, declared by our board of directors out of funds legally available for dividends. Upon our dissolution or liquidation or the sale of all or substantially all or our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our Class A Common Shares are entitled to receive pro rata our remaining assets available for distribution. Holders of Class A Common Shares do not have conversion, redemption or pre-emptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of Class A Common Shares are subject to the rights of the holders of any shares of preferred stock, which we may issue in the future.

Class B Common Shares

None of our outstanding Class B Common Shares have voting rights. Upon our liquidation, the assets available for distribution to shareholders, if any, shall be paid to holders of our Class A Common Shares up to the full amount of their purchase price, and thereafter to holders of our Class B Common Shares in an amount equal to each Class B Common Shares' par value. Thereafter the Class B Common Shares receive no further distributions, and any remaining assets available for distribution shall be paid to the holders of the Class A Common Shares.

Dividends will be declared on our Class B Common Shares in the same amount as on our Class A Common Shares, but will not be payable on our Class B Common Shares until the later of (i) the conversion of Class B Common Shares into Class A Common Shares and (ii) the payment date for dividends that were declared on the Class A Common Shares at the same time as dividends that were declared on the Class B Common Shares.

Upon the earlier of a change of control as defined in our amended and restated articles of incorporation or the completion of a public offering of our Class A Common Shares that we may conduct in the futures resulting in gross proceeds to us of at least $50 million, our outstanding Class B Common Shares will be converted into Class A Common Shares on a one-for-one basis. The number of Class B Common Shares that will be converted into Class A Common Shares will be reduced by one percentage point of the aggregate outstanding Class A and Class B Common Shares (excluding the 186,656 Class A Common Shares that were issued to the initial purchasers in connection with the private placement) subject to a total reduction of up to five percentage points, or 741,954 Class B Common Shares, for each 30-day period beginning 180 days after the closing of the private placement that a registration statement relating to an exchange offer for the units sold to investors in the private placement has not been declared effective by the Commission, or in the case of a shelf registration statement, the Company has not complied with its obligation to use its commercially reasonable efforts to file and cause the shelf registration to be declared effective. Any Class B Common Shares not converted into Class A Common Shares shall be cancelled and any accrued but unpaid dividends thereon will be forfeited.

Preferred Stock

Our amended and restated articles of incorporation authorize our board of directors to establish one or more series of preferred stock and to determine, with respect to any series of preferred stock, the terms and rights of that series, including:

•: the designation of the series;
•: the number of shares of the series;
•: the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of such series; and
•: the voting rights, if any, of the holders of the series.

Units

Each of our units consists of one Class A Common Share and one-fifth of one Warrant. The Class A Common Share and one-fifth of one Warrant are transferable together as a unit, and are not separately transferable until the earlier of (i) the date on which a resale registration statement concerning the units, and component Class A Common Shares and Warrants and Class A Common Shares issuable upon exercise of the Warrants is declared effective by the SEC and (ii) such earlier date as the initial purchasers may determine the Separation Date. After the Separation Date, the Class A Common Shares and the Warrants will be separately, or transferable.

Warrants

The following is a summary of certain provisions of our Warrants. The following summary of the terms of the Warrants does not purport to be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions set forth in the Warrant agreement.

General

One-fifth of one Warrant was issued together with one of our Class A Common Shares in each unit offered in the private placement. Each Warrant entitles its holder to purchase one Class A Common Share at an exercise price of $10.00 per share in cash. The Warrants become exercisable upon the closing of a public offering for our Class A Common Shares that we may conduct in the future resulting in gross proceeds to us of at least $50 million, which we refer to as a qualified public offering, and may be exercised at any time thereafter until its expiration. Each Warrant will expire on November 21, 2011. In the event we consummate a qualified public offering in which the offering price per Class A Common Share is less than $10.00 per share, then the exercise price of each Warrant will be reset to the offering price per Class A Common Shares in such qualified public offering. The Warrants do not provide for cashless exercises.

Holders of the Warrants have no right to vote on matters submitted to our shareholders and have no right to receive dividends. Holders of Warrants will not be entitled to share in our assets in the event of our liquidation, dissolution or winding up.

Merger or Liquidation of the Company

In the event of any merger, consolidation or other combination of the Company with another entity, provision must be made for Warrant holders to receive, upon the exercise of Warrants and in lieu of Class A Common Shares, such cash, securities or assets as would be issued or paid in respect of Class A Common Shares upon such merger, consolidation or other combination. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, upon the exercise of such Warrants, each Warrant holder shall be entitled to share, with respect to the Class A Common Shares issued upon exercise of his Warrants, equally and ratably in any cash or non-cash distributions payable to holders of Class A Common Shares. Warrant holders will not be entitled to receive payment of any such distribution until payment of the exercise price is made, and the Warrant is surrendered.

Anti-Dilution

The number of Class A Common Shares issuable upon exercise of a Warrant will be adjusted upon the occurrence of certain events including, without limitation, the payment of a dividend on, or the making of any distribution in respect of, capital stock of the Company, payment of which is made in:

•: shares of the Company's capital stock (including Class A Common Shares);
•: options, Warrants or rights to purchase, or securities convertible into or convertible or exercisable for, shares of common stock or other securities or property of our at an exercise price below fair market value; or
•: evidences of indebtedness or assets of the Company.

An adjustment will also be made in the event of a combination, subdivision or reclassification of the Class A Common Shares. Adjustments will also be made in the event that we consummate any equity offering prior to the consummation of a qualified public offering. In addition, adjustments will be made whenever and as often as any specified event requires an adjustment to occur, provided that no adjustment will be required until such time as the adjustment would be more than one percent.

Reservation of Shares

We have authorized and reserved for issuance and will at all times reserve and keep available such number of Class A Common Shares as will be issuable upon the exercise of all outstanding Warrants. Such Class A Common Shares, when paid for and issued, will be duly and validly issued, fully paid and nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof.

Directors

Our directors are elected by a plurality of the votes cast by shareholders entitled to vote. There is no provision for cumulative voting.

Our current amended and restated bylaws require our board of directors to consist of at least three members. Following the completion of this offering, our board of directors will consist of five members. Our current amended and restated bylaws may be amended by holders of at least 70% our Class A Common Shares or by the vote of 66²/3% of our entire board of directors.

Each director shall be elected annually on a staggered basis, and shall serve for a three year term and until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. Our board of directors has the authority to fix the amounts which shall be payable to the members of the board of directors for attendance at any meeting or for services rendered to us.

Shareholder Meetings

Under our amended and restated bylaws, annual meetings of shareholders will be held at a time and place selected by our board of directors. The meetings may be held in or outside of the Republic of the Marshall Islands. Special meetings may be called at any time by a majority of our board of directors, the chairman of the board of directors or the president of the Company. Our board of directors may set a record date between 15 and 60 days before the date of any meeting to determine the shareholders that will be eligible to receive notice and vote at the meeting.

Dissenters' Rights of Appraisal and Payment

Under the BCA, our shareholders have the right to dissent from various corporate actions, including any merger or consolidation and the sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our articles of incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which our shares are primarily traded on a local or national securities exchange.

Shareholders' Derivative Actions

Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a holder of common shares both at the time the derivative action is commenced and at the time of the transaction to which the action relates.

Limitations on Liability and Indemnification of Officers and Directors

The BCA authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their shareholders for monetary damages for breaches of directors' fiduciary duties. Our amended and restated articles of incorporation and bylaws include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by law.

insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability and indemnification provisions in our articles of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Anti-takeover Effect of Certain Provisions of our Amended and Restated Articles of Incorporation and Bylaws

Several provisions of our articles of incorporation and bylaws, which are summarized below, may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of us by means of a tender offer, a proxy contest or otherwise that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors.

Blank Check Preferred Stock

Under the terms of our amended and restated articles of incorporation, our board of directors has authority, without any further vote or action by our shareholders, to issue up to 25 million shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of us or the removal of our management.

Election and Removal of Directors

Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our articles of incorporation also provide that our directors may be removed for cause upon the affirmative vote of not less than 66²/3% of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder's notice must be received at our principal executive offices not less than 120 days nor more than 180 days prior to the date on which we first mailed our proxy materials for the preceding year's annual meeting of shareholders. Our bylaws also specify requirements as to the form and content of a shareholder's notice. These provisions may impede shareholders' ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.

Classified Board of Directors

Our amended and restated articles of incorporation provide for the division of our board of directors into three classes of directors upon the completion of this offering, with each class as nearly equal in number as possible, serving staggered three year terms. Approximately one-third of our board of directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay stockholders who do not agree with the policies of our board of directors from removing a majority of our board of directors for two years.

Business Combinations

Although the BCA does not contain specific provisions regarding "business combinations" between companies organized under the laws of the Marshall Islands and "interested shareholders," we have included these provisions in our articles of incorporation. Specifically, our articles of incorporation prohibit us from engaging in a "business combination" with certain persons for three years following the date the person becomes an interested shareholder. Interested shareholders generally include:

•: any person who is the beneficial owner of 20% or more of our outstanding voting stock; or
•: any person who is our affiliate or associate and who held 20% or more of our outstanding voting stock at any time within three years before the date on which the person's status as an interested shareholder is determined, and the affiliates and associates of such person.

Subject to certain exceptions, a business combination includes, among other things:

•: certain mergers or consolidations of us or any direct or indirect majority-owned subsidiary of ours;
•: any sale, lease, exchange, mortgage, pledge, transfer or other disposition of our assets or of any subsidiary of ours having an aggregate market value equal to 10% or more of either the aggregate market value of all of our assets, determined on a consolidated basis, or the aggregate value of all of our outstanding stock;
•: certain transactions that result in the issuance or transfer by us of any stock of ours to the interested shareholder;
•: any transaction involving us or any of our subsidiaries that has the effect of increasing the proportionate share of any class or series of stock, or securities convertible into any class or series of stock, of ours or any such subsidiary that is owned directly or indirectly by the interested shareholder or any affiliate or associate of the interested shareholder; and
•: any receipt by the interested shareholder of the benefit directly or indirectly (except proportionately as a shareholder) of any loans, advances, guarantees, pledges or other financial benefits provided by or through us.

These provisions of our articles of incorporation do not apply to a business combination if:

•: before a person became an interested shareholder, our board of directors approved either the business combination or the transaction in which the shareholder became an interested shareholder;
•: upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than certain excluded shares;
•: at or following the transaction in which the person became an interested shareholder, the business combination is approved by our board of directors and authorized at an annual or special meeting of shareholders, and not by written consent, by the affirmative vote of the

holders of at least 66²/3% of our outstanding voting stock that is not owned by the interest shareholder;

•

the shareholder was or became an interested shareholder prior to the closing of this offering.

•

a shareholder became an interested shareholder inadvertently and (i) as soon as practicable divested itself of ownership of sufficient shares so that the shareholder ceased to be an interested shareholder; and (ii) would not, at any time within the three-year period immediately prior to a business combination between us and such shareholder, have been an interested shareholder but for the inadvertent acquisition of ownership; or

•

the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required under our articles of incorporation which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an interested shareholder during the previous three years or who became an interested shareholder with the approval of the board; and (iii) is approved or not opposed by a majority of the members of the board of directors then in office (but not less than one) who were directors prior to any person becoming an interested shareholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to:

(i): a merger or consolidation of us (except for a merger in respect of which, pursuant to the BCA, no vote of our shareholders is required);
(ii): a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of us or of any direct or indirect majority-owned subsidiary of ours (other than to any direct or indirect wholly-owned subsidiary or to us) having an aggregate market value equal to 50% or more of either that aggregate market value of all of our assets determined on a consolidated basis or the aggregate market value of all the outstanding shares; or
(iii): a proposed tender or exchange offer for 50% or more of our outstanding voting stock.

MARSHALL ISLANDS COMPANY CONSIDERATIONS

Our corporate affairs are governed by our articles of incorporation and bylaws and by the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. While the BCA also provides that it is to be in interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Republic of the Marshall Islands and we can not predict whether Marshall Islands courts would reach the same conclusions as courts in the United States. Thus, you may have more difficulty in protecting your interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction which has developed a substantial body of case law. The following table provides a comparison between the statutory provisions of the BCA and the Delaware General Corporation Law relating to shareholders' rights.

Marshall Islands		Delaware
Shareholder Meetings
•	Held at a time and place as designated in the bylaws	•	May be held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the board of directors
•	May be held within or without the Marshall Islands	•	May be held within or without Delaware
•	Notice:	•	Notice:
•	Whenever shareholders are required to take action at a meeting, written notice shall state the place, date and hour of the meeting and indicate that it is being issued by or at the direction of the person calling the meeting	•	Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any
•	A copy of the notice of any meeting shall be given personally or sent by mail not less than 15 nor more than 60 days before the meeting	•	Written notice shall be given not less than 10 nor more than 60 days before the meeting
Shareholders' Voting Rights
•	Any action required to be taken by meeting of shareholders may be taken without meeting if consent is in writing and is signed by all the shareholders entitled to vote	•	Shareholders may act by written consent to elect directors
•	Any person authorized to vote may authorize another person or persons to act for him by proxy	•	Any person authorized to vote may authorize another person or persons to act for him by proxy
•	Unless otherwise provided in the articles of incorporation, a majority of shares entitled to vote constitutes a quorum. In no event shall a quorum consist of fewer than one-third of the shares entitled to vote at a meeting	•	For stock corporations, certificate of incorporation or bylaws may specify the number to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum

•	When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders	•	When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders
•	The articles of incorporation may provide for cumulative voting in the election of directors	•	The certificate of incorporation may provide for cumulative voting
•	Any two or more domestic corporations may merge into a single corporation if approved by the board and if authorized by a majority vote of the holders of outstanding shares at a shareholder meeting	•	Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by shareholders of each constituent corporation at an annual or special meeting
•	Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the corporation's usual or regular course of business, once approved by the board, shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a shareholder meeting	•	Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of a corporation entitled to vote
•	Any domestic corporation owning at least 90% of the outstanding shares of each class of another domestic corporation may merge such other corporation into itself without the authorization of the shareholders of any corporation	•	Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of shareholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called shareholder meeting
•	Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be authorized without the vote or consent of the shareholders, unless otherwise provided for in the articles of incorporation	•	Any mortgage or pledge of a corporation's property and assets may be authorized without the vote or consent of shareholders, except to the extent that the certificate of incorporation otherwise provides
Directors
•	Board must consist of at least one member	•	Board must consist of at least one member
•	Number of members can be changed by an amendment to the bylaws, by the shareholders, or by action of the board	•	Number of board members shall be fixed by the bylaws, unless the certificate of incorporation fixes the number of directors
•	If the board is authorized to change the number of directors, it can only do so by majority of the entire board and so long as no decrease in the number shall shorten the term of any incumbent director	•	If the number of directors is fixed by the certificate of incorporation, a change in the number shall be made only by an amendment of the certificate

•	Removal:	•	Removal:
•	Any or all of the directors may be removed for cause by vote of the shareholders	•	Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote unless the certificate of incorporation otherwise provides
•	If the articles of incorporation or the bylaws so provide, any or all of the directors may be removed without cause by vote of the shareholders	•	In the case of a classified board, shareholders may effect removal of any or all directors only for cause
Dissenters' Rights of Appraisal
•	Shareholders have a right to dissent from a merger or sale of all or substantially all assets not made in the usual course of business, and receive payment of the fair value of their shares	•	Appraisal rights shall be available for the shares of any class or series of stock of a corporation in a merger or consolidation
•	A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment for such shares if the amendment:
•	Alters or abolishes any preferential right of any outstanding shares having preference; or
•	Creates, alters, or abolishes any provision or right in respect to the redemption of any outstanding shares; or
•	Alters or abolishes any preemptive right of such holder to acquire shares or other securities; or
•	Excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class
Shareholder's Derivative Actions
•	An action may be brought in the right of a corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates or of a beneficial interest in such shares or certificates. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law	•	In any derivative suit instituted by a shareholder or a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder's stock thereafter devolved upon such shareholder by operation of law

•	Complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort	•	Other requirements regarding derivative suits have been created by judicial decision, including that a shareholder may not bring a derivative suit unless he or she first demands that the corporation sue on its own behalf and that demand is refused (unless it is shown that such demand would have been futile)
•	Such action shall not be discontinued, compromised or settled, without the approval of the High Court of the Republic of the Marshall Islands
•	Reasonable expenses including attorney's fees may be awarded if the action is successful
•	Corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the plaintiff owns less than 5% of any class of stock and the shares have a value of less than $50,000

MATERIAL U.S. AND MARSHALL ISLANDS INCOME TAX CONSIDERATIONS

The following is a discussion of the material Marshall Islands and United States federal income tax considerations relevant to an investment decision by a U.S. Holder, and a Non-U.S. Holder, each as defined below, with respect to the Class A Common Shares and Warrants. This discussion does not purport to deal with the tax consequences of owning Class A Common Shares or Warrants to all categories of investors, some of which, such as dealers in securities, investors whose functional currency is not the United States dollar and investors that own, actually or under applicable constructive ownership rules, 10% or more of our Class A Common Shares, may be subject to special rules. This discussion deals only with holders who hold the Class A common stock and Warrants as capital assets. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal, state, local or foreign law of the ownership of Class A Common Shares and Warrants.

Marshall Islands Tax Considerations

We are incorporated in the Republic of the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our shareholders.

United States Federal Income Tax Considerations

In the opinion of Seward & Kissel LLP, the following are the material United States federal income tax consequences to us of our activities and to U.S. Holders, as defined below, of our Class A common stock and Warrants. The following discussion of United States federal income tax matters is based on the United States Internal Revenue Code of 1986, or the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, all of which are subject to change, possibly with retroactive effect. This discussion is based in part upon Treasury Regulations promulgated under Section 883 of the Code, or Section 883. The discussion below is based, in part, on the description of our business as described in "Business" above and assumes that we conduct our business as described in that section. References in the following discussion to "we" and "us" are to Paragon Shipping Inc. and its subsidiaries on a consolidated basis.

United States Federal Income Taxation of Our Company

Taxation of Operating Income: In General

Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, code sharing arrangements or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as "shipping income," to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sources within the United States, which we refer to as "U.S.-source shipping income."

Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within the United States. We are not permitted to engage in transportation that produces income which is considered to be 100% from sources within the United States.

Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax.

In the absence of exemption from tax under Section 883, our gross U.S.-source shipping income would be subject to a 4% tax imposed without allowance for deductions as described below.

Exemption of Operating Income from United States Federal Income Taxation

Under Section 883, we will be exempt from United States federal income taxation on our U.S.-source shipping income if:

•: we are organized in a foreign country (our "country of organization") that grants an "equivalent exemption" to corporations organized in the United States; and

either:

•: more than 50% of the value of our stock is owned, directly or indirectly, by "qualified stockholders," individuals who are (i) "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States and (ii) satisfy certain documentation requirements, which we refer to as the "50% Ownership Test," or
•: our Class A Common Shares are "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test."

The Republic of the Marshall Islands, the jurisdiction where we and our ship-owning subsidiaries are incorporated, grants an "equivalent exemption" to United States corporations. Therefore, we will be exempt from United States federal income taxation with respect to our U.S.-source shipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.

Due to the widely-held nature of our stock, we will have difficulty satisfying the 50% Ownership Test. Our ability to satisfy the Publicly-Traded Test is discussed below.

The regulations define an "established securities market" to include a national securities exchange that is registered under section 6 of the Securities Act of 1934, a "United States over-the-counter market," and certain foreign securities exchanges. We intend to take the position for United States federal income tax purposes that the OTC Bulletin Board qualifies as an "United States over-the-counter market" and thus is an "established securities market" under the regulations. However, we do not believe that The PORTAL^SM Market qualifies as an "established securities market" for this purpose. Therefore, we will not satisfy the Publicly-Traded Test for any taxable year during which our Class A Common Shares are traded on The PORTAL^SM Market for more than half the days of the taxable year.

The regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be "primarily traded" on an established securities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Upon the registration of our Class A Common Shares pursuant to the registration statement of which this prospectus is a part, we anticipate that our Class A Common Shares, which will be the sole class of our issued and outstanding stock that are publicly traded will be "primarily traded" on the OTC Bulletin Board.

100

Under the regulations, our stock will be considered to be "regularly traded" on an established securities market if one or more classes of our stock representing 50% or more of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listed on the market which we refer to as the listing threshold. Since our Class A Common Shares, which will be the sole class of stock that will be publicly traded after its registration pursuant to the registration statement of which this prospectus is a part, will be listed on the OTC Bulletin Board, we will satisfy the listing requirement.

It is further required that with respect to each class of stock relied upon to meet the listing threshold (i) such class of the stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or 1/6 of the days in a short taxable year; and (ii) the aggregate number of shares of such class of stock traded on such market is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year. We believe our Class A Common Shares will satisfy the trading frequency and trading volume tests. Even if this were not the case, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied by a class of stock if, as we expect to be the case with our Class A Common Shares, such class of stock is traded on an established market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.

Notwithstanding the foregoing, the regulations provide, in pertinent part, our Class A common stock will not be considered to be "regularly traded" on an established securities market for any taxable year in which 50% or more of the outstanding shares of our Class A Common Shares are owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of our common stock, which we refer to as the "5 Percent Override Rule."

For purposes of being able to determine the persons who own 5% or more of our stock, or "5% Stockholders," the regulations permit us to rely on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the "SEC," to identify persons who have a 5% or more beneficial interest in our Class A Common Shares. The regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Stockholder for such purposes.

After the registration of our Class A Common Shares, we may be subject to the 5 Percent Override Rule. Therefore, we can give no assurance that we will satisfy the Publicly Traded Test.

Under the regulations, if we do not satisfy the Publicly-Traded Test and therefore are subject to the 5 Percent Override Rule or the 50% Ownership Test, we would have to satisfy certain substantiation requirements regarding the identity of our shareholders in order to qualify for the Code Section 883 exemption. These requirements are onerous and it is unclear whether we would be able to satisfy them.

Therefore we can give no assurances regarding our qualification or that of our subsidiaries for the benefits of Section 883.

Taxation in Absence of Exemption

To the extent the benefits of Section 883 are unavailable, our U.S.-source shipping income, to the extent not considered to be "effectively connected" with the conduct of a U.S. trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions. Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being derived from U.S. sources, the maximum effective rate of U.S. federal income tax on our shipping income would never exceed 2% under the 4% gross basis tax regime.

101

To the extent the benefits of the Section 883 exemption are unavailable and our U.S.-source shipping income is considered to be "effectively connected" with the conduct of a U.S. trade or business, as described below, any such "effectively connected" U.S.-source shipping income, net of applicable deductions, would be subject to the U.S. federal corporate income tax currently imposed at rates of up to 35%. In addition, we may be subject to the 30% "branch profits" taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of its U.S. trade or business.

Our U.S.-source shipping income would be considered "effectively connected" with the conduct of a U.S. trade or business only if:

•: We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and
•: substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We do not intend to have any vessel operating to the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S.-source shipping income will be "effectively connected" with the conduct of a U.S. trade or business.

United States Taxation of Gain on Sale of Vessels

Regardless of whether we qualify for exemption under Section 883, we will not be subject to United States federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under United States federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by us will be considered to occur outside of the United States.

United States Federal Income Taxation of U.S. Holders

As used herein, the term "U.S. Holder" means a beneficial owner of Class A Common Shares or Warrants that is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership holds our Class A Common Shares or Warrants, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our Class A Common Shares or Warrants, you are encouraged to consult your tax advisor.

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our Class A Common Shares to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or "qualified dividend income" as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United

102

States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in his Class A Common Shares on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United States corporation, U.S. Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our Class A shares will generally be treated as "passive category income" or, in the case of certain types of U.S. Holders, "general category income" for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

Our Class A Common Shares are listed on The PORTAL^SM Market and we will apply to have them qualified for trading on the OTC Bulletin Board. Unless and until our Class A Common Shares are readily tradable on an established securities market in the United States, dividends paid on our Class A Common Shares will be taxable as ordinary income to a U.S. Holder. Neither The PORTAL^SM Market nor the OTC Bulletin Board is an established securities market for this purpose. If our Class A Common Shares come to be listed on an established securities market in the United States, dividends paid on our Class A common stock to a U.S. Holder who is an individual, trust or estate (a "U.S. Individual Holder") will generally be treated as "qualified dividend income" that is taxable to such U.S. Individual Holders at preferential tax rates (through 2010) provided that (1) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be) and (2) the U.S. Individual Holder has owned the Class A Common Shares for more than 60 days in the 121-day period beginning 60 days before the date on which the Class A Common Shares become ex-dividend. Even if our Class A Common Shares were to be listed on an established securities market in the United States, there is no assurance that any dividends paid on our Class A Common Shares will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Legislation has been introduced in the U.S. House of Representatives which, if enacted in its present form, would preclude our dividends from qualifying for such preferential rates prospectively from the date of the enactment, even if our Class A Common Shares come to be listed on an established securities market in the United States.

Special rules may apply to any "extraordinary dividend," generally a dividend in an amount which is equal to or in excess of ten percent of a shareholder's adjusted basis (or fair market value in certain circumstances) in a share of Class A Common Shares paid by us. If we pay an "extraordinary dividend" on our Class A Common Shares and such dividend is treated as "qualified dividend income," then any loss derived by a U.S. Individual Holder from the sale or exchange of such Class A Common Shares will be treated as long-term capital loss to the extent of such dividend.

Sale, Exchange or other Disposition of Class A Common Shares

Assuming we do not constitute a passive foreign investment company for any taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our Class A Common Shares in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder's tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder's holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. Holder's ability to deduct capital losses is subject to certain limitations.

Exercise, Sale, Retirement or Other Taxable Disposition of Warrants

Neither we nor a U.S. Holder of a Warrant will recognize gain or loss as a result of the U.S. Holder's receipt of our Class A Common Shares upon exercise of a Warrant. A U.S. Holder's adjusted tax basis in the Class A Common Shares received will be an amount equal to the sum of (i) the U.S. Holder's adjusted tax basis in the Warrant exercised plus (ii) the amount of the exercise price for the

103

Warrant. If the Warrants lapse without exercise, the U.S. Holder will recognize capital loss in the amount equal to the U.S. Holder's adjusted tax basis in the Warrants. A U.S. Holder's holding period for Class A Common Shares received upon exercise of a Warrant will commence on the date the Warrant is exercised.

Upon the sale, retirement or other taxable disposition of a Warrant, the U.S. Holder will recognize gain or loss to the extent of the difference between the sum of the cash and the fair market value of any property received in exchange therefor and the U.S. Holder's tax basis in the Warrant. Any such gain or loss recognized by a holder upon the sale, retirement or other taxable disposition of a Warrant will be capital gain or loss and will be long-term capital gain or loss if the Warrant has been held for more than one year.

The exercise price of a Warrant is subject to adjustment under certain circumstances. If an adjustment increases a proportionate interest of the holder of a Warrant in the fully diluted common stock without proportionate adjustments to the holders of our common stock, U.S. Holder of the Warrants may be treated as having received a constructive distribution, which may be taxable to the U.S. Holder as a dividend.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special United States federal income tax rules apply to a U.S. Holder that holds stock or Warrants in a foreign corporation classified as a passive foreign investment company for United States federal income tax purposes. In general, we will be treated as a passive foreign investment company with respect to a U.S. Holder if, for any taxable year in which such holder held our Class A Common Shares, either:

•: at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or
•: at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income (including cash).

For purposes of determining whether we are a passive foreign investment company, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary's stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute "passive income" unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

Based on our current operations and future projections, we do not believe that we have been, are, nor do we expect to become, a passive foreign investment company with respect to any taxable year. Alternatively, we intend to rely upon the "start-up exception" to the PFIC rules to avoid being characterized as a passive foreign investment company in 2006. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a passive foreign investment company, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we are a passive foreign investment company. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning the characterization of income derived from time charters and voyage charters as services

104

income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing passive foreign investment companies, the Internal Revenue Service or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a passive foreign investment company with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a passive foreign investment company for any taxable year, a U.S. Holder would be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a "Qualified Electing Fund," which election we refer to as a "QEF election." As an alternative to making a QEF election, a U.S. Holder may, if our Class A Common Shares come to be traded on an "established securities market", be able to make a "mark-to-market" election with respect to our Class A Common Shares, as discussed below.

Taxation of U.S. Holders Making a Timely QEF Election

If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an "Electing Holder," the Electing Holder must report each year for United States federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder's adjusted tax basis in the Class A Common Shares will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the Class A Common Shares and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our Class A Common Shares. A U.S. Holder would make a QEF election with respect to any year that our company is a passive foreign investment company by filing IRS Form 8621 with his United States federal income tax return. If we were aware that we were to be treated as a passive foreign investment company for any taxable year, we would provide each U.S. Holder with all necessary information in order to make the QEF election described above. A U.S. Holder may not make a QEF election with respect to its ownership of a Warrant.

Taxation of U.S. Holders Making a "Mark-to-Market" Election

Alternatively, if we were to be treated as a passive foreign investment company for any taxable year and our Class A Common Shares are treated as "marketable stock," a U.S. Holder would be allowed to make a "mark-to-market" election with respect to our Class A Common Shares, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. For so long as our Class A Common Shares are traded on The PORTAL^SM Market or the OTC Bulletin Board, our stock will not be treated as "marketable stock" for this purpose. If our stock comes to be listed on an established securities market, then our stock will be treated as "marketable stock" for this purpose. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the Class A Common Shares at the end of the taxable year over such holder's adjusted tax basis in the Class A Common Shares. The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis in the Class A Common Shares over its fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder's tax basis in his Class A Common Shares would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our Class A Common Shares would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the Class A Common Shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. Holder.

105

Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, if we were to be treated as a passive foreign investment company for any taxable year, a U.S. Holder who does not make either a QEF election or a "mark-to-market" election for that year, whom we refer to as a "Non-Electing Holder," would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on our Class A Common Shares or Warrants in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the Class A Common Shares or Warrants), and (2) any gain realized on the sale, exchange or other disposition of our Class A Common Shares or Warrants. Under these special rules:

•: the excess distribution or gain would be allocated ratably over the Non-Electing Holders' aggregate holding period for the Class A Common Shares or Warrants;
•: the amount allocated to the current taxable year and any taxable year before we became a passive foreign investment company would be taxed as ordinary income; and
•: the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

These penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of our Class A Common Shares or Warrants. If a Non-Electing Holder who is an individual dies while owning our Class A Common Shares or Warrants, such holder's successor generally would not receive a step-up in tax basis with respect to such stock or Warrants.

United States Federal Income Taxation of "Non-U.S. Holders"

A beneficial owner of Class A Common Shares or Warrants that is not a U.S. Holder is referred to herein as a "Non-U.S. Holder."

Dividends on Class A Common Shares

Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to our Class A Common Shares, unless that income is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.

Sale, Exchange or Other Disposition of Class A Common Shares or Warrants

Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our Class A Common Shares or Warrants, unless:

•: the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or
•: the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

106

If the Non-U.S. Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the Class A Common Shares or Warrants, including dividends and the gain from the sale, exchange or other disposition of the stock or Warrants that is effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, if you are a corporate Non-U.S. Holder, your earnings and profits that are attributable to the effectively connected income, which are subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty.

A Non-U.S. Holder will not recognize any gain or loss on the exercise or lapse of the Warrants.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements. Such payments will also be subject to backup withholding tax if you are a non-corporate U.S. Holder and you:

•: fail to provide an accurate taxpayer identification number;
•: are notified by the Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or
•: in certain circumstances, fail to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY, as applicable.

If you sell your Class A Common Shares or Warrants to or through a United States office or broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your Class A Common Shares or Warrants through a non-United States office of a non-United States broker and the sales proceeds are paid to you outside the United States then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your Class A Common Shares or Warrants through a non-United States office of a broker that is a United States person or has some other contacts with the United States.

Backup withholding tax is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your income tax liability by filing a refund claim with the Internal Revenue Service.

We encourage each shareholder to consult with his, her or its own tax advisor as to the particular tax consequences to it of holding and disposing of our shares, including the applicability of any state, local or foreign tax laws and any proposed changes in applicable law.

107

OTHER EXPENSES OF DISTRIBUTION

We estimate the expenses in connection with the distribution of our Class A Common Shares in this offering, other than underwriting discounts and commissions, will as set forth in the table below. We will be responsible for paying all expenses associated with this offering.

SEC Registration Fee	$	3,356.87

Printing Expenses	$	100,000.00

Legal Fees and Expenses	$	250,000.00

Accountants' Fees and Expenses	$	500,000.00

Blue Sky Fees and Expenses	$	20,000.00

Transfer Agent's Fees and Expenses	$	10,000.00

Miscellaneous	$	16,643.13

Total	$	900,000.00

108

LEGAL MATTERS

The validity of the Class A Common Shares, Warrants and certain other matters relating to United States Federal income tax considerations and Marshall Islands law will be passed upon for us by Seward & Kissel LLP, New York, New York.

EXPERTS

The financial statements of Paragon Shipping Inc., as of December 31, 2006, and for the period from inception (April 26, 2006) to December 31, 2006, included in this prospectus, have been audited by Deloitte Hadjipavlou Sofianos & Cambanis S.A., an independent registered public accounting firm and member of Deloitte Touche Tohmatsu, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The sections in this registration statement entitled "Summary" and "The International Drybulk Shipping Industry" have been reviewed by Drewry Shipping Consultants Ltd., or Drewry, which has confirmed to us that they accurately describe the international drybulk shipping market, subject to the availability and reliability of the data supporting the statistical information presented in this registration statement.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

Until our Class A Common Shares and Warrants are registered under the Exchange Act, at which time we will furnish information on the Commission's Electronic Data Gathering, Analysis, and Retrieval system, or EDGAR, we will provide quarterly and annual financial information on our website.

While any Class A Common Shares or Warrants remain outstanding, we will make available, upon request, to any beneficial owner and any prospective purchaser of Class A Common Shares or Warrant the information required pursuant to Rule 144A(d)(4) under the Securities Act during any period in which we are not subject to Section 13 or 15(d) of the Exchange Act, as amended. Any such request and requests for the agreements summarized herein should be directed to Paragon Shipping Inc. at Voula Center, 102-104 V. Pavlou Street, Voula 16673, Athens, Greece.

In connection with the filing of this registration statement, we will become subject to the reporting requirements of the Securities Exchange, applicable to foreign private issuers and, in accordance therewith, will file reports, including annual reports on Form 20-F, and other information with the Commission. Interested persons may, once filed, (i) inspect and copy these materials at the public reference facilities maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549. Interested persons may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and may obtain copies of documents filed with the Commission at prescribed rates from the Public Reference Section of the Commission at its principal office in Washington, D.C. 20549. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that we file electronically with the Commission.

109

ENFORCEABILITY OF CIVIL LIABILITIES

Paragon Shipping Inc. is a Marshall Islands company and our executive offices are located outside of the United States in Voula, Greece. All of our directors, officers and some of the experts named in this registration statement reside outside the United States. In addition, a substantial portion of our assets and the assets of our directors, officers and experts are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in United States courts against us or these persons.

110

GLOSSARY OF SHIPPING TERMS

The following are definitions of certain terms that are commonly used in the shipping industry.

Annual Survey. The inspection of a vessel pursuant to international conventions, by a classification society surveyor, on behalf of the flag state, that takes place every year.

Ballast. A voyage during which the ship is not laden with cargo.

Bareboat Charter. A charter of a ship under which the ship-owner is usually paid a fixed daily or monthly rate for a certain period of time during which the charterer is responsible for the ship operating expenses and voyage expenses of the ship and for the management of the ship. In this case, all voyage related costs, including vessel fuel, or bunker, and port dues as well as all vessel operating expenses, such as day-to-day operations, maintenance, crewing and insurance are paid by the charterer. A bareboat charter is also known as a "demise charter" or a "time charter by demise" and involves the use of a vessel usually over longer periods of time ranging over several years The owner of the vessel receives monthly charter hire payments on a per day basis and is responsible only for the payment of capital costs related to the vessel.

Bunkers. Fuel oil used to operate a vessel's engines, generators and boilers.

Capesize. A drybulk carrier with a cargo-carrying capacity exceeding 100,000 dwt. These vessels generally operate along long haul iron ore and coal trade routes. Only the largest ports around the world possess the infrastructure to accommodate vessels of this size.

Charter. The hire of a vessel for a specified period of time or to carry a cargo for a fixed fee from a loading port to a discharging port. The contract for a charter is called a charterparty.

Charterer. The company that hires a vessel pursuant to a charter.

Charter Hire. Money paid to the ship-owner by a charterer for the use of a vessel under a time charter or bareboat charter. Such payments are usually made during the course of the charter every 15 or 30 days in advance or in arrears by multiplying the daily charter rate times the number of days and, under a time charter only, subtracting any time the vessel was deemed to be off-hire. Under a bareboat charter such payments are usually made monthly and are calculated on a 360 or 365 day calendar year basis.

Charter Rate. The amount of money agreed between the charterer and the ship-owner accrued on a daily or monthly basis that is used to calculate the vessel's charter hire.

Classification Society. An independent society that certifies that a vessel has been built and maintained according to the society's rules for that type of vessel and complies with the applicable rules and regulations of the country in which the vessel is registered, as well as the international conventions which that country has ratified. A vessel that receives its certification is referred to as being "in class" as of the date of issuance.

Clean Products. Liquid products refined from crude oil, whose color is less than or equal to 2.5 on the National Petroleum Association scale. Clean products include naphtha, jet fuel, gasoline and diesel/gas oil.

Container Vessel. Vessels which are specially designed and built to carry large numbers of containers.

Contract of Affreightment. A contract of affreightment, or COA, relates to the carriage of specific quantities of cargo with multiple voyages over the same route and over a specific period of time which usually spans a number of years. A COA does not designate the specific vessels or voyage schedules

111

that will transport the cargo, thereby providing both the charterer and ship owner greater operating flexibility than with voyage charters alone. The charterer has the flexibility to determine the individual voyage scheduling at a future date while the ship owner may use different ships to perform these individual voyages. As a result COAs are mostly entered into by large fleet operators such as pools or ship owners with large fleets of the same vessel type. All of the ship's operating, voyage and capital costs are borne by the ship owner while the freight rate normally is agreed on a per cargo ton basis.

Deadweight Ton "dwt". A unit of a vessel's capacity for cargo, fuel oil, stores and crew, measured in metric tons. A vessel's dwt or total deadweight is the total weight the vessel can carry when loaded to a particular load line.

Double Hull. Hull construction design in which a vessel has an inner and outer side and bottom separated by void space, usually 2 meters in width.

Draft. Vertical distance between the waterline and the bottom of the vessel's keel.

Drybulk. Non-liquid cargoes of commodities shipped in an unpackaged state.

Drybulk Carriers. Vessels which are specially designed and built to carry large volumes of drybulk.

Drydocking. The removal of a vessel from the water for inspection and/or repair of those parts of a vessel which are below the water line. During drydockings, which are required to be carried out periodically, certain mandatory classification society inspections are carried out and relevant certifications issued. Drydockings are generally required once every 30 to 60 months.

Freight. Money paid to the ship-owner by a charterer for the use of a vessel under a voyage charter. Such payment is usually made on a lump-sum basis upon loading or discharging the cargo and is derived by multiplying the tons of cargo loaded on board by the cost per cargo ton, as agreed to transport that cargo between the specific ports.

Gross Ton. A unit of measurement for the total enclosed space within a vessel equal to 100 cubic feet or 2.831 cubic meters used in arriving at the calculation of gross tonnage.

Handymax. Handymax vessels have a cargo carrying capacity of approximately 30,000 to 60,000 dwt. These vessels operate on a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks. Vessels below 60,000 dwt are sometimes built with on-board cranes enabling them to load and discharge cargo in countries and ports with limited infrastructure.

Handysize. Handysize vessels have a cargo carrying capacity of up to 30,000 dwt. These vessels carry exclusively minor bulk cargo. Increasingly, these vessels are operating on regional trading routes. Handysize vessels are well suited for small ports with length and draft restrictions that may lack the infrastructure for cargo loading and unloading.

Hull. Shell or body of a vessel.

IMO. International Maritime Organization, a United Nations agency that issues international regulations and standards for seaborne transportation.

Intermediate Survey. The inspection of a vessel by a classification society surveyor which takes place between two and three years before and after each special survey for such vessel pursuant to the rules of international conventions and classification societies.

Metric Ton. A unit of weight equal to 1,000 kilograms.

Newbuilding. A new vessel under construction or just completed.

112

Off-Hire. The period a vessel is unable to perform the services for which it is required under a time charter. Off-hire periods typically include days spent undergoing repairs and drydocking, whether or not scheduled.

OPA. Oil Pollution Act of 1990 of the United States (as amended).

Orderbook. The orderbook refers to the total number of currently placed orders for the construction of vessels or a specific type of vessel worldwide.

Panamax. Panamax vessels have a cargo carrying capacity of approximately 60,000 to 100,000 dwt of maximum length, depth and draft capable of passing fully loaded through the Panama Canal. The ability of Panamax vessels to pass through the Panama Canal makes them more versatile than larger vessels. Panamax drybulk carriers carry coal, grains, and, to a lesser extent, minor bulks, including steel products, forest products and fertilizers.

Petroleum Products. Refined crude oil products, such as fuel oils, gasoline and jet fuel.

Period Charter. A period charter is an industry term referring to both time and bareboat charters. These charters are referred to as period charters or period market charters due to use of the vessel by the charterer over a specific period of time.

Pools. Arrangements that enable participating vessels to combine their revenues. Vessels may be employed either exclusively in spot charters or a combination of spot and period charters and contracts of affreightment. Pools are administered by the pool manager who secures employment for the participating vessels. The contract between a vessel in a shipping pool and the pool manager is a period charter where the charter hire is based on the vessel's corresponding share of the income generated by all the vessels that participate in the pool. The corresponding share of every vessel in the pool is based on a pre-determined formula rating the technical specifications of each vessel. Pools have the size and scope to combine spot market voyages, time charters and contracts of affreightment with freight forward agreements for hedging purposes to perform more efficient vessel scheduling thereby increasing fleet utilization.

Product tanker. A vessel designed to carry a variety of liquid products varying from crude oil to clean and dirty petroleum products, acids and other chemicals, as well as edible oils. The tanks are coated to prevent product contamination and hull corrosion. The vessel may have equipment designed for the loading and unloading of cargoes with a high viscosity.

Protection and Indemnity (or P&I) Insurance. Insurance obtained through mutual associations (called "Clubs") formed by vessel-owners to provide liability insurance protection against a large financial loss by one member by contribution towards that loss by all members. To a great extent, the risks are reinsured.

Scrapping. The disposal of old or damaged vessel tonnage by way of sale as scrap metal.

Single Hull. A hull construction design in which a vessel has only one hull.

Sister Ships. Vessels of the same type and specification which were built by the same shipyard.

SOLAS. The International Convention for the Safety of Life at Sea 1974, as amended, adopted under the auspices of the IMO.

Strict Liability. Liability that is imposed without regard to fault.

Special Survey. An extensive inspection of a vessel by classification society surveyors that must be completed within five years. Special surveys require a vessel to be drydocked.

113

Spot Charter. A spot charter is an industry term referring to both voyage and trip time charters. These charters are referred to as spot charters or spot market charters due to their short term duration, consisting mostly of a single voyage between one load port and one discharge port.

Tanker. Vessel designed for the carriage of liquid cargoes in bulk with cargo space consisting of many tanks. Tankers carry a variety of products including crude oil, refined petroleum products and liquid chemicals.

TCE. Time charter equivalent, a standard industry measure of the average daily revenue performance of a vessel. The TCE rate achieved on a given voyage is expressed in U.S. dollars/day and is generally calculated by subtracting voyage expenses, including bunkers and port charges, from voyage revenue and dividing the net amount (time charter equivalent revenues) by the round-trip voyage duration. TCE is a standard seaborne transportation industry performance measure used primarily to compare period-to-period changes in a seaborne transportation 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 during specific periods.

Time Charter. A time charter is a contract under which a charterer pays a fixed daily hire rate on a semi-monthly or monthly basis for a fixed period of time for use of the vessel. Subject to any restrictions in the charter, the charterer decides the type and quantity of cargo to be carried and the ports of loading and unloading. The charterer pays the voyage related expenses such as fuel, canal tolls, and port charges. The ship-owner pays all vessel operating expenses such as the management expenses and crew costs as well as for the capital costs of the vessel. Any delays at port or during the voyages are the responsibility of the charterer, save for certain specific exceptions such as loss of time arising from vessel breakdown and routine maintenance.

Trip Time Charter. A trip time charter is a short term time charter where the vessel performs a single voyage between load port(s) and discharge port(s) and the charterer pays a fixed daily hire rate on a semi-monthly basis for use of the vessel. The difference between a trip time charter and a voyage charter is only in the form of payment for use of the vessel and the respective financial responsibilities of the charterer and ship owner as described under time charter and voyage charter.

Ton. See "Metric ton."

Vessel Operating Expenses. The costs of operating a vessel that is incurred during a charter, primarily consisting of crew wages and associated costs, insurance premiums, lubricants and spare parts, and repair and maintenance costs. Vessel operating expenses exclude fuel and port charges, which are known as "voyage expenses." For a time charter, the vessel-owner pays vessel operating expenses. For a bareboat charter, the charterer pays vessel operating expenses.

Voyage Charter. A voyage charter involves the carriage of a specific amount and type of cargo from specific load port(s) to specific discharge port(s), subject to various cargo handling terms. Most of these charters are of a single voyage nature between two specific ports, as trading patterns do not encourage round voyage trading. The owner of the vessel receives one payment derived by multiplying the tons of cargo loaded on board by the cost per cargo ton, as agreed to transport that cargo between the specific ports. The owner is responsible for the payment of all expenses including voyage, operating and capital costs of the vessel. The charterer is typically responsible for any delay at the loading or discharging ports.

Voyage Expenses. Expenses incurred due to a vessel's traveling from a loading port to a discharging port, such as fuel (bunker) cost, port expenses, agent's fees, canal dues and extra war risk insurance, as well as commissions.

114

Index to consolidated financial statements

		Page
Report of independent registered public accounting firm		F-2
Consolidated balance sheet as of December 31, 2006		F-3
Consolidated statement of operations for the period from inception (April 26, 2006) to December 31, 2006		F-4
Consolidated statement of shareholders' equity for the period from inception (April 26, 2006) to December 31, 2006		F-5
Consolidated statement of cash flows for the period from inception (April 26, 2006) to December 31, 2006		F-6
Notes to the consolidated financial statements		F-7

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
Paragon Shipping Inc.

We have audited the accompanying consolidated balance sheet of Paragon Shipping Inc (the "Company") as of December 31, 2006 and the related consolidated statements of income, shareholder's equity, and cash flows for the period from April 26, 2006 (inception) to December 31, 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Paragon Shipping Inc. as of December 31, 2006, and the results of its operations and its cash flows for the for the period from April 26, 2006 (inception) to December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
Athens, Greece
April 25, 2007, except for Note 18(c), as to which the date is May 7, 2007 and Note 18(e), as to which the date is May 15, 2007, and Note 18(d), as to which the date is May 17, 2007.

F-2

Paragon Shipping Inc.
Consolidated Balance Sheet
As of December 31, 2006
(Expressed in United States Dollars)

Assets
Current assets
Cash and cash equivalents			32,331,848
Other receivables		Note 3	876,537
Inventories			201,659

Total current assets			33,410,044

Fixed assets
Office equipment			2,767
Advances for vessel acquisitions			2,963,391
Vessels at cost			152,554,289
Less: accumulated depreciation			(1,066,527	)

Total fixed assets		Note 4	154,453,920

Other assets		Note 5	375,895

Total Assets			188,239,859

Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable			650,064
Accrued expenses		Note 6	1,099,918
Due to management company		Note 7	1,741,872
Interest rate swap		Note 11	117,965
Deferred revenue from the valuation of charter agreement		Note 8	123,750
Deferred income		Note 9	516,056

Total current liabilities			4,249,625
Long-term debt		Note 10	77,437,500
Obligations for warrants		Note 12	10,266,969

Total long-term liabilities			87,704,469

Total Liabilities			91,954,094

Commitments and Contingencies		Note 17	—
Shareholders' equity:
Preferred shares: $0.001 par value, 25,000,000 authorized, none issued, none outstanding
	Class A Common shares, $0.001 par value; 120,000,000 authorized 11,497,656 issued and outstanding at December 31, 2006	Note 12	11,498
	Class B Common shares, $0.001 par value; 5,000,000 authorized, 2,003,288 issued and outstanding at December 31, 2006	Note 12	2,003
Additional paid-in capital			98,738,185
Accumulated deficit			(2,465,921	)

Total shareholders' equity			96,285,765

Total Liabilities and Shareholders' Equity			188,239,859

The accompanying notes are an integral part of the consolidated financial statements

F-3

Paragon Shipping Inc.
Consolidated Statement of Operations
For the period from inception (April 26, 2006) to December 31, 2006
(Expressed in United States Dollars)

Revenue
Time charter revenue		4,949,426
Less: commissions		220,266

Net Revenue		4,729,160

Expenses
Voyage expenses		18,970
Vessels operating expenses	Note 14	559,855
Management fees charged by a related party	Note 7	170,750
Depreciation	Note 4	1,066,527
General and administrative expenses (including share based compensation of $1,476,717)	Note 15	1,782,429

Operating Income		1,130,629

Other Income (Expenses)
Interest and finance costs		(951,798	)
Unrealized loss on interest rate swap		(117,965	)
Interest income		404,409
Foreign currency losses		(3,511	)

Total Other Expenses, net		(668,865	)

Net Income		461,764

Income allocable to Class B common shares		(259,036	)
Income available to Class A common shares		202,728

Earnings per Class A common share, basic	Note 16	$0.14
Earnings per Class A common share, diluted	Note 16	$0.14
Earnings per Class B common share, basic and diluted	Note 16	$0.00
Weighted average number of Class A common shares, basic	Note 16	1,441,887
Weighted average number of Class A common shares, diluted	Note 16	1,442,639
Weighted average number of Class B common shares, basic and diluted	Note 16	1,842,381

The accompanying notes are an integral part of the consolidated financial statements

F-4

Paragon Shipping Inc.
Consolidated Statement of Shareholders' Equity
For the period from inception (April 26, 2006) to December 31, 2006
(Expressed in United States Dollars)

	Class A Shares		Class B Shares
	Number of Shares	Par Value	Number of Shares	Par Value	Additional Paid-in Capital		Accumulated deficit		Total
Balance at inception (April 26, 2006)
Issuance of Class A common shares through private placement	9,062,000	9,062	—	—	82,516,573		—		82,525,635
Issuance of Class A common shares issued to initial purchasers	185,656	186	—	—	1,690,770		—		1,690,956
Class A common shares offering costs					(7,444,622	)			(7,444,622	)
Issuance of Class B common shares	—	—	2,003,288	2,003	7,997		—		10,000
Issuance of Class A common shares to Innovation Holdings SA	2,250,000	2,250	—	—	20,490,750		—		20,493,000
Share based compensation	—	—			1,476,717		—		1,476,717
Deemed dividend	—	—	—	—			(2,927,685	)	(2,927,685	)
Net income	—	—	—	—	—		461,764		461,764

Balance, December 31, 2006	11,497,656	11,498	2,003,288	2,003	98,738,185		(2,465,921	)	96,285,765

The accompanying notes are an integral part of the consolidated financial statements

F-5

Paragon Shipping Inc.
Consolidated Statement of Cash Flows
For the period from inception (April 26, 2006) to December 31, 2006
(Expressed in United States Dollars)

Cash Flows from Operating Activities
Net Income			461,764
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation			1,066,527
Amortization of deferred revenue from the valuation of charter agreement			(41,250	)
Amortization of financing costs			3,292
Share based compensation			1,476,717
Unrealized loss on interest rate swap			117,965
Changes in assets and liabilities
	Increase in other receivables		(51,537	)
	Increase in inventories		(201,659	)
	Increase in other assets		(2,051	)
	Decrease in trade accounts payable		(166,801	)
	Increase in accrued expenses		116,954
	Decrease in due to management company		(1,674,085	)
	Increase in deferred income		516,056

Net cash from operating activities			1,621,892

Cash flows from investing activities
Purchase of office equipment			(2,767	)
Acquisition of vessels and capital expenditures			(152,554,289	)
Deferred revenue from the valuation of charter agreement			165,000
Advances for vessel acquisition			(2,963,391	)

Net cash used in investing activities			(155,355,447	)

Cash flows from financing activities
Proceeds from long term debt			125,937,500
Repayment of long-term debt			(48,500,000	)
Payment of financing costs			(377,136	)
Contribution of capital to Elegance and Icon			21,694,942
Return of capital to shareholders of Elegance and Icon			(21,694,942	)
Proceeds from the issuance of units			113,120,186
Proceeds from the issuance of Class B common shares			10,000
Class A common share offering costs			(4,125,147	)

Net cash from financing activities			186,065,403

Net increase in cash and cash equivalents			32,331,848

Cash and cash equivalents at the beginning of the period			—

Cash and cash equivalents at the end of the period			32,331,848

Supplemental disclosure of cash flow information
Cash paid during the period for interest			—
Supplemental disclosure of non-cash investing and financing activities
Commissions due for the acquisition of the vessels (Note 3)		$	825,000
Commissions due to management company		$	825,000
Accrued offering costs		$	982,964
Offering costs payable		$	480,137
Deemed dividend		$	2,927,685

The accompanying notes are an integral part of the consolidated financial statements

F-6

Paragon Shipping Inc.
Notes to consolidated financial statements

(Expressed in United States Dollars)

1. Basis of Presentation and General Information

The accompanying consolidated financial statements include the accounts of Paragon Shipping Inc., and its wholly owned subsidiaries listed below (collectively the "Company"). Paragon Shipping Inc. is a private company incorporated in the Republic of the Marshall Islands on April 26, 2006 to act as a holding company. In December 2006, the Company established a branch in Greece under the provision of Law 89 of 1967, as amended.

On November 15, 2006 Paragon Shipping Inc. acquired all outstanding shares of five of the vessel owning subsidiary companies immediately upon incorporation and on December 21, 2006 acquired all outstanding shares of a sixth vessel owning subsidiary company immediately upon incorporation, which are all listed below.

(a): Trade Force Shipping S.A. ("Trade Force") incorporated in the Marshall Islands on November 15, 2006, owner of the Cayman Island flag 72,891 dwt (built 1999), bulk carrier "Deep Seas", which was delivered to the Company on December 28, 2006 from Elegance Shipping Limited, a related party. Elegance Shipping Limited was incorporated in the Marshall Islands on September 8, 2006, and acquired Deep Seas from an unrelated party on October 12, 2006.
(b): Camelia Navigation S.A. ("Camelia") incorporated in the Marshall Islands on November 15, 2006, owner of the Cayman Islands flag 45,654 dwt (built 1995) bulk carrier "Blue Seas", which was delivered to the Company on December 28, 2006 from Icon Shipping Limited, a related party. Icon Shipping Limited was incorporated in the Marshall Islands on September 8, 2006, and acquired Blue Seas from an unrelated party on October 4, 2006.
(c): Frontline Marine Co. ("Frontline") incorporated in the Marshall Islands on November 15, 2006, owner of the Marshall Islands flag 74,047 dwt (built 1999) bulk carrier "Calm Seas, which it took delivery on December 28, 2006.
(d): Fairplay Maritime Ltd. ("Fairplay") incorporated in the Marshall Islands on November 15, 2006, owner of the Marshall Islands flag 72,493 dwt (built 1999) bulk carrier "Kind Seas", which it took delivery on December 21, 2006.
(e): Explorer Shipholding Limited. ("Explorer") incorporated in the Marshall Islands on November 15, 2006, owner of the Cayman Islands flag 46,640 dwt (built 1995) bulk carrier "Clean Seas", which it took delivery on January 8, 2007.
(f): Opera Navigation Co. ("Opera") incorporated in the Marshall Islands on December 21, 2006, owner of the Liberian flag 43,222 dwt (built 1995) bulk carrier "Crystal Seas", which it took delivery on January 10, 2007.

On January 1, 2007, the Company acquired all outstanding shares of Epic Investments Inc. ("Epic"), a company incorporated in the Marshall Islands, for no consideration, as shares had no par value. Epic acts as treasurer to the Company.

The Company is engaged in the ocean transportation of cargoes worldwide through the ownership and operation of the bulk carrier vessels described above.

The Company outsources the technical and commercial management of all vessels to Allseas Marine S.A. ("Allseas"), a related party, pursuant to management agreements with an initial term of

F-7

five years. Mr. Michael Bodouroglou, the Company's President and Chief Executive Officer, is the sole shareholder and managing director of Allseas. These agreements automatically extend for successive five year terms, unless, in each case, at least one year's advance notice of termination is given by either party. The Company pays Allseas a technical management fee of $650 (based on a Euro/U.S. dollar exchange rate of 1.268:1.00) per vessel per day on a monthly basis in advance, pro rata for the calendar days these vessels are owned by us. The management fee will be adjusted quarterly based on the Euro/U.S. dollar exchange rate as published by EFG Eurobank Ergasias S.A. two days prior to the end of the previous calendar quarter. The management fee will be increased on an annual basis, commencing on January 1, 2008, by reference to the official Greek inflation rate for the previous year, as published by the Greek National Statistical Office. The Company also pays Allseas 1.25% of the gross freight, demurrage and charter hire collected from the employment of the vessels. Allseas will also earn a fee equal to 1.0% of the purchase price of any vessel bought or sold on behalf of the Company, calculated in accordance with the relevant memorandum of agreement.

During 2006 two charterers individually accounted for more than 10% of the Company's voyage revenue.

2. Significant Accounting Policies

(a): Principles of Consolidation: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include the accounts and operating results of Paragon Shipping Inc. and its wholly-owned subsidiaries referred to in Note 1. All significant intercompany balances and transactions have been eliminated in consolidation.
(b): Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates include evaluation of relationships with other entities to identify whether they are variable interest entities, determination of useful lives, determination of the fair value of the interest rate swap, restricted shares, warrants and options.
(c): Other Comprehensive Income (Loss): The Company has no other comprehensive income (loss) and, accordingly, comprehensive income (loss) equals net income (loss) for all periods presented.
(d): Variable Interest Entities: The Company evaluates its relationships with other entities to identify whether they are variable interest entities as defined by FASB Interpretation No. 46 (R) Consolidation of Variable Interest Entities ("FIN 46R") and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the consolidated financial statements in accordance with FIN 46R. There were no such entities as of December 31, 2006 that were required to be included in the accompanying financial statements.

F-8

(e): Foreign Currency Translation: The functional currency of the Company is the U.S. Dollar. For other than derivative instruments, each asset, liability, revenue, expense, gain or loss arising from a foreign currency transaction is measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At each balance sheet date, recorded balances that are denominated in a currency other than the functional currency are adjusted to reflect the current exchange rate and any gains or losses are included in the statement of operations.
(f): Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.
(g): Inventories: Inventories consist of, lubricants and stores, which are stated at the lower of cost or market. Cost is determined by the first in, first out method except for bunkers, the cost of which is determined by the weighted average method.
(h): Vessel Cost: Vessels are stated at cost, which consists of the contract price less discounts, plus any material expenses incurred upon acquisition (delivery expenses and other expenditures to prepare the vessel for her initial voyage). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels, otherwise these amounts are charged to expense as incurred.
(i): Impairment of Long-Lived Assets: The Company applies SFAS No. 144 "Accounting for the Impairment or Disposal of Long-lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that, long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss for an asset held for use should be recognized when the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount. Measurement of the impairment loss is based on the fair value of the asset. In this respect, management regularly reviews the carrying amount of the vessels to determine if they are recoverable. The review of the carrying amount for each of the Company's vessels, as of December 31, 2006 indicated that such carrying amount were recoverable.
(j): Vessel Depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel's salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of the Company's vessels to be 25 years from the date of initial delivery from the shipyard (second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life).
(k): Dry-Docking and Special Survey Costs: The Company follows the deferral method of accounting for dry-docking costs whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the expected date of the next dry-docking. Dry-docking costs include all direct costs incurred at the dry-docking yard solely

F-9

as a result of the regulatory requirement to have the vessels inspected including but not limited to, services for vessel preparation, coating, steelworks, piping works and valves, machinery works and electrical works. Routine repair and maintenance costs incurred at the dry-docking yard are expensed.. Unamortized dry-docking costs of vessels that are sold are written off in the year of the vessels' sale.

(l): Financing Costs: Fees incurred for obtaining new loans or refinancing existing ones are deferred and amortized to interest expense over the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing is made.
(m): Pension and Retirement Benefit Obligations—Crew: The vessel-owning companies employ the crew on board under short-term contracts (usually up to nine months) and accordingly, they are not liable for any pension or post-retirement benefits.
(n): Revenue and Expenses: Revenues are generated from voyage and time charter agreements. Time charter revenues are recorded over the term of the charter as service is provided. Time charter revenues received in advance are recorded as deferred income, until charter service is rendered. Under a voyage charter, the revenues are recognized ratably over the duration of the voyage from load port to discharge port. The relevant voyage costs are recognized as incurred. Probable losses on voyages are provided for in full at the time such losses become apparent and can be estimated. A voyage is deemed to commence upon the issuance of notice of readiness at the loading port and is deemed to end upon the completion of discharge of the current cargo. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recorded when earned. Vessel operating expenses are accounted for on the accrual basis.
: When vessels are acquired with time charters attached and the charter rate on such charters is above or below market, the Company includes the fair vale of the above or below market charter in the cost of the vessel and records a corresponding asset or liability for the above or below market charter. The fair value is computed as the present value of the difference between the contractual amount to be received over the term of the time charter and the management's estimate of the then current market charter rate for equivalent vessels at the time of acquisition. The asset or liability record is amortized over the remaining period of the time charter as a reduction or addition to charter hire revenue.
(o): Repairs and Maintenance: All repair and maintenance expenses including underwater inspection expenses, are expensed in the year incurred. Such costs are included in vessel operating expenses in the accompanying consolidated statements of operations.
(p): Segment Reporting: The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e. spot or time charters. The Company does not have discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating

F-10

results of the fleet and thus the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and as a result, the disclosure of geographic information is impracticable.

(q): Income Taxes: Under the law of the country of the Company's incorporation, the Company is not subject to income taxes. Furthermore, the Company is subject to United States federal income taxation in respect of income that is derived from the international operation of ships and the performance of services directly related thereto ("Shipping Income"), unless exempt from United States federal income taxation under the rules discussed below.
: If the Company does not qualify for the exemption from tax under Section 883 as described below, it will be subject to a 4% tax on its "U.S. source shipping income," imposed without the allowance for any deductions. For these purposes, "U.S. source shipping income" means 50% of the shipping income that will be derived by the Company that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
: Under Section 883, the Company through December 31, 2006 is exempt from United States federal income taxation on its U.S.-source shipping income since: (a) it is organized in the Republic of the Marshall Islands that grants an "equivalent exemption" to corporations organized in the United States; and (b) the Company's stock is owned, indirectly, by "qualified stockholders," individuals who are (i) "residents" of a foreign country that grants an "equivalent exemption" to corporations organized in the United States and (ii) satisfies certain documentation requirements, referred to as the "50% Ownership Test".
(r): Earnings per Share (EPS): The Company has two classes of common shares—Class A common shares and Class B common shares and, accordingly, we present basic and diluted EPS for each such class of our common shares.
: Basic EPS for our Class A and Class B common shares excludes dilutive effects of potential common shares and is calculated by dividing income available to holders of Class A common share and Class B common share, respectively, by the weighted average number of shares of Class A and Class B common shares outstanding during the period. Diluted EPS for Class A and Class B common shares gives effect to all dilutive potential common shares that were outstanding during the period. Please refer to Note 16 for additional information on the computation of our basic and diluted EPS.
(s): Derivatives: SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts, if any) are recorded in the balance sheet as either an asset or liability measured at its fair value, with changes in the derivatives' fair value recognized currently in earnings unless specific hedge accounting criteria are met.
(t): Share-based Compensation: On December 16, 2004, Statement of Financial Accounting Standards No. 123 (revised 2004) ("SFAS No. 123(R)"), "Share-Based Payment," was issued. All share-based payments to employees, including grants of employee stock options, to be

F-11

recognized in the statement of operations based on their fair values and amortized over the service period.

(u): Recent Accounting Pronouncements: In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections, a Replacement of APB Opinion No. 20 and SFAS 3" ("SFAS 154"). SFAS 154 requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable. APB Opinion No. 20, "Accounting Changes", previously required most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 is effective for the Company as of December 31, 2006, and did not have a material impact on the Company's financial statements.
: In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurement" ("SFAS 157"). SFAS 157 addresses standardizing the measurement of fair value for companies that are required to use a fair value measure of recognition for recognition or disclosure purposes. The FASB defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure date." SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact, if any, of SFAS 157 on its financial position, results of operations and cash flows.
: In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), which supplements SFAS No. 109, "Accounting for Income Taxes", by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is "more-likely-than-not" to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized.
: Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. The Company estimates that this statement will not have a significant impact on its financial position.
: In September 2006, the FASB Staff issued FSP No. AUG AIR-1, "Accounting for Planned Major Maintenance Activities," ("FSP No. AUG AIR-1"). FSP No. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods, if no liability is required to be recorded for an asset retirement obligation based on a legal obligation for which the event obligating the entity has occurred. FSP No. AUG AIR-1 also requires disclosures regarding the method of

F-12

accounting for planned major maintenance activities and the effects of implementing the FSP. The guidance in FSP No. AUG AIR-1 is effective for the Company as of January 1, 2007. No planned major maintenance activities took place during the period from inception (April 26, 2006) to December 31, 2006. The adoption of FSP No. AUG AIR-1 will not have a material impact on the financial position, results of operations or cash flows of the Company.

: On September 13, 2006, the SEC released staff accounting bulleting ("SAB") No. 108, which provides guidance on materiality. SAB No. 108 states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement, contains guidance on correcting errors under the dual approach, and provides transition guidance for correcting errors existing in prior years. If prior-year errors that had been previously considered immaterial (based on the appropriate use of the registrant's prior approach) now are considered material based on the approach in the SAB, the registrant need not restate prior period financial statements. SAB No. 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. This statement is effective for the Company for the fiscal year ending December 31, 2006. SAB No. 108 did not have a material impact on the financial position and results of operations of the Company.
: In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"), which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Earlier adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, "Fair Value Measurements." The Company is currently evaluating the impact of SFAS 159, but does not expect the adoption of SFAS 159 to have a material impact on its financial consolidated position, results of operations or cash flows.

3. Other Receivables

Other receivables mainly represent commissions to be reimbursed by the ship brokers on the purchase of the vessels Calm Seas and Kind Seas amounting to $825,000.

F-13

4. Fixed Assets, Net

The fixed assets of the Company as of December 31, 2006 are as follows:

Vessels	Kind Seas		Blue Seas		Deep Seas		Calm Seas		Clean Seas	Total
Advances	—		—		—		—		2,963,391	2,963,391
Acquisitions	41,239,560		29,651,288		40,099,944		41,563,497		—	152,554,289
Accumulated Depreciation	(66,463	)	(498,158	)	(476,103	)	(25,803	)	—	(1,066,527	)

Balance, net	41,173,097		29,153,130		39,623,841		41,537,694		2,963,391	154,451,153

Other fixed assets—Office equipment										2,767

Total fixed assets										154,453,920

Subsequent to year end, the Company took delivery of the Clean Seas. See Note 1 (e) and Note 18 (a).

5. Other assets

The balance $375,895 consists of loan arrangement fees deferred financing costs of $373,844 and utilities deposits related to the leased office space of $2,051. The deferred financing costs shown in the accompanying balance sheet at December 31, 2006 are analyzed as follows:

Inception (April 26, 2006)
Additions	$	377,136
Amortizations		(3,292	)

December 31, 2006		373,844

The deferred financing costs are being amortized from the initial borrowing date (December 18, 2006) over the life of the loan agreement through the last repayment date of the loan, which is June 21, 2010. The deferred financing costs are amortized using the straight line method of amortization, which approximates the effective interest method.

F-14

6. Accrued Expenses

The accrued expenses and others, shown in the accompanying consolidated balance sheet at December 31, 2006 are analyzed as follows:

		2006
Accrued loan interest		80,170
Accrued voyages expenses		23,107
Publication fees		50,000
Accrual for professional fees		500,000
Accrual for share registration costs		394,000
Other professional services		38,964
Other sundry liabilities and accruals		13,677

Total		1,099,918

7. Transactions with Related Parties

(a): Vessel Acquisitions from Affiliated Companies: On October 5, 2006, the Company entered into individual Memoranda of Agreement ("MOA") totaling $69,900,000 with Icon Shipping Limited and Elegance Shipping Limited, each of which has acquired one dry-bulk vessel each from an unaffiliated third party. Icon Shipping Limited and Elegance Shipping Limited are wholly owned and under the management of Michael Bodouroglou. Due to the relationships and the common control therein, the acquisitions of the vessels by Icon Shipping Limited and Elegance Shipping Limited by the Company have been accounted for as a combination of entities under common control in a manner similar to pooling of interests. Accordingly, the accompanying financial statements have been prepared as if the vessels were owned by the Company as of October 4, 2006 and October 12, 2006 (i.e., vessels' delivery date to Icon Shipping Inc. and Elegance Shipping Inc.), respectively. This conclusion is based on the guidance in FASB Statement 141 "Business Combinations" and EITF 02-05 "Definition of "Common Control" in relation to FASB Statement 141." The Company acquired the two vessels collateral free, from the respective two affiliated companies, which were both delivered on December 28, 2006. The acquisition price paid by the Company to acquire the vessels from the affiliated companies with charter parties attached, equaled the price paid to acquire these vessels by the affiliated companies, charter free, plus actual incurred expenses in connection with the vessels' delivery, which amounted to $69,900,000. The proceeds received by the affiliated companies were used to pay the loans used to originally finance the acquisitions of the vessels and to return the capital to the owners. The net income of the affiliated companies earned until the date of acquisition by the Company of $2,927,685 was treated as a deemed dividend to the beneficial shareholder of Innovation Holdings, the sole shareholder of the Company through the date of the private placement (Note 12.b). The deemed dividend is a non-cash transaction as they pertain to the remaining assets of the affiliated companies consisting of a "due to management company" of $2,590,957 and "trade accounts payable" of $336,728, both attributable to the operations of the vessels Deep Seas and Blue Seas, that were not carried over by the Company subsequent to the actual transfer of Deep Seas and Blue Seas.

F-15

: The Company funded the acquisition cost of the two vessels with drawings under the senior secured credit facility (Note 10) and a portion of the proceeds of the private placement. Upon their delivery to the Company, the vessels were provided as collateral to secure the Company's senior secured credit facility.
(b): Allseas Marine S.A. ("Allseas"): The Company leases office space in Athens, Greece. Although the lease agreement is with an unaffiliated third party, the Company has entered into a tripartite agreement with the lessor and its affiliate, Allseas. The tripartite agreement calls for the Company to assume all of the rights and obligations under the lease agreement, which was initially entered into between the lessor and Allseas. The term of the lease that was originally expiring on September 30, 2006 has been extended until September 30, 2007. The rent expense charged for 2006 amounted to $2,110, which is included in General and administrative expenses (Note 15) in the accompanying statement of operations.
(c): Allseas Marine S.A. ("Allseas"): As discussed in Note 1, the ship-owning companies have a management agreement with Allseas, under which management services are provided in exchange for a fixed monthly fee per vessel. The Company pays Allseas a technical management fee of $650 (based on a Euro/U.S. dollar exchange rate of 1.268:1.00) per vessel per day on a monthly basis in advance, pro rata for the calendar days these vessels are owned by the Company. The management fee will be adjusted quarterly based on the Euro/U.S. dollar exchange rate as published by EFG Eurobank Ergasias S.A. two days prior to the end of the previous calendar quarter. The management fee will be increased on an annual basis, commencing on January 1, 2008, by reference to the official Greek inflation rate for the previous year, as published by the Greek National Statistical Office. The management fees incurred from inception date April 26, 2006 through December 31, 2006 amounted to $170,750 and were due to Allseas Marine S.A. as at December 31, 2006. The Company also pays Allseas 1.25% of the gross freight, demurrage and charter hire collected from the employment of the vessels. Allseas will also earn a fee equal to 1.0% of the purchase price of any vessel bought or sold on behalf of the Company, calculated in accordance with the relevant memorandum of agreement. As of December 31, 2006 the chartering and vessel commissions incurred amounted to $6,661 and $825,000 respectively. In addition, Allseas had paid on behalf of the Company an aggregate amount of $739,461 that was due to Allseas as at December 31, 2006, consisting of $353,189 of vessels' capitalized expenses and $386,272 of offering costs. Allseas maintains and handles the majority of the cash generated from vessels' operations. The account with Allseas at each balance sheet date consists of the balance of collections and payments made by Allseas on behalf of the Company's vessels including the prepaid revenue relating to Deep Seas and Blue Seas.
(d): Consulting agreements: The chief executive officer, chief operating officer and chief financial officer all have separate consulting agreements with the Company and with companies owned by each of them for work performed outside Greece. The total expense incurred for the period from inception (April 26, 2006) to December 31, 2006 is $151,145 and is recorded in general and administrative expenses. No amount was due at December 31, 2006.
(e): The right of first refusal with regard to vessel acquisitions: The Chief Executive Officer has entered into an agreement with the Company which includes a provision to allow the

F-16

Company to exercise a right of first refusal to acquire any drybulk carrier, after the Chief Executive Officer or an affiliated entity of his enters into an agreement that sets forth terms upon which he or it would acquire a drybulk carrier. Pursuant to this letter agreement, the Chief Executive Officer will notify the Company's committee of independent directors of any agreement that he or any of his other affiliates has entered into to purchase a drybulk carrier. He will provide the committee of independent directors a seven calendar day period in respect of a single vessel transaction, or a fourteen calendar day period in respect of a multi-vessel transaction, from the date that he delivers such notice to the committee, within which to decide whether or not to accept the opportunity and nominate a subsidiary of the Company to purchase the vessel or vessels, before the Chief Executive Officer will accept the opportunity or offer it to any of his other affiliates.

8. Deferred Revenue from the Valuation of the Charter Agreement

The bulk carrier Kind Seas was acquired with a time charter attached that was at a below-market rate. As described in Note 2 (n) above, the Company records the difference between the contractual amount to be received over the term of the time charter and the fair value of the time charter at the time of acquisition, in the purchase price of the vessel and in "deferred revenue from the valuation of time charter agreement" of $165,000 in the consolidated balance sheet. The deferred revenue from the valuation of the time charter is amortized over the remaining period of the time charter as an increase to time charter revenue. For the period from inception (April 26, 2006) to December 31, 2006, amortization of deferred revenue was $41,250.

9. Deferred Income

The amounts shown in the accompanying consolidated balance sheets as of December 31, 2006 are analyzed as follows:

		December 31, 2006
Kind Seas		211,828
Calm Seas		304,228

Total		516,056

F-17

10. Long-Term Debt

Senior Secured Credit Facility (the "Facility"): On December 18, 2006 the Company entered into a loan agreement with a HSH Nordbank that, subject to certain conditions, provided the Company with an amount of up to $95.3 million.

At dates coinciding with the delivery of the vessels described in Note 1.a through 1.d, the Company drew $77.44 million from the Facility to fund a portion of the acquisition of the said four vessels.

The Facility has a term of 3.5 years from the initial draw down date (which was December 18, 2006) and bears interest at LIBOR plus a margin of between 1% and 1.2%. Thereafter, the Facility amount will be repayable in one single payment due 3.5 years from the initial draw down date. The weighted average interest rate for the period from December 18, 2006 through December 31, 2006 was 6.3491%.

In addition, the Facility will be secured by a first priority mortgage on the six vessels, a first assignment of all freights, earnings, insurances and cross default with all ship-owning companies owned by the Company. Future borrowings will be subject to the Company not being in default of any loan covenants described below.

The Facility contains financial covenants requiring the Company, among other things, to ensure that:

•: The ratio of total debt of the mortgaged vessels to EBITDA shall be not greater than 5.00 to 1.00.
•: Market adjusted net worth of minimum $50 million.
•: The Company and its subsidiaries shall at all times maintain cash equivalents in an amount of no less than $500,000 per vessel.
•: The ratio of indebtedness to total capitalization shall not be greater than 0.70 to 1.00.
•: The aggregate average fair market value of the Company's vessels that secure the Facility shall be no less than 140% of the aggregate outstanding loans. In case of a dividend declaration, the fair market value shall not be less than 145% of the aggregate outstanding loans.

Moreover, the Facility also contains covenants that require the Company to maintain adequate insurance coverage and to obtain the lender's consent before it acquires new vessels, change the flag, class or management of the vessels, or enter into a new line of business. In addition, the Facility includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation and Warranty, a cross-default to other indebtedness and non-compliance with security documents. Furthermore, the Facility prohibits the Company from paying dividends if the Company is in default on the facility and if, after giving effect to the payment of the dividend, the Company is in breach of a covenant. HSH Nordbank waived the debt covenant requirements as of December 31, 2006. The covenants will be applicable beginning with the financial results for the three months ending March 31, 2007.

The total loan principal amount of $77,437,500 at December 31, 2006 is due in June 21, 2010.

F-18

In October 2006, the affiliated companies Icon Shipping Limited and Elegance Shipping Limited obtained two variable rate mortgage bank loans for $48.5 million in the aggregate for the acquisition of two vessels Blue Seas and Deep Seas respectively. The loans were fully repaid by Icon Shipping Limited and Elegance Shipping Limited on December 28, 2006 from the proceeds that Icon Shipping Limited and Elegance Shipping Limited received from the sale of the vessels to the affiliates Camelia Navigation S.A. and Trade Force Shipping S.A.

11. Interest Rate SWAP

Effective December 21, 2006, the Company entered into an interest-rate swap with HSH Nordbank on a notional amount of $55 million, based on expected principal outstanding under the Company's revolving credit facility, in order to manage interest costs and the risk associated with changing interest rates. Under the terms of the swap, the Company makes quarterly payments to HSH Nordbank on the relevant amount at a fixed rate of, 6% if 3 month LIBOR is greater than 6%, at three months LIBOR if 3 month LIBOR is between 4.11% and 6%, and at 4.11% if 3 month LIBOR is equal to or less than 4.11% the Company pays 4.11%. HSH Nordbank makes quarterly floating-rate payments to the Company for the relevant amount based on the 3 month LIBOR. The swap transaction effectively limits the Company's expected floating-rate interest obligation under its new revolving credit facility to a range of 4.11% and 6%, exclusive of margin due to its lenders. The swap is effective from December 21, 2006 to June 21, 2010. The term of the derivative is 3.5 years and coincides with the maturity of the senior secured credit facility of which a maximum of $55 million was conditional on entering into the interest-rate swap. The interest rate swap did not qualify for hedge accounting as of December 31, 2006.

Under SFAS 133, the Company marks to market the fair market value of the derivative at the end of every period and reflects the resulting gain or loss during the period as "Unrealized swap loss (gain)" on its consolidated statement of operations as well as including the cumulative loss or gain on its balance sheet. At December 31, 2006, the fair value of the interest swap was a liability of $117,965 and is recorded in "interest rate swap" on the balance sheet. For the period from inception (April 26, 2006) to December 31, 2006, the loss to record the interest rate swap at fair value amounted to $117,965, which resulted from the comparatively lower LIBOR, to which the variable-rate portion of the swap is tied.

12. Capital Structure

(a): Common Stock: The Company's authorized capital stock since inception and prior to the amendment of its articles of incorporation discussed below, consisted of 150,000,000 shares of common stock, par value $0.001 per share. As of December 31, 2006, the Company had a total of 11,497,656 Class A Common Shares outstanding and a total of 2,003,288 Class B Common Shares outstanding.
: On May 16, 2006, 2,272,941 shares of common stock were issued to the Company's sole existing shareholder for nominal consideration of $10,000. On October 26, 2006, the then sole shareholder approved an amendment to the Company's articles of incorporation. Under the amended and restated articles of incorporation, the Company's authorized capital stock consists of 25,000,000 shares of preferred stock, par value $0.001 per share, 125,000,000 shares

F-19

of common stock, par value $0.001 per share, divided into 120,000,000 shares of Class A common stock and 5,000,000 shares of Class B (or "subordinated shares") common stock. Through the amended and restated articles of incorporation, the Company's issued and outstanding as of October 26, 2006 common shares were redesignated as Class B Common Shares. On November 20, the Company's articles of incorporation were further amended to effect a reverse stock split of the Company's Class B Common Stock, pursuant to which the number of outstanding Class B Common Shares was reduced to 1,738,588 in order to be equal to 15% of all outstanding shares up until the IPO, excluding those issued to initial purchasers in lieu of cash commissions. That was included as a provision for Class B common shares, in a purchase agreement that the Company entered into on November 15, 2006. On December 18, 2006, a further 264,700 Class B Common Shares were issued bringing the total Class B Common Shares outstanding to 2,003,288, to be equal to the 15% of the outstanding shares provision, mentioned above.

: Class A Common Shares. Each holder of Class A Common Shares is entitled to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of Class A Common Shares are entitled to receive ratably all dividends, if any, declared by the Company's board of directors out of funds legally available for dividends. Upon dissolution, liquidation or sale of all or substantially all of the Company's assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, Class A Common Share holders are entitled to receive pro rata the Company's remaining assets available for distribution. Holders of Class A Common Shares do not have conversion, redemption or pre-emptive rights.
: Class B Common Shares. Class B Common Shares do not have voting rights. Upon liquidation, assets available for distribution to shareholders, if any, shall be paid to holders of Class A Common Shares up to the full amount of their purchase price, and thereafter to Class B Common Shares in an amount equal to each Class B Common Shares' par value. Thereafter Class B Common Shares receive no further distributions. Dividends will be declared on Class B Common Shares in the same amount as on Class A Common Shares, but will not be payable until the later of (i) the conversion of Class B Common Shares into Class A Common Shares and (ii) the payment date for dividends that were declared on the Class A Common Shares at the same time as dividends declared on the Class B Common Shares.
: The outstanding Class B Common Shares will become convertible into Class A Common Shares on a one-for-one basis upon the earlier of, a change of control as defined in the Company's amended and restated articles of incorporation, or the completion of a future public offering of the Company's Class A Common Shares resulting in gross proceeds to the Company of at least $50 million. However, it is provided that the number of Class B Common Shares that will be converted into Class A Common Shares, will be reduced by one percentage point of the aggregate of the total outstanding Class A Common Shares (less 185,656 Class A Common Shares) and outstanding Class B Common Shares, subject to a total reduction of up to five percentage points, for each 30 day period a registration statement relating to an exchange offer for the Class A Common Shares and Warrants has not been declared effective

F-20

by the U.S. Securities and Exchange Commission (SEC) beginning 180 days after November 21, 2006, or in the case of a shelf registration statement, the Company has not complied with its obligation to use its commercially reasonable efforts to file and cause the shelf registration statement to be declared effective. Any Class B Common Shares not converted into Class A Common Shares shall be cancelled and any accrued but unpaid dividends thereon forfeited.

(b): Private Placement: On November 21, 2006, the Company concluded a private offering of 7,562,000 units consisting of one Class A Common Share and one-fifth of one Warrant for one Class A Common Share at an offering price of $10.00 per unit. In addition, Innovation Holdings S.A., a company beneficially owned by the Company's founder and chief executive officer and members of his family, purchased upon the closing of the offering a further 529,340 units at the same price per unit paid by investors. On December 18, 2006 Cantor Fitzgerald & Co., CRT Capital Group LLC and Oppenheimer & Co, referred to as initial purchasers, purchased a further 1,500,000 units at an offering price of $10.00 per unit. The initial purchasers in the private offering were also issued and aggregate of 185,656 units in connection with the private placement. On December 28, 2006, which is the delivery date of the two vessels above (Note 7.a), Innovation Holdings S.A., purchased a further 1,720,660 units at $10.00 per unit.
(c): Registration Rights Agreement: The Company entered into a registration rights agreement in connection with the private placement whereby it agreed to file a registration statement with the SEC promptly following the closing of the private placement with respect to its Class A Common Shares and warrants offered in the private placement. The Company also undertook an obligation to cause a registration statement for an exchange offer for the Class A Common Shares and Warrants to be declared effective not more than 180 days after the closing of the private placement, or in the case of a shelf registration statement, the Company has not complied with its obligation to use its commercially reasonable efforts to file and cause the shelf registration statement to be declared effective.
(d): Purchase Agreement: The Company granted to the initial purchasers in the private placement, in lieu of cash commission, 185,656 shares plus 37,131 warrants. The fair value of these shares and warrants amounted to $1,856,560. The fair value of the warrants of $165,604 is recorded in obligations for warrants of $10,266,969 on the balance sheet. The fair value of the Class A Common Share of $1,690,770 in excess of par value is recorded in additional paid in capital. The nature and terms of the warrants that existed during the period and the potential effects of those arrangements on shareholders is detailed in Note 12(e).
(e): Warrant Agreement: The Company entered into a Warrant agreement in connection with the private placement whereby it issued one fifth of a Warrant, which was attached to each Class A Common Share. In total 1,997,200 Warrants were issued by the Company, including 450,000 Warrants issued to Innovation Holdings and 34,800 warrants issued to the initial purchasers in the private placement. On December 18, 2006, 300,000 additional warrants were issued to the investors in connection with the purchase of an additional 1,500,000 units and 11,656 additional units (consisting of 11,656 Class A common shares and 2,331 warrants) (note 12 d) were issued to the initial purchasers in the private placement.

F-21

Each Warrant entitles the holder to purchase one Class A Common Share at an exercise price of $10.00 per share, and will become exercisable upon a future public offering of the Company's Class A Common Shares resulting in gross proceeds to the Company of at least $50 million and may be exercised at any time thereafter until expiration. Each Warrant expires on November 21, 2011. If upon a qualifying initial public offering the offering price per Class A Common Share is less than $10.00 per share, then the exercise price of the Warrant will be reset to the offering price per Class A Common Share. Upon the exercise of the Warrant, each holder will receive Class A Common Shares with an aggregate market value (measured at the offering price per Class A Common Share in a qualifying IPO and thereafter at the market value at the close of business on the day of exercise) equal to the difference between such market value per Class A Common Share and the $10.00 exercise price of the Warrant (or such lesser amount of the exercise price that has been adjusted as set forth in the preceding sentence), multiplied by the number of such shares, or at the holders' option, the cash equivalent thereof. No fractional shares of Class A Common Shares will be issued. The Company will pay to the holder at the time of exercise an amount in cash equal to the current market value of any fractional Class A Common Shares less a corresponding fraction of the aggregate exercise price.

Holders of the Warrants will have no right to vote on matters submitted to our shareholders and will have no right to receive dividends. Holders of Warrants will not be entitled to share in the Company's assets in the event of a liquidation, dissolution or winding up of the Company.

In the event of any merger, consolidation or other combination of the Company with another entity, provision will be made for each Warrant holder to receive, upon exercise of the Warrant and in lieu of Class A Common Shares, such cash, securities or assets as would be issued or paid in respect of Class A Common Shares upon such merger, consolidation or other combination. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, upon the exercise of such Warrants, each Warrant holder shall be entitled to share, with respect to the Class A Common Shares issued upon exercise of its Warrants, equally and ratably in any cash or non-cash distributions payable to holders of Class A Common Shares. Warrant holders will not be entitled to receive payment of any such distribution until payment of the exercise price is made, and the Warrant is surrendered.

•: shares of the Company's capital stock (including Class A Common Shares);
•: options, Warrants or rights to purchase, or securities convertible into or convertible or exercisable for, shares of common stock or other securities or property of our at an exercise price below fair market value; or
•: evidences of indebtedness or assets of the Company.

An adjustment will also be made in the event of a combination, subdivision or reclassification of the Class A Common Shares. Adjustments will also be made in the event that the Company consummates any equity offering prior to the consummation of a qualifying IPO. In addition, adjustments will be made whenever and as often as any specified event requires an adjustment to occur, provided that no adjustment will be required until such time as the adjustment would be more than one percent.

F-22

The fair value of the warrants granted were estimated using the Cox-Rubinstein Binominal methodology and the Company recognized a liability to redeem the warrants from the warrant holders at $4.46 per warrant, or $10,266,969. This amount is presented as a liability in the consolidated balance sheet under the caption "obligations for warrants" and is deducted from paid in capital at December 31, 2006.

The assumptions used to calculate the fair value were as follows:

Underlying stock price of $9.11
Exercise price based upon the agreements
Volatility of 54% based upon comparable companies
Time to expiration based upon the contractual life or expected term if applicable
Short-term (risk-free) interest rate based on the treasury securities with a similar expected term.
No dividends being paid

13. Share based payments

Equity Incentive Plan

On October 11, 2006, the Company adopted an equity incentive plan, under which the officers, key employees and directors of the Company will be eligible to receive options to acquire shares of Class A Common Shares. A total of 1,500,000 shares of Class A Common Shares are reserved for issuance under the plan. The Board of Directors administers the plan. Under the terms of the plan, the Board of Directors are able to grant new options exercisable at a price per Class A Common Share to be determined by the Board of Directors but in no event less than fair market value as of the date of grant. The plan also permits the Board of Directors to award restricted shares, restricted share units, non-qualified options, stock appreciation rights and unrestricted shares.

Upon the completion of the private placement, the Company awarded 570,000 options and 40,000 shares of restricted Class A common shares. These awards are described below. The total compensation cost for the period from April 26, 2006 (inception) to December 31, 2006 for these awards was $1,476,717. As of December 31, 2006, there was $2,122,582 of total unrecognized compensation cost related to 70,000 non vested options granted to executive officers and directors and 40,000 restricted share awards and 250,000 options that will vest upon the successful completion of the initial public offering. The amount of $1,457,500 of the unrecognized compensation cost that relates to the 250,000 options, will be recognized upon the occurrence of a qualified public offering. The remaining unrecognized compensation cost is expected to be recognized over a weighted average period of 4 years, according to the contractual terms of those non vested options and restricted share awards.

Options

During 2006, the Company granted to its officers, key employees and directors options to purchase 570,000 shares of Class A Common Shares. The options expire ten years from the grant dated and the exercise price is $12.00.

The options award included 500,000 options granted to the CEO. 250,000 of these options were fully vested and exercisable at the grant date and the remaining 250,000 options will fully vest and become exercisable upon the occurrence of an initial public offering of the Company's Class A

F-23

Common Shares raising gross proceeds of at least $50 million, conditioned upon the CEO's continued service as an employee of the Company through the applicable vesting date. In the event the CEO ceases to be an employee, as applicable, for any reason, the CEO will forfeit all rights to the non-vested portion of the award. For the period from April 26, 2006 (inception) to December 31, 2006, none of these options were exercised or forfeited during 2006.

The additional 61,500 options awarded to employees and directors and the 8,500 options awarded to employees of Allseas, vest ratably over 4 years from the grant date and are conditioned upon the option holder's continued service as an employee of the Company, an employee of an affiliate or a director through the applicable vesting date. In the event the option holder ceases to be an employee of the Company, an employee of an affiliate, a consultant or a director, the option holder will forfeit all rights to the non-vested portion of their award.

During the term of the options, any vested portion of the options not previously exercised may be exercised in part or in whole at any time. The administrator, the compensation committee or any other committee designated by the board of directors to administer the equity incentive plan, may accelerate the exercisability of the options at such time and under such circumstances as the administrator deems appropriate.

The fair values of the options were determined on the date of grant using a Cox Rubinstein binomial option pricing model. Estimated life of options granted was estimated using the historical exercise behavior of employees, during their employment in Allseas Marine SA. Expected volatility was based on average calculated historical price volatilities of selected peer group companies using expected term (10 years of price data or most available) as range for historical daily price range. Risk free interest is based on contractual in effect at the time of grant. These options were valued based on the following assumptions: an estimated life of ten years for the 500,000 options granted to CEO and 6.25 years for 70,000 options granted to executive officers and directors, volatility of 54% for options granted during 2006, risk free interest rate of 4.58% for options granted during 2006, and zero dividend yield for options granted.

The fair value of the 500,000 options to purchase common shares granted on November 21, 2006 is $5.83 per share. The fair value of the 70,000 options to purchase common shares granted on November 21, 2006 is $4.57 per share.

The following table summarizes all stock option activity through December 31, 2006:

		Number of Options	Weighted Average Exercise		Weighted Average Price Fair Value at Grant Date
Outstanding April 26, 2006
	Granted	500,000	$	12.00	$	5.83
	Granted	61,500		12.00		4.57
	Exercised	—		—		—
	Forfeited	—		—		—

Outstanding, December 31, 2006		561,500		12.00		5.69

F-24

A summary of the activity for non vested stock option awards during the year ended of December 31, 2006 is as follows:

	Number of Options		Weighted Average Exercise	Weighted Average Price Fair Value at Grant Date
Non-vested, April 26, 2006	—		—		—
Granted	500,000		12		5.83
Granted	61,500		12		4.57
Vested	(250,000	)	12	$	5.83
Forfeited	—		—		—

Non vested, December 31, 2006	311,500		12	$	5.58

The following table summarizes certain information about stock options outstanding and exercisable as of December 31, 2006:

	Options Outstanding, December 31, 2006				Options Exercisable, December 31, 2006
Range of Exercise Price	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (YEARS)	Number of Options	Weighted Average Exercise Price
$12	500,000	$	12.00	10	250,000	$	12
$12	61,500		12.00	6.25

	561,500	$	12.00	9.59	250,000	$	12

The 8,500 options that were granted to non employees were not considered significant as an amount, for separate disclosure.

The following table summarizes the amortization of unrecognized compensation on options as of December 31, 2006, which will be included in general and administrative expense, for the next four years following December 31, 2006:

Options Grant Date	2007		2008		2009		2010		TOTAL
November 21, 2006		70,264		70,264		70,264		62,370		273,162
Total by year	$	70,264	$	70,264	$	70,264	$	62,370	$	273,162

Restricted Shares

On November 21 2006, the Company granted 31,500 of restricted Class A common shares, respectively, to certain senior officers, directors and employees of the Company. The restricted shares vest ratably over 4 years from the grant date and are conditioned upon the option holder's continued

F-25

service as an employee of the Company, or a director through the applicable vesting date. Until the forfeiture of any restricted shares, the grantee has the right to vote such restricted shares, to receive and retain all regular cash dividends paid on such restricted shares and to exercise all other rights provided that the Company will retain custody of all distributions other than regular cash dividends made or declared with respect to the restricted shares. The Company pays dividends on all restricted shares regardless of whether it has vested and there is no obligation of the employee to return the dividend when employment ceases. The Company estimates the forfeitures of restricted shares to be immaterial. The Company will, however, re-evaluate the reasonableness of its assumption at each reporting period.

SFAS No. 123(R) describes two generally accepted methods of accounting for restricted share awards with a graded vesting schedule for financial reporting purposes: 1) the "accelerated method", which treats an award with multiple vesting dates as multiple awards and results in a front-loading of the costs of the award and 2) the "straight-line method" which treats such awards as a single award and results in recognition of the cost ratably over the entire vesting period.

Management has selected the straight-line method with respect to the restricted shares because it considers each restricted share award to be a single award and not multiple awards, regardless of the vesting schedule. Additionally, the "front-loaded" recognition of compensation cost that results from the accelerated method implies that the related employee services become less valuable as time passes, which management does not believe to be the case. The fair value of the restricted shares was estimated by utilizing the subsequent adoption of the Black-Scholes model known as the Cox-Rubinstein Binominal methodology for Standard American Style Options. The stock based compensation expense for the restricted shares amounted to $10,233 and is included in the consolidated statement of operations under the caption "General and administrative expenses (including share based compensation of $1,476,717)". The assumptions used to calculate the fair value were as follows: (i) underlying stock price of $9.11; (ii) exercise price based upon the agreements; (iii) volatility of 54% based upon comparable companies; (iv) time to expiration based upon the contractual life or expected term if applicable; (v) short-term (risk-free) interest rate based on the treasury securities with a similar expected term; and (vi) no dividends being paid.

A summary of the activity for restricted shares awards during the year ended of December 31, 2006 is as follows:

	Number of Shares	Weighted Average Fair Value
Non vested, April 26, 2006	—	$	—
Granted	31,500		9.11
Vested	—		—
Forfeited	—		—

Non vested, December 31, 2006	31,500	$	9.11

In addition, 8,500 restricted Class A common shares were granted to non employees. These amounts were not considered significant for separate disclosure.

F-26

The following table summarizes the unrecognized compensation cost on restricted as of December 31, 2006, which will be included in general and administrative expense, for the next four years:

Restricted Shares Grant Date	2007		2008		2009		2010		TOTAL
November 21, 2006	$	71,741	$	71,741	$	71,741	$	63,683	$	278,906
Total by year	$	71,741	$	71,741	$	71,741	$	63,683	$	278,906

Conversion Feature of Class B Common Shares

The Company's Class B common shares, which are all held by Innovation Holdings S.A.—an entity beneficially owned by Mr. Bodouroglou, our founder and CEO, along with family members, will automatically convert, on a one-for-one basis, into Class A common shares upon the successful completion of a future public offering raising at least $50 million in gross proceeds or the occurrence of a change in control (as defined in the Amended and Restated Articles of Incorporated). The number of Class B Common Shares that will be converted into Class A Common Shares will be reduced by one percentage point outstanding Class B Common Shares subject to a total reduction of up to five percentage points, or 741,954 Class B Common Shares, for each 30-day period beginning 180 days after the closing of the private placement that a registration statement relating to an exchange offer for the units sold to investors in the private placement has not been declared effective by the Commission, or in the case of a shelf registration statement, the Company has not complied with its obligation to use its commercially reasonable efforts to file and cause the shelf registration statement to be declared effective.

F-27

on a graduated basis by up to $6.76 million ($9.11 × 741,954 shares) depending on the amount of time that passes before the successful registration of the Class A common shares issued in the private placement.

14. Vessel Operating Expenses

Vessel operating expenses for the period from inception (April 26, 2006) to December 31, 2006, includes of the following:

Crew wages and related costs		206,758
Insurance		117,257
Repairs and maintenance		34,131
Spares and consumable stores		171,565
Miscellaneous expenses		30,144

Total		559,855

15. General and Administrative Expenses

The details of general and administrative expenses are as follows:

		December 31, 2006
Share based compensation		1,476,717
Consulting fees		151,145
Company establishment expenses		113,008
Salaries		14,375
Non-executive directors remuneration		10,107
Office rent		2,110
Telephone expenses		7,757
Other expenses		7,210

Total		1,782,429

16. Earnings Per Share

We presented basic and diluted EPS for our Class A common shares and Class B common shares.

Our Amended and Restated Articles of Incorporation provides that dividends will be declared on our Class B common shares in the same amounts, on a per share basis, as on our Class A common shares. However, pursuant to our Amended Articles of Incorporation, the holders of our Class B common shares will receive payment for any dividends declared only upon our successful completion of a qualifying initial public offering (qualifying IPO) and so long as all outstanding dividends declared to our Class A common shares have been paid.

F-28

In calculating the basic EPS for our Class A common shares, income available to Class A common shares is determined by deducting from net income the portion attributable to Class B common shares (computed as net income multiplied by the ratio of the weighted Class A common shares outstanding over the sum of the weighted Class A common shares outstanding and of weighted Class B common shares outstanding). The income allocable to Class A common shares used in calculating the basic EPS for our Class A common shares is calculated as follows:

Net income		461,764
Less—income allocable to Class B common shares		259,036
Income available to Class A common shares		202,728

On the other hand, in calculating the basic EPS for our Class B common shares, net income is allocated to our Class B common shares only when its ability to receive dividend is no longer contingent upon the occurrence of the successful completion of a qualifying initial public offering. Thus, for the period ended December 31, 2006, no portion of net income was allocated to our Class B common shares and, accordingly, basic EPS for our Class B common shares is nil.

There is no difference between the income available to our Class A common shares used for the computation of basic and dilutive EPS.

We have outstanding stock option awards that vest only upon successful completion of a qualifying IPO and provided the grantee-employees are still employed by us at the completion of such qualifying IPO. In addition, we have warrants outstanding that are exercisable only upon successful the completion of a qualifying IPO. Further, our Class B common shares automatically convert, on a one to one basis (subject to certain adjustments), to Class A common shares only upon successful completion of a qualifying IPO.

In calculating diluted EPS for our Class A common shares, we excluded the dilutive effect of 250,000 stock options awards, 2,302,011 warrants, and 2,003,288 Class B common shares that will vest, will become exercisable or will become convertible to our Class A common shares only upon the successful completion of a qualifying IPO. There are no dilutive securities for our Class B common shares.

The reconciliation of the weighted average number of Class A common shares outstanding used for the computation of basic EPS to the adjusted amounts for the computation of diluted EPS is as follows:

Weighted average number of Class A common shares outstanding for basic EPS		1,441,887
Effects of dilutive securities:
Restricted stocks		752
Weighted average number of Class A common shares outstanding for dilutive EPS		1,442,639

We excluded other stock option awards in calculating dilutive EPS for our Class A common shares as they were anti-dilutive since their exercise price exceeds the average value of our Class A common shares.

F-29

17. Commitments and Contingencies

From time to time the Company expects to be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Such claims, even if lacking in merit, could result in the expenditure of significant financial and managerial resources. Currently, the Company is not aware of any claim or contingent liability, which should be disclosed, or for which a provision should be established in the accompanying financial statements.

The Company has entered into a lease agreement for its office facilities that terminates in September 2007. Rental expense for the year ended December 31, 2006 was $2,110. Fixed future minimum rent commitments for the nine-month period ending September 31, 2007 amount to $6,847.

The Company has entered into two contracts to acquire vessels for a total of $58.35 million at December 31. 2006. See Note 18(a).

18. Subsequent Events

(a): Vessel Acquisitions from Unaffiliated Third-Parties: The Company entered into two separate Memoranda of Agreeemnt ("MOA") with unaffiliated third parties on October 13, 2006 and on December 22, 2006 for the acquisition of two dry-bulk vessels, the Clean Seas and the Crystal Seas, for $58.35 million, in the aggregate, which were delivered on January 8, 2007 and on January 10, 2007.
: The Company funded the acquisition cost with drawings under the senior secured credit facility (Note 18 b) and the proceeds of the private placement (Note 12. b). Upon delivery, the vessels were provided as collateral to the Facility.
(b): Senior Secured Credit Facility (the "Facility"): On January 9, 2007 the loan agreement (Note 10) was supplemented to include the partial financing of Crystal Seas and an increase in the Facility to $109.5 million.
: At dates coinciding with the delivery of the vessels in Note 18.a above, and pursuant to this Facility, the Company has borrowed $108.25 million to fund a portion of the acquisition of all six vessels
(c): Amendment in Warrants' Exercise Features: The Company and the majority of the Warrant Holders agreed to amend the exercise features of the Warrants on May 7, 2007; which agreement is binding to all Warrant Holders. The Warrants, as amended, may only be exercised through physical settlement, removing the prior exercise terms which allow the Warrant Holders to receive Class A Common Shares with an aggregate market value equal to the difference between such market value per Class A Common Share and the $10.00 exercise price of the Warrant (or such lesser amount of the exercise price as set forth in the Warrant Agreement) multiplied by the number of such Class A Common Shares, or at the Warrant Holders' option, the cash equivalent thereof (see Note 12).
: As a result of the foregoing amendment, the obligations for warrants will be reclassified into permanent equity as of the amendment date since the warrants, as amended, no longer allow net cash or net share settlement. Additionally, any future changes in the fair value of the warrants will not be recognized in the financial statements.

F-30

(d): Dividend declaration: On May 17, 2007 our board of directors declared a dividend in the amount of $0.4375 per Class A Common Share and $0.4375 per Class B Common Share to shareholders of record on May 21, 2007.
(e): Contingent compensation awards: On May 15, 2007, the Company's board of directors approved a conditional compensation award to the directors, executive officers and certain employees of Allseas consisting of an aggregate 46,500 restricted shares, 50% of which would vest one year after issuance, and the balance of which would vest on the second anniversary of issuance and an aggregate payment of Euro 1.07 million to the Company's senior executive officers. The granting of any portion of the restricted shares and the payment of Euros is contingent upon the completion of a successful public offering resulting in gross proceeds to us of at least $50 million.

F-31

1,849,531 Warrants
and
11,097,187 Class A Common Shares

Prospectus Delivery Obligation

Through and including 2007, which is the 40^th day after the date of this prospectus, all dealers effecting transactions in the common stock, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments.

PART II:
INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 6. Indemnification of Directors and Officers

The bylaws of the Company provide that every director and officer of the Company shall be indemnified out of the funds of the Registrant against:

Our bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly authorized to advance certain expenses (including attorney's fees and disbursements and court costs) to our directors and offices and carry directors' and officers' insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Section 60 of the BCA provides as follows:

Indemnification of directors and officers.

(1) Actions not by or in right of the corporation. A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonable believed to be in or not opposed to the bests interests of the corporation, and, with respect to any criminal action or proceedings, had reasonable cause to believe that his conduct was unlawful.

(2) Actions by or in right of the corporation. A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the

II-1

request of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him or in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not, opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claims, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

(3) When director or officer successful. To the extent that a director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (1) or (2) of this section, or in the defense of a claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.

(4) Payment of expenses in advance. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding as authorized by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this section.

(5) Indemnification pursuant to other rights. The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

(6) Continuation of indemnification. The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(7) Insurance. A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer against any liability asserted against him and incurred by him in such capacity whether or not the corporation would have the power to indemnify him against such liability under the provisions of this section.

Item 7. Recent Sales of Unregistered Securities.

In the fourth quarter of 2006, we completed a private placement of units consisting of one of our Class A Common Shares and one-fifth of one Warrant. In connection with the private placement, we issued 7,736,000 Class A Common Shares and 1,546,800 Warrants on November 21, 2006 and an additional 1,511,656 Class A Common Shares and 302,331 Warrants on December 18, 2006. We have also issued in connection with our private placement an addition 2,250,000 units, consisting of 2,250,000 Class A Common Shares and 450,000 Warrants to Innovation Holdings. We have also issued an

II-2

aggregate of 2,003,288 Class B Common Shares to Innovation Holdings. The following table sets forth our private sale of our shares of our common stock from inception through December 31, 2006.

Securities Sold	Consideration Per Share	Total Consideration		Registration Exemption	Purchasers
9,247,656 Class A Common Shares	$9.11 per share	$	84,246,146	Rule 144A / Regulation S	Cantor Fitzgerald & Co.; CRT Capital Group LLC; Oppenheimer & Co. Inc.
2,250,000 Class A Common Shares	$9.11 per share	$	20,497,500	Regulation S	Innovation Holdings
1,849,531 Warrants	$4.46 per warrant	$	8,248,908	Rule 144A / Regulation S	Cantor Fitzgerald & Co.; CRT Capital Group LLC; Oppenheimer & Co. Inc.
450,000 Warrants	$4.46 per warrant	$	2,007,000	Regulation S	Innovation Holdings
40,000 Restricted Class A Shares	—			Rule 4(2)	Certain directors and officers pursuant to equity incentive plan
2,003,288 Class B Common Shares	—	$	10,000	Regulation S	Innovation Holdings

Item 8. Exhibits and Financial Statement Schedules

Exhibit Number		Description
1.1		Purchase Agreement
3.1		Amended and Restated Articles of Incorporation
3.2		Amended and Restated By-laws
4.1		Specimen Class A Common Shares certificate
5.1		Legality opinion of Seward & Kissel LLP
8.1		Tax opinion of Seward & Kissel LLP
10.1		Senior Secured Credit Facility
10.2		Form of Vessel Management Agreement
10.3		Registration Rights Agreement
10.4		Initial Purchaser Registration Rights Agreement
10.5		Innovation Holdings Registration Rights Agreement
10.6		Warrant Agreement, as amended
10.7		Letter Agreement with Michael Bodouroglou
21.1		List of Subsidiaries of Company
23.1		Consent of Seward & Kissel LLP (included in Exhibit 5.1)
23.2		Consent of Deloitte Hadjipavlou, Sofianos & Cambanis S.A.
23.3		Consent of Drewry
24.1		Power of Attorney (included in signature pages of this registration statement)

Item 9. Undertakings

A. The Company hereby undertakes:

(1): To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement, unless the information required to be included is to contained in reports filed with or furnished to the Commission that are incorporated by reference in this

II-3

registration statement or is contained in a form of prospectus filed pursuant to Rule 424(b) under the Securities Act that is part of this registration statement,

(i): To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii): To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
(iii): To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2): That, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3): To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4): Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of this registration statement as of the date the filed prospectus was deemed part of and included in this registration statement.
(5): Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of this registration statement for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in this registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(6): The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be

II-4

a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i): Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii): Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii): The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv): Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(8): The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(9): The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report, to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.
(10): Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(11): The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules an regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.

B. The undersigned registrant hereby undertakes (i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail

II-5

or other equally prompt means, and (ii) to arrange or provide for a facility in the United States for the purpose of responding to such requests. The undertaking in subparagraph (i) above include information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

C. The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Athens, Greece, on the day of June 4, 2007.

		PARAGON SHIPPING INC.
		By:	/s/ MICHAEL BODOUROGLOU
			Name: Michael Bodouroglou Title: Chairman and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael Bodouroglou, Christopher Thomas, Gary J. Wolfe and Robert E. Lustrin, or either of them, with full power to act alone, his or her true lawful attorneys-in-fact and agents, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing necessary to be done, as fully for all intents and purposes as he or she might or could do in person hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute, may lawfully do or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons on June 4, 2007 in the capacities and on the date indicated.

Signature		Title

/s/ MICHAEL BODOUROGLOU Michael Bodouroglou		Chairman and Chief Executive Officer (Principle Executive Officer)
/s/ CHRISTOPHER THOMAS Christopher Thomas		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
/s/ GEORGE SKRIMIZEAS George Skrimizeas		Chief Operating Office and Director
/s/ NIGEL D. CLEAVE Nigel D. Cleave		Director
/s/ BRUCE OGILVY Bruce Ogilvy		Director
/s/ IAN CHARLES DAVIS Ian Charles Davis		Director

II-7

AUTHORIZED REPRESENTATIVE

Pursuant to the requirement of the Securities Act of 1933, the undersigned, the duly authorized representative of the Registrant in the United States, has signed this registration statement in the City of Newark, State of Delaware, on June 4, 2007.

		PUGLISI & ASSOCIATES
		By:	/s/ DONALD J. PUGLISI
			Donald J. Puglisi Managing Director Authorized Representative in the United States

II-8

QuickLinks

DRYBULK SHIPPING INDUSTRY DATA
FORWARD-LOOKING STATEMENTS
TABLE OF CONTENTS
PROSPECTUS SUMMARY
Our Company
Our Fleet
Our Competitive Strengths
Our Business Strategy
Drybulk Shipping Industry Trends
Corporate Structure
Our Dividend Policy
Senior Secured Credit Facility
THE OFFERING
Paragon Shipping Inc. Summary Financial Data
RISK FACTORS
USE OF PROCEEDS
FORECASTED CASH AVAILABLE FOR DIVIDENDS, RESERVES AND EXTRAORDINARY EXPENSES FOR 2007
Forecasted Cash Amount Available for Dividends, Reserves and Extraordinary Expenses During Our First Full Fiscal Year
Charterer Redelivery at Earliest Redelivery Date
CAPITALIZATION
OUR DIVIDEND POLICY
SELECTED FINANCIAL AND OTHER DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INDUSTRY
World Seaborne Trade—2006
Dry Bulk Trade Development (Million tons)
Drybulk Carrier Seaborne Trade
GDP Growth (% change)
Chinese Iron Ore Imports (Million Tonnes)
Ton Mile Demand (Billion ton-miles)
Annual Changes (%) Dry Bulk Trade and Tonne Mile Demand
Major Dry Bulk Seaborne Trade Routes
Drybulk Carrier Fleet—April 2006
Drybulk Carrier Orderbook—April 2006
Dry Bulk Carrier Age Profile—April 2006
Dry Bulk Carrier Scrapping
Baltic Exchange Freight Indices
(Index points)
Drybulk Carrier One Year Time Charter Rates (US Dollars per day)
Drybulk Carriers—One Year Time Charter Rates (Period Averages) (US Dollars per day)
Dry Bulk Carrier Newbuilding Prices (Millions of US Dollars)
Drybulk Carrier Secondhand Prices—5 year old (Period Averages) (Millions of US Dollars)
Dry Bulk Carrier Secondhand Prices—5 Year Old Vessels (Millions of US Dollars)
BUSINESS Our Company
Our Fleet
Chartering
Our Competitive Strengths
Our Business Strategy
Our Fleet Management
Employees and Crewing
Our Customers
Properties
Environmental and Other Regulations
Risk of Loss and Liability Insurance
Legal Proceedings
Exchange Controls
Senior Secured Credit Facility
MANAGEMENT
Committees of the Board of Directors
Compensation of Directors and Senior Management
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
RELATED PARTY TRANSACTIONS
SELLING SHAREHOLDERS
PLAN OF DISTRIBUTION
DESCRIPTION OF OUR CAPITAL STOCK AND WARRANTS
MARSHALL ISLANDS COMPANY CONSIDERATIONS
MATERIAL U.S. AND MARSHALL ISLANDS INCOME TAX CONSIDERATIONS
OTHER EXPENSES OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND ADDITIONAL INFORMATION
ENFORCEABILITY OF CIVIL LIABILITIES
GLOSSARY OF SHIPPING TERMS
Index to consolidated financial statements
Report of Independent Registered Public Accounting Firm
Paragon Shipping Inc. Consolidated Balance Sheet As of December 31, 2006 (Expressed in United States Dollars)
Paragon Shipping Inc. Consolidated Statement of Operations For the period from inception (April 26, 2006) to December 31, 2006 (Expressed in United States Dollars)
Paragon Shipping Inc. Consolidated Statement of Shareholders' Equity For the period from inception (April 26, 2006) to December 31, 2006 (Expressed in United States Dollars)
Paragon Shipping Inc. Consolidated Statement of Cash Flows For the period from inception (April 26, 2006) to December 31, 2006 (Expressed in United States Dollars)
Paragon Shipping Inc. Notes to consolidated financial statements (Expressed in United States Dollars)
Prospectus Delivery Obligation
PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS
SIGNATURES
POWER OF ATTORNEY
AUTHORIZED REPRESENTATIVE
EX-1.1 2 a2178205zex-1_1.htm EXHIBIT 1.1

Exhibit 1.1

EXECUTION COPY

PARAGON SHIPPING INC.

Units Consisting of Class A Common Stock and Warrants

Purchase Agreement

November 15, 2006

Cantor Fitzgerald & Co.
110 East 59th Street
New York, NY 10022

CRT Capital Group LLC
262 Harbor Drive
Stamford, Connecticut 06902

Oppenheimer & Co. Inc.
125 Broad Street
New York, NY 10004

c/o Cantor Fitzgerald & Co.
110 East 59th Street
New York, New York 10022

Ladies and Gentlemen:

Paragon Shipping Inc., a Marshall Islands corporation (the “Company”), proposes to issue and sell to Cantor Fitzgerald & Co. (“CF&Co.”), CRT Capital Group LLC (“CRT”) and Oppenheimer & Co. Inc. (“Opco” and together with CF&Co. and CRT, the “Initial Purchasers”), an aggregate of 7,562,000 shares of its Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”) and, for each share of Class A Common Stock purchased by the Initial Purchasers, one-fifth (1/5) of one warrant (“Warrant”), with an exercise price of $10.00 and expiring five years from the date of issuance pursuant to a warrant agreement, dated as of the Closing Date (the “Warrant Agreement”), among the Company and Computershare Trust Company, Inc., as warrant agent (the “Warrant Agent”). After the Separation Date (as defined below), the shares of Class A Common Stock and the Warrants will be separately transferable. The Class A Common Stock and the Warrants will be sold in the form of units (“Units”) pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The share of Class A common stock and one-fifth of one Warrant comprising the Unit will be transferable together as a unit, and will not be separately transferable until the earlier of (i) the consummation of the registered exchange offer pursuant to the Registration Rights Agreement (as defined below) or, if no registered exchange offer is conducted, the date on which a registration statement covering the resale of Units, and the Class A Common Stock and Warrants forming components of the Units, and the shares of Class A Common Stock issuable upon exercise of the Warrants, by the holders thereof is declared effective by the Securities and Exchange Commission (the “Commission”), or (ii) such earlier date as CF&Co. may determine (the “Separation Date”).

The Securities will be offered (“Exempt Resales”) without being registered under the Securities Act, or qualification under state securities or Blue Sky laws, to qualified institutional buyers (“QIBs”) in compliance with the exemption from Securities Act registration provided by Rule 144A under the Securities Act and to non-U.S. persons outside the United States (“Reg S Investors” and, together with QIBs, “Eligible Purchasers”) pursuant to Regulation S under the Securities Act on terms set forth in the final offering memorandum, dated November 15, 2006 (the “Offering Memorandum”), relating to the Company, the Securities and the Registration Rights Agreement.

The Initial Purchasers and their respective direct and indirect transferees will be entitled to the benefits of a Registration Rights Agreement dated the Closing Date (as defined below) by and among the Company, Innovation Holdings S.A. (“Innovation Holdings”), a company beneficially-owned by the Company’s founder and chief executive officer, Michael Bodouroglou, and members of his family, and the Initial Purchasers (the “Registration Rights Agreement”), subject to the conditions contained therein, pursuant to which the Company has agreed, among other things, to file one or more registration statements with the Commission providing for the registration of the Securities or the Exchange Securities referred to (and as defined) in the Registration Rights Agreement.

The Company has prepared a preliminary offering memorandum dated October 26, 2006 (the “Preliminary Offering Memorandum”), a Supplement to the Preliminary Offering Memorandum dated November 6, 2006 (the “First Preliminary OfferingMemorandum Supplement”) and a Supplement to the Preliminary Offering Memorandum dated November 15, 2006 (the “Second Preliminary Offering Memorandum Supplement”) setting forth information concerning the Company, the Securities and the Registration Rights Agreement. At or prior to 2:00 p.m. (New York City time) on November 16, 2006, the time when sales of the Securities were first made (the “Applicable Time”), the written information listed on Schedule I hereto shall have been prepared (collectively with the Preliminary Offering Memorandum, the “Disclosure Package”). The Company will promptly prepare the Offering Memorandum.

1. Agreements to Sell and Purchase. The Company hereby agrees with each Initial Purchaser as follows:

(a) The Company agrees to sell to each Initial Purchaser, and each Initial Purchaser, upon the basis of the representations, warranties and covenants of the Company herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the number of Units (the “Firm Securities”) set forth opposite such Initial Purchaser’s name under the heading “Number of Securities” on Schedule II hereto at a purchase price of $9.63 per Unit (the “Purchase Price”), which reflects the Initial Purchasers’ discount of $0.37 per Unit. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Initial Purchasers, severally and not jointly, to purchase up to an additional 1,512,400 Units (the “Option Securities” and collectively with the Firm Securities, the “Securities”) at a purchase price of $9.40 per Unit (the “Option Purchase Price”), which reflects the Initial Purchasers’ discount of $0.60 per Unit less an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Securities but not payable on the Option Securities. The option hereby granted will expire 30 days after the date hereof and may be exercised in whole or in part from time to time upon notice by CF&Co. to the Company setting forth the number of Option Securities as to which the several Initial Purchasers are then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery shall be determined by CF&Co., but shall not be later than seven full Business Days after the exercise of said option, nor in any event prior to the Closing Date, as hereinafter defined. If the option is exercised as to all or any portion of the Option Securities, each of the Initial Purchasers, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which

the number of Firm Securities set forth in Schedule II opposite the name of such Initial Purchaser bears to the total number of Firm Securities, subject in each case to such adjustments as CF&Co. in its discretion shall make to eliminate any sales or purchases of fractional Units. On the Closing Date (as defined below), as a commission and for no consideration, the Company will also issue an aggregate of 174,000 Units (the “Commission Units”) to the several Initial Purchasers. Each Initial Purchaser will be issued that proportion of the total number of Commission Units which the number of Firm Securities set forth in Schedule II opposite the name of such Initial Purchaser bears to the total number of Firm Securities set forth in Schedule II. The Company agrees to enter into an agreement with the Initial Purchasers providing for piggyback and demand registration rights in respect of the Commission Units (the “Initial Purchaser Registration Rights Agreement”).

(b) Payment for the Firm Securities shall be made by wire transfer in immediately available funds to the account specified by the Company to the Initial Purchasers on November 21, 2006, or such other date, not later than the third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) Business Day after the date hereof, as the Initial Purchasers and the Company may agree upon in writing, or in the case of the Option Securities, on the date and time specified by the Initial Purchasers in the written notice of the Initial Purchasers’ election to purchase Option Securities. The time and date of such payment for the Firm Securities is referred to herein as the “Closing Date” and the time and date of such payment for Option Securities is referred to herein as an “Additional Closing Date.” As used herein, the term “Business Day” means any day other than a day on which banks are permitted or required to be closed in New York City.

The Securities shall be in definitive form or global form, as specified by the Initial Purchasers, and registered in such names and in such denominations as the Initial Purchasers shall request in writing not later than two full business days prior to the Closing Date. The Firm Securities shall be delivered to you on the Closing Date, with any transfer taxes payable in connection with the transfer of the Firm Securities to the Initial Purchasers duly paid, against payment of the Purchase Price therefore plus accrued interest, if any, to the date of payment and delivery. The specified number of Option Securities shall be delivered to you on any Additional Closing Date, with any transfer taxes payable in connection with the transfer of the Option Securities to the Initial Purchasers duly paid, against payment of the Option Purchase Price therefore plus accrued interest, if any, to the date of payment and delivery.

2. Representations and Warranties of the Company. The Company represents and warrants to each Initial Purchaser as follows:

(a) The Preliminary Offering Memorandum as of its date does not, the Preliminary Offering Memorandum as supplemented by the Preliminary Offering Memorandum Supplement as of the date of the Preliminary Offering Memorandum Supplement does not, the Disclosure Package as of the Applicable Time does not, and the Offering Memorandum as of its date does not, and as of the Closing Date and, if applicable, any Additional Closing Date, will not, and any supplement or amendment thereto, as of its date, will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the representations and warranties contained in this paragraph shall not apply to statements in or omissions from the Preliminary Offering Memorandum, the Disclosure Package or the Offering Memorandum made in reliance upon and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by the Initial Purchasers expressly for use therein.

(b) The financial statements, and the related notes and schedules thereto, included in the Disclosure Package and the Offering Memorandum present fairly the financial position of the Company as of the dates indicated and the results of its operations, cash flows and changes in

stockholders’ equity for the periods specified; and said financial statements have been prepared in conformity with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis, and the supporting schedules included in the Disclosure Package and the Offering Memorandum present fairly the information required to be stated therein. The selected financial data and the summary financial information included in the Disclosure Package and Offering Memorandum present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Disclosure Package and Offering Memorandum. The pro forma financial information under the heading “Unaudited Pro-Forma Financial Statements” included in the Disclosure Package and the Offering Memorandum presents fairly the information shown therein, has been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and has been properly compiled on the bases described therein, the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.

(c) Since the respective dates as of which information is given in the Disclosure Package and the Offering Memorandum, there has not been any change in the capital stock or long-term debt of the Company or any material change, or any development involving a prospective material change, in or affecting the general affairs, business, prospects, management, consolidated financial position, stockholders’ equity or results of operations of the Company, otherwise than as set forth or contemplated in such Disclosure Package or the Offering Memorandum; and except as set forth or contemplated in the Disclosure Package and the Offering Memorandum, the Company has not entered into any transaction or agreement (whether or not in the ordinary course of business) material to the Company.

(d) The statements set forth in the Disclosure Package and the Offering Memorandum under the heading “Forecasted Cash Available for Dividends, Reserves and Extraordinary Expenses” in the Disclosure Package and Offering Memorandum have been made in good faith and with reasonable basis following careful review by the Company. The assumptions described in the Disclosure Package and the Offering Memorandum under the heading “Forecasted Cash Available for Dividends, Reserves and Extraordinary Expenses” have been made in good faith and fairly and accurately represent the Company’s best estimate of the expected income from chartering, and anticipated expenses of operating, the vessels in the Company’s fleet during the period contemplated thereby. Since that date as of which the information set forth in the Disclosure Package and the Offering Memorandum under the heading “Forecasted Cash Available for Dividends, Reserves and Extraordinary Expenses” is given there has not been any changes or any developments involving a material prospective change affecting the matters described therein.

(e) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Republic of the Marshall Islands, with power and authority (corporate and other) to own its properties and conduct its business as described in Disclosure Package and the Offering Memorandum, and is duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, other than those jurisdictions where the failure to be so qualified or in good standing would not have a material adverse effect on the Company.

(f) The Company has no Subsidiaries and the Company owns no beneficial interest, directly or indirectly, in any corporation, partnership, joint venture, limited liability company or other entity.

(g) Each of (i) the Memoranda of Agreement (the “MoAs”) to purchase the vessels described in the Disclosure Package and the Offering Memorandum (the Deep Seas, the Blue Seas, the Calm Seas, the Clean Seas and the Kind Seas) (the “Identified Vessels”), (ii) the charters described in the Disclosure Package and the Offering Memorandum for each of the Identified Vessels (the “Charters”), (iii) the Management Agreement to be entered into upon the delivery of the Identified Vessels to the Company (the “Management Agreement), between the Company or a wholly-owned vessel owning Subsidiary of the Company and Allseas Marine S.A., (iv) the Right of First Refusal Agreement (the “Right of First Refusal Agreement”) between the Company and Michael Bodouroglou and (v) the Subscription Agreement between Innovation Holdings and the Company for the purchase, at a price per share of $10.00, on (x) the Closing Date a number of shares of Class A Common Stock equal to 7% of the number of shares sold hereunder, (y) an aggregate of 1,720,660 shares on the dates of delivery to the Company of the Deep Seas and the Blue Seas (the “Subscription Agreement” and, collectively with the MoAs, the Charters, the Management Agreement and the Right of First Refusal Agreement, the “Operative Documents”) has been duly authorized, executed and delivered by the respective parties thereto, and is a valid and binding agreement of each such party enforceable against each such party in accordance with its terms. The Disclosure Package and the Offering Memorandum each contains a summary of the terms of the Operative Documents which summaries are accurate and fair in all material respects.

(h) The Company has an authorized capitalization as set forth in the Disclosure Package and the Offering Memorandum and its authorized capital stock conforms as to legal matters to the description thereof set forth in the Disclosure Package and the Offering Memorandum, and all of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully-paid and non-assessable and are not subject to any pre-emptive or similar rights; and, except as described in or expressly contemplated by the Disclosure Package and the Offering Memorandum, there are no outstanding rights (including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interests in the Company, or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock of the Company, any such convertible or exchangeable securities or any such rights, warrants or options and there are no restrictions on subsequent transfers of the Securities under the laws of the Republic of the Marshall Islands or in Greece.

(i) This Agreement has been duly authorized, executed and delivered by the Company.

(j) The Company has full right, power and authority to execute and deliver this Agreement, the Registration Rights Agreement and the Warrant Agreement (collectively, the “Transaction Documents”) to which it is a party and perform its obligations hereunder and thereunder, and to issue, sell and deliver the Securities; and all corporate action required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby and the authorization, issuance and delivery of the Securities have been duly and validly taken.

(k) When the Exchange Securities have been duly authorized, issued and delivered by the Company and the Exchange Securities have been issued and delivered in exchange for the Securities in accordance with the terms of the Registration Rights Agreement, the Exchange Securities will be validly issued, fully paid and nonassessable and will not be subject to any statutory preemptive rights or preemptive rights pursuant to the organization document or bylaws of the Company.

(l) The Securities, when issued, sold and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable. The issuance, sale or delivery of the

Securities is not subject to any preemptive right of stockholders of the Company arising under law or the Amended and Restated Articles of Incorporation or Bylaws of the Company, or to any contractual right of first refusal or other right in favor of any person.

(m) The Commission Units, when issued and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable. The issuance or delivery of the Commission Units is not subject to any preemptive right of stockholders of the Company arising under law or the Amended and Restated Articles of Incorporation or Bylaws of the Company, or to any contractual right of first refusal or other right in favor of any person.

(n) The outstanding shares of Class B Common Stock (the “Class B Common Stock”) of the Company have been duly and validly issued and are fully paid and nonassessable. The shares of Class A Common Stock originally issuable upon conversion (the “Conversion Shares”) of the Class B Common Stock as described in the Disclosure Package and the Offering Memorandum have been duly and validly reserved for issuance, and upon issuance in accordance with the Amended and Restated Articles of Incorporation of the Company, shall be duly and validly issued, fully paid and non-assessable. The conversion of the Class B Common Stock and the issuance and delivery of the Conversion Shares is not subject to any preemptive right of stockholders of the Company arising under law or the Amended and Restated Articles of Incorporation, or bylaws the Company, or to any contractual right of first refusal or other right in favor of any person.

(o) The Warrants have been duly authorized, and when duly and validly issued and are fully paid and nonassessable, the shares of Class A Common Stock originally issuable upon exercise (the “Warrant Shares”) of the Warrants as described in the Disclosure Package and the Offering Memorandum have been duly and validly reserved for issuance, and upon issuance in accordance with the Warrant Agreement and the Amended and Restated Articles of Incorporation of the Company, shall be duly and validly issued, fully paid and non-assessable. The exercise of Warrants and the issuance and delivery of the Warrant Shares is not subject to any preemptive right of stockholders of the Company arising under law or the Amended and Restated Articles of Incorporation, or bylaws the Company, or to any contractual right of first refusal or other right in favor of any person.

(p) The Registration Rights Agreement has been duly authorized by the Company and Innovation Holdings and, assuming the due authorization, execution and delivery by the Initial Purchasers, when duly executed and delivered by the Company and Innovation Holdings, will be the legal, valid and binding obligation of the Company and Innovation Holdings, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium and similar laws relating to or affecting creditors’ rights generally and equitable principles of general applicability (whether applied by a court of law or equity) and except as rights to indemnification and contribution thereunder may be limited under applicable law. The Disclosure Package and the Offering Memorandum each contain a summary of the terms of the Registration Rights Agreement, which summary is accurate in all material respects.

(q) The Initial Purchaser Registration Rights Agreement has been duly authorized by the Company and, assuming the due authorization, execution and delivery by the Initial Purchasers, when duly executed and delivered by the Company, will be the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium and similar laws relating to or affecting creditors’ rights generally and equitable principles of general applicability (whether applied by a court of law or equity) and except as rights to indemnification and contribution thereunder may be limited under applicable law.

(r) The Warrant Agreement has been duly authorized by the respective parties thereto and, when duly executed and delivered by the Company and the Warrant Agent, will be the legal, valid and binding obligation of the Company and the Warrant Agent, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium and similar laws relating to or affecting creditors’ rights generally and equitable principles of general applicability (whether applied by a court of law or equity) and except as rights to indemnification and contribution thereunder may be limited under applicable law. The Disclosure Package and the Offering Memorandum each contain a summary of the terms of the Warrant Agreement, which summary is accurate in all material respects.

(s) The Commitment Letter (the “Commitment Letter”) between the Company and HSH Nordbank AG relating to the credit facility of up to $120 million described in the Disclosure Package and the Offering Memorandum has been duly authorized, executed and delivered by the parties thereto and the summary of the terms of the Commitment Letter and the credit facility contemplated thereby contained in the Disclosure Package and the Offering Memorandum is accurate in all material respects.

(t) The execution and delivery by the Company of, and the performance by the Company of its obligations under the Transaction Documents and the issuance, sale and delivery of the Securities will not contravene any provision of applicable law or the Amended and Restated Articles of Incorporation or Bylaws of the Company or any agreement or other instrument binding upon the Company or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under the Transaction Documents, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities and by federal and state securities and Blue Sky laws with respect to the Company’s obligations under the Registration Rights Agreement.

(u) KPMG Kyriacou Certified Auditors A.E. (“KPMG”), which has audited the financial statements of the Company and the combined statement of financial position of Icon Shipping Limited and Elegance Shipping Limited included in the Preliminary Offering Memorandum and the Offering Memorandum, are independent public accountants with respect to the Company within the meaning of the Securities Act and rule 101 of the American Institute of Certified Public Accountants’ Code of Professional Conduct, and its interpretations and rulings.

(v) There are no legal or governmental investigations, actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties or to which the Company is or may be a party or to which any property of the Company is or may be the subject which, if determined adversely to the Company, could have, or reasonably be expected to have, a material adverse effect on the general affairs, business, prospects, management, consolidated financial position, stockholders’ equity or results of operations of the Company, or on the ability of the Company to perform its obligations under the Transaction Documents or to consummate the transactions contemplated by the Disclosure Package and the Offering Memorandum, and, to the best of the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others.

(w) There are no statutes, regulations, pending legal or governmental actions, contracts or other documents to which the Company is a party of a character that would be required to be described in the Disclosure Package and the Offering Memorandum, if it were a prospectus filed as part of a registration statement under the Securities Act or filed as exhibits to such registration statement, that are not described in the Disclosure Package and the Offering Memorandum. All descriptions in the

Disclosure Package and the Offering Memorandum of such contracts or documents are accurate in all material respects. Copies of all such contracts and documents have been furnished to the Initial Purchasers, and all such contracts and documents and minutes of meetings of the Board of Directors and stockholders of the Company furnished to the Initial Purchasers and their counsel in connection with their due diligence review relating to the transactions contemplated herein, are true, accurate and complete copies of such contracts, documents and minutes.

(x) To the knowledge of the Company, no action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency or body which prevents the issuance of the Securities or suspends the sale of the Securities in any jurisdiction; no injunction, restraining order or order of any nature by any federal or state court of competent jurisdiction has been issued with respect to the Company which would prevent or suspend the issuance or sale of the Securities or the use of the Preliminary Offering Memorandum the materials comprising of the Disclosure Package or the Final Offering Memorandum in any jurisdiction; no action, suit or proceeding is pending against or, to the knowledge of the Company, threatened against or affecting the Company before any court or arbitrator or any governmental agency, body or official, domestic or foreign, which could reasonably be expected to interfere with or adversely affect the issuance of the Securities or the validity or enforceability of any of the Transaction Documents or any action taken or to be taken pursuant thereto.

(y) The Company is not, or with the giving of notice or lapse of time or both will not be, in violation of or in default under its Amended and Restated Articles of Incorporation or Bylaws or any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which it or any of its properties is bound, except for violations and defaults which individually or in the aggregate are not material to the Company; the issue and sale of the Securities and the performance by the Company of its other obligations under any of the Transaction Documents and the consummation of the transactions contemplated thereby will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, nor will any such action result in any violation of the provisions of the Amended and Restated Articles of Incorporation or the Bylaws of the Company or any applicable law or statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties; and no consent, approval, authorization, order, license, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company of the transactions contemplated by the Transaction Documents.

(z) The Company owns, possesses or has obtained all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all federal, state, local and other governmental authorities (including foreign regulatory agencies), all self-regulatory organizations and all courts and other tribunals, domestic or foreign, necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof, other than such licenses, permits, certificates, consents, orders, approvals, other authorizations, declarations and filings which individually or in the aggregate are not material to the Company, and the Company has not received any actual notice of any proceeding relating to revocation or modification of any such license, permit, certificate, consent, order, approval or other authorization, except as described in the Disclosure Package and the Offering Memorandum; and the Company is in compliance with all laws and regulations relating to the conduct of its business as conducted as of the date hereof other than any failure to so comply that would not have a material adverse effect on the financial condition, prospects and operations of the business of the Company.

(aa) All dividends and other distributions declared and payable on the shares of capital stock of the Company may under the current laws and regulations of the Republic of the Marshall Islands and Greece be paid in United States dollars and may be freely transferred out of the Marshall Islands or Greece, and all such dividends and other distributions are not subject to withholding or other taxes under the current laws and regulations of the Republic of the Marshall Islands or Greece and are otherwise free and clear of any other tax, withholding or deduction in, and without the necessity of obtaining any consents, approvals, authorizations, orders, licenses, registrations, clearances and qualifications of or with any court or governmental agency or body or any stock exchange authorities in, the Republic of the Marshall Islands or Greece.

(bb) There are no documentary, stamp or other issuance or transfer taxes of duties or similar fees or charges under U.S. federal law or the taws of any U.S. state, the Republic of The Marshall Islands (assuming that none of the Initial Purchasers are carrying on business or conducting transactions in the Republic of the Marshall Islands) or any political subdivision of any thereof, required to be paid in connection with the execution and delivery of this Agreement or the issuance by the Company of the Securities, or the sale and delivery by the Company of the Securities to the Initial Purchasers of the sale and delivery by the Initial Purchasers of the Securities to the purchasers thereof, in the manner described under the heading “Plan of Distribution” in the Disclosure Package and the Offering Memorandum.

(cc) The Company has filed all U.S. federal, state, local and foreign tax returns which have been required to be filed and have paid all taxes shown thereon and all assessments received by them or any of them to the extent that such taxes have become due and are not being contested in good faith through appropriate proceedings; and, except as disclosed in the Disclosure Package and the Offering Memorandum, there is no tax deficiency which has been or might reasonably be expected to be asserted or threatened against the Company.

(dd) The statements set forth in the Disclosure Package and the Offering Memorandum under the headings “Our Dividend Policy,” “Description of Capital Stock,” “Related Party Transactions,” “Tax Considerations” and “Plan of Distribution” insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate and complete in all material respects.

(ee) The Company has not taken, directly or indirectly, any action designed to, or that might be reasonably expected to, cause or result in stabilization or manipulation of the price of the Common Stock.

(ff) Except as would not, singly or in the aggregate, have a material adverse effect on the Company, (A) the Company is not in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”), or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Company has all permits, authorizations and approvals required under any applicable Environmental Laws and is in compliance with its requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company, (D) there are no events or circumstances that would reasonably be expected to form

the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company, relating to Hazardous Materials or any Environmental Laws, (E) the Company has not been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, (F) there has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission or other release of any kind of toxic or other wastes or other hazardous substances by, due to, or caused by the Company (or, to the Company’s knowledge, upon any other entity for whose acts or omissions the Company is or may liable) upon any other property now or previously owned or leased by the Company, or upon any other property, which would be a violation of or give rise to any liability under any applicable law, rule, regulation, order, judgment, decree or permit (including any applicable regulations and standards adopted by the International Maritime Organization) relating to pollution or protection of human health and the environment, (G) except as set forth in the Disclosure Package and the Offering Memorandum, there has been no disposal, discharge, emission or other release of any kind onto such property or into the environment surrounding such property, of any toxic or other wastes or other hazardous substances with respect to which the Company has knowledge and (H) the Company has not agreed to assume, undertake or provide indemnification for any liability or any other person under any Environmental Law, including any obligation for cleanup or remedial action, other than by operation of law or due to the Company’s membership in any mutual protection and indemnity association.

(gg) Except as described in the Offering Memorandum, there are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would have a material adverse effect on the Company.

(hh) The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary and in accordance with standard industry practice in the businesses in which they are engaged; the Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business, except as described in or contemplated by the Disclosure Package and the Offering Memorandum.

(ii) The Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which (i) are designed to ensure that material information relating to the Company, including its consolidated subsidiaries, when established, is made known to the Company’s principal executive officer and its principal financial officer by others within those entities, particularly during the preparation of the Disclosure Package and the Offering Memorandum; (ii) have been evaluated for effectiveness as of the date hereof; and (iii) are effective in all material respects to perform the functions for which they were established.

(jj) Based on the evaluation of its internal controls over financial reporting, the Company is not aware of (i) any significant deficiency or material weakness in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

(kk) No relationship, direct or indirect, exists between or among the Company on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company on the other hand, which if required to be described in the Disclosure Package and the Offering Memorandum if

it were a prospectus filed as part of a registration statement under the Securities Act or filed as exhibits to such registration statement, that are not described or set forth in the Disclosure Package and the Offering Memorandum.

(ll) No stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Initial Purchasers to Greece or the Marshall Islands or any political subdivision or taxing authority thereof or therein in connection with the sale and delivery by the Company of the Securities to or for the account of the Initial Purchasers or the sale and delivery by the Initial Purchasers of the Securities to the purchasers thereof.

(mm) The Company does not have, or guarantee, any securities accorded a rating by any “nationally recognized statistical rating organization,” as such term is defined in Rule 436(g)(2) under the Securities Act.

(nn) The Company is not and, after giving effect to the offering and sale of the Securities, will not be an “investment company” or an entity “controlled” by an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

(oo) The Company does not believe that it qualified as a “passive foreign investment company” (“PFIC”) within the meaning of Section 1296 of the United States Internal Revenue Code of 1986, as amended, for its most recently completed taxable year and does not believe that it is likely to become a PFIC in a subsequent taxable year.

(pp) Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person acting on behalf of the Company is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

(qq) Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or person acting on behalf of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

(rr) The Company has good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real and personal property which are material to the business of the Company, in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except those that do not materially interfere with the use made and proposed to be made of such property by the Company and could not reasonably be expected to have a material adverse effect on the Company.

(ss) There are no existing or, to the best knowledge of the Company, threatened labor disputes with the employees of the Company which are likely to have a material adverse effect on the financial condition and operations of the Company.

(tt) On and immediately after the Closing Date or the Additional Closing Date, as the case may be, the Company (after giving effect to the issuance of the Securities and to the other transactions related thereto as described in the Disclosure Package and the Offering Memorandum) will be Solvent. As used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date (i) the present fair market value (or present fair saleable value) of the assets of the Company are not less than the total amount required to pay the probable liabilities of the Company on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) the Company is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) assuming the sale of the Securities as contemplated by this Agreement and the Disclosure Package and the Offering Memorandum, the Company is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature and (iv) the Company is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its properly would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which the Company is engaged. In computing the amount of such contingent liabilities at any time, it is intended that such liabilities will be computed at the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

(uu) Except as contemplated hereby, the Company is not a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Company or the Initial Purchaser for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Securities.

(vv) No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained the Disclosure Package and the Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

(ww) None of the Company or any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act, an “Affiliate”) of the Company has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the Securities or (ii) offered, solicited offers to buy or sold the Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

(xx) None of the Company, its Affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities and the Company and its Affiliates and any person acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S.

(yy) The Securities satisfy the requirements set forth in Rule 144A(d)(3) under the Securities Act.

(zz) Assuming the accuracy of the representations and warranties of the Initial Purchasers and their affiliates contained in Section 6 and their compliance with their agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial Purchasers and their affiliates in the manner contemplated by this Agreement, the Disclosure Package and the Offering Memorandum, to register the Securities under the Securities Act.

As used herein, the term “Subsidiary” means a corporation, company or other entity (i) more than 50% of whose outstanding Shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50% of whose ownership interest representing the right to make decisions for such other entity is, owned or controlled, directly or indirectly, by the Company. The Company does not have any Subsidiaries.

3. Agreements of the Company. In further consideration of the agreements of the Initial Purchasers contained in this Agreement, the Company covenants with each Initial Purchaser as follows:

(a) To furnish to the Initial Purchasers in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Section 3(c), as many copies of the Preliminary Offering Memorandum, any other portion of the Disclosure Package and the Offering Memorandum and any supplements and amendments thereto as the Initial Purchasers may reasonably request.

(b) Prior to the later of (i) the Closing Date and (ii) completion of the offering and sale of the Securities, not to amend or supplement the Preliminary Offering Memorandum, the Disclosure Package or the Offering Memorandum during such period unless the Initial Purchasers previously have been advised thereof and have not reasonably objected thereto within a reasonable time after being furnished a copy thereof. The Company shall promptly prepare, upon the Initial Purchasers’ request, any amendment or supplement to the Preliminary Offering Memorandum, the Disclosure Package or the Offering Memorandum that may be necessary or advisable in connection with exempt resales or market making activities.

(c) (A) If at any time prior to the Closing Date, any event occurs as a result of which, in the judgment of the Company or in the reasonable opinion of counsel for the Company or counsel for the Initial Purchasers, it becomes necessary or advisable to amend or supplement the Disclosure Package in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary or advisable to amend or supplement the Disclosure Package to comply with applicable law, (i) to notify the Initial Purchasers and (ii) to use its commercially reasonable efforts to prepare forthwith, subject to Section 3(b) above, an appropriate amendment or supplement to the Disclosure Package so that the statements therein as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading, or so that the Disclosure Package will comply with applicable law, or (B) if prior to the completion of the distribution of the Securities, any event occurs as a result of which, in the judgment of the Company or in the reasonable opinion of counsel for the Company or counsel for the Initial Purchasers, it becomes necessary or advisable to amend or supplement the Offering Memorandum in order to make the statements therein, in the light of the circumstances when such Offering Memorandum is delivered to an Eligible Purchaser, not misleading, or if it is necessary or advisable to amend or supplement the Offering Memorandum to comply with applicable law, (i) to notify the Initial Purchasers and (ii) to use its commercially reasonable efforts to prepare forthwith, subject to Section 3(b) above, an appropriate amendment or supplement to the Offering Memorandum so that the statements therein as so amended or supplemented will not, in the

light of the circumstances when it is so delivered, be misleading, or so that the Offering Memorandum will comply with applicable law.

(d) To endeavor to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers shall reasonably request; provided that the Company shall not be required to file a general consent to service of process in any jurisdiction.

(e) During a period of three years from the date of the Offering Memorandum, to furnish to the Initial Purchasers copies of all reports or other communications (financial or other) furnished to holders of the Securities or Common Stock, and copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange; it being understood and agreed that posting such reports on the Commission’s Edgar website and/or on the Company’s website shall be sufficient.

(f) Without the prior written consent of the Initial Purchasers, not to make any offer relating to the Securities that would constitute a “free writing prospectus” (if the offering of the Securities was made pursuant to a registered offering under the Securities Act) as defined in Rule 405 under the Securities Act (a “Free Writing Offering Document”); the only Free Writing Offering Document the use of which has been consented to by the Initial Purchasers is listed on Schedule I hereto; if at any time following issuance of a Free Writing Offering Document any event occurred or occurs as a result of which such Free Writing Offering Document would conflict with the information in the Preliminary Offering Memorandum or the Offering Memorandum or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Initial Purchasers and, if reasonably requested by the Initial Purchasers, will prepare and furnish without charge to each Initial Purchaser a Free Writing Offering Document or other document which will correct such conflict, statement or omission.

(g) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including without limiting the generality of the foregoing: (i) the fees, disbursements and expenses of the Company’s counsel and the Company’s accountant in connection with the issuance and sale of the Securities and all other fees or expenses in connection with the preparation of the Preliminary Offering Memorandum, any other portion of the Disclosure Package and the Offering Memorandum and all amendments and supplements thereto, including all printing costs associated therewith, and the delivering of copies thereof to the Initial Purchasers, in the quantities herein above specified, (ii) all costs and expenses related to the transfer and delivery of the Securities to the Initial Purchasers, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or legal investment memorandum in connection with the offer and sale of the Securities under state securities laws and all expenses in connection with the qualification of the Securities for offer and sale under state securities laws as provided in Section 3(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial Purchasers in connection with such qualification and in connection with the Blue Sky or legal investment memorandum up to $15,000, (iv) the fees and expenses, if any, incurred in connection with the admission of the Securities for trading in The PORTAL^SM Market or any appropriate market system, (v) the costs and charges of any transfer agent, registrar or depositary, (vi) the cost of the preparation, issuance and delivery of the Securities, (vii) any costs and expenses incurred by the Company in connection with any “road show” undertaken in connection with the marketing of the offering of the Securities, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and

the cost of any aircraft chartered in connection with the road show, and (viii) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section 3.

(h) To use the net proceeds received by the Company from the sale of the Securities pursuant to this Agreement in the manner specified in the Disclosure Package and the Offering Memorandum under the caption “Use of Proceeds.”

(i) The Company shall reacquire for nominal consideration and cancel or otherwise make any adjustment (whether by a stock split, reverse stock split or other division or combination) to the number of outstanding shares of Class B Common Stock necessary so that the number of shares of Class B Common Stock outstanding as of the Closing Date equals 15.0% of the total number of outstanding shares of all classes of the Company’s capital stock, on a combined basis (but excluding the Commission Units and taking into account the shares of Class A Common Stock to be issued to Innovation Holdings after the Closing Date pursuant to the Subscription Agreement for purposes of this calculation).

(j) Not to take (and to cause its subsidiaries, when established, not to take), directly or indirectly, any action designed to, or that might reasonably be expected to cause or result in stabilization or manipulation of the Securities.

(k) Neither the Company nor any Affiliate will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which could be integrated with the sale of the Securities in a manner which would require the registration under the Securities Act of the Securities.

(l) Not to solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

(m) While any of the Securities remain “restricted securities” within the meaning of the Securities Act, to make available, upon request, to any seller of such Securities the information specified in Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.

(n) If requested by the Initial Purchasers, to use its best efforts to permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in The PORTAL^SM Market and obtain approval of the Securities by The Depositary Trust Company (“DTC”) for “book-entry” transfer.

(o) None of the Company, its Affiliates or any person acting on its or their behalf (other than the Initial Purchasers) will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities, and the Company and its Affiliates and each person acting on its or their behalf (other than the Initial Purchasers) will comply with the offering restrictions requirement of Regulations S.

(p) During the period of two years after the Closing Date or the Additional Closing Date, as the case may be, the Company will not, and will not permit any of their affiliates (as defined in Rule 144 under the Securities Act) to resell any of the Securities which constitute “restricted securities” under Rule 144 that have been reacquired by any of them.

(q) Not to take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the Securities contemplated hereby.

(r) The Company hereby agrees that, without the prior written consent of the Initial Purchasers it will not, during the period (the “Lock-Up Period”) through and including the date that is 180 days after the date of the Offering Memorandum, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Securities or any securities convertible into or exercisable or exchangeable for Securities or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Securities or such other securities, in cash or otherwise. This section 3(r) shall not apply to: (a) the Securities to be sold hereunder; (b) the sale of Units to Innovation Holdings pursuant to the Subscription Agreement, (c) the issuance of shares of Class A Common Stock pursuant to the exercise of the Warrants, (d) the issuance by the Company of Class A Common Stock or Units upon the exercise of options or warrants or the conversion of any security (including the shares of Class B Common Stock owned by Innovation Holdings) or note outstanding on the date hereof which is described in the Offering Memorandum; (e) the issuance of shares of Class A Common Stock or grant of options or other incentive awards pursuant to the Company’s stock incentive or employee stock purchase plans; and (f) the issuance of securities in connection with an underwritten initial public offering or in connection with the transactions contemplated by the Registration Rights Agreement.

(s) The Securities (and all securities issued in exchange therefore or in substitution thereof) shall bear the following legend until, in our judgment, such legend shall no longer be necessary or advisable because such Securities are no longer subject to the restrictions on transfer described therein:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS [IN THE CASE OF RULE 144A SECURITIES: TWO YEARS] [IN THE CASE OF REGULATION S SECURITIES: ONE YEAR] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY, ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION

STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT THAT SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, “SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

4. Conditions to the Initial Purchasers’ Obligations. The several obligations of the Initial Purchasers hereunder to purchase and pay for the Securities, on the Closing Date or the Additional Closing Date, as the case may be, are subject to the performance by the Company of its obligations hereunder and the following conditions:

(a) Since the respective dates as of which information is given in the Disclosure Package and the Offering Memorandum, there shall not have been any change in the capital stock or long-term debt of the Company or any material adverse change, or any development involving a prospective

material adverse change, in or affecting the general affairs, business, prospects, management, consolidated financial position, results of operations, cash flows or stockholders, equity of the Company, otherwise than as set forth or contemplated in the Disclosure Package and the Offering Memorandum (including, in each case, if applicable, any amendment or supplement thereto) provided to prospective purchasers of the Securities that, in the judgment of the Initial Purchasers makes it impracticable or inadvisable to market the Securities, on the terms and in the manner contemplated in the Disclosure Package and the Offering Memorandum; and the Company shall not have sustained since the date of the latest audited financial statements included in the Disclosure Package and the Offering Memorandum any material loss or interference with its business from fire, explosion, flood, vessel damage or loss (including to any of the Identified Vessels) or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Disclosure Package and the Offering Memorandum.

(b) The Initial Purchasers shall have received on the Closing Date or the Additional Closing Date, as the case may be, a certificate signed by the Chief Executive Officer and the Chief Financial Officer of the Company to the effect set forth in Section 4(a). The Initial Purchasers shall have also received on the Closing Date or the Additional Closing date, as the case may be, a certificate signed by the Chief Executive Officer and the Chief Financial Officer of the Company, to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date or the Additional Closing Date, as the case may be, and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date or the Additional Closing Date, as the case may be.

(c) The Initial Purchasers shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Seward & Kissel LLP, U.S. counsel for the Company, in form and substance satisfactory to the Initial Purchasers, to the effect set forth in Exhibit A. Such opinion shall be rendered to the Initial Purchasers at the request of the Company and shall so state therein.

(d) The Initial Purchasers shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Seward & Kissel LLP, Marshall Islands counsel for the Company, in form and substance satisfactory to the Initial Purchasers, to the effect set forth in Exhibit B. Such opinion shall be rendered to the Initial Purchasers at the request of the Company and shall so state therein.

(e) The Initial Purchasers shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of a nationally recognized Greek law firm, reasonably satisfactory to the Initial Purchasers, as Greek counsel of the Company, in form and substance satisfactory to the Initial Purchasers, to the effect set forth in Exhibit C. Such opinion shall be rendered to the Initial Purchasers at the request of the Company and shall so state therein.

(f) The Initial Purchasers shall have received on each of the date hereof and the Closing Date or the Additional Closing Date, as the case may be, a letter, dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Initial Purchasers from KPMG, independent registered public accounting firm, with respect to the Company, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to the Initial Purchasers with respect to the financial statements and certain financial information contained in the Disclosure Package and the Offering Memorandum.

(g) The Initial Purchasers shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Morgan, Lewis & Bockius LLP, counsel to

the Initial Purchasers, with respect to the Offering Memorandum and other related matters as the Initial Purchasers may reasonably request, and such counsel shall have received from the Company such papers and information as they may reasonably request to enable them to pass upon such matters.

(h) The Company, Innovation Holdings and the Initial Purchasers shall have entered into the Registration Rights Agreement, and the Initial Purchasers shall have received counterparts, conformed as executed, thereof.

(i) The Company and the Initial Purchasers shall have entered into the Initial Purchaser Registration Rights Agreement, and the Initial Purchasers shall have received counterparts, conformed as executed, thereof.

(j) The Company and the Warrant Agent shall have entered into the Warrant Agreement, and the Initial Purchasers shall have received counterparts, conformed as executed, thereof.

(k) Innovation Holdings and the Company shall have entered into the Subscription Agreement and the Initial Purchasers shall have received executed counterparts thereof.

(l) The Company shall have entered into charter arrangement for the Clean Seas, with a duration of at least one-year and a time charter hire rate of $14,500 per day, and the Initial Purchasers shall have received counterparts, conformed as executed, thereof.

(m) The number of outstanding shares of Class B Common Stock shall not constitute more than 15.0% of the total number of outstanding shares of all classes of the Company’s capital stock, on a combined basis (but excluding the Commission Units and taking into account the shares of Class A Common Stock to be issued to Innovation Holdings after the Closing Date pursuant to the Subscription Agreement for purposes of this calculation), as of the Closing Date, and the Initial Purchasers shall have received documentation evidencing the foregoing to their satisfaction.

(n) The Amended and Restated Articles of Incorporation of the Company, in a form containing the subordination provisions for the Class B Common Stock conforming to the description thereof in the Disclosure Package and Offering Memorandum, shall have become effective and be in full force and effect and the Initial Purchasers shall have received a copy of such Amended and Restated Articles of Incorporation certified by the Registrar of Corporations of the Republic of the Marshall Islands.

(o) On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company shall have furnished to the Initial Purchasers such further certificates and documents as the Initial Purchasers shall reasonably request.

5. Terms of Offering. The Initial Purchasers have advised the Company that the Initial Purchasers will make an offering of the Securities purchased by the Initial Purchasers hereunder in accordance with Section 6 hereof on the terms described in the Disclosure Package and to be described in the Offering Memorandum, as soon as practicable after this Agreement is entered into as is advisable in the judgment of the Initial Purchasers.

6. Offering of Securities; Restrictions on Transfer. Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:

(a) Such Initial Purchaser is a QIB and an institutional accredited investor (as defined in Rule 501(a), (2), (3) or (7) under the Securities Act) with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Securities.

(b) It will not solicit offers for, or offer or sell, the Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

(c) In connection with the Exempt Resales, it will solicit offers to buy the Securities only from, and will offer to sell the Securities only to Eligible Purchasers. Each Initial Purchaser further (A) agrees that it will offer to sell the Securities only to, and will solicit offers to buy the Securities only from (1) Eligible Purchasers that such Initial Purchaser reasonably believes are QIBs and (2) Reg S Investors and (B) acknowledges and agrees that, in the case of such QIBs and such Reg S Investors, such Securities will not have been registered under the Securities Act and may be resold, pledged or otherwise transferred only (x)(I) to a person whom the seller reasonably believes is a QIB purchasing for its own account or for the account of a QIB for which such person is acting as fiduciary or agent, in a transaction meeting the requirements of Rule 144A under the Securities Act, (II) in an offshore transaction (as defined in Rule 902 under the Securities Act) meeting the requirements of Rule 904 under the Securities Act, (III) in a transaction meeting the requirements of Rule 144 under the Securities Act, (IV) to an institutional accredited investor that, prior to such transfer, furnishes the Transfer Agent for the Class A Common Stock a signed letter containing certain representations and agreements relating to the registration of transfer of such Securities or (V) in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests), (y) to the Company or any of its subsidiaries, (z) pursuant to an effective registration statement under the Securities Act and, in each case, in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction and (C) acknowledges that they will, and each subsequent holder is required to, notify any purchaser of the security evidenced thereby of the resale restrictions set forth in (B) above.

(d) In respect of offers and sales outside of the United States, (a) such Initial Purchaser and its affiliates or any person acting on its behalf has not engaged or will not engage in any directed selling efforts within the meaning of Regulation S with respect to the Securities and (b) such Initial Purchaser will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Securities or has in its possession or distributes any component of the Disclosure Package or the Offering Memorandum.

(e) Such Initial Purchaser agrees that it has not offered or sold and will not offer or sell the Securities in the United States or to, or for the benefit or account of, a U.S. Person (other than a distributor), in each case, as defined in Rule 902 under the Securities Act (i) as part of its distribution at any time and (ii) otherwise under one-year after the later of the commencement of the offering of the Securities pursuant hereto and the Closing Date or the Additional Closing Date, as the case may be, other than in accordance with Rule 903 of Regulation S of the Securities Act or another exemption from the registration requirements of the Securities Act. Such Initial Purchaser agrees that, during such one-year distribution compliance period, it will not cause any advertisement with respect to the Securities (including any “tombstone” advertisement) to be published in any newspaper or periodical or posted in any public place and will not issue any circular relating to the Securities except such advertisements as are permitted by and include the statements required by Regulation S.

(f) Such Initial Purchaser agrees that, at or prior to confirmation of a sales of the Securities, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period (within the meaning of Regulation S) a confirmation or notice to substantially the following effect:

“THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED AND SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II) OTHERWISE UNTIL ONE-YEAR AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING AND THE CLOSING DATE, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S (OR RULE 144A IF AVAILABLE) UNDER THE SECURITIES ACT. TERMS USED ABOVE HAVE THE MEANING GIVEN TO THEM BY REGULATION S.”

Each Initial Purchaser acknowledges that the Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act.

The Initial Purchasers acknowledge that the Company, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 4 hereof, counsel for the Company and counsel for the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations and hereby consent to such reliance.

7. Indemnification.

(a) The Company agrees to indemnify and hold harmless each Initial Purchaser, each affiliate of each Initial Purchaser, including the directors, officers, partners, employees and agents of each Initial Purchaser and each person, if any, who (i) controls any Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under common control with any Initial Purchaser from and against any and all losses, claims, damages, expenses and liabilities (including, without limitation, the legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted) caused by any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, the Disclosure Package or the Offering Memorandum (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by the Initial Purchasers expressly for use therein.

(b) Each Initial Purchaser severally, and not jointly, agrees to indemnify and hold harmless the Company, its directors and officers and each person who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to the Initial Purchasers, but only with reference to information relating to the Initial Purchasers furnished to the Company in writing by such Initial Purchaser expressly for use in the Preliminary Offering Memorandum, the Disclosure Package, the Offering Memorandum or any amendment or supplement thereto.

(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to any of the two preceding paragraphs, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnity may be sought (the “Indemnifying Person”) in writing, but failure to so notify an Indemnifying Person shall not relieve such Indemnifying Person from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. The Indemnifying Person, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for an Initial Purchaser, each affiliate of such Initial Purchaser which assists such Initial Purchaser in the distribution of the Securities and such control persons of an Initial Purchaser shall be designated in writing by the Initial Purchaser and any such separate firm for the Company, its directors, its officers and such control persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding.

(d) If the indemnification provided for in paragraphs (a), (b) or (c) of this Section 7 is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other hand, from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions that

resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other hand, shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Securities (before deducting expenses) received by the Company and the total discounts and commissions received by the Initial Purchasers, in each case as set forth in the Offering Memorandum, bear to the aggregate offering price of the Securities. The relative fault of the Company, on the one hand, and the Initial Purchasers, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) Each of the Company and each of the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7(e), in no event shall any Initial Purchaser be required to contribute any amount in excess of the amount by which the total price at which the Securities placed by it and distributed to the public were offered to the public exceeds the amount of any damages that the Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 1l(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(f) The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

(g) The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser or any person controlling any Initial Purchaser or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Securities.

8. Termination. Notwithstanding anything herein contained to the contrary, this Agreement (and the obligations of the Initial Purchasers with respect to the Firm Securities or, in the case of any condition to the purchase of the Option Securities on an Additional Closing Date, the obligations of the several Initial Purchasers to purchase the relevant Option Securities) may be terminated in the absolute discretion of the Initial Purchasers, by notice given to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange or the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade, or the Nasdaq Global Market, (ii) trading of any securities of or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred, (iv) any moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities, (v) if there has been, since

the time of execution of this Agreement or since the respective dates as of which information is given in the Disclosure Package or Offering Memorandum, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business, or (vi) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis or any material disruption in the international shipping industry that, in the judgment of the Initial Purchasers, is material and adverse and which, in the judgment of the Initial Purchasers makes it impracticable or inadvisable to proceed with the offer, sale, or delivery of the Securities on the terms and in the manner contemplated in the Disclosure Package and the Offering Memorandum.

9. Defaulting Initial Purchaser.

(a) This Agreement shall become effective upon the execution and delivery hereof by each of the parties hereto.

(b) If on the Closing Date or the Additional Closing Date, as the case may be, any one or more of the Initial Purchasers shall fail or refuse to purchase Securities which it or they have agreed to purchase hereunder on such date, and the aggregate number of Securities which such defaulting Initial Purchasers or Initial Purchasers agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of Securities to be purchased on such date by all Initial Purchasers, the other Initial Purchasers shall be obligated severally in the proportions that the number of Securities set forth opposite their respective names in Schedule II bears to the aggregate number of Initial Purchasers set forth opposite the names of all such non-defaulting Initial Purchasers, or in such other proportions as the Initial Purchasers may specify, to purchase the Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase on such date; provided that in no event shall the number of Securities that any Initial Purchaser has agreed to purchase pursuant to Section 1 be increased pursuant to this Section 9 by an amount in excess of one-tenth of such number of Securities without the written consent of such Initial Purchaser. If on the Closing Date or the Additional Closing Date, as the case may be, any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase Securities which it or they have agreed to purchase hereunder on such date, and the aggregate number of Securities with respect to which such default occurs is more than one-tenth of the aggregate number of Securities to be purchased on such date, and arrangements satisfactory to the Initial Purchaser and the Company for the purchase of such Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Initial Purchaser or the Company. In any such case either the Initial Purchasers or the Company shall have the right to postpone the Closing Date or the Additional Closing Date, as the case may be, but in no event for longer than seven days, in order that the required changes, if any, in the Offering Memorandum or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Initial Purchaser from liability in respect of any default of such Initial Purchaser under this Agreement.

10. Reimbursement of Initial Purchasers’ Expenses. If this Agreement shall be terminated by the Initial Purchasers because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement or any condition of the Initial Purchasers’ obligations cannot be fulfilled, the Company agrees to reimburse the Initial Purchasers for all out-of-pocket expenses (including the fees and expenses of its counsel) reasonably incurred by the Initial Purchasers in connection with this Agreement or the offering contemplated hereunder.

11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Company, the Initial Purchasers, each respective affiliate of a Initial Purchaser which assists the Initial Purchasers in the distribution of the Securities, any controlling persons referred to herein

and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Securities from the Initial Purchasers shall be deemed to be a successor by reason merely of such purchase.

12. Notices, etc. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Initial Purchasers shall be delivered to Cantor Fitzgerald & Co., 110 East 59th Street, New York, New York 10022 (facsimile: 212-829-4972); Attention: Marc Blazer and Anthony Argyropoulos, Managing Directors, ITD-Investment Banking, with a copy to Philip A. Marber, President and Chief Executive Officer, Institutional Equities. Notices to the Company shall be given to them at Voula Center, 102-104, V. Pavlou Str., GR 16 673, Voula, Greece (facsimile: 011 30 210 899 5086); Attention: Chief Executive Officer.

13. Submission to Jurisdiction. Each of the parties hereto irrevocably (i) agrees that any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any state or federal court located in the Borough of Manhattan, The City of New York, New York (each a “New York Court”), (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding and (iii) submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company has appointed Seward & Kissel LLP, New York, New York, One Battery Park Plaza, New York, New York 10004, as its authorized agent (the “Authorized Agent”) upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated hereby which may be instituted in any New York Court by the Initial Purchasers or by any person who controls any Initial Purchaser, expressly consents to the jurisdiction of any such court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment shall be irrevocable. The Company represents and warrants that the Authorized Agent has agreed to act as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company.

14. Currency. In respect of any judgment or order given or made for any amount due hereunder that is expressed and paid in a currency (the “judgment currency”) other than United States dollars, the Company will indemnify each Initial Purchaser against any loss incurred by the Initial Purchaser as a result of any variation as between (i) the rate of exchange at which the United States dollar amount is converted into the judgment currency for the purpose of such judgment or order and (ii) the rate of exchange at which an Initial Purchaser is able to purchase United States dollars with the amount of the judgment currency actually received by such Initial Purchaser. The foregoing indemnity shall constitute a separate and independent obligation of the Company and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term rate of exchange shall include any premiums and costs of exchange payable in connection with the purchase of or conversion into United States dollars.

15. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.

16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF.

17. No Fiduciary Duty. The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the several Initial Purchasers on the other, (ii) in connection therewith and with the process leading to a transaction each Initial Purchaser is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Initial Purchaser has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby in the process leading thereto (irrespective of whether such Initial Purchaser has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company agrees that it will not claim that the Initial Purchasers or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.

18. Entire Agreement. This Agreement supersedes all prior agreement and understandings (whether written or oral) between the Company and the Initial Purchasers, or any of them, with respect to the subject matter hereof.

19. Amendments. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same is in writing and signed by the partied hereto.

20. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

[Remainder of Page Intentionally Blank]

If the foregoing is in accordance with your understanding, please sign and return four counterparts hereof.

		Very truly yours,

		PARAGON SHIPPING INC.


		By:	/s/ Michael Bodouroglou
			Michael Bodouroglou
			Chief Executive Officer

Accepted:


CANTOR FITZGERALD & CO.


By:			/s/ Philip Marber
			Philip Marber
			CEO and President of Equity Capital Markets

CRT CAPITAL GROUP LLC


By:		/s/ Doug Harvey
		Doug Harvey
		Managing Director
		Head of Capital Markets

OPPENHEIMER & CO, INC.


By:	/s/ Roger Elsas
	Roger Elsas
	Managing Director

SCHEDULE I

1. Supplement, dated November 6, 2006, to Preliminary Offering Memorandum.

2. Supplement, dated November 15, 2006, to Preliminary Offering Memorandum.

SCHEDULE II

Name of Initial Purchaser		Number of Securities
Cantor Fitzgerald & Co		2,646,700
CRT Capital Group LLC		2,646,700
Oppenheimer & Co. Inc		2,268,600
Total		7,562,000

EXHIBIT A

Form of United States Counsel Legal Opinion

Seward & Kissel LLP, as special U.S. counsel to the Company, shall have furnished to the Initial Purchasers their written opinion addressed to the Initial Purchasers and dated as of the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, to the effect that:

1. It is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers under the Purchase Agreement or in connection with the initial resale of such Securities by the Initial Purchasers in the manner contemplated by the Purchase Agreement, the Disclosure Package and the Offering Memorandum to register the Securities under the U.S. Securities Act of 1933, as amended.

2. The sale of the Securities in the manner contemplated by the Disclosure Package and the Offering Memorandum and the performance by the Company will not conflict with or result in any breach or violation of any provision of the applicable federal laws of the United States of America (except for the securities laws which we address separately in paragraph 1 above) or of the laws of the State of New York (except that we express no opinion as to any applicable Blue Sky laws).

3. Other than as set forth or contemplated in the Disclosure Package and the Offering Memorandum and insofar as matters of United States federal and New York state law are concerned, to the best of our knowledge, there are no legal or governmental investigations, actions, suits or proceedings pending or threatened against or affecting the Company or any of its respective properties or to which the Company is or may be a party or to which any property of the Company is or may be the subject which, if determined adversely to the Company, would individually or in the aggregate have, or could reasonably be expected to have, a material adverse effect on the financial position or results of operations of the Company. We do not know of any statutes, regulations, contracts or other documents that are required to be described in the Disclosure Package and the Offering Memorandum that are not described as required.

4. To the extent governed by the laws of the State of New York, each of the Purchase Agreement, the Registration Rights Agreement, the Initial Purchaser Registration Rights Agreement and the Warrant Agreement has been duly executed and delivered by the Company.

5. Under the laws of the State of New York relating to personal jurisdiction, the Company has, pursuant to Section 13 of the Purchase Agreement, Section 13 of the Registration Rights Agreement and Article 14 of the Warrant Agreement, validly and irrevocably submitted to the personal jurisdiction of any state or federal court located in the Borough of Manhattan, The City of New York, New York (each a “New York Court”) in any action arising out of or relating to the Purchase Agreement or the transactions contemplated thereby, has validly and irrevocably waived any objection to the venue of a proceeding in any such court, and has validly and irrevocably appointed the Authorized Agent as its authorized agent for the purpose described in Section 13 of the Purchase Agreement, Section 13 of the Registration Rights Agreement and Article 14 of the Warrant Agreement; and service of process effected on such agent in the manner set forth in Section 13 of the Purchase Agreement, Section 13 of the Registration Rights Agreement and Article 14 of the Warrant Agreement will be effective to confer valid personal jurisdiction over the Company.

6. The statements in the Disclosure Package and the Offering Memorandum under

the headings “Enforceability of Civil Liabilities,” “Management,” “Business—Senior Secured Credit Facility,” “Senior Secured Credit Facilities,” “Related Party Transactions” and “Exchange Offer; Registration Rights,” insofar as such statements constitute a summary of the terms of legal matters, documents or proceedings referred to therein, and under the headings “Tax Considerations —United States Federal Income Tax Considerations,” “Tax Considerations—United States Federal Income Taxation of Our Company,” “Tax Considerations—United States Federal Income Taxation of U.S. Holders,” “Tax Considerations—United States Federal Income Taxation of ‘Non-U. S. Holders’” and “Tax Considerations—Backup Withholding and Information Reporting,” insofar as such statements describe United States federal income tax law, fairly summarize the information called for with respect to such terms, legal matters, documents, proceedings or descriptions.

7. The issue and sale of the Shares being delivered on the Closing Date and the performance by the Company of its obligations under the Purchase Agreement, the Registration Rights Agreement, the Initial Purchaser Registration Rights Agreement and the Warrant Agreement and the consummation of the respective transactions contemplated therein will not result in a material breach of any of the terms or provisions of, or constitute a default under, any agreement or instrument, known to us, to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject.

8. No consent, approval, authorization, order, license, registration or qualification of or with any court or governmental agency or body is required for the issue and sale of the Shares or the consummation of the other transactions contemplated by the Purchase Agreement, the Registration Rights Agreement and the Warrant Agreement, except such consents, approvals, authorizations, orders, licenses, registrations or qualifications (A) as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Initial Purchasers or such as may be required by the NASD and as may be required under the Securities Act with respect to the registration of the Exchange Shares, and (B) as may be required in connection with the acquisition of any vessel as contemplated in the Prospectus.

9. The Company is not and, after giving effect to the offering and sale of the Shares, will not be an “investment company” or entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

Such counsel shall also state as follows:

We have participated in conferences with officers and other representatives of the Company, representatives of the independent registered public accounting firm of the Company and representatives of the Initial Purchasers at which the contents of the Preliminary Offering Memorandum, the Offering Memorandum and the Disclosure Package were discussed. Although we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Offering Memorandum, the Offering Memorandum and the Disclosure Package (except as and to the extent stated in paragraph 6 above), on the basis of the foregoing, but without independent check or verification, we can confirm to you that nothing has come to our attention that has led us to believe that the Disclosure Package, at the Applicable Time, or the Offering Memorandum or any supplement thereto at the time the Offering Memorandum was issued, at the time any such supplemented Offering Memorandum was issued or at the Closing Date, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we do not express any belief with respect to the financial statements and schedules and other financial or statistical data included in the Offering Memorandum).

EXHIBIT B

Form of Marshall Islands Counsel Legal Opinion

Seward & Kissel LLP, as special Marshall Islands counsel to the Company, shall have furnished to the Initial Purchasers their written opinion addressed to the Initial Purchasers and dated as of the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, to the effect that:

1. The Company has been incorporated and is validly existing as a corporation in good standing under the law of the Marshall Islands with corporate power and authority to own its properties and conduct its business as described in the Disclosure Package and the Offering Memorandum.

2. The Company’s authorized share capital is as set forth in the Disclosure Package and Offering Memorandum and the authorized capital stock of the Company, including the Units, the Class A Common Stock, the Warrants, and the Class A Common Stock issuable upon the exercise of the Warrants, conforms as to legal matters to the descriptions thereof contained in the Disclosure Package and Offering Memorandum.

3. All issued and outstanding shares of each of the Company have been duly authorized and are validly issued, fully paid and non-assessable and are not subject to any statutory preemptive rights or preemptive rights pursuant to the organizational documents or bylaws of the Company.

4. The Securities to be issued and sold by the Company have been duly authorized and, when issued and delivered to and paid for by the Initial Purchasers in accordance with the terms of the Purchase Agreement, will be validly issued, fully paid and nonassessable, and the issuance of the Securities is not subject to any statutory preemptive rights or preemptive rights pursuant to the organizational documents or bylaws of the Company. The Commission Units have been duly authorized and, when issued and delivered to the Initial Purchasers in accordance with the terms of the Purchase Agreement, will be validly issued, fully paid and nonassessable, and the issuance of the Commission Units is not subject to any statutory preemptive rights or preemptive rights pursuant to the organizational documents or bylaws of the Company

5. The Exchange Securities have been duly authorized and, when the Exchange Securities have been issued and delivered in exchange for the Securities in accordance with the terms of the Registration Rights Agreement, the Exchange Securities will be validly issued, fully paid and nonassessable and will not be subject to any statutory preemptive rights or preemptive rights pursuant to the organization document or bylaws of the Company.

6. The Warrant Shares have been duly authorized and, when the Warrant Shares have been issued and delivered by the Company upon exercise of the Warrants, the Warrant Shares will be validly issued, fully paid and nonassessable and will not be subject to any statutory preemptive rights or preemptive rights pursuant to the organization document or bylaws of the Company.

7. No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body of the Republic of The Marshall Islands is required for the execution and delivery by the Company of the Purchase Agreement, the Registration Rights Agreement, the Initial Purchaser Registration Rights Agreement or the Warrant Agreement in order for it to be duly and validly authorized.

8. Each of the Purchase Agreement, the Registration Rights Agreement, the Initial Purchaser Registration Rights Agreement and the Warrant Agreement has been duly authorized, executed and delivered by the Company.

9. Other than as set forth or contemplated in the Disclosure Package and the Offering Memorandum and insofar as matters of Marshall Islands law are concerned, to our knowledge there are no legal or governmental investigations, actions, suits or proceedings pending or threatened in the Republic of The Marshall Islands against or affecting the Company or any of its properties or to which the Company is or may be a party or to which any of their properties is or may be the subject.

10. The compliance by the Company with all of the provisions of the Purchase Agreement, the Registration Rights Agreement, the Initial Purchaser Registration Rights Agreement and the Warrant Agreement and the consummation of the respective transactions therein contemplated will not result in any violation of the provisions of the Articles of Incorporation or Bylaws of the Company or any Marshall Islands statute or any order, rule or regulation known to us of any court or governmental agency or body in the Marshall Islands having jurisdiction over the Company or any of its properties.

11. No licenses, permits, certificates, consents, orders, approvals and other authorizations of, or declarations and filings with, any governmental or regulatory authorities of the Republic of The Marshall Islands are required for the Company to own or lease, as the case may be, and to operate, its properties and to carry on its business as conducted as of the date hereof in the manner described in the Disclosure Package and the Offering Memorandum other than such licenses, permits, certificates, consents, orders, approvals and other authorizations the failure to obtain would not in the aggregate have a material adverse effect on the Company).

12. No consent, approval, authorization, order, license, registration or qualification of or with any court or governmental agency or body the Republic of The Marshall Islands is required for the issuance and sale of the Securities by the Company or the consummation by the Company of the transactions contemplated by the Purchase Agreement, the Registration Rights Agreement and the Warrant Agreement except (A) which have been duly obtained and are in full force and effect or (B) as may be required in connection with the acquisition of any vessel as contemplated in the Disclosure Package and the Offering Memorandum and the registration of any such vessel under the law and flag of the Marshall Islands.

13. The statements in the Disclosure Package and the Offering Memorandum under “Enforceability of Civil Liabilities”, “Our Dividend Policy,” “Description of Capital Stock” and “Marshall Islands Company Considerations,” insofar as such statements constitute a summary of the terms of the capital stock of the Company, Marshall Islands legal matters, documents or proceedings referred to therein, and the statements in the Prospectus under “Tax Considerations—Marshall Islands Tax Considerations,” insofar as such statements describe Marshall Islands tax law, fairly present in all material respects the information called for with respect to such terms, legal matters under Marshall Islands law, documents or proceedings.

14. No stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Initial Purchasers to the Republic of The Marshall Islands or to any political subdivision or taxing authority thereof or therein in connection with the sale and delivery by the Company of the Securities to the Initial Purchasers or the Initial Purchasers delivery of the Securities.

15. The agreement of the Company to the choice of law provisions set forth in Section 16 of the Purchase Agreement, Section 14(i) of the Registration Rights Agreement and Article 14 of the Warrant

Agreement will be recognized by the courts of the Marshall Islands; the Company can sue and be sued in its own name under the law of the Marshall Islands; the irrevocable submission of the Company to the exclusive jurisdiction of a New York Court, the waiver by the Company of any objection to the venue of a proceeding of a New York Court and the agreement of the Company that the Purchase Agreement and the Registration Rights Agreement shall be governed by and construed in accordance with the law of the State of New York are legal, valid and binding; service of process effected in the manner set forth in Section 13 of the Purchase Agreement and Section 13 of the Registration Rights Agreement will be effective, insofar as the law of the Marshall Islands is concerned, to confer valid personal jurisdiction over the Company; and a final non-appealable judgment against the Company entered by a court in any United States or foreign jurisdiction in any suit, action or proceeding would be enforceable against the Company in the courts of the Republic of The Marshall Islands without a retrial of the merits of the matter, provided that: (a) the judgment was for a sum of money and was final in the jurisdiction granting the judgment, (b) the court granting the judgment had jurisdiction under the laws of the place where it sat and the judgment did not offend principles of the Republic of The Marshall Islands as to due process, propriety or public order, and (c) the defendant was actually present in person or by duly appointed representative, and the judgment did not constitute in effect a default judgment.

16. All dividends and other distributions declared and payable on the shares of capital stock of the Company will not be subject to withholding or other taxes under the current law and regulations of the Marshall Islands.

EXHIBIT C

Form of Greek Counsel Legal Opinion

Special Greek counsel to the Company, shall have furnished to the Initial Purchasers their written opinion addressed to the Initial Purchasers and dated as of the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, to the effect that:

1. To the best of our knowledge, there are no legal or governmental proceedings pending or threatened in Greece to which the Company is a party or to which any property of the Company is the subject.

2. The compliance by the Company with all of the provisions of the Purchase Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated therein will not conflict in any material respect with any Greek law.

3. The Company is not required to file tax returns or pay any taxes in Greece.

4. To the best of our knowledge, the Company has obtained any licenses and other forms of authorization from, and has made all declarations and filings with, any governmental authorities, self- regulatory organizations and any courts and other tribunals in Greece necessary to own or lease, as the case may be, and to operate the vessel owned by it and to carry on its business as conducted as of the date of the Offering Memorandum, and the Company has not received any actual notice of any proceedings relating to revocation or modification of any such license or other form of authorization, and the Company is in compliance in all material respects with all laws and regulations in Greece relating to the ownership or lease, as the case may be, and the operation of the vessel owned by it and the conduct of its business as conducted as of the date of the Offering Memorandum.

5. No documentary stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes, are payable by or on behalf of the Initial Purchasers to the Republic of Greece or to any political subdivision or taxing authority thereof or therein in connection with the sale and delivery by the Company of the Securities to the Initial Purchasers or the sale and delivery of the Securities by the Initial Purchasers.

6. All dividends and other distributions declared and payable on the shares of capital stock of the Company will not be subject to withholding or other taxes under the current law and regulations of Greece.

EX-3.1 3 a2178205zex-3_1.htm EXHIBIT 3.1

Exhibit 3.1

AMENDED AND RESTATED ARTICLES OF INCORPORATION

PARAGON SHIPPING INC.

UNDER SECTION 93 OF THE

BUSINESS CORPORATIONS ACT

The undersigned, Michael Bodouroglou, Chief Executive Officer of PARAGON SHIPPING INC. (the “Corporation”), a corporation incorporated under the laws of the Republic of the Marshall Islands, for the purpose of amending and restating the Articles of Incorporation of the Corporation pursuant to Section 93 of the Business Corporations Act, as amended, hereby certifies that:

1. The name of the Corporation is: PARAGON SHIPPING INC.

2. The Articles of Incorporation were filed with the Registrar of Corporations as of the 26^th day of April, 2006 and subsequently amended on October 26, 2006.

3. The Corporation’s total capital stock issued and outstanding is 2,272,941 Class B Common Shares, par value $0.001.

4. These Amended and Restated Articles of Incorporation amend and restate and integrate the Articles of Incorporation, as amended, of the Corporation.

5. The Articles of Incorporation of the Corporation are hereby amended and restated in their entirety to read as follows:

A. The name of the Corporation shall be:

PARAGON SHIPPING INC.

B. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act (the “BCA”) and without in any way limiting the generality of the foregoing, the corporation shall have the power:

(1) To purchase or otherwise acquire, own, use, operate, pledge, hypothecate, mortgage, lease, charter, sub-charter, sell, build, and repair steamships, motor ships, tankers, vessels, sailing vessels, tugs, lighters, barges, and all other vessels and craft of any and all motive power whatsoever, including aircraft, land craft, and any and all means of conveyance and transportation by land, water or air, together with engines, boilers, machinery equipment and appurtenances of all kinds, including masts, sails, boats, anchors, cables, tackle, furniture and all other necessities thereunto appertaining and belonging, together with all materials, articles, tools, equipment and appliances necessary, suitable or convenient for the construction, equipment, use and operation thereof, and to equip, furnish, and outfit such vessels and ships.

(2) To engage in ocean, coastwise and inland commerce, and generally in the carriage of freight, goods, cargo in bulk, passengers, mail and personal effects by water between the various ports of the world and to engage generally in waterborne commerce.

(3) To purchase or otherwise acquire, own, use, operate, lease, build, repair, sell or in any manner dispose of docks, piers, quays, wharves, dry docks, warehouses and storage facilities of all kinds, and any property, real, personal and mixed, in connection therewith.

(4) To act as charterers, or chartering brokers, or shipbuilding/shiprepairing brokers or ship’s sale and purchase brokers, ship’s husband, customhouse brokers, ship’s agents, manager of shipping property, freight contractors, forwarding agents, warehousemen, wharfingers, ship chandlers, and general traders.

C. The registered address of the Corporation in the Marshall Islands is Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH96960. The name of the Corporation’s registered agent at such address is The Trust Company of the Marshall Islands, Inc.

D. (a) The Corporation is authorized to issue an aggregate of one hundred fifty million (150,000,000) registered shares of stock, consisting of:

(1) one hundred twenty million (120,000,000) shares of Class A common stock, with a par value of one tenth of one United States cent (US$0.001) per share (the “Class A Common Shares”);

(2) five million (5,000,000) shares of Class B common stock, with a par value of one tenth of one United States cent (US$0.001) per share (the “Class B Common Shares”); and

(3) twenty-five million (25,000,000) preferred shares, with a par value of one tenth of one United States cent (US$0.001) per share (the “Preferred Shares”). The Board of Directors shall have the authority to authorize the issuance from time to time of one or more classes of preferred shares with one or more series within any class thereof, with such voting powers, full or limited, or without voting powers and with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions thereon as shall be set forth in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series of preferred shares including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times, in such manner and the price or prices of such redemption, (ii) entitled to receive dividends (which many be cumulative or non-cumulative) and other distributions at such rates, on such conditions, and at such times, and payable in preference to, or in relation to, the dividends payable on any other class or classes or any series thereof, (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation, or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or any other series of the same or any other series of class of stock, of the Corporation, at such price or prices or at such rates of

exchange and with such adjustments, all as may be stated in such resolution or resolutions.

The relative powers, preferences and rights, and the qualifications, limitations and restrictions, of the Class A Common Shares and the Class B Common Shares shall be in all respects identical except as further provided in this Section D.

(b) Effective with the commencement of business on November 21, 2006, the Corporation has effected a reverse stock split as to its issued and outstanding Class B Common Shares, pursuant to which the number of issued and outstanding shares of Class B Common Shares shall decrease from 2,272,941 to 1,738,588 Class B Common Shares. The reverse stock split shall not change the number of registered Class B Common Shares the Corporation is authorized to issue or the par value of the Class B Common Shares. The stated capital of the Corporation is hereby reduced from $2,272.94 to $1,738.59 and the amount of $534.35 is hereby reallocated to surplus.

(c) Definitions. For the purposes of these Amended and Restated Articles of Incorporation, the following definitions shall be used:

(1) “Continuing Directors” means, as of any date of determination, any member of the Corporation’s board of directors (the “Board of Directors”), unless Board of Directors is defined elsewhere, who:

(i) was a member of the Board of Directors on the date immediately after the completion of the Rule 144A Offering; or

(ii) was nominated for election or elected to the Board of Directors with the approval of a majority of the directors then in office who were either directors immediately after the completion of the Rule 144A Offering or whose nomination or election was previously so approved.

(2) “Exchange Class A Common Shares” shall mean the Corporation’s Class A Common Shares that are subject to an effective registration statement under the Securities Act with the U.S. Securities and Exchange Commission.

(3) “Exchange Offer” shall mean the offer by the Corporation to exchange Exchange Class A Common Shares and warrants to purchase Class A Common Shares for Class A Common Shares and warrants to purchase Class A Common Shares purchased in the Rule 144A Offering.

(4) “Qualifying Initial Public Offering” shall mean the initial public offering of the Corporation’s Class A Common Shares having gross proceeds of not less than $50 million.

(5) “Rule 144A Offering” shall mean the Corporation’s offering of up to 9,074,400 Class A Common Shares and 1,814,880 warrants to purchase Class A Common Shares to be made on a private placement basis pursuant to Section 4(2), Rule 144A and Regulation S under the Securities Act.

(6) “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.

(7) “Subordination Period” shall commence upon the issuance of the Class A Common Shares and warrants to purchase Class A Common Shares and shall extend until the completion of a Qualifying Initial Public Offering of the Corporation’s Class A Common Shares.

(d) Voting Rights. Except as otherwise provided herein or as otherwise required by law, the entire voting power and all voting rights shall be vested exclusively in the Class A Common Shares. Each Class A Common Share shall entitle the holder thereof to one vote, in person or by proxy, at any and all meetings of the shareholders of the Corporation.

(e) Conversion of Class B Common Shares to Class A Common Shares. Upon the completion of a Qualifying Initial Public Offering, the number of issued and outstanding Class B Common Shares, which may be reduced under certain circumstances if the completion of the Exchange Offer and the qualification of Class A Common Shares for trading on the OTC Bulletin Board is not completed within certain proscribed periods set forth in a registration statement relating to, inter alia, the Exchange Offer, shall automatically convert to Class A Common Shares on a one-for-one basis. All Class B Common Shares which shall have been converted as provided in this section D(e) shall no longer be deemed to be outstanding and all rights with respect to such shares shall forthwith cease and terminate except for the right of the holders thereof to receive full Class A Common Shares. Any Class B Common Share surrendered for conversion shall be cancelled, retired and not reissued. Any Class B Common Shares not converted into Class A Common Shares shall be cancelled and any accrued but unpaid dividends thereon will be forfeited at the time of Conversion of the Class B Common Shares into Class A Common Shares.

(f) Change of Control. Notwithstanding the above, the Subordination Period shall end immediately upon a Change of Control of the Corporation. For purposes of this section (f) only, “change of control” shall mean:

(1) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the Corporation’s assets, other than a disposition to any of the Corporation’s affiliates;

(2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person (as such term is used in Section 13(d)(3) of the United States Securities Exchange Act of 1934), other than any of the Corporation’s affiliates (excluding persons that may be deemed affiliates solely by virtue of their stock ownership) or shareholders of the Corporation prior to the Rule 144A Exchange Offer, becomes the beneficial owner, directly or indirectly, of more than 35% of the Corporation’s voting shares, measured by voting power rather than number of shares;

(3) the Corporation consolidates with, or merges with or into, any person (other than any of the Corporation’s affiliates), or any such person consolidates with, or merges with or into, the Corporation, in any such event pursuant to a transaction in which any of the outstanding Class A Common Shares or Class B Common Shares are converted into or exchanged for cash, securities or other property, or receive a payment of cash, securities or other property, other than

any such transaction where the Class A Common Shares and Class B Common Shares that are outstanding immediately prior to such transaction are converted into or exchanged for voting stock of the surviving person constituting a majority of the outstanding shares of such voting stock of such surviving person immediately after giving effect to such issuance; or

(4) the first day on which a majority of the members of the Corporation’s Board of Directors are not Continuing Directors.

(g) Reservation. The corporation shall at all times reserve and keep available out of its authorized but unissued Class A Common Shares, solely for the purpose of effecting the conversion of the Class B Common Shares, the full number of Class A Common Shares from time to time issuable upon the conversion of all Class B Common Shares then outstanding and shall take all such action and obtain all such permits or orders as may be necessary to enable the Corporation lawfully to issue such Class A Common Shares upon the conversion of such Class B Common Shares. In addition, the Corporation shall also reserve and keep available such other securities and property as may from time to time be deliverable upon conversion of the Class B Common Shares. So long as any Class B Common Shares shall be outstanding, the Corporation will take all corporate action necessary in order that the Corporation may validly and legally issue fully paid and nonassessable Class A Common Shares upon conversion of Class B Common Shares.

(h) Dividends. Subject to the foregoing provisions of this Section D, shareholders shall be entitled to receive as and when declared by the Board of Directors, such dividends (payable in cash or otherwise) as the Board of Directors may from time to time determine, payable to the shareholders of record on such dates as shall be fixed for the purpose by the Board of Directors in advance of payment of each particular dividend. No dividend shall be declared on any Class B Common Share unless an equal dividend is simultaneously declared on each Class A Common Share, nor shall any dividend be declared on any Class A Common Share unless an equal dividend is simultaneously declared on each Class B Common Share. Dividends will not be payable on any Class B Common Shares until the later of (i) the conversion of the Class B Common Shares into Class A Common Shares and (ii) the payment date for dividends that were declared on Class A Common Shares simultaneously with dividends declared on Class B Common Shares.

(i) Liquidation. Upon the liquidation of the Corporation, the assets available for distribution to shareholders of the Corporation shall be paid to the holders of Class A Common Shares until the holders of Class A Common Shares receive their full purchase price paid for the Class A Common Shares. Following the payment of the full purchase price of the Class A Common Shares to the holders of Class A Common Shares, the holders of Class B Common Shares shall be paid an amount equal to the par value of the Class B, and thereafter holders of the Class B Common Shares shall receive no further distributions and any additional assets available for distribution shall be paid to the holders of the Class A Common Shares.

E. No holder of shares of the Corporation shall, by reason thereof, have any preemptive or other preferential right to acquire, by subscription or otherwise, any unissued or treasury shares of the Corporation, or any other share of any class or series of the Corporation’s shares to be issued because of an increase in the authorized capital stock of the Corporation, or any bonds, certificates of indebtedness, debentures or other securities convertible into shares of the Corporation. However, the Board of Directors may issue or dispose of any such unissued or treasury shares, or any such additional authorized issue of new shares or securities convertible into shares upon such terms as the Board of Directors may, in its discretion, determine, without offering to shareholders then of record, or any class of shareholders, any thereof, on the same terms or any terms.

F. The Corporation shall have every power which a corporation now or hereafter organized under the BCA may have.

G. The name and address of the incorporator is:

Name		Post Office Address

Majuro Nominees, Ltd.		P.O. Box 1405 Majuro, Marshall Islands MH96960

H. Corporate existence commenced on April 26, 2006 and shall continue upon filing these Amended and Restated Articles of Incorporation with the Registrar of Corporations.

I. (a) Upon the consummation of the Rule 144A Offering, the Corporation’s Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the entire Board of Directors permits, with the term of office of one or another of the three classes expiring each year, provided, however, that such class provision shall not apply to any director elected by the holders of one or more series of preferred stock voting separately as a class. The term of office of the first class to expire at the first Annual Meeting of Shareholders held following the closing of the Rule 144A Offering, the term of office of the second class to expire at the second Annual Meeting of Shareholders held following the Rule 144A Offering and the term of office of the third class to expire at the third Annual Meeting of Shareholders held following the Rule 144A Offering. Commencing with the first Annual Meeting of Shareholders held following the Corporation’s Rule 144A Offering, the directors elected at an annual meeting of shareholders to succeed those whose terms then expire shall be identified as being directors of the same class as the directors whom they succeed, and each of them shall hold office until the third succeeding annual meeting of shareholders and until such director’s successor is elected and has qualified. The initial classes of the Board of Directors shall be determined by the shareholders of the Corporation immediately prior to the consummation of the Rule 144A Offering with such classes to be effective upon the closing of the Rule 144A Offering.

Any vacancies in the Board of Directors for any reason, and any created directorships resulting from any increase in the number of directors, may be filled by the vote of not less than a majority of the members of the Board of Directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next election of their successors shall be elected and qualified. If the Corporation shall have created multiple classes of directors at the time a vacancy is filled by the vote of not less than a majority of the members of the Board of Directors then in office, the class of such chose director shall be determined by the majority of the members of the Board of Directors then in office in accordance with the provisions of the preceding paragraph.

No decrease in the number of directors shall shorten the term of any incumbent director. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of preferred stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the then authorized number of directors shall be increased by the number of directors so to be elected, and the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of shareholders.

Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or Amended and Restated Bylaws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law), any director or the entire Board of Directors of the Corporation may be removed at any time, but only for cause and by the affirmative vote of the holders of 66 2/3% or more of the issued and outstanding voting shares of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the shareholders called for that purpose. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of preferred stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the provisions of this section (a) of this Article I shall apply only to such holders of preferred stock with respect to the director or directors elected by such holders of preferred stock.

Except as otherwise provided by applicable law, cause for the removal of a director shall be deemed to exist only if the director whose removal is proposed: (i) has been found to have been negligent or guilty of misconduct in the performance of his duties to the Corporation in any matter of substantial importance to the Corporation by the affirmative vote of at least 70% of the directors then in office, other than the director whose removal is being sought, at any meeting of the Board called for that purpose or (ii) has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetence directly affects his ability to serve as a director of the Corporation.

No proposal by a shareholder to remove a director shall be voted upon at a meeting of the shareholders unless such shareholder has given timely notice thereof in proper written form to the Secretary. To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one hundred and twenty (120) days nor more than one hundred eighty (180) days prior to the one year anniversary of the mailing date of the proxy materials for the immediately preceding annual meeting of shareholders or any such later deadline as may be required in the rules promulgated by the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, regarding the solicitation of proxies. To be in proper written form, a shareholder’s notice must set forth: (a) a statement of the grounds, if any, on which such director is proposed to be removed, (b) evidence reasonably satisfactory to the Secretary, of such shareholder’s status as such and of the number of shares of each class of capital stock of the Corporation beneficially owned by such shareholder, and (c) a list of the names and addresses of other shareholders of the Corporation, if any, with whom such shareholder is acting in concert, and the number of shares of each class of capital stock of the Corporation beneficially owned by each such shareholder.

No shareholder proposal to remove a director shall be voted upon at a meeting of the shareholders unless proposed in accordance with the procedures set forth in this Article I. If the Chairman of the meeting determines, based on the facts, that a shareholder proposal to remove a director was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that a proposal to remove a director of the Corporation was not made in accordance with the

procedures prescribed by these Amended and Restated Articles, and such defective proposal shall be disregarded.

All of the foregoing provisions of this Article I are subject to the terms of any preferred stock with respect to the directors to be elected solely by the holders of such preferred stock.

(b) Directors shall be elected by a plurality of the votes cast at a meeting of shareholders by the holders of shares entitled to vote in the election. Cumulative voting, as defined in Division 7, Section 71(2) of the BCA, shall not be used to elect directors.

(c) Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or Amended and Restated Bylaws (and notwithstanding the fact that some lesser percentage may be specified by law), the affirmative vote of the holders of 66 2/3% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article I.

J. The Board of Directors of the Corporation is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation by a vote of not less than 66 2/3% of the entire Board of Directors, and the shareholders may, subject to compliance with the provisions of Article II of the Bylaws concerning the nature of business to be transacted at a meeting of the shareholders, by the affirmative vote of the holders of 70% or more of the outstanding shares of stock entitled to vote (considered for this purpose as one class), amend, alter, change or repeal any Bylaws adopted by the Board of Directors or make any additional Bylaws or amend or repeal any existing Bylaws. Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or the Amended and Restated Bylaws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law), the affirmative vote of the holders of 70% or more of the outstanding shares of common stock of the Corporation entitled to vote (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article J.

K. (a) The Corporation may not engage in any Business Combination with any Interested Shareholder for a period of three years following the time of the transaction in which the person became an Interested Shareholder, unless:

(1) prior to such time, the Board of Directors of the Corporation approved either the Business Combination or the transaction which resulted in the shareholder becoming an Interested Shareholder; or

(2) upon consummation of the transaction which resulted in the shareholder becoming an Interested Shareholder, the Interested Shareholder owned at least 85% of the voting stock of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

(3) at or subsequent to such time, the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of shareholders, and not by written consent, by the affirmative vote of at least 66

2/3% of the outstanding voting stock that is not owned by the interested shareholder; or

(4) the shareholder became an Interested Shareholder prior to the consummation of the Rule 144A Offering.

(b) The restrictions contained in this section shall not apply if:

(1) A shareholder becomes an Interested Shareholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the shareholder ceases to be an Interested Shareholder, and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Corporation and such shareholder, have been an Interested Shareholder but for the inadvertent acquisition of ownership; or

(2) The Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an Interested Shareholder during the previous three years or who became an Interested Shareholder with the approval of the Board; and (iii) is approved or not opposed by a majority of the members of the Board then in office (but not less than one) who were Directors prior to any person becoming an Interested Shareholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to:

(i) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to the BCA_, no vote of the shareholders of the Corporation is required);

(ii) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly-owned subsidiary or to the Corporation) having an aggregate market value equal to 50% or more of either that aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding shares; or

(iii) a proposed tender or exchange offer for 50% or more of the outstanding voting shares of the Corporation.

The Corporation shall give not less than 20 days notice to all Interested Shareholders prior to the consummation of any of the transactions described in clause (i) or (ii) of section (b)(2) of this Article K.

(1) “Affiliate” means a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.

(2) “Associate,” when used to indicate a relationship with any person, means: (i) Any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting shares; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.

(3) “Business Combination,” when used in reference to the Corporation and any Interested Shareholder of the Corporation, means:

(i) Any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation with (A) the Interested Shareholder or any of its affiliates, or (B) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the Interested Shareholder.

(ii) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a shareholder of the Corporation, to or with the Interested Shareholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding shares;

(iii) Any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any shares, or any share of such subsidiary, to the Interested Shareholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares, or shares of any such subsidiary, which securities were outstanding prior to the time that the Interested Shareholder became such; (B) pursuant to a merger with a direct or indirect wholly-owned subsidiary of the Corporation solely for purposes of forming a holding Corporation; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares, or shares of any such subsidiary, which security is distributed, pro rata to all holders of a class or series of shares subsequent to the time the Interested Shareholder became such; (D) pursuant to an exchange offer by the Corporation to purchase shares made on the same terms to all holders of said shares; or (E) any issuance or transfer of shares by the Corporation; provided however, that in no case under items (C)-(E) of this subparagraph shall

there be an increase in the Interested Shareholder’s proportionate share of the any class or series of shares;

(iv) Any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of any class or series of shares, or securities convertible into any class or series of shares, or shares of any such subsidiary, or securities convertible into such shares, which is owned by the Interested Shareholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares not caused, directly or indirectly, by the Interested Shareholder; or

(v) Any receipt by the Interested Shareholder of the benefit, directly or indirectly (except proportionately as a shareholder of the Corporation), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted in subparagraphs (i)-(iv) of this paragraph) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.

(4) “Control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise. A person who is the owner of 20% or more of the outstanding voting shares of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.

(5) “Interested Shareholder” means any person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 20% or more of the outstanding voting shares of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 20% or more of the outstanding voting shares of the Corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Shareholder, and the affiliates and associates of such person; provided, however, that the term “Interested Shareholder” shall not include any person whose ownership of shares in excess of the 20% limitation set forth herein is the result of action taken solely by the Corporation; provided that such person shall be an Interested Shareholder if thereafter such person acquires additional shares of voting shares of the Corporation, except as a result of further Corporation action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an Interested Shareholder, the voting shares of the Corporation deemed to be outstanding shall include voting shares deemed to be owned by the person through application of paragraph (8) below, but shall not include any other

unissued shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

(6) “Person” means any individual, corporation, partnership, unincorporated association or other entity.

(7) “Voting stock” means, with respect to any corporation, shares of any class or series entitled to vote and, with respect to any entity that is not a corporation, any equity interest entitled to vote.

(8) “Owner,” including the terms “own” and “owned,” when used with respect to any shares, means a person that individually or with or through any of its affiliates or associates:

(i) Beneficially owns such shares, directly or indirectly; or

(ii) Has (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of shares tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered shares is accepted for purchase or exchange; or (B) the right to vote such shares pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any shares because of such person’s right to vote such shares if the agreement, arrangement or understanding to vote such shares arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or

(iii) Has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subparagraph (ii) of this paragraph), or disposing of such shares with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such shares.

(d) Any amendment of this Article K shall not be effective until 12 months after the approval of such amendment at a meeting of the shareholders of the Corporation and shall not apply to any Business Combination between the Corporation and any person who became an Interested Shareholder of the Corporation at or prior to the time of such approval.

(e) Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Amended and Restated Articles of Incorporation), the affirmative vote of the holders of 66 2/3% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article K.

L. The Corporation may transfer its corporate domicile from the Marshall Islands to any other place in the world.

M. No director shall be personally liable to the Corporation or any of its shareholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the BCA as the same exists or may hereafter be amended. If the BCA is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the BCA, as so amended. Any repeal or modification of this Section M shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

6. These Amended and Restated Articles of Incorporation were duly adopted in accordance with Section 93 of the Business Corporations Act. These Amended and Restated Articles of Incorporation were duly authorized by written consent of the Board of Directors of the Corporation and by written consent of the Sole Shareholder of the Corporation.

IN WITNESS WHEREOF, I have executed these Amended and Restated Articles of Incorporation on this day of November 20, 2006.


	/s/ Michael Bodouroglou
	Name: Michael Bodouroglou
	Title: Chief Executive Officer

EX-3.2 4 a2178205zex-3_2.htm EXHIBIT 3.2

Exhibit 3.2

PARAGON SHIPPING INC.

(the “Corporation”)

AMENDED AND RESTATED BYLAWS

As Adopted October 26, 2006

ARTICLE I
OFFICES

The principal place of business of the Corporation shall be at such place or places as the directors shall from time to time determine. The Corporation may also have an office or offices at such other places within or without the Marshall Islands as the Board of Directors (the “Board”) may from time to time appoint or the business of the Corporation may require.

ARTICLE II
SHAREHOLDERS

Section 1. Annual Meeting:

The annual meeting of shareholders of the Corporation shall be held on such day and at such time and place within or without the Marshall Islands as the Board may determine for the purpose of electing directors and or transacting such other business as may properly be brought before the meeting.

Section 2. Nature of Business at Annual Meetings of Shareholders:

No business may be transacted at an annual meeting of shareholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof); (b) otherwise properly brought before the annual meeting by or at the direction of the Board (or any duly authorized committee thereof); or (c) otherwise properly brought before the annual meeting by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in Section 2 of this Article II and has remained a shareholder of record through the record date for the determination of shareholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in Section 2 of this Article II. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation (the “Secretary”).

To be timely a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one-hundred twenty (120) days nor more than one-hundred eighty (180) days prior to the one year

anniversary of the immediately preceding annual meeting of shareholders. In no event shall the public disclosure of any adjournment of an annual meeting of the shareholders commence a new time period for the giving of the shareholder’s notice described herein.

To be in proper written form, a shareholder’s notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such shareholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. In addition, notwithstanding anything in Section 2 of this Article II to the contrary, a shareholder intending to nominate one or more persons for election as a Director at an annual meeting must comply with Article III Section 3 of these Amended and Restated Bylaws for such nomination or nominations to be properly brought before such meeting.

No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in Section 2 of this Article II; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in Section 2 of this Article II shall be deemed to preclude discussion by any shareholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman of the meeting shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Section 3. Special Meeting:

A special meeting of the shareholders may be called at any time by the Board, or by the Chairman of the Board, or by the President. No other person or persons are permitted to call a special meeting. No business may be conducted at the special meeting other than business brought before the meeting by the Board, the Chairman of the Board or the President. The Chairman of the Board or, in the Chairman’s absence, another person designated by the Board shall act as the Chairman of all meetings of shareholders. If the Chairman of the special meeting determines that business was not properly brought before the special meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Section 4. Notice of Meetings:

Notice of every annual and special meeting of shareholders, other than any meeting the giving of notice of which is otherwise prescribed by law, stating the date, time, place and purpose thereof, and in the case of special meetings, the name of the person or persons at whose direction the notice is being issued, shall be given personally or sent by mail, telegraph, cablegram, telex or teleprinter at least fifteen (15) but not more than sixty (60) days before such meeting, to each shareholder of record entitled to vote thereat and to each shareholder of record who, by reason of any action proposed at such meeting would be entitled to have his shares appraised if such action were taken, and the notice shall include a statement of that purpose and to that effect. If mailed, notice shall be deemed to have been given when deposited in the mail, directed to the shareholder at his address as the same appears on the record of shareholders of the Corporation or at such address as to which the shareholder has given notice to the Secretary. Notice of a meeting need not be given to any shareholder who submits a signed waiver of notice, whether before or after the meeting, or who attends the meeting without protesting prior to the conclusion thereof the lack of notice to him.

Section 5. Adjournments:

Any meeting of shareholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the meeting is-adjourned for lack of quorum, notice of the new meeting shall be given to each shareholder of record entitled to vote at the meeting. If after an adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to notice in Section 4 of this Article II.

Section 6. Quorum:

At all meetings of shareholders, except as otherwise expressly provided by law, there must be present either in person or by proxy shareholders of record holding at least a majority of the shares issued and outstanding and entitled to vote at such meetings in order to constitute a quorum, but if less than a quorum is present, a majority of those shares present either in person or by proxy shall have power to adjourn any meeting until a quorum shall be present. Voting:If a quorum is present, and except as otherwise expressly provided by law, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the shareholders. At any meeting of shareholders, with respect to matter for which a shareholder is entitled to vote, each such shareholder shall be entitled to one vote for each share it holds. Each shareholder may exercise such voting right either in person or by proxy provided, however, that no proxy shall be valid after the expiration of eleven months from the date such proxy was authorized unless otherwise provided in the proxy. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with

an interest sufficient in the law of the Marshall Islands to support an irrevocable power. A shareholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary. Shareholders may act by way of written consent in accordance with the provisions of Section 67 of the BCA.

Section 7. Fixing of Record Date:

The Board may fix a time not more than sixty (60) nor less than fifteen (15) days prior to the date of any meeting of shareholders as the time as of which shareholders entitled to notice of and to vote at such a meeting shall be determined, and all persons who were holders of record of voting shares at such time and no other shall be entitled to notice of and to vote at such meeting. The Board may fix a time not exceeding sixty (60) days preceding the date fixed for the payment of any dividend, the making of any distribution, the allotment of any rights or the taking of any other action, as a record time for the determination of the shareholders entitled to receive any such dividend, distribution, or allotment or for the purpose of such other action.

ARTICLE III
DIRECTORS

Section 1. Number:

The affairs, business and property of the Corporation shall be managed by a Board to consist of such number of directors, not less than three, as shall be fixed by a vote of not less than 66 2/3% of the entire Board from time to time. The directors, other than those who may be elected by the holders of one or more series of preferred stock voting separately as a class pursuant to the provisions of a resolution of the Board providing for the establishment of any series of preferred stock, shall be divided into three classes, which shall be as nearly equal in number as possible. Should the number of directors be increased, there shall be no classification of the additional directors until the next annual meeting of the shareholders. Each director shall serve his respective term of office until his successor shall have been elected and qualified, except in the event of his death, resignation or removal. No decrease in the number of directors shall shorten the term of any incumbent director. The directors need not be residents of the Marshall Islands or shareholders of the Corporation. Corporations may, to the extent permitted by law, be elected or appointed directors.

Section 2. How Elected:

Except as otherwise provided by law or in Section 5 of this Article III, the directors of the Corporation (other than the first Board of Directors if named in the Amended & Restated Articles of Incorporation or designated by the incorporators) shall be elected at an annual meeting of shareholders by a plurality of the shareholders entitled to vote. Except as otherwise provided in the Amended & Restated Articles of Incorporation or in Section 1

of this Article III, each Director shall be elected to serve until the third succeeding annual meeting of shareholders and until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office.

Section 3. Nomination of Directors:

Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Amended & Restated Amended & Restated Articles of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board may be made at any annual meeting of shareholders (a) by or at the direction of the Board (or any duly authorized committee thereof) or (b) by any shareholders of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in Section 3 of this Article III and on the record date for the determination of shareholder entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in Section 3 of this Article III.

In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary.

To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one-hundred twenty (120) days nor more than one-hundred eighty (180) days prior to the anniversary date of the immediately preceding annual meeting of shareholders.

To be in proper written form, a shareholder’s notice to the Secretary must set forth; (a) as to each person whom the shareholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder applicable to issuers that are not foreign private issuers and (b) as to the shareholder giving the notice (i) the name and record address of such shareholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such shareholder, (iii) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person and persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (iv) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the

person or persons named in its notice and (v) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in Section 3 of this Article III. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

Section 4. Removal:

Any or all of the directors may be removed, with cause, by the affirmative vote of holders of 66 2/3% of the issued and outstanding voting shares of the Corporation. No director may be removed without cause. Except as otherwise provided by applicable law, cause for the removal of a director shall be deemed to exist only if the director whose removal is proposed: (i) has been found to have been negligent or guilty of misconduct in the performance of his duties to the Corporation in any matter of substantial importance to the Corporation by the affirmative vote of at least 70% of the directors then in office, other than the director whose removal is being sought, at any meeting of the Board called for that purpose; or (ii) has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetence directly affects his ability to serve as a director of the Corporation.

No proposal by a shareholder to remove a director shall be voted upon at a meeting of the shareholders unless such shareholder has given timely notice thereof in proper written form to the Secretary. To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one hundred and twenty (120) days nor more than one hundred eighty (180) days prior to the anniversary date of the immediately preceding annual meeting of the shareholders. To be in proper written form, a shareholder’s notice must set forth: (a) a statement of the grounds, if any, on which such director is proposed to be removed, (b) evidence reasonably satisfactory to the Secretary, of such shareholder’s status as such and of the number of shares of each class of capital stock of the Corporation beneficially owned by such shareholder, and (c) a list of the names and addresses of other shareholders of the Corporation, if any, with whom such shareholder is acting in concert, and the number of shares of each class of capital stock of the Corporation beneficially owned by each such shareholder.

No shareholder proposal to remove a director shall be voted upon at an annual meeting of the shareholders unless proposed in accordance with the procedures set forth in Section 4 of this Article III. If the Chairman of the meeting determines, based on the facts, that a

shareholder proposal to remove a director was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that a proposal to remove a director of the Corporation was not made in accordance with the procedures prescribed by these Amended and Restated Bylaws, and such defective proposal shall be disregarded.

All of the foregoing provisions of Section 4 of this Article III are subject to the terms of any preferred stock with respect to the directors to be elected solely by the holders of such preferred stock.

Section 5. Vacancies:

Any vacancies in the Board of Directors for any reason, and any created directorships resulting from any increase in the number of directors, may be filled by the vote of not less than a majority of the members of the Board of Directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next election of the class for which such directors shall have been chosen and until their successors shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of preferred stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the then authorized number of directors shall be increased by the number of directors so to be elected, and the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of shareholders.

Section 6. Regular meetings:

Regular meetings of the Board may be held at such time and place as may be determined by resolution of the Board and no notice shall be required for any regular meeting. Except as otherwise provided by law, any business may be transacted at any regular meeting.

Section 7. Special meeting:

Special meetings of the Board may, unless otherwise prescribed by law, be called from time to time by the Chairman, the President, or by a majority of the Board. The President or the Secretary shall call a special meeting of the Board upon written request directed to either of them by any two directors stating the time, place and purpose of such special meeting. Special meetings of the Board shall be held on a date and at such time and at such place as may be designated in the notice thereof by the officer calling the meeting.

Section 8. Notice of Special Meeting:

Notice of the special date, time and place of each special meeting of the Board shall be given to each Director at least forty-eight (48) hours prior to such meeting, unless the

notice is given orally or delivered in person, in which case it shall be given at least twenty-four (24) hours prior to such meeting. For the purpose of this section, notice shall be deemed to be duly given to a Director if given to him personally (including by telephone) or if such notice be delivered to such Director by mail, telegraph, cablegram, telex or teleprinter to his last known address Notice of a meeting need not be given to any Director who submits a signed waiver of notice, whether before of after the meeting, or who attends the meeting without protesting, prior to the conclusion thereof, the lack of notice to him.

Section 9. Quorum:

A majority of the directors at the time in office, present in person or by proxy or conference telephone, shall constitute a quorum for the transaction of business.

Section 10. Interested Directors:

No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board as defined in Section 55 of the BCA, by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest and as to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.

Section 11. Voting:

The vote of the majority of the directors, present in person or by proxy or conference telephone, at a meeting at which a quorum is present shall be the act of the directors. Any action required or permitted to be taken at a meeting may be taken without a meeting if all members of the Board consent thereto in writing.

Section 12. Compensation of Directors and Members of Committees:

The Board may from time to time, in its discretion, fix the amounts which shall be payable to members of the Board and to members of any committee, for attendance at the meetings of the Board or of such committee and for services rendered to the Corporation.

ARTICLE IV
COMMITTEES

The Board may, by resolution or resolutions passed by a majority of the entire Board, designate from among its members an executive committee to consist of two or more of the directors of the Corporation, which, to the extent provided in said resolution or resolutions, or in these Amended and Restated Bylaws, shall have and may exercise, to the extent permitted by law, the powers of the Board in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it provided, however, that no committee shall have the power or authority to (i) fill a vacancy in the Board or in a committee thereof, (ii) amend or repeal any bylaw or adopt any new bylaws, (iii) amend or repeal any resolution of the entire Board, (iv) or increase the number of directors on the Board, or (v) remove any Director. In addition, the Board may designate from among its members other committees to consist of two or more of the directors of the Corporation, each of which shall perform such functions and have such authority and powers as shall be delegated to such committee by said resolution or resolutions or as provided for in these Amended and Restated Bylaws, except that only the executive committee may have and exercise the powers of the Board. Members of the executive committee and any other committee shall hold office for such period as may be prescribed by the vote of the entire Board, subject, however, to removal at any time by the vote of the Board. Vacancies in membership of such committees shall be filled by vote of the Board. Committees may adopt their own rules of procedures and may meet at stated times or on such notice as they may determine. Each committee shall keep a record of its proceedings and report the same to the Board when required.

ARTICLE V
OFFICERS

Section 1. Number and Designation:

The Board shall elect a President, Secretary and Treasurer and such other officers as it may deem necessary. Officers may be of any nationality and need not be residents of the Marshall Islands. The Officers shall be elected annually by the Board at its first meeting following the annual election of directors, (except that the initial officers may be named by the Board at its first meeting following such Board’s appointment in the Amended & Restated Amended & Restated Articles of Incorporation or as designated by the incorporators) but in the event of the failure of the Board to so elect any officer, such

officer may be elected at any subsequent meeting of the Board. The salaries of officers and any other compensation paid to them shall be fixed from time to time by the Board. The Board may at any meeting elect additional officers. Each officer shall hold office until the first meeting of the Board following the next annual election of directors and until his successor shall have been duly elected and qualified except in the event of the earlier termination of his term of office, through death, resignation, removal or otherwise. Any officer may be removed by the Board at any time with or without cause. Any vacancy in an office may be filled for the unexpired position of the term of such office by the Board at any regular or special meeting.

Section 2. President:

In the absence of the Chairman of the Board, the President of the Corporation shall preside at all meetings of the Board and of the shareholders at which he or she shall be present. The President shall perform all duties incident to the office of president of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or as may be provided by law.

Section 3. Secretary:

The Secretary shall act as secretary of all meetings of the shareholders and of the Board at which he is present, shall have supervision over the giving and serving of notices of the Corporation, shall be the custodian of the corporate records of the corporate seal of the Corporation, shall be empowered to affix the corporate seal to those documents, the execution of which, on behalf of the Corporation under its seal, is duly authorized and when so affixed may attest the same, and shall exercise the powers and perform such other duties as may be assigned to him by the Board or the President.

Section 4. Treasurer:

The Treasurer shall have general supervision over the care and custody of the funds, securities, and other valuable effects of the Corporation and shall deposit the same or cause the same to be deposited in the name of the Corporation in such depositories as the Board may designate, shall disburse the funds of the Corporation as may be ordered by the Board, shall have supervision over the accounts of all receipts and disbursements of the Corporation, shall, whenever required by the Board, render or cause to be rendered financial statements of the Corporation, shall have the power and perform the duties usually incident to the office of Treasurer, and shall have such powers and perform other duties as may be assigned to him by the Board or President.

Section 5. Other Officers:

Officers other than those treated in Sections 2 through 4 of this Article V shall exercise such powers and perform such duties as may be assigned to them by the Board or the President.

Section 6. Bond:

The Board shall have power to the extent permitted by law to require any officer, agent or employee of the Corporation to give bond for the faithful discharge of his duties in such form and with such surety as the Board may deem advisable.

ARTICLE VI
CERTIFICATES FOR SHARES

Section 1. Form and Issuance:

The Shares of the Corporation shall be represented by certificates in form meeting the requirements of law and approved by the Board. Certificates shall be signed by (i) the President or a Vice-President and by (ii) the Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer. These signatures may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or its employee.

Section 2. Transfer:

The Board shall have power and authority to make such rules and regulations as they may deem expedient concerning the issuance, registration and transfer of certificates representing shares of the Corporation’s stock, and may appoint transfer agents and registrars thereof.

Section 3. Loss of Stock Certificates:

The Board may direct a new certificate of stock to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.

ARTICLE VII
DIVIDENDS

Dividends may be declared in conformity with applicable law by, and at the discretion of, the Board at any regular or special meeting. Dividends may be declared and paid in cash, stock or other property of the Corporation.

ARTICLE VIII
INDEMNIFICATION

Section 1. The Corporation shall indemnify, to the full extent permitted by law, any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 2. The Corporation shall indemnify, to the full extent permitted by law, any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was properly brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court having proper jurisdiction shall deem proper.

Section 3. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 or 2 of this Article VIII, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

Section 4. Any indemnification under Sections 1 or 2 of this Article VIII (unless ordered by a court having proper jurisdiction) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in such section. Such determination shall be made:

(i) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding; or

(ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or

(iii) by the shareholders.

Section 5. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Section.

Section 6. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 7. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VIII.

Section 8. For purposes of this Article VIII, references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article VIII with respect to the resulting or surviving

corporation as he would have with respect to such constituent corporation of its separate existence had continued.

Section 9. For purposes of this Article VIII, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article VIII.

Section 10. The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

Section 11. No director or officer of the Corporation shall be personally liable to the Corporation or to any shareholder of the Corporation for monetary damages for breach of fiduciary duty as a director or officer, provided that this provision shall not limit the liability of a director or officer (i) for any breach of the director’s or the officer’s duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which the director or officer derived an improper personal benefit.

ARTICLE IX
CORPORATE SEAL

The Seal of the Corporation, if any, shall be circular in form, with the name of the Corporation in the circumference and such other appropriate legend as the Board may from time to time determine.

ARTICLE X
FISCAL YEAR

The fiscal year of the Corporation shall be such period of twelve consecutive months as the Board may by resolution designate.

ARTICLE XI
AMENDMENTS

These Amended and Restated Bylaws may be amended, added to, altered or repealed, or new Bylaws may be adopted, solely at any regular or special meeting of the Board by the affirmative vote of 66 2/3% of the entire Board, or by the shareholders by the affirmative vote of the holders of 70% or more of the outstanding shares of stock entitled to vote (considered for this purpose as one class). The phrase “66 2/3% of the entire Board” shall be deemed to refer to 66 2/3% of the number of directors constituting the Board as set forth in accordance with Article III, without regard to any vacancies, or if the number of Directors constituting 66 2/3% of the entire Board is greater than the number of members of the Board then in office, the unanimous vote of Directors in office.

EX-4.1 5 a2178205zex-4_1.htm EXHIBIT 4.1

Exhibit 4.1

016570| 003590|127C|RESTRICTED||4|057-423

COMMON STOCK CLASS A	COMMON STOCK CLASS A
PAR VALUE $0.001	PAR VALUE $0.001

Certificate		Shares
Number		600620****
ZQ 000000	PARAGON SHIPPING INC.	*600620***
	INCORPORATED UNDER THE LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS	**600620**
	120,000,000 AUTHORIZED SHARES $0.001 PAR VALUE	***600620*
		****600620

THIS CERTIFIES THAT	MR SAMPLE & MRS SAMPLE &	CUSIP 69913R 10 1
	MR SAMPLE & MRS SAMPLE	SEE REVERSE FOR CERTAIN DEFINITIONS

is the owner of	*** SIX HUNDRED THOUSAND
	SIX HUNDRED AND TWENTY ***

FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK CLASS A OF

Paragon Shipping Inc. (hereinafter called the “Company”), transferable on the books of the Company in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the Articles of Incorporation, as amended, and the By-Laws, as amended, of the Company (copies of which are on file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.

Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.

		DATED << Month Day Year>>
/s/ ILLEGIBLE
President		COUNTERSIGNED AND REGISTERED
	[SEAL]	COMPUTERSHARE TRUST COMPANY, INC.
/s/ ILLEGIBLE		(DENVER)
Secretary		TRANSFER AGENT AND REGISTRAR

		By
			AUTHORIZED SIGNATURE

SECURITY INSTRUCTIONS ON REVERSE

PARAGON SHIPPING INC.
TRANSFER FEE $25.00

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATIONS UNDER THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS [IN THE CASE OF RULE 144A SECURITIES: TWO YEARS] [IN THE CASE OF REGULATIONS SECURITIES: ONE YEAR] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY, ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A. TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATIONS UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT THAT SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
	TEN COM	- as tenants in common	UNIF GIFT MIN ACT -		Custodian
				(Cust)		(Minor)
	TEN ENT	- as tenants by the entireties		under Uniform Gifts to Mirrors Act
						(State)
	JT TEN	- as joint tenants with right of survivorship and not as tenants in common	UNIF TRF MIN ACT	Custodian (until age )
				(Cust)		(Minor)
				under Uniform Transfers to Minors Act
		Additional abbreviations may also be used though not in the above list.				(State)

THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, A SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND RIGHTS, AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE ARTICLES OF INCORPORATION OF THE COMPANY, AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE VARIATIONS FOR FUTURE SERIES. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORS MAY REQUIRE THE OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE, OR HIS LEGAL REPRESENTATIVES, TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE.

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

For value received, hereby sell, assign and transfer unto

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE)

		Shares
of the class A common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
		Attorney
to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.

Dated: 20			Signature(s) Guaranteed: Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.

Signature:

Signature:
	Notice:	The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever.

EX-5.1 6 a2178205zex-5_1.htm EXHIBIT 5.1

Exhibit 5.1

[Seward & Kissel LLP Letterhead]

Paragon Shipping Inc.	May 30, 2007
Voula Center
102-104 V. Pavlou Street
Voula 16673
Athens, Greece

Re: Paragon Shipping Inc.

Ladies and Gentlemen:

We have acted as counsel to Paragon Shipping Inc. (the “Company”) in connection with the Company’s Registration Statement on Form F-1 (File No. 333- ) (the “Registration Statement”) as filed with the U.S. Securities and Exchange Commission (the “Commission”) on May 30, 2007, as thereafter amended or supplemented, with respect to the registration by the Company of 11,097,187 Common Shares, par value $0.001 per share, and 1,849,531 Warrants together with the Common Shares, (the “Securities”) of the Company (the “Offering”) to be offered by certain selling shareholders.

We have examined originals or copies, certified or otherwise identified to our satisfaction, of: (i) the Registration Statement; (ii) the prospectus of the Company (the “Prospectus”) included in the Registration Statement; and (iii) such corporate documents and records of the Company and such other instruments, certificates and documents as we have deemed necessary or appropriate as a basis for the opinions hereinafter expressed. In such examinations, we have assumed the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies or drafts of documents to be executed, the genuineness of all signatures and the legal competence or capacity of persons or entities to complete the execution of documents. As to various questions of fact which are material to the opinions hereinafter expressed, we have relied upon statements or certificates of public officials, directors of the Company and others.

We have further assumed for the purposes of this opinion, without investigation, that (i) all documents contemplated by the Prospectus to be executed in connection with the Offering have been duly authorized, executed and delivered by each of the parties thereto other than the Company, and (ii) the terms of the Offering comply in all respects with the terms, conditions and restrictions set forth in the Prospectus and all of the instruments, agreements and other documents relating thereto or executed in connection therewith.

Based upon and subject to the foregoing, and having regard to such other legal considerations which we deem relevant, we are of the opinion that:

Under the laws of the Republic of the Marshall Islands, the Securities have been duly authorized and validly issued and are fully paid for and non-assessable.

This opinion is limited to the law of the State of New York and the federal law of the United States of America and the laws of the Republic of the Marshall Islands as in effect on the date hereof.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and to each reference to us and the discussions of advice provided by us under the headings “Legal Matters” in the Prospectus, without admitting we are “experts” within the meaning of the Securities Act of 1933, as amended, or the rules and regulations of the Commission thereunder with respect to any part of the Registration Statement.


	Very truly yours,

	/s/ Seward & Kissel LLP

EX-8.1 7 a2178205zex-8_1.htm EXHIBIT 8.1

Exhibit 8.1

[Seward & Kissel LLP Letterhead]

Paragon Shipping Inc.	May 30, 2007
Voula Center
102-104 V. Pavlou Street
Voula 16673
Athens, Greece

Re: Paragon Shipping Inc.

Ladies and Gentlemen:

You have requested our opinion regarding certain United States federal income tax matters and Marshall Islands tax matters relating to Paragon Shipping Inc. (the “Company”) and the holders of shares of the Company’s common shares and warrants.

In formulating our opinion as to these matters, we have examined such documents as we have deemed appropriate, including the Registration Statement filed by the Company on Form F-1 (File No. 333- ) with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended, through the date hereof (the “Registration Statement”) and the prospectus of the Company (the “Prospectus”) included in the Registration Statement. We also have obtained such additional information as we have deemed relevant and necessary from representatives of the Company.

Capitalized terms not defined herein have the meanings ascribed to them in the Registration Statement.

Based on the facts as set forth in the Registration Statement and, in particular, on the representations, covenants, assumptions, conditions and qualifications described under the captions “Risk Factors” and “Material Tax Considerations”, therein, we hereby confirm that the opinions of Seward & Kissel LLP with respect to United States federal income tax matters and Marshall Islands tax matters are those opinions attributed to Seward & Kissel LLP expressed in the Registration Statement under the captions “Material Tax Considerations” and “Risk Factors - We may have to pay tax on United States source income, which would reduce our earnings”, “Risk Factors — “Dividends on our common shares will not be eligible to qualify for certain preferential U.S. federal income tax rates until our common shares are readily tradable on an established securities market in the United States” and “Risk Factors - U.S. tax authorities could treat us as a ‘passive foreign investment company,’ which could have adverse U.S. federal income tax consequences to U.S. holder” in the Registration Statement accurately state our views as to the tax matters discussed therein.

Our opinions and the tax discussion as set forth in the Registration Statement are based on the current provisions of the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder, published pronouncements of the Internal Revenue Service which may be cited or used as precedents, and case law, any of which may be changed at any time with retroactive effect. No opinion is expressed on any matters other than those specifically referred to above by reference to the Registration Statement.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement.

	Very truly yours,

	/s/ Seward & Kissel LLP

EX-10.1 8 a2178205zex-10_1.htm EXHIBIT 10.1

Exhibit 10.1

Date 18 December 2006

PARAGON SHIPPING INC.
as Borrower

- and -

THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders

- and -

HSH NORDBANK AG
as Agent and as Security Trustee

- and -

HSH NORDBANK AG
as Swap Bank

- and -

HSH NORDBANK AG
as Lead Arranger, Bookrunner and Underwriter

LOAN AGREEMENT

relating to a loan facility of up to US$95,322,060
to finance part of the purchase price of up to five vessels

WATSON FARLEY & WILLIAMS
Piraeus

INDEX

Clause		Page

1	INTERPRETATION	1

2	FACILITY	17

3	POSITION OF THE LENDERS, THE SWAP BANK AND THE MAJORITY LENDERS	17

4	DRAWDOWN	18

5	INTEREST	19

6	INTEREST PERIODS	21

7	DEFAULT INTEREST	22

8	REPAYMENT AND PREPAYMENT	23

9	CONDITIONS PRECEDENT	25

10	REPRESENTATIONS AND WARRANTIES	26

11	GENERAL UNDERTAKINGS	27

12	CORPORATE UNDERTAKINGS	31

13	INSURANCE	33

14	SHIP COVENANTS	39

15	SECURITY COVER	43

16	PAYMENTS AND CALCULATIONS	44

17	APPLICATION OF RECEIPTS	46

18	APPLICATION OF EARNINGS	47

19	EVENTS OF DEFAULT	48

20	FEES AND EXPENSES	52

21	INDEMNITIES	53

22	NO SET-OFF OR TAX DEDUCTION	55

23	ILLEGALITY, ETC	56

24	INCREASED COSTS	57

25	SET-OFF	58

26	TRANSFERS AND CHANGES IN LENDING OFFICES	59

27	VARIATIONS AND WAIVERS	61

28	NOTICES	62

29	SUPPLEMENTAL	64

30	LAW AND JURISDICTION	64

SCHEDULE 1 LENDERS AND COMMITMENTS		66

SCHEDULE 2 DETAILS OF SHIPS AND OWNERS		67

SCHEDULE 3 DRAWDOWN NOTICE		69

SCHEDULE 4 CONDITION PRECEDENT DOCUMENTS		70

SCHEDULE 5 TRANSFER CERTIFICATE		73

SCHEDULE 6 DESIGNATION NOTICE		77

SCHEDULE 7 FORM OF COMPLIANCE CERTIFICATE		78

SCHEDULE 8 MANDATORY COST FORMULA		79

EXECUTION PAGES		82

THIS LOAN AGREEMENT is made on 18 December 2006

BETWEEN:

(1) PARAGON SHIPPING INC. a corporation incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH 96960 as Borrower;

(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders;

(3) HSH NORDBANK AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany, as Agent;

(4) HSH NORDBANK AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany, as Security Trustee;

(5) HSH NORDBANK AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany, as Swap Bank; and

(6) HSH NORDBANK AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095, Germany, as Lead Arranger, as Bookrunner and as Underwriter.

WHEREAS

(A) The Lenders have agreed to make available to the Borrower term loan facility in an amount of up to the lesser of (a) US$95,322,060 and (b) 50 per cent of the aggregate Market Value of the Ships to finance part of the purchase price of the Ships. The Borrower will on-lend the Loan to the Owners to assist them in financing the acquisition of the Ships.

(B) The Swap Bank has agreed to enter into interest rate swap transactions with the Borrower from time to time to hedge the Borrower’s exposure under this Agreement to interest rate fluctuations.

(C) The Lenders and the Swap Bank have agreed to share pari passu in the security to be granted to the Security Trustee pursuant to this Agreement.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement;

“Advance” means the principal amount of each borrowing by the Borrower under this Agreement;

“Affected Lender” has the meaning given in Clause 5.5;

“Agency and Trust Deed” means the agency and trust deed executed or to be executed between the Borrower, the Lenders, the Swap Bank, the Agent and the Security Trustee in such form as the Lenders may approve or require;

“Agent” means HSH Nordbank AG and any of its successors including, without limitation, any successor appointed under clause 5 of the Agency and Trust Deed;

“Applicable Accounts” means, as at the date of calculation or, as the case may be, in respect of an accounting period, the annual audited consolidated accounts and financial

statements of the Group or the quarterly unaudited accounts and financial statements of the Group, in each case, which the Borrower is obliged to deliver to the Agent pursuant to Clause 11.6;

“Approved Broker” means each of H. Clarkson & Company Limited of London, England, Barry Rogliano Salles S.A. of Paris, France, R.S. Platou Shipbrokers A.S. of Oslo, Norway, P.F. Bassoe AS of Oslo, Norway, Arrow Sale & Purchase (UK) Ltd. of London, England, Simpson Spence & Young of London, England, Fearnley AS of Oslo, Norway, Maersk Shipbrokers of Copenhagen, Denmark, Ingenieurbiiro Weselmann of Hamburg, Germany, Galbraith’s Limited of London, England and E.A. Gibson Shipbrokers Ltd of London, England;

“Approved Flag” means the Marshall Islands flag, the Cayman Islands flag or such other flag as the Agent may, in its sole and absolute discretion, approve as the flag on which a Ship shall be registered;

“Approved Flag State” means the Marshall Islands, the Cayman Islands or any other country in which the Agent, may in its sole and absolute discretion, approve that a Ship be registered;

“Approved Manager” means, in relation to each Ship, Allseas Marine S.A. a corporation organised and existing under the laws of the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia, Liberia and maintaining a ship management office at Voula Center, Vasileos Pavlou Avenue 102-104, 166 73 Voula, Greece or any other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the technical and/or commercial manager of a Ship;

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

(a) 31 January 2007 or such later date as the Agent may, with the authorisation of all the Lenders, agree with the Borrower; or

(b) if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

“Borrower” means Paragon Shipping Inc., a corporation incorporated in the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH 96960;

“Business Day” means a day on which banks are open in London, Athens, Hamburg and any other city in which a Lender is incorporated or maintains its lending office and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Charterparty Assignment” means, in relation to each Ship, an assignment of the rights of the Owner of that Ship under any Initial Charterparty and any Future Charterparty executed or to be executed by the relevant Owner in favour of the Security Trustee, in each case, in such form as the Lenders may approve or require and, in the plural, means all of them;

“Commitment” means, in relation to a Lender, the amount set opposite its name in the Schedule 1 or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Confirmation” and “Early Termination Date”, in relation to any continuing Designated Transaction, have the meanings given in the Master Agreement;

“Compliance Certificate” means a certificate in the form set out in Schedule 7 (or in any other form which the Agent approves or reasonably requires) to be provided at the times and in the manner set out in Clauses 12.5 and 12.10;

“Contractual Currency” has the meaning given in Clause 21.5;

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

“Creditor Party” means the Agent, the Security Trustee, the Swap Bank or any Lender, whether as at the date of this Agreement or at any later time;

“Deed of Covenant” means, in relation to each Ship which is registered on the Cayman Islands flag, a deed of covenant collateral to the Mortgage on that Ship to be executed in favour of the Security Trustee by the Owner of the relevant Ship in such form as the Lenders may approve or require and, in the plural means all of them;

“Designated Transaction” means a Transaction which fulfils the following requirements:

(a) it is entered into by the Borrower pursuant to the Master Agreement with the Swap Bank which, at the time the Transaction is entered into, is also a Lender;

(b) its purpose is the hedging of the Borrower’s exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Final Maturity Date; and

(c) it is designated by the Borrower, by delivery by the Borrower to the Agent of a notice of designation in the form set out in Schedule 6, as a Designated Transaction for the purposes of the Finance Documents;

“Dividend Declaration Date” means, in respect of each quarterly period during each Financial Year, a date (being a Business Day) falling no later than 60 days after the end of the relevant preceding financial quarter but in any event not later than 10 days prior to any intended declaration by the Borrower to its shareholders of any dividend;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to an Advance, the date requested by the Borrower for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 3 (or in any other form which the Agent 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 Owner thereof or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the relevant Owner or the Security Trustee in the event of requisition of that Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c) if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

“Earnings Account” means, in relation to each Ship, an account in the name of the Owner of that Ship, with the Agent in Hamburg designated “[name of Ship] - Earnings Account”, or any other account (with that or another office of the Agent) which is designated by the Agent as the Earnings Account for that Ship for the purposes of this Agreement and, in the plural means all of them;

“Earnings Account Pledge” means, in relation to the Earnings Accounts, a pledge agreement creating security in favour of the Security Trustee in such form as the Lenders may approve or require;

“EBITDA” means, as at the date of calculation or, as the case may be, for any accounting period, the consolidated net income of the Group for that accounting period;

(a) plus, to the extent deducted in computing consolidated net income of the Group for that accounting period, the sum, without duplication, of:

(i) all federal, state, local and foreign taxes and tax distributions;

(ii) Net Interest Expenses; and

(iii) depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortisation of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;

(b) minus, to the extent added in computing consolidated net income of the Group for that accounting period, any non-cash income or non-cash gains and any extraordinary gains not incurred in the ordinary course of business;

all determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the Applicable Accounts;

“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, in relation to each Ship:

(a) any release of Environmentally Sensitive Material from that Ship; or

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case,

in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship or the Owner thereof and/or any operator or manager is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Owner thereof and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Event of Default” means any of the events or circumstances described in Clause 19.1;

“Fee Letter” means a letter issued or to be issued by the Borrower to the Agent in which the Borrower agrees to pay certain fees to the Agent in connection with this Agreement;

“Final Maturity Date” means the date following 42 months after the first Drawdown Date;

“Finance Documents” means:

(a) this Agreement;

(b) the Master Agreement;

(d) the Fee Letter;

(e) the Guarantees;

(f) the Master Agreement Assignment;

(g) the Mortgages;

(h) the General Assignments;

(i) the Deeds of Covenant;

(j) the Retention Account Pledge;

(k) the Earnings Accounts Pledge;

(l) the Swap Account Pledge;

(m) any Charterparty Assignment;

(n) the Management Agreement Assignments;

(o) the Manager’s Undertakings; and

(p) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower, any Owner or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders and/or the Swap Bank under this Agreement or any of the 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;

(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 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;

“Financial Year” means, in relation to the Group, each period of 1 year commencing on 1 January in respect of which its consolidated accounts are or ought to be prepared;

“Fleet Vessels” means, together, all of the vessels (including, but not limited to, the Ships) from time to time owned by members of the Group;

“Future Charterparty” means, in relation to each Ship, any time charterparty or contract of affreightment in respect of such Ship (other than an Initial Charterparty) of at least 11 consecutive months in duration or under any bareboat charter and any guarantee of such charter (if such a guarantee is provided to the Owner owning that Ship) or other contract of employment in respect of such Ship to be entered into by the Owner owning that Ship and a charterer approved by the Agent in form and substance satisfactory to the Agent;

“GAAP” means generally accepted accounting principles as from time to time in effect in the United States of America;

“General Assignment” means, in relation to each Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation of that Ship in such form as the Lenders may approve or require and in plural means all of them;

“Group” means the Borrower and its subsidiaries (whether direct or indirect and including, but not limited to, the Owners) from time to time during the Security Period and “member of the Group” shall be construed accordingly;

“Guarantee” means, in relation to each Owner, a guarantee to be given by that Owner in favour of the Security Trustee guaranteeing the obligations of the Borrower under (inter

alia) this Agreement, the Master Agreement and the other Finance Documents in such form as the Lenders shall approve or require and in the plural means all of them;

“Hedge Strategy Letter” means a letter issued or to be issued by the Borrower to the Agent in a form and on terms acceptable to the Agent which letter shall be prepared in consultation with, and with the assistance of the Agent in accordance with Clause 11.18;

“IACS” means the International Association of Classification Societies;

“Initial Charterparty” means, in relation to a Ship, a time charter of the Ship entered or to be entered into by the Owner owning that Ship and a charterer approved by the Agent effective on and from the acquisition of that Ship by the relevant Owner in form and substance satisfactory to the Agent and complying with the provisions of Clause 14.16;

“Insurances” means, in relation to each Ship:

(a) all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, her Earnings or otherwise in relation to her; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interest Period” means a period determined in accordance with Clause 6;

“ISM Code” means:

(a) ‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisations pursuant to Resolution A.788(19) adopted on 25 November 1995,

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” includes, in relation to each Ship:

(a) the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to that Ship within the periods specified by the ISM Code; and

(b) all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Agent may require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain the Ship’s or the compliance of its Owner with the ISM Code which the Agent may require;

“ISM SMS” means, in relation to each Ship, the safety management system for that Ship which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation (“IMO”) now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of the IMO on Maritime Security in December 2002 and includes any amendments or extensions to it and any regulation issued pursuant to it but shall only apply insofar as it is applicable law in the relevant Ship’s flag state and any jurisdiction on which such Ship is operated;

“ISPS Code Documentation” includes:

(a) the International Ship Security Certificate issued pursuant to the ISPS Code in relation to each Ship within the period specified in the ISPS Code; and

(b) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“Lead Arranger” means HSH Nordbank acting through its office at Gerhart-Hauptmann-Platz 50, D-20092, Hamburg, Germany,

“Lender” means, subject to Clause 26.6:

(a) a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrower under Clause 26.14) unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and

(b) the holder for the time being of a Transfer Certificate;

“Leverage Ratio” means, at any relevant time, the ratio (expressed as a percentage) of:

(a) the Total Liabilities (including, without limitation, all amounts outstanding from time to time under this Agreement, the Master Agreement and the other Finance Documents); and

(b) the Market Value Adjusted Total Assets (including, without limitation, the Ships);

“LIBOR” means, for an Interest Period:

(a) the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on REUTERS BBA Page LIBOR 01 at or about 11:00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period (and, for the purposes of this Agreement, “REUTERS BBA Page LIBOR 01” means the display designated as “REUTERS BBA Page LIBOR 01” on the Reuters Money News Services or such other page as may replace REUTERS BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers’ Association for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollars); or

(b) if no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum determined by the Agent to be the arithmetic mean of the rates per annum notified to the Agent by each Lender to be the rate per annum at which deposits in Dollars are offered to that Lender by leading banks in the London Interbank Market at or

about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

“Liquid Assets” means, at any relevant time hereunder, the aggregate of:

(a) cash in hand or held with banks or other financial institutions of the Borrower and/or any other member of the Group (other than restricted cash) in Dollars or another currency freely convertible into Dollars;

(b) the market value of transferable certificates of deposit in a freely convertible currency acceptable to the Lenders (being for the purposes of this Agreement, Dollars, Japanese Yen, Swiss Francs, Euros or Sterling) issued by a prime international bank; and

(c) the market value of equity securities (if and to the extent that the Agent is satisfied that such equity securities are readily saleable for cash and that there is a ready market therefor) and investment grade debt securities which are publicly traded on a major stock exchange or investment market (valued at market value as at any applicable date of determination);

in each case owned by the Borrower or any other member of the Group where:

(i) the market value of any asset specified in paragraph (b) and (c) shall be the bid price quoted for it on the relevant calculation date by the Agent; and

(ii) the amount or value of any asset denominated in a currency other than Dollars shall be converted into Dollars using the Agent’s spot rate for the purchase of Dollars with that currency on the relevant calculation date;

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means, in relation to each Ship, any casualty to that 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 (in the case of any Ship which is a Panamax bulk carrier) or $400,000 (in the case of any Ship which is a handymax bulk carrier) or, in either case, the equivalent in any other currency;

“Majority Lenders” means:

(a) before an Advance has been made, Lenders whose Commitments total at least 66 2/3 per cent, of the Total Commitments; and

(b) after an Advance has been made, Lenders whose Contributions total 66 2/3 per cent. of the Loan;

“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 Security Trustee in such form as the Lenders 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 Owner thereof to the rights of the Creditor Parties under the Finance Documents and, in the plural, means all of them;

“Management Agreement” means, in relation to each Ship, an agreement made or to be made between the Owner of that Ship and the Approved Manager in respect of the commercial and technical management of the Ship and, in the plural, means all of them;

“Management Agreement Assignment” means, in relation to each Management Agreement, the assignment of the Owner’s rights and interests under that Management Agreement in such form as the Lenders may approve or require and, in the plural, means all of them;

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 8;

“Margin” means:

(a) at any time when the Leverage Ratio is equal to, or less than, 55 per cent 1 per cent per annum; and

(b) at all other times, 1.2 per cent per annum;

“Market Value” means, in relation to each Ship and each Fleet Vessel, the market value thereof calculated in accordance with Clause 15.4;

“Market Value Adjusted Net Worth” means Paid-Up Capital plus General Reserves plus Retained Earnings adjusted to reflect the difference between the book values of the Fleet Vessels and the Market Values of all Fleet Vessels at any relevant time;

“Market Value Adjusted Total Assets” means, at any time, Total Assets adjusted to reflect the difference between the book values of all Fleet Vessels and the aggregate Market Value of all Fleet Vessels and lease transactions relating to any Fleet Vessels;

“Master Agreement” means the master agreement (on the 1992 ISDA (Multicurrency - Crossborder) form) made between the Borrower and the Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement;

“Master Agreement Assignment” means the assignment of the Master Agreement in such form as the Lenders may approve or require;

“MOA” means, in relation to a Ship, a memorandum of agreement made or to be made between the Seller of that Ship and the Owner which is the buyer of that Ship on terms and conditions acceptable to the Agent and, in the plural, means all of them;

“Mortgage” means, in relation to a Ship, the first preferred or, as the case may be, priority ship mortgage on the Ship under the relevant Approved Flag executed by the Owner of that Ship in favour of the Security Trustee, each in such form as the Lenders may approve or require and, in plural, means all of them;

“Negotiation Period” has the meaning given in Clause 5.8;

“Net Interest Expenses” means, in respect of any relevant period, the aggregate of all interest, commitment and other fees, commissions, discounts and other costs, charges or expenses accruing due from all the members the Group during that accounting period less interest income received, determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the Applicable Accounts;

“Notifying Lender” has the meaning given in Clause 23.1 or Clause 24.1 as the context requires;

“Owner” means, in relation to each Ship, the corporation which is specified in Schedule 2 as the owner thereof, being a corporation incorporated in the Republic of the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH 96960 each being a corporation which is a direct or indirect wholly-owned subsidiary of the Borrower and, in the plural, means all of them;

“Paid-Up Capital”, “General Reserves” and “Retained Earnings” have the meanings ascribed to them in the Applicable Accounts;

“Payment Currency” has the meaning given in Clause 21.5;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) liens for unpaid crew’s wages in accordance with usual maritime practice;

(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 relevant Owner in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(h);

(f) any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the relevant Owner is prosecuting or defending such action in good faith by appropriate steps; and

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

“Pertinent 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;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have

such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

“Relevant Dividend Distribution Date” has the meaning given in Clause 8.2;

“Relevant Person” has the meaning given in Clause 19.9;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Retention Account” means an account in the name of the Borrower with the Agent in Hamburg designated “Paragon Shipping Inc. - Retention Account”, or any other account (with that or another office of the Agent) which is designated by the Agent as the Retention Account for the purposes of this Agreement;

“Retention Account Pledge” means a pledge agreement creating security in favour of the Security Trustee in respect of the Retention Account in such form as the Lenders may approve or require;

“Secured Liabilities” means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or any judgment relating to the Finance Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Cover Percentage” means, at any relevant time, the aggregate of the Market Value of all the Ships subject to a Mortgage expressed as a percentage of the Loan;

“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 rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; 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 (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means each Owner, the Approved Manager and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the Lenders that:

(a) all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither the Borrower nor any Security Party has any future or contingent liability under Clause 20, 21 or 22 below or any other provision of this Agreement or another Finance Document; and

(d) the Agent, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

“Security Trustee” means HSH Nordbank AG and any of its successors including, without limitation, any successor appointed under clause 5 of the Agency and Trust Deed;

“Seller” means, in relation to:

(a) “BLUE SEAS”, Icon Shipping Limited of the Cayman Islands;

(b) “CALM SEAS”, Vortimer Marine Inc. of the Marshall Islands;

(d) “DEEP SEAS”, Elegance Shipping Limited of the Cayman Islands; and

(e) “KIND SEAS”, Indigo Shipping Company of the Marshall Islands,

(f) and in the plural means all of them;

“Ships” means, together, the ships referred to in Schedule 2 and, in the singular, means any of them;

“Sponsors” means, together:

(a) Mr Michael Bodouroglou; and

(b) such other sponsors to be nominated and acceptable to the Lead Arranger in its sole and absolute discretion;

“Swap Account” means an account in the name of the Borrower with the Agent in Hamburg designated “Paragon Shipping Inc. - Swap Account”, or any other account (with that or another office of the Agent) which is designated by the Agent as the Swap Account for the purposes of this Agreement;

“Swap Account Pledge” means a pledge agreement creating security in favour of the Security Trustee in respect of the Swap Account in such form as the Lenders may approve or require;

“Swap Bank” means HSH Nordbank AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany;

“Swap Exposure” means, as at any relevant date, the amount certified by the Swap Bank to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrower to the Swap Bank under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrower and the Swap Bank;

“Total Assets” means, as at the relevant date, the aggregate value of all trade debtors and the value of all stock (valued in accordance with GAAP) and all other investments and other tangible and intangible assets of the Group properly included in the Applicable Accounts as “fixed assets” in accordance with GAAP but excluding any assets held on trust;

“Total Equity” means, as at the relevant date, the value of the stockholders’ equity of the Group determined on a consolidated basis in accordance with GAAP and as shown in the consolidated balance sheets for the Group in the Applicable Accounts;

“Total Liabilities” means, as at the date of calculation, the aggregate Financial Indebtedness of the Group;

“Total Loss” means, in relation to each Ship:

(a) actual, constructive, compromised, agreed or arranged total loss of that Ship;

(b) any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension;

(d) any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless she is within 30 days redelivered to the full control the relevant Owner;

“Total Loss Date” means:

(a) in the case of an actual loss of a Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of a 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 relevant Owner, with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

“Transaction” has the meaning given in the Master Agreement;

“Transfer Certificate” has the meaning given in Clause 26.2; and

“Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Deed.

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 13, approved in writing by the Agent;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any partnership, joint venture and unincorporated association;

“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, fax or telex;

“excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of her insured value being less than the value at which that 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 form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower and/or the Owner owning the Ship is obliged to effect, under Clause 13 below 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 therein 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 (either having the force of law or compliance with which is reasonable in the ordinary course of business of the party concerned) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“subsidiary” has the meaning given in Clause 1.4;

“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

“war risks” means the risks according to Institute War and Strike Clauses (Hull Time) (1/10/83) or (1/11/95), or equivalent conditions, including, but not limited to risk of mines, blocking and trapping, missing vessel, confiscation, vandalism, sabotage and malicious mischief and all risks excluded from the standard form of English or other marine policy.

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attached to the issued shares 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.

(a) In this Agreement:

(i) 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;

(ii) 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; and

(iii) words denoting the singular number shall include the plural and vice versa.

(b) Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears.

(c) References in Clause 1.1 to a document being in the form of a particular Appendix or Schedule include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires.

(d) The clause headings shall not affect the interpretation of this Agreement.

2 FACILITY

2.1 Amount and purpose of facility. Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower a loan facility in an amount not exceeding the lesser of:

(a) $95,322,060; and

(b) 50% of the aggregate Market Value of all the Ships in up to 5 Advances. Each Advance shall be used to assist the relevant Owner to finance up to 50 per cent. of the Market Value of the Ship to be owned by it.

2.2 Lenders’ participations in Loan. Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments.

2.3 Purpose of Advances. The Borrower undertakes with each Creditor Party to use each Advance only for the purpose stated in the preamble to this Agreement and Clause 2.1.

3 POSITION OF THE LENDERS, THE SWAP BANK AND THE MAJORITY LENDERS

3.1 Interests of Lenders and Swap Bank several. The rights of the Lenders and the Swap Bank under this Agreement and the Master Agreement are several; accordingly:

(a) each Lender shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement; and

(b) the Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under the Master Agreement.

without joining the Agent, the Security Trustee, any other Lender or the Swap Bank as additional parties in the proceedings.

3.2 Proceedings by individual Lender or Swap Bank. However, without the prior consent of the Majority Lenders, neither a Lender nor the Swap Bank may bring proceedings in respect of:

(a) any other liability or obligation of the Borrower or a Security Party under or connected with a Finance Document or the Master Agreement; or

(b) any misrepresentation or breach of warranty by the Borrower or a Security Party in or connected with a Finance Document or the Master Agreement.

3.3 Obligations several. The obligations of the Lenders under this Agreement and of the Swap Bank under the Master Agreement are several; and a failure of a Lender to perform its obligations under this Agreement or of the Swap Bank to perform its obligations under the Master Agreement shall not result in:

(a) the obligations of the other Lenders being increased; nor

(b) the Borrower, any Security Party or any other Creditor Party being discharged (in whole or in part) from its obligations under any Finance Document;

and in no circumstances shall a Lender or the Swap Bank have any responsibility for a failure of another Lender or the Swap Bank to perform its obligations under this Agreement or the Master Agreement.

3.4 Parties bound by certain actions of Majority Lenders. Every Lender, the Swap Bank, the Borrower and each Security Party shall be bound by:

(a) any determination made, or action taken, by the Majority Lenders under any provision of a Finance Document;

(b) any instruction or authorisation given by the Majority Lenders to the Agent or the Security Trustee under or in connection with any Finance Document;

(c) any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation.

3.5 Reliance on action of Agent. However, the Borrower and each Security Party:

(a) shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take; and

(b) shall not be entitled to require any evidence that such an instruction or authorisation has been given.

3.6 Construction. In Clauses 3.4 and 3.5 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.

4 DRAWDOWN

4.1 Request for Advance. Subject to the following conditions, the Borrower may request an Advance to be made by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg time) 3 Business Days prior to the intended Drawdown Date.

4.2 Availability. The conditions referred to in Clause 4.1 are that:

(a) a Drawdown Date has to be a Business Day during the Availability Period;

(b) each Advance shall be made available in a single amount and any amount undrawn in respect of an Advance shall be cancelled and may not be borrowed by the Borrower at a later date;

(c) each Advance shall not exceed 50 per cent. of the Market Value of the Ship which is the subject of the Advance (as determined by the valuations referred to in paragraph 8 of Part C of Schedule 4) and shall be applied in financing part of the purchase price of the relevant Ship; and

(d) the aggregate of the Advances shall not exceed the Total Commitments.

4.3 Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

(a) the amount of the Advance and the Drawdown Date;

(b) the amount of that Lender’s participation in the Advance; and

4.4 Drawdown Notice irrevocable. A Drawdown Notice must be signed by a director of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

4.5 Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on each Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender on that Drawdown Date under Clause 2.2.

4.6 Disbursement of Advance. Subject to the provisions of this Agreement, the Agent shall on each Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrower shall be made:

(a) to the account which the Borrower specifies in the relevant Drawdown Notice; and

(b) in the like funds as the Agent received the payments from the Lenders.

4.7 Disbursement of Advance to third party. The payment by the Agent under Clause 4.6 to a third party specified in the relevant Drawdown Notice shall constitute the making of the Advance and the Borrower shall thereupon become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution.

5 INTEREST

5.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on each Advance and the Loan and each part thereof in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

5.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance and the Loan and each part thereof in respect of an Interest Period shall be the aggregate of (i) the applicable Margin, (ii) the Mandatory Cost (if any) and (iii) LIBOR.

5.3 Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

5.4 Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:

(a) each rate of interest; and

(b) the duration of each Interest Period;

as soon as reasonably practicable after each is determined.

5.5 Market disruption. The following provisions of this Clause 5 apply if:

(a) no rate is quoted on Reuters BBA Page LIBOR 01 and at least half of the total number of Lenders at any time do not, before 1.00 p.m. (Hamburg time) on the second Business Day before the commencement of an Interest Period, provide quotations to the Agent in order to fix LIBOR; or

(b) at least one Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent. of the Loan (or, if an Advance has not been made, Commitments amounting to more than 50 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period; or

(c) at least one Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

5.6 Notification of market disruption. The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.5 which have caused its notice to be given.

5.7 Suspension of drawdown. If the Agents notice under Clause 5.6 is served before an Advance is made:

(a) in a case falling within paragraphs (a) or (b) of Clause 5.5, the Lenders’ obligations to make the Advance;

(b) in a case falling within paragraph (c) of Clause 5.5, the Affected Lender’s obligation to participate in the Advance;

shall be suspended while the circumstances referred to in the Agent’s notice continue.

5.8 Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.6 is served after an Advance is made, the Borrower, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.6 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution to the relevant Advance or Advances during the Interest Period concerned.

5.9 Application of agreed alternative rate of Interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

5.10 Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution to the relevant Advance or Advances plus the Mandatory Cost (if any) and the applicable Margin; and the procedure provided for by this Clause 5.10 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

5.11 Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.10, the Borrower may give the Agent not less than 15 Business Days’ notice of its intention to prepay the relevant Advance or Advances at the end of the interest period set by the Agent.

5.12 Prepayment; termination of Commitments. A notice under Clause 5.11 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

(b) on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the applicable Margin and the Mandatory Cost (if any).

5.13 Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.

5.14 Calculation of Leverage Ratio. The Agent shall calculate the Leverage Ratio Percentage on the first Drawdown Date and on each Dividend Declaration Date thereafter based on the information contained in the latest Compliance Certificate (and evidenced by an accompanying set of market valuations of all the Fleet Vessels prepared in accordance with Clause 15.4 and the latest Applicable Accounts) for the purposes of calculating the Margin and shall advise the Borrower and the Lenders in writing, within 10 Business Days of each Dividend Declaration Date, of the Margin which will apply for the next Interest Period Provided that in respect of each Dividend Declaration Date other than the first Dividend Declaration Date, the Agent shall only be obliged to advise the Borrowers and the Lenders of the Margin which will apply for the next Interest Period if that Margin will be different to the Margin which applies immediately prior to the relevant Dividend Declaration Date.

For the purposes of calculating the Leverage Ratio pursuant to this Clause 5.14, the Market Value of the Ships shall be determined no more than 15 days prior to the relevant Dividend Declaration Date.

6 INTEREST PERIODS

6.1 Commencement of Interest Periods. The first Interest Period applicable to an Advance shall commence on the Drawdown Date relative to that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

6.2 Duration of normal Interest Periods. Subject to Clause 6.3, each Interest Period in respect of each Advance shall be:

(a) 1, 3 or 6 months as notified by the Borrower to the Agent not later than 11.00 a.m. (Hamburg time) 3 Business Days before the commencement of the Interest Period Provided that there may be no more than 2 Interest Periods having a duration of 1 month in any calendar year; or

(b) in the case of the first Interest Period applicable to the second and any subsequent Advance, a period ending on the last day of the then current Interest Period whereupon all of the Advances shall be consolidated and treated as a single Advance;

(d) such other period as the Agent may, with the Majority Lenders’ authority, agree with the Borrower.

7 DEFAULT INTEREST

7.1 Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

7.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent. above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at paragraphs (a) and (b) of Clause 7.3; or

(b) in the case of any other overdue amount, the rate set out at paragraph (b) of Clause 7.3.

7.3 Calculation of default rate of interest. The rates referred to in Clause 7.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

(b) the aggregate of the Mandatory Cost (if any) and the applicable Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

(i) LIBOR; or

(ii) if the Agent determines that Dollar deposits for any such period are not being made available to a Lender or (as the case may be) Lenders by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Agent from such other sources as the Agent may from time to time determine.

7.4 Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent’s notification.

7.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

7.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

7.7 Application to Master Agreement. For the avoidance of doubt, this Clause 7 does not apply to any amount payable under the Master Agreement in respect of any continuing Designated Transaction as to which section 2(e) (Default Interest; Other Amounts) of the Master Agreement shall apply.

8 REPAYMENT AND PREPAYMENT

8.1 Amount of repayment instalments. If, on a Dividend Declaration Date, the Security Cover Percentage is less than 140 per cent., then the Borrower shall repay the Loan in an amount which, once repaid, shall eliminate the shortfall.

8.2 Repayment dates. If a repayment is required pursuant to Clause 8.1 on any Dividend Declaration Date (being the “Relevant Dividend Declaration Date”), then the Borrower shall transfer the amount of the repayment due under Clause 8.1 into the Retention Account no later than 3 Business Days after the Relevant Dividend Declaration Date. On the last day of the Interest Period current as at the Relevant Dividend Declaration Date the Agent shall apply all amounts standing to the credit of the Retention Account in or towards repayment of the Loan and the payment of interest thereon in accordance with Clause 18.4.

8.3 Final Maturity Date. On the Final Maturity Date, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all principal and other sums then accrued or owing under any Finance Document.

8.4 Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan on the last day of an Interest Period.

8.5 Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

(a) any partial prepayment to be applied against the Loan shall be $1,000,000 or a higher multiple thereof;

(b) the Agent has received from the Borrower at least 5 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and

(c) the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

8.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authority of the Majority

Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

8.7 Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).

8.8 Voluntary Commitment reductions. Subject to the following conditions, the Total Commitments may be permanently reduced, cancelled or terminated by the Borrower.

8.9 Conditions for voluntary Commitment reduction. The conditions referred to in Clause 8.8 are that:

(a) any partial reduction, cancellation or termination of the Total Commitments shall be for an amount of $1,000,000 or a higher integral multiple thereof;

(b) the Agent has received from the Borrower at least 3 Business Days prior written notice specifying the amount of the Total Commitments to be reduced, cancelled or terminated and the date on which such reduction, cancellation or termination is to apply; and

(c) a notice served under paragraph (b) may not be given after expiry of the Availability Period and may not be withdrawn or amended without the consent of the Agent given with the authority of the Majority Lenders.

8.10 Notification of notice of Commitment reduction. The Agent shall notify the Lenders promptly upon receiving a notice under Clause 8.9(b), and shall notify each Lender of the amount by which its Commitment shall be reduced pursuant thereto.

8.11 Mandatory prepayment. The Borrower shall be obliged to prepay the Relevant Amount of the Loan:

(a) if a Ship is sold, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or

(b) if a Ship becomes a Total Loss, on the earlier of the date falling 120 days after the relevant Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

In this Clause 8.11, “Relevant Amount” means an amount which after giving credit for the amount of the prepayment made pursuant to this Clause 8.11, results in the Security Cover Percentage being equal to the higher of (i) the Security Cover Percentage maintained immediately prior to the prepayment made pursuant to this Clause 8.11 and (ii) 140 per cent.

8.12 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.1(b) but without premium or penalty.

8.13 Application of partial prepayment. Any Sum received by the Agent pursuant to Clauses 8.4 and 8.11 shall be applied in prepayment of the Loan and, subject to no Event of Default being in occurrence or continuing at the time a prepayment is made under Clause 8.11, any balance arising from the sale or Total Loss proceeds of a Ship which is sold or becomes a Total Loss after the prepayment required by Clause 8.11 has been made shall be released to the Borrower or to such other person (including, without limitation, the Owner of the relevant Ship) as the Borrower may direct.

8.14 Reborrowing. No amount prepaid in respect of the Loan may be reborrowed.

8.15 Unwinding of Designated Transactions. On or prior to any repayment or prepayment of the Loan under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions to the extent necessary to ensure that the notional principal amount of the continuing Designated Transactions thereafter remaining does not exceed the amount of the Loan following such repayment or prepayment.

8.16 Prepayment of Swap Benefit. If a Designated Transaction is terminated in circumstances where the Swap Bank would be obliged to pay an amount to the Borrower under the Master Agreement, the Borrower hereby agrees that such payment shall be applied in prepayment of the Loan and authorises the Swap Bank to pay such amount to the Agent for such purpose.

9 CONDITIONS PRECEDENT

9.1 Documents, fees and no default. Each Lender’s obligation to contribute to an Advance is subject to the following conditions precedent:

(a) that, on or before the date of this Agreement, the Agent receives the documents described in Part A of Schedule 4 in a form and substance satisfactory to the Agent and its lawyers;

(b) that, on or before the service of the first Drawdown Notice, the Agent receives the documents described in Part B of Schedule 4 in a form and substance satisfactory to the Agent and its lawyers

(c) that, on or before the Drawdown Date in respect of each Advance, the Agent receives the documents described in Part C of Schedule 4 in form and substance satisfactory to the Agent and its lawyers;

(d) that, on or before the service of the first Drawdown Notice, the Agent receives all accrued commitment fee and all other fees referred to in Clause 20.1 which are payable at that time and has received payment of the expenses referred to in Clause 20.2;

(e) that both at the date of each Drawdown Notice and at each Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the relevant Advance;

(ii) the representations and warranties in Clause 10 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) none of the circumstances contemplated by Clause 5.5 has occurred and is continuing;

(f) that, if the ratio set out in Clause 15.1 were applied immediately following the making of the Advance, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

(g) that at each Drawdown Date the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrower prior to the relevant Drawdown Date.

9.2 Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date relative to that Advance (or such longer period as the Agent may, with the authority of the Majority Lenders, specify).

10 REPRESENTATIONS AND WARRANTIES

10.1 General. The Borrower represents and warrants to each Creditor Party as follows.

10.2 Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands.

10.3 Share capital and ownership. The Borrower has an authorised share capital divided into 150,000,000 registered shares of $0.001 each, all of which shares have been issued each fully paid.

10.4 Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to execute the Finance Documents to which it is a party; and

(b) to borrow under this Agreement, to enter into Designated Transactions under the Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which the Borrower is a party.

10.5 Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

10.6 Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a) constitute the Borrower’s legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate

subject to any relevant insolvency laws affecting creditors’ rights generally.

10.7 No third party Security Interests. Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document;

(a) the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

10.8 No conflicts. The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrower; or

10.9 No withholding taxes. All payments which the Borrower is 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.

10.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

10.11 Information. All information which has been provided in writing by or on behalf of the Borrower or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts.

10.12 No litigation. No legal or administrative action involving the Borrower has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken.

10.13 No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to a third party in connection with the purchase by each Owner of the Ship to be owned by it, other than as disclosed to the Lenders in writing on or prior to the date of this Agreement.

10.14 Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and 11.13.

10.15 Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower or its business.

10.16 ISM and ISPS Code compliance. The Borrower will procure that the Owners and the Approved Manager obtain all necessary ISM Code Documentation and ISPS Code Documentation in connection with the Ships and comply with the ISM Code and the ISPS Code on or before the date on which each Ship is delivered to its Owner pursuant to the MOA relative to that Ship.

10.17 No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

11 GENERAL UNDERTAKINGS

11.1 General. The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

11.2 Title; negative pledge and pari passu ranking. The Borrower will:

(a) own (directly or indirectly) the entire beneficial interest in each Owner free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents;

(b) not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future (including, but not limited to the Borrower’s rights against the Swap Bank under the Master Agreement or all or any part of the Borrower’s interest in any amount payable to the Borrower by the Swap Bank under the Master Agreement); and

(c) procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.

11.3 No disposal of assets. The Borrower will not transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

11.4 Restriction on other liabilities or obligations to be incurred. The Borrower will not incur, and will procure that none of the Owners will, incur, any liability or obligation except liabilities and obligations:

(a) under the MOAs and the Finance Documents to which each is a party;

(b) under the Master Agreement (but in such case, only in connection with Designated Transactions); and

11.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

11.6 Provision of financial statements. The Borrower will send to the Agent:

(a) as soon as possible, but in no event later than 180 days after the end of each Financial Year (commencing with the Financial Year ended 31 December 2006), the audited consolidated Financial Statements of the Group for that Financial Year;

(b) as soon as possible, but in no event later than each Dividend Declaration Date (commencing with the first Dividend Declaration Date falling within 2007), the unaudited consolidated accounts of the Group for the most recent financial quarter which has ended before that Dividend Declaration Date and additionally, in the case of each of the second, third and fourth financial quarters, the unaudited consolidated accounts of the Group for the period 1 January up to the end of the relevant financial quarter certified in each case as to their correctness by the chief financial officer of the Borrower;

(c) as soon as possible, but in no event later than 45 days after the commencement of each Financial Year (commencing with the Financial Year commencing 1 January 2007), a cashflow projection for the Group for that Financial Year in form and substance satisfactory to the Agent;

(d) together with the quarterly financial statements referred to in paragraph (b) above for each of the financial quarters in each Financial Year, at least two valuations of each Fleet Vessel each prepared by an Approved Broker (at the cost of the Borrower) in accordance with Clause 15.4, which valuations shall be used in determining the Security Cover Percentage pursuant to Clause 15.1, the Margin in accordance with Clause 5.14, the financial covenants referred to in Clause 12.4, the ability of the Borrower to declare a dividend in accordance with Clause 12.9 and whether a repayment of the Loan needs to be made in accordance with Clause 8.1; and

(e) promptly after each request by the Agent, such further financial information about the Borrower, the Group, the Ships, the other Fleet Vessels and the Owners (including, but not limited to, charter arrangements, Financial Indebtedness and operating expenses) as the Agent may require.

11.7 Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.6 will:

(a) be prepared in accordance with all applicable laws and GAAP consistently applied;

(b) in the case of the annual audited financial statements of the Group, be audited by an internationally renowned auditing firm and such financial statements shall not include any material qualifications;

(c) give a true and fair view of the state of affairs of the Group at the date of those accounts and of its profit for the period to which those accounts relate; and

(d) fully disclose or provide for all significant liabilities of the Group.

11.8 Shareholder and creditor notices. The Borrower will send the Agent, at the same time as they are despatched, copies of all communications which are despatched to all of the Borrower’s shareholders or creditors or any class of them.

11.9 Consents. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

(a) for the Borrower to perform its obligations under any Finance Document;

(b) for the validity or enforceability of any Finance Document;

and the Borrower will comply (or procure compliance) with the terms of all such consents.

11.10 Maintenance of Security Interests. The Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

11.11 Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any Security Party, the Approved

Manager, any Ship or the Earnings or the Insurances of any Ship as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

11.12 No amendment to Master Agreement; Transactions. The Borrower will not:

(a) agree to any amendment or supplement to, or waive or fail to enforce, the Master Agreement or any of its provisions; or

(b) enter into any Transaction pursuant to the Master Agreement except Designated Transactions.

11.13 Principal place of business. The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 28.2(a); and the Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in any country other than the Marshall Islands.

11.14 Confirmation of no default. The Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by 2 directors of the Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

The Agent may serve requests under this Clause 11.14 from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if no Advance has been made) Commitments exceeding 10 per cent of the Total Commitments; and this Clause 11.14 does not affect the Borrower’s obligations under Clause 11.15.

11.15 Notification of default. The Borrower will notify the Agent as soon as the Borrower becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred;

and will thereafter keep the Agent fully up-to-date with all developments.

11.16 Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:

(a) to the Borrower, any Owner, any Ship, the Approved Manager or any other Security Party, the Insurances or the Earnings; or

(b) to any other matter relevant to, or to any provision of, a Finance Document which may be requested by the Agent, the Security Trustee or any Lender at any time.

11.17 Provision of copies and translation of documents. The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and if the Agent so requires in respect of any of those documents,

the Borrower will provide a certified English translation prepared by a translator approved by the Agent.

11.18 Hedging of interest rate risks. The Borrower shall deliver to the Agent by no later than the date of this Agreement the duly signed Hedge Strategy Letter, and shall from time to time, enter into such Designated Transactions with the Swap Bank in order to implement the hedging strategy outlined in the Hedge Strategy Letter whereby for the period on and from the date of this Agreement up to and including the Final Maturity Date, it will hedge all or the major part of the interest risk under this Agreement (but in any event not less than 50 per cent. of the interest rate risk under this Agreement outstanding at any time during the aforesaid period).

11.19 Ownership. The Borrower shall ensure that (a) it shall remain the direct or indirect owner of the whole of the issued share capital of each Owner and (b) there shall be no change in the legal and beneficial ownership of the shares in each Owner.

11.20 General and administrative costs. The Borrow shall ensure that the payment of all the general and administrative costs of the Borrower and the Owners in connection with the ownership and operation of the Ships (including, without limitation, the payment of the management fees pursuant to the Management Agreements) shall be fully subordinated to the payment obligations of the Borrower and the Owners under this Agreement and the other Finance Documents throughout the Security Period.

12 CORPORATE UNDERTAKINGS

12.1 General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

12.2 Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands.

12.3 Negative undertakings. The Borrower will not:

(a) change the nature of its business; or

(b) declare or pay any dividend or effect any other form of distribution save as permitted pursuant to Clause 12.9:

(d) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in the Borrower’s share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected;

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length Provided that this shall not prevent or restrict the Borrower from on-lending the Loan to the Owners or granting credit or financial assistance to its wholly-owned direct or indirect subsidiaries;

(e) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

(f) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than Designated Transactions;

(g) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

12.4 Financial Covenants. The Borrower shall ensure that at all times:

(a) the ratio of Total Liabilities to EBITDA shall not exceed 5:1;

(b) the Market Value Adjusted Net Worth of the Group shall not be less than $50,000,000;

(c) there is available to the Borrower and all the other members of the Group an amount of not less than $500,000 per Fleet Vessel (excluding, for the avoidance of doubt, any amount standing to the credit of the Retention Account or any other restricted account) in Liquid Assets of which, all amounts in respect of the Ships, shall be held in the Earnings Accounts, the Swap Account or such other interest bearing accounts held with the Agent and pledged in favour of the Security Trustee; and

(d) the ratio of Total Liabilities to Market Value Adjusted Total Assets shall not exceed 0.7:1.

12.5 Compliance Check. Compliance with the undertakings contained in Clause 12.4 shall be determined in each Financial Year:

(a) at the time the Agent receives the audited consolidated accounts of the Group and the unaudited consolidated accounts of the Group (pursuant to Clauses 11.6(a) and 11.6(b) respectively), by reference to the unaudited consolidated accounts in the case of the first three financial quarters in each Financial Year and for the fourth financial quarter in each Financial Year, initially by reference to the unaudited consolidated accounts for the relevant fourth quarter and, once available, by reference to the audited consolidated accounts for that Financial Year of the Group; and

(b) at any other time as the Agent may reasonably request by reference to such evidence as the Lenders may require to determine and calculate the financial covenants referred to in Clause 12.4.

At the same time as it delivers the consolidated accounts referred to in this Clause 12.5, the Borrower shall deliver to the Agent a Compliance Certificate demonstrating its compliance (or not, as the case may be) with the provisions of Clause 12.4 signed by the chief financial officer of the Borrower.

12.6 Change in accounting expressions and policies. If, by reason of change in format or GAAP or other relevant accounting policies, the expressions appearing in any accounts and financial statements referred to in Clause 11.6 alter from those in the accounts and financial statements for the Borrower for the year ended 31 December 2006, the relevant definitions contained in Clause 1.1 and the provisions of Clause 12.4 shall be deemed modified in such manner as the Agent, acting with the authorisation of the Majority Lenders, shall require to take account of such different expressions but otherwise to maintain in all respects the substance of those provisions.

12.7 Subordination of rights of Borrower. All rights which the Borrower at any time has (whether in respect of the Loan or any other transaction) against any Owner or its assets shall be fully subordinated to the rights of the Creditor Parties under the Finance Documents; and in particular, the Borrower shall not during the Security Period:

(a) claim, or in a bankruptcy of any Owner or prove for any amount payable to the Borrower by an Owner, whether in respect of the Loan or any other transaction;

(b) take or enforce any Security Interest for any such amount; or

12.8 Free Syndication market. The Borrower shall not, and shall ensure that no Owner, no member of the Group and no affiliate of the Borrower or any other member Group shall, until the Agent has declared that the primary syndication of the Loan has closed:

(a) syndicate or issue or attempt to syndicate or issue; or

(b) announce or authorise the announcement of the syndication or issuance of; or

any Financial Indebtedness with any banks or financial institutions in the commercial banking market Provided that this shall not restrict the Borrower from making any further equity offerings.

12.9 Dividend payment. Subject to the following conditions, the Borrower may pay dividends in any Financial Year.

12.10 Conditions for dividend payment. The conditions referred to in Clause 12.9 are as follows:

(a) that the Agent has received from the Borrower by no later than the relevant Dividend Declaration Date at least 10 days’ prior written notice of its intention to announce a dividend payment (such notice hereinafter a “Dividend Declaration”);

(b) each Dividend Declaration is accompanied by a completed Compliance Certificate (evidencing the Borrower is in compliance with the financial covenants referred to in Clause 12.4) and evidence that the payment of the proposed dividend will not result in the Borrower being in breach of any of the said financial covenants or in the occurrence of an Event of Default or a Potential Event of Default;

(c) each completed Compliance Certificate referred to in paragraph (b) above shall be accompanied by the latest Applicable Accounts evidencing, together with the details of the aggregate Market Value of the Ships referred to in paragraph (d) below, the compliance of the Borrower with the financial covenants referred to in Clause 12.4;

(d) each Dividend Declaration is accompanied by details of the Market Value of each Ship determined in accordance with Clause 15.4 and evidence that the Security Cover Percentage as at the Dividend Declaration Date is no less than 145 per cent.; and

(e) the Agent has confirmed to the Borrower in writing that the Borrower is in compliance with paragraphs (b) and (c) prior to the Borrower’s announcement of such dividend payment.

13 INSURANCE

13.1 General. The Borrower also undertakes with each Creditor Party to procure that each Owner will comply with the following provisions of this Clause 13 at all times during the Security Period (after the Ship which is owned or to be owned by that Owner has been delivered to it under the relevant MOA) except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

13.2 Maintenance of obligatory insurances. The Borrower shall procure that each Owner keep the Ship owned by it insured at the expense of that Owner against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

(b) war risks (including protection and indemnity war risks);

(c) in the case of protection and indemnity war risks, in an amount equal to the amount for which the war risks under the hull policies are effected;

(d) protection and indemnity risks in excess of the limit of cover for oil pollution liability risks included within the protection and indemnity risks; and

(e) any other risks against which the Majority Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Majority Lenders be reasonable for the relevant Owner to insure and which are specified by the Security Trustee by notice to the relevant Owner.

13.3 Terms of obligatory insurances. The Borrower shall procure that each Owner shall effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) an amount, which when aggregated with the insured value of the other Ships at the relevant time subject to a Mortgage, is equal to 120 per cent. of the Loan and (ii) the Market Value of the Ship owned by it; and

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

(d) in relation to protection and indemnity risks, in respect of the full value and tonnage of the Ship owned by it;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

13.4 Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, the Borrower shall procure that the obligatory insurances shall:

(a) (except in relation to risks referred to in Clauses 13.2(c) and (d)) name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(b) name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the relevant Owner or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee;

(f) provide that the Security Trustee may make proof of loss if the relevant Owner fails to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Security Trustee for 30 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

13.5 Renewal of obligatory insurances. The Borrower shall procure that each Owner shall:

(a) at least 21 days before the expiry of any obligatory insurance:

(i) notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Owner proposes to renew that insurance and of the proposed terms of renewal; and

(ii) in case of any substantial change in insurance cover, obtain the Security Trustee’s approval to the matters referred to in paragraph (i) above;

(b) at least 14 days before the expiry of any obligatory insurance, renew the insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

13.6 Copies of policies; letters of undertaking. The Borrower shall procure that each Owner shall ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters of undertaking in a form required by the Majority Lenders and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

(d) they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal

instructions from that Owner or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by the relevant Owner under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Security Trustee.

13.7 Copies of certificates of entry. The Borrower shall procure that each Owner shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by that Owner is entered provides the Security Trustee with:

(a) a certified copy of the certificate of entry for that Ship;

(b) a letter or letters of undertaking in such form as may be required by the Majority Lenders; and

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Owner in accordance with the requirements of such protection and indemnity association; and

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority.

13.8 Deposit of original policies. The Borrower shall procure that each Owner shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

13.9 Payment of premiums. The Borrower shall procure that each Owner shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.

13.10 Guarantees. The Borrower shall procure that each Owner shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

13.11 Restrictions on employment. The Borrower shall procure that no Owner employ the Ship owned by it, nor permit her to be employed, outside the cover provided by any obligatory insurances.

13.12 Compliance with terms of insurances. The Borrower shall procure that no Owner shall do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

(a) each Owner shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

(b) no Owner shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;

(c) each Owner shall make all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) no Owner shall employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

13.13 Alteration to terms of insurances. The Borrower shall procure that no Owner shall either make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee.

13.14 Settlement of claims. The Borrower shall procure that no Owner shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

13.15 Provision of copies of communications. The Borrower shall procure that each Owner shall provide the Security Trustee, at the time of each such communication, copies of all written communications between that Owner and:

(a) the approved brokers; and

(b) the approved protection and indemnity and/or war risks associations; and

(i) that Owner’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between that Owner and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

13.16 Provision of information. In addition, the Borrower shall procure that each Owner shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 below or dealing with or considering any matters relating to any such insurances

and the Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above.

13.17 Mortgagee’s interest and additional peril insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew all or any of the following insurances in such amounts, on such terms, through such insurers and generally in such manner as the Majority Lenders 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 Security Trustee for any losses under or in connection with any Finance Document which directly or indirectly result from loss of or damage to any Ship or a liability of any Ship or of any Owner, 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 any Owner, of any operator, charterer, manager or sub-manager of any Ship or of any officer, employee or agent of any Owner or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;

(ii) any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of any Owner, any other person referred to in paragraph (i) above, or of any officer, employee or agent of any Owner or of such a person, including the casting away or damaging of any Ship and/or any Ship being unseaworthy; and/or

(iii) any other matter capable of being insured against under a mortgagee’s interest marine insurance policy whether or not similar to the foregoing;

(b) a mortgagee’s interest additional perils policy in an amount not less than 110 per cent. of the Loan, providing for the indemnification of the Security Trustee 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 any Ship, the imposition of any Security Interest over any Ship and/or any other matter capable of being insured against under a mortgagee’s interest additional perils policy whether or not similar to the foregoing and the Borrower shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

13.18 Review of insurance requirements. The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Majority Lenders, significant and capable of affecting the Owners or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Owners may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrower.

13.19 Modification of insurance requirements. The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Majority Lenders consider appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Borrower accordingly.

13.20 Compliance with mortgagee’s instructions. The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require any Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the Owner of that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.19.

14 SHIP COVENANTS

14.1 General. The Borrower also undertakes with each Creditor Party to procure that each Owner shall comply with the following provisions of this Clause 14 at all times during the Security Period (after the Ship has been delivered to it under the relevant MOA) except as the Agent, with the authority of the Majority Lenders, may otherwise permit.

14.2 Ship’s name and registration. The Borrower shall procure that each Owner shall keep the Ship owned by it registered in its ownership under Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of any Ship.

14.3 Repair and classification. The Borrower shall procure that each Owner shall keep the Ship owned by it in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the highest class with a first-class classification society which is a member of IACS acceptable to the Agent free of overdue recommendations and conditions of such classification society; and

(c) so as to comply with all laws and regulations applicable to vessels registered at ports in the relevant Approved Flag State or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code, the ISPS Code, the ISM Code Documentation and the ISPS Code Documentation.

14.4 Classification society undertaking. The Borrower shall procure that each Owner shall instruct the classification society referred to in Clause 14.3 (and procure that the classification society undertakes with the Security Trustee):

(a) to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records and any other related records held by the classification society in relation to the Ship owned by that Owner;

(b) to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Owner and its Ship at the offices of the classification society and to take copies of them;

(i) receives notification from the Owner or any person that the Ship’s classification society is to be changed; or

(ii) becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of the Ship’s class under the rules or terms and conditions of the Owner’s or the Ship’s membership of the classification society;

(d) following receipt of a written request from the Security Trustee:

(i) to confirm that the Owner is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or

(ii) if the Owner is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.

14.5 Modification. The Borrower shall procure that no Owner shall make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on her which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce her value.

14.6 Removal of parts. The Borrower shall procure that no Owner shall remove any material part of the Ship owned by it, or any item of equipment installed on, the Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the Ship the property of the Owner and subject to the security constituted by the Mortgage and if applicable, the Deed of Covenant, relative to the Ship Provided that the Owner may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship.

14.7 Surveys. The Borrower shall procure that each Owner shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Majority Lenders, provide the Security Trustee (at the expense of the Borrower) with copies of all survey reports.

14.8 Inspection.

(a) In the event the survey report of a Ship obtained by the Agent pursuant to paragraph 7 of Part C of Schedule 4 is, in the Agent’s sole and absolute discretion, not satisfactory, the Borrower shall procure that the relevant Owner shall (at the Borrower’s expense) permit the Agent (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it during the first six months after that Owner’s acquisition of such Ship at any time to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections; and

(b) at all other times, the Borrower shall procure that each Owner shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections Provided that so long as no Event of Default has occurred and is continuing at the relevant time and a Ship is found to be in a satisfactory condition (in the opinion of the Security Trustee) the Borrower shall be obliged to pay the fees and expenses of one inspection of that Ship in any calendar year.

14.9 Prevention of and release from arrest. The Borrower shall procure that each Owner shall promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, her Earnings or her Insurances;

(b) all taxes, dues and other amounts charged in respect of the Ship, her Earnings or her Insurances; and

and, forthwith upon receiving notice of the arrest of the Ship, or of her detention in exercise or purported exercise of any lien or claim, the relevant Owner shall forthwith procure her release by providing bail or otherwise as the circumstances may require.

14.10 Compliance with laws etc. The Borrower shall procure that each Owner and the Approved Manager shall:

(a) comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by the relevant Owner, its ownership, operation and management or to the business of that Owner;

(b) not employ the Ship nor allow her employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers unless the prior written consent of the Majority Lenders has been given and the Owner has (at its expense) effected any special, additional or modified insurance cover which the Majority Lenders may require.

14.11 Provision of information. The Borrower shall procure that each Owner shall promptly provide the Security Trustee with any information which the Majority Lenders request regarding:

(a) the Ship owned by it, her employment, position and engagements;

(b) the Earnings and payments and amounts due to the master and crew of the Ship owned by it;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship owned by it and any payments made in respect of that Ship;

(d) any towages and salvages;

(e) its compliance or the compliance of the Ship owned by it with the ISM Code and the ISPS Code,

and, upon the Security Trustee’s request, provide copies of any current charter relating to the Ship and of any current charter guarantee, and copies of the ISM Code Documentation and the ISPS Code Documentation.

14.12 Notification of certain events. The Borrower shall procure that each Owner shall immediately notify the Security Trustee 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 that Ship or her Earnings or any requisition of that Ship for hire;

(e) any intended dry docking of the Ship;

(f) any Environmental Claim made against that Owner or in connection with the Ship owned by it, or any Environmental Incident;

(g) any claim for breach of the ISM Code or the ISPS Code being made against the Owner, 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 the Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Owner’s, the Approved Manager’s or any other person’s response to any of those events or matters.

14.13 Restrictions on chartering, appointment of managers etc. The Borrower shall procure that no Owner shall:

(a) let the Ship owned by it on demise charter for any period;

(b) other than the relevant Initial Charterparty or Future Charterparty, enter into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 11 months;

(d) enter into any charter in relation to the Ship under which more than 2 months’ hire (or the equivalent) is payable in advance;

(e) charter the Ship otherwise than on bona fide arm’s length terms at the time when the Ship is fixed;

(f) appoint a manager of the Ship other than the Approved Manager or agree to any alteration to the terms of the Approved Manager’s appointment;

(g) de-activate or lay up the Ship; or

(h) put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or her Earnings for the cost of such work or otherwise.

14.14 Notice of Mortgage. The Borrower shall procure that each Owner shall keep the Mortgage applicable to the Ship owned by it registered against that Ship as a valid first priority or first preferred mortgage, carry on board that 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 that Ship a framed printed notice stating that that Ship is mortgaged by the relevant Owner to the Security Trustee.

14.15 Sharing of Earnings. The Borrower shall procure that no Owner shall:

(a) enter into any agreement or arrangement for the sharing of any Earnings;

(b) enter into any agreement or arrangement for the postponement of any date on which any Earnings are due; the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of that Owner to any Earnings; or

(c) enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings.

14.16 Initial Charterparty. The Borrower shall procure that on and from the acquisition of a Ship by the relevant Owner, such Ship shall be time chartered pursuant to the terms of an Initial Charterparty which shall be for a period of not less than 12 months duration with a reputable (In the opinion of the Agent) charterer and which shall provide for a net daily charter hire rate sufficient (in the Agent’s sole and absolute discretion) to cover the operational expenses of that Ship and the proportion of debt service (namely principal and interest payments due under this Agreement) attributable by the Agent to that Ship.

14.17 Charterparty Assignment. If any Owner enters into any Future Charterparty in respect of its Ship that Owner shall, at the request of the Agent, execute, or, as the case may be, procure the execution in favour of the Security Trustee of a Charterparty Assignment in respect of that Future Charterparty, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Schedule 4, Part A as the Agent may require.

15 SECURITY COVER

15.1 Provision of additional security cover; prepayment of Loan. The Borrower undertakes with each Creditor Party that if the Agent notifies the Borrower that:

(a) the aggregate Market Value of the Ships subject to a Mortgage; plus

(b) the net realisable value of any additional security previously provided under this Clause 15;

is below 140 per cent, of the Loan, the Borrower will on the first Business Day after the date on which the Agent’s notice is served prepay in accordance with Clause 8 such part (at least) of the Loan as will eliminate the shortfall.

If the Borrower satisfies the Majority Lenders that it is unable to make the prepayment of the Loan required pursuant to this Clause 15.1, the Agent (acting upon the instructions of the Majority Lenders) may (in its sole and absolute discretion) agree instead to accept within 14 days after the date on which its notice is served, additional security from the Borrower or a third party which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which, if it consists of or includes a Security Interest, covers such asset or assets and is documented in such terms as the Agent may, with authorisation from the Majority Lenders, approve or require.

15.2 Meaning of additional security. In Clause 15.1 “security” means a Security Interest over an asset or assets (including, without limitation a vessel (other than a Ship)) (whether securing the Borrower’s liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit, cash deposit or other security acceptable to the Majority Lenders (in their sole and absolute discretion) in respect of the Borrower’s liabilities under the Finance Documents.

15.3 Requirement for additional documents. The Borrower shall not be deemed to have complied with Clause 15.1 (i) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 5, Part A and such legal opinions in terms acceptable to the Majority Lenders from such lawyers as they may select.

15.4 Valuation of Ship. The market value of a Ship at any date is that shown by taking the arithmetic mean of two valuations each prepared:

(a) as at a date not more than 30 days previously;

(b) in the case of the first valuation, by an Approved Broker appointed by the Borrower and, in the case of the second valuation, by an Approved Broker appointed by the Agent;

(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, free of any existing charter or other contract of employment; and

(e) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale,

Provided that if the two valuations provided pursuant to this Clause 15.4 differ by more than 15 per cent., a third valuation shall be obtained from a third Approved Broker appointed by the Agent and prepared on the basis described in paragraphs (a), (c), (d) and (e) of this Clause 15.4 and the Market Value of the relevant Ship which is the subject of the third valuation shall be the arithmetic mean of the three valuations obtained pursuant to this Clause 15.4.

15.5 Value of additional security. The net realisable value of any additional security which is provided under Clause 15.1 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.4.

15.6 Valuations binding. Any valuation under Clause I5.1(i), 15.4 or 15.5 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Majority Lenders make of a security which does not consist of or include a Security Interest.

15.7 Provision of information. The Borrower shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.4 or 15.5 with any information which the Agent or the Approved Broker or expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

15.8 Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker instructed by the Agent under this Clause.

16 PAYMENTS AND CALCULATIONS

16.1 Currency and method of payments. All payments to be made:

(a) by the Lenders to the Agent; or

(b) by the Borrower to the Agent, the Security Trustee or any Lender

under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(i) by not later than 11.00 a.m. (New York City time) on the due date;

(ii) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

(iii) to the account of the Agent at JPMorgan Chase Bank, New York (Account No 001-1-331808 SWIFT Code: CHASUS 33 under reference “Paragon Shipping Inc.-US$110.32m facility”), or to such other account with such other bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

(iv) in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

16.2 Payment on non-Business Day. If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

16.3 Basis for calculation of periodic payments. All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

16.4 Distribution of payments to Creditor Parties. Subject to Clauses 16.5, 16.6 and 16.7:

(a) any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, the Swap Bank or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be, the Swap Bank or the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender, the Swap Bank or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

(b) amounts to be applied in satisfying amounts of a particular category which are due to the Lenders or the Swap Bank generally shall be distributed by the Agent to each Lender or the Swap Bank pro rata to the amount in that category which is due to it.

16.5 Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender or the Swap Bank, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or the Swap Bank under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or the Swap Bank to pay on demand.

16.6 Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender or the Swap Bank any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender or the Swap Bank until the Agent has satisfied itself that it has received that sum.

16.7 Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower or a Lender or the Swap Bank, without first having received that sum, the Borrower or (as the case may be) the Lender or the Swap Bank concerned shall, on demand:

(a) refund the sum in full to the Agent; and

(b) pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

16.8 Agent may assume receipt. Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

16.9 Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each Security Parry under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

16.10 Agent’s memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

16.11 Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall, absent manifest error, be prima facie evidence that amount is owing to that Creditor Party.

17 APPLICATION OF RECEIPTS

17.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreement in the following order and proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrower under Clauses 20,21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document or in the Master Agreement);

(ii) secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents and the Master Agreement (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Swap Bank at the time of application or distribution under this Clause 17); and

(iii) thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure of the Swap Bank (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

(b) SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document or the Master Agreement but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and

payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a); and

17.2 Variation of order of application. The Agent may, with the authorisation of the Majority Lenders and the Swap Bank by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

17.3 Notice of variation of order of application. The Agent may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

17.4 Appropriation rights overridden. This Clause 17 and any notice which the Agent gives under Clause 17.3 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

18 APPLICATION OF EARNINGS

18.1 Payment of Earnings. The Borrower undertakes with each Creditor Party to ensure that throughout the Security Period:

(a) (subject only to provisions of the relevant General Assignment), all the Earnings of each Ship are paid to the Earnings Account for that Ship; and

(b) all payments by the Swap Bank to a Borrower under a Designated Transaction are paid to the Swap Account.

18.2 Retentions. The Borrower undertakes with each Creditor Party to ensure that:

(a) no later than 3 Business Days after a Relevant Dividend Declaration Date, there shall be transferred to the Retention Account out of the aggregate Earnings received in the Earnings Accounts, the repayment instalment falling due under Clause 8.1 at that time; and

(b) in each calendar month of the Security Period commencing on the date falling 1 month after the first Drawdown Date and on the same day in each subsequent month, there is transferred to the Retention Account out of the aggregate Earnings received in the Earnings Accounts during the preceding calendar month the relevant fraction of the amount of interest on the Loan which is payable on the next due date for payment of interest for the Loan under this Agreement.

The “relevant fraction” in paragraph (b) above, is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period applicable to the Loan (or, if the current Interest Period ends after the next date for payment of interest under this Agreement, 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 date for payment of interest under this Agreement).

18.3 Shortfall in Earnings. If the aggregate Earnings received are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 18.2, the Borrower shall make up the amount of the insufficiency on demand from the Agent; but, without thereby prejudicing the Agent’s right to make such demand at any time, the Agent

may, if so authorised by the Majority Lenders, permit the Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 18.2 from the Earnings received in the next or subsequent months.

18.4 Application of retentions. Until an Event of Default occurs, the Agent shall on each due date for the payment of interest under this Agreement distribute to the Lenders in accordance with Clause 16.4 so much of the then balance on the Retention Account as equals:

(a) any repayment instalment due in accordance with Clause 8.1 on that interest payment date; and

(b) the amount of interest payable on that interest payment date

in discharge of the Borrower’s liability for that repayment instalment or that interest.

18.5 Interest accrued on Retention Account. Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on the Retention Account.

18.6 Release of accrued interest. Interest accruing under Clause 18.5 shall be released to the Borrower on each interest payment date unless an Event of Default or a Potential Event of Default has occurred or the then credit balance on the Retention Account is less than what would have been the balance had the full amount required by Clause 18.2 (and Clause 18.3, if applicable) been transferred in that and each previous month.

18.7 Location of accounts. The Borrower shall promptly:

(a) comply, and ensure that the Owners comply, with any requirement of the Agent as to the location or re-location of any Earnings Account, the Swap Account or the Retention Account;

(b) execute, and ensure that the Owners execute, any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Accounts (or any of them), the Swap Account and the Retention Account.

18.8 Debits for expenses etc. The Agent shall be authorised by the Borrower (but not obliged) from time to time to debit the Earnings Account without prior notice in order to discharge any amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 or 21.

18.9 Borrower’ obligations unaffected. The provisions of this Clause 18 do not affect:

(a) the liability of the Borrower to make payments of principal and interest on the due dates; or

(b) any other liability or obligation of the Borrower or any Security Party under any Finance Document.

19 EVENTS OF DEFAULT

19.1 Events of Default. An Event of Default occurs if:

(a) the Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs of Clause 9.2, 11.2, 11.3, 11.4, 11.6, 11.19, 11.20, 12.2, 12.3, 12.4, 12.5, 12.9, 12.10, 13.2, 15.1 or 18.1; or

(c) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b) above) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 10 days after written notice from the Agent requesting action to remedy the same; or

(d) (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c) above); or

(e) any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $100,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Majority Lenders, is similar to any of the foregoing; or

(h) the Borrower or any Security Party ceases or suspends carrying on or changes the nature of its business or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

(ii) for the Agent, the Security Trustee, the Lenders or the Swap Bank to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) any consent necessary to enable any Owner to own, operate or charter a Ship or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(k) it appears to the Majority Lenders that, without their prior written consent, a change has occurred or probably has occurred after the date of this Agreement in the ultimate beneficial ownership of any of the shares in the Borrower or any Owner or in the ultimate control of the voting rights attaching to any of those shares; or

(l) the Sponsors cease to be the only shareholders of the Borrower (either directly and/or through companies beneficially owned by the Sponsors);

(m) any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(n) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(o) the Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason except with the consent of the Agent, acting with the authorisation of the Majority Lenders; or

(p) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of any Security Party; or

(ii) any accident or other event involving any Ship or another vessel owned, chartered or operated by a Relevant Person;

in the light of which the Majority Lenders consider that there is a significant risk that the Borrower or any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

19.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:

(a) the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i) serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or

(ii) serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(iii) take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b) the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent and/or the Lenders and/or the Swap Bank are entitled to take under any Finance Document or any applicable law.

19.3 Termination of Commitments. On the service of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate.

19.4 Acceleration of Loan. On the service of a notice under paragraph (a)(ii) of Clause 19.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrower

or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

19.5 Multiple notices; action without notice. The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

19.6 Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee and each Security Party a copy of the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy of the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

19.7 Lender’s rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

19.8 Exclusion of Creditor Party Liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset;

except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the wilful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

19.9 Relevant Persons. In this Clause 19 “a Relevant Person” means the Borrower, a Security Party and any other member of the Group; but excluding any company which is dormant and the value of whose gross assets is $50,000 or less.

19.10 Position of Swap Bank. Neither the Agent nor the Security Trustee shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this Clause 19, to have any regard to the requirements of the Swap Bank except to the extent that the Swap Bank is also a Lender.

19.11 Interpretation. In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “petition” includes an application,

20 FEES AND EXPENSES

20.1 Facility and commitment fees. The Borrower shall pay to the Agent:

(a) a commitment fee for distribution among the Lenders pro rata to their Commitments at the rate of 0.30 per cent. per annum on the amount of the Total Commitments less the amount of the Loan for the period from (and including) the earlier of (i) the date of this Agreement and (ii) 30 December 2006 up to and including the earlier of (A) the

Drawdown Date in respect of the fifth and final Advance and (B) the last day of the Availability Period, such fee to be paid quarterly in arrears and on the last day of such period; and

(b) such other facility fees as are referred to in the Fee Letter, such fees being payable at the times and in the manner referred to in the Fee Letter.

20.2 Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document (including, without limitation, any legal fees (which shall include, for the avoidance of doubt, the fees incurred by the Agent with respect to the legal opinions referred to in Schedule 4) or out of pocket expenses and printing expenses).

20.3 Costs or variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent’s demand, the amount of all expenses (including, without limitation, any legal fees or expenses) incurred by a Lender or the Swap Bank in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lenders, the Majority Lenders or the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(d) such circumstances where the Agent, in its absolute opinion, considers that there has been a material change to the insurances in respect of a Ship, the review of the insurances of that Ship pursuant to Clause 13.18;

(e) any step taken by the Lender concerned or the Swap Bank with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (e) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

20.4 Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any liabilities and expenses resulting from any failure or delay by the Borrower to pay such a tax.

20.5 Certification of amounts. A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

21 INDEMNITIES

21.1 Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all expenses, liabilities and losses which are incurred by that

Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) an Advance not being borrowed on the date specified in the Drawdown Notice for that Advance for any reason other than a default by the Lender claiming the indemnity;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c) any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19;

and in respect of any tax (other than tax on its overall net income) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

21.2 Breakage costs. Without limiting its generality, Clause 21.1 covers any liability, expense or loss, including a loss of a prospective profit, incurred by a Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.

21.3 Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Patty severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, the relevant Creditor Party, in any country, in relation to:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

(b) any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document;

other than liability items which are shown to have been caused by the gross negligence or the wilful misconduct of the relevant Creditor Party’s own officers or employees.

21.4 Extension of indemnities; environmental indemnity. Without prejudice to its generality, Clause 21.3 covers:

(a) any matter which would be covered by Clause 21.3 if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and

(b) any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution, the protection of the environment, the ISM Code or the ISPS Code.

21.5 Currency indemnity. If any sum due from the Borrower or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a) making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

the Borrower shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Parry is converted at the available rate of exchange into the Contractual Currency.

In this Clause 21.5, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (Hamburg time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 21.5 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

21.6 Application to Master Agreement. For the avoidance of doubt, Clause 21.5 does not apply in respect of sums due from the Borrower to the Swap Bank under or in connection with the Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of the Master Agreement shall apply.

21.7 Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

21.8 Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

22 NO SET-OFF OR TAX DEDUCTION

22.1 No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

(b) free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

22.2 Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

(a) the Borrower shall notify the Agent as soon as it becomes aware of the requirement;

(b) the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

22.3 Evidence of payment of taxes. Within 1 month after making any tax deduction, the Borrower concerned shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

22.4 Exclusion of tax on overall net income. In this Clause 22 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party’s overall net income.

22.5 Application to the Master Agreement. For the avoidance of doubt, Clause 22 does not apply in respect of sums due from the Borrower to the Swap Bank under or in connection with the Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement shall apply.

23 ILLEGALITY, ETC

23.1 Illegality. This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

23.2 Notification of illegality. The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

23.3 Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 23.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 23.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution in accordance with Clause 8.

23.4 Mitigation. If circumstances arise which would result in a notification under Clause 23.1 then, without in any way limiting the rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

24 INCREASED COSTS

24.1 Increased costs. This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law or regulation or an alteration after the date of this Agreement in the manner in which a law or regulation is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Notifying Lender’s overall net income); or

(b) 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 Notifying Lender allocates capital resources to its obligations under this Agreement (including, without limitation, any laws or regulations which shall replace, amend and/or supplement those set out in the statement of the Basle Committee on Banking Regulations and Supervisory Practices dated July 1988 and entitled “International Convergence of Capital Management and Capital Structures”)) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

is that the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”, that is to say:

(i) an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums; or

(ii) a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

(iii) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

(iv) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement;

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22.

For the purposes of this Clause 24.1 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class thereof) on such basis as it considers appropriate.

24.2 Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

24.3 Payment of increased costs. The Borrower shall pay to the Agent, at the end of any Interest Period during which the Agent makes demand, for the account of the Notifying Lender, the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

24.4 Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.3, the Borrower may give the Agent not less than 14 days’ notice of its intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.

24.5 Prepayment; termination of Commitment. A notice under Clause 24.4 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

(a) on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

(b) on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the applicable Margin and the Mandatory Cost (if any).

24.6 Application of prepayment. Clause 8 shall apply in relation to the prepayment.

25 SET-OFF

25.1 Application of credit balances. Each Creditor Party may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrower;

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

25.2 Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

25.3 Sums deemed due to a Lender. For the purposes of this Clause 25, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

26 TRANSFERS AND CHANGES IN LENDING OFFICES

26.1 Transfer by Borrower. The Borrower may not, without the consent of the Agent, given on the instructions of all the Lenders:

(a) transfer any of its rights or obligations under any Finance Document; or

(b) enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

26.2 Transfer by a Lender. Subject to Clause 26.5, a Lender (the “Transferor Lender”) may at any time (and with the consent of the Agent), cause:

(a) its rights in respect of all or part of its Contribution; or

(b) its obligations in respect of all or part of its Commitment; or

to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution which is experienced in ship financing (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.

26.3 Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

(a) sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee and each of the Lenders;

(b) on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and

26.4 Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

26.5 No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

26.6 Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the successor shall automatically and without any further act being necessary become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

26.7 Effect of Transfer Certificate. A Transfer Certificate takes effect in accordance with English law as follows:

(a) to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

(b) the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

(c) the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender (or the part thereof specified in the Transfer Certificate) and a Commitment of an amount specified in the Transfer Certificate;

(d) the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

(e) any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

(f) the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.5 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

(g) in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

26.8 Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 5 Business Days prior notice.

26.9 Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

26.10 Authorisation of Agent to sign Transfer Certificates. The Borrower, the Security Trustee and each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

26.11 Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,000 from the Transferor Lender or (at the Agent’s option) the Transferee Lender.

26.12 Sub-participation; subrogation assignment. A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

26.13 Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

26.14 Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

(a) the date on which the Agent receives the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

26.15 Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

27 VARIATIONS AND WAIVERS

27.1 Variations, waivers etc. by Majority Lenders. Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

27.2 Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender and the Swap Bank”:

(a) a change in the applicable Margin or in the definition of LIBOR;

(b) a change to the date for, or the amount of, any payment of principal, interest, fees, or other sum payable under this Agreement;

(d) an extension of the Availability Period;

(e) a change to the definition of “Majority Lenders” or “Finance Documents”;

(f) a change to the preamble or to Clause 2, 3, 4, 5.1, 8.1, 8.2, 17, 18, 19 or 30;

(g) a change to this Clause 27;

(h) any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

(i) any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.

27.3 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

(b) an Event of Default; or

(d) any right or remedy conferred by any Finance Document or by the general law;

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

28 NOTICES

28.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by registered 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.

28.2 Addresses for communications. A notice shall be sent:

(a) to the Borrower:		Paragon Shipping Inc. Voula Center Vasileos Pavlou Avenue 102-104 166 73 Voula Greece Fax No: +(30) 210 899 5085 Attn: the Chief Financial Officer

(b) to a Lender:		At the address opposite its name in Schedule I or (as the case may require) in the relevant Transfer Certificate; and

(c) to the Swap Bank, the Agent and the Security Trustee:		HSH Nordbank AG Gerhart-Hauptmann-Platz 50 D-20095 Hamburg Germany

		Fax No: +(49) 40 33 33 34 118 Attn: Shipping, Greek clients

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrower, the Lenders, the Swap Bank and the Security Parties.

28.3 Effective date of notices. Subject to Clauses 28.4 and 28.5:

(a) a notice which is delivered personally shall be deemed to be served, and shall take effect, at the time when it is delivered;

(b) a notice which is delivered by registered letter shall be deemed to be served, and shall take effect, 5 Business Days after being deposited in the post postage prepaid in an envelope addressed to it at the relevant address; and

(c) a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

28.4 Service outside business hours. However, if under Clause 28.3 a notice would be deemed to be served:

(a) on a day which is not a business day in the place of receipt; or

(b) on such a business day, but after 5 p.m. local time;

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

28.5 Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

28.6 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if;

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

28.7 English language. Any notice under or in connection with a Finance Document shall be in English.

28.8 Meaning of “notice”. In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

28.9 Electronic communication

(a) Any communication to be made between the Agent or the Security Trustee and a Lender or the Swap Bank under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent, the Security Trustee and the relevant Lender or, as the case may be, the Swap Bank:

(i) agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

(ii) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(iii) notify each other of any change to their address or any other such information supplied by them,

(b) Any electronic communication made between the Agent and a Lender or the Swap Bank or the Security Trustee will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender or the Swap Bank to the Agent or the Security Trustee only if it is addressed in such a manner as the Agent or Security Trustee shall specify for this purpose.

29 SUPPLEMENTAL

29.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:

(a) cumulative;

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

29.4 Counterparts. A Finance Document may be executed in any number of counterparts.

30 LAW AND JURISDICTION

30.1 English law. This Agreement shall be governed by, and construed in accordance with, English law.

30.2 Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

30.3 Choice of forum for the exclusive benefit of the Creditor Parties. Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

The Borrower shall not commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

30.4 Process agent. The Borrower irrevocably appoints HTD Services Limited at their office for the time being, presently at Irongate House, Duke’s Place, London EC3A 7HX, 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 Creditor Party rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

30.6 Meaning of “proceedings”. In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

SCHEDULE 1

LENDERS AND COMMITMENTS

Lender	Lending Office	Commitment
		(US Dollars)
HSH Nordbank AG	Gerhart-Hauptmann-Platz 50 D-20095 Hamburg Germany	95,322,060

SCHEDULE 2

DETAILS OF SHIPS AND OWNERS

1	Name of Ship:	“BLUE SEAS”

	Flag:	Cayman Islands

	IMO Number:	9104550

	Official Number:	739718

	Dwt:	45,654

	Class Society and notation:	[•]

	Year built:	1995

	Owner:	Camelia Navigation S.A.

2	Name of Ship:	“CALM SEAS”

	Flag:	Marshall Islands

	IMO Number:	9184835

	Official Number:	[•]

	Dwt:	74,047

	Class Society and notation:	[•]

	Year built:	1999

	Owner:	Frontline Marine Company

3	Name of Ship:	“CLEAN SEAS”

	Flag:	Cayman Islands

	IMO Number:	9109366

	Official Number:	[•]

	Dwt:	46,640

	Class Society and notation:	[•]

	Year built:	1995

	Owner:	Explorer Shipholding Limited
4	Name of Ship:	“DEEP SEAS”

	Flag:	Cayman Islands

	IMO Number:	9169380

	Official Number:	[•]

	Dwt:	72,891

	Class Society and notation:	[•]

	Year built:	1999

	Owner:	Trade Force Shipping S.A.

5	Name of Ship:	“KIND SEAS”

	Flag:	Marshall Islands

	IMO Number:	9205847

	Official Number:	[•]

	Dwt:	72,493

	Class Society and notation:	[•]

	Year built:	1999

	Owner:	Fairplay Maritime Ltd.

SCHEDULE 3

DRAWDOWN NOTICE

To: HSH Nordbank AG
Gerhart-Hauptmann-Platz 50
D-20095 Hamburg
Germany

Attention: Loans Administration

[ ] 2006

DRAWDOWN NOTICE

1 We refer to the loan agreement (the “Loan Agreement”) dated 18 December 2006 and made between ourselves as Borrower, the Lenders referred to therein, yourselves as Agent and as Security Trustee, the Swap Bank referred to therein, yourselves as Lead Arranger, Bookrunner, and Underwriter in connection with a loan facility of up to US$95,322,060. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

2 We request to borrow an Advance to part-finance the vessel “[•]” as follows:

(a) Amount of Advance: $[ ];

(b) Drawdown Date: [ ];

(d) Payment instructions : account of [ ] and numbered [ ] with [ ] of [ ].

3 We represent and warrant that:

(a) the representations and warranties in Clause 10 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 Majority Lenders.

5 [We authorise you to deduct all accrued commitment fee applicable to the Advance referred to in Clause 20.1 from the amount of the Advance].

[Name of Signatory]


for and on behalf of PARAGON SHIPPING INC.

SCHEDULE 4

CONDITION PRECEDENT DOCUMENTS

PART A

The following are the documents referred to in Clause 9.1(a).

1 A duly executed original of each of:

(a) this Agreement;

(b) the Agency and Trust Deed;

(d) the Master Agreement;

(e) the Master Agreement Assignment;

(f) the Guarantees;

(g) the Retention Account Pledge;

(h) the Earnings Account Pledge; and

(i) the Swap Account Pledge.

2 Copies of the certificate of incorporation and constitutional documents of the Borrower and each Owner.

3 Copies of resolutions of the shareholders and directors of the Borrower and of each Owner authorising the execution of each of the Finance Documents to which the Borrower or that Owner is a party and, in the case of the Borrower, authorising named officers to give the Drawdown Notices and other notices under this Agreement.

4 The original of any power of attorney under which any Finance Document is executed on behalf of the Borrower or an Owner.

5 Copies of all consents which the Borrower or any Owner requires to enter into, or make any payment under, any Finance Document.

6 A copy of the memorandum relating to the private placement of the share capital of the Borrower.

7 If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

PART B

The following are the documents referred to in Clause 9. l(b).

1 Evidence satisfactory to the Agent and its legal advisers that:

(a) the Borrower has received net cash proceeds from the Sponsors in an amount of at least $113,120,000 from a private placement of the share capital of the Borrower; and

(b) Mr Michael Bodouroglou has made an additional equity contribution of at least 7 per cent. of the Borrower’s Total Equity.

2 The originals of any mandates or other documents required in connection with the opening or operation of each Earnings Account and the Retention Account.

3 Evidence satisfactory to the Agent that each Owner is a direct or indirect wholly-owned subsidiary of the Borrower.

4 All documentation required by each Creditor Party in relation to the Borrower and any Security Party pursuant to that Creditor Party’s “know your customer” requirements.

5 Documentary evidence that the agent for service of process named in Clause 30 has accepted its appointment.

6 Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Marshall Islands, England, Germany and such other relevant jurisdictions as the Agent may require.

PART C

The following are the documents referred to in Clause 9.1(c). “Relevant Ship” means, in relation to an Advance, the Ship which is to be part-financed by that Advance.

1 A copy of the MOA for the Relevant Ship and all documents signed or issued by the parties thereto (or any of them) under or in connection with it.

2 Such documentary evidence as the Agent and its legal advisers may require in relation to the due authorisation and execution of the MOA in relation to the Relevant Ship and all documents to be executed by the parties thereto under that MOA.

3 A duly executed original of the Mortgage, the Deed of Covenant (if applicable), the General Assignment, the Management Assignment and the Charterparty Assignment (in respect of the relevant Initial Charterparty) for the Relevant Ship (and of each document to be delivered under each of them).

4 Documentary evidence that:

(a) the Relevant Ship has been unconditionally delivered to, and accepted by, the relevant Owner under the relevant MOA and the full purchase price payable under that MOA comprising the equity contribution of the Sponsors (in addition to the part financed by the relevant Advance) has been duly paid;

(b) the Relevant Ship has been unconditionally delivered to, and accepted by, the relevant charterer for service under the Initial Charterparty in respect of the Relevant Ship;

(c) the Relevant Ship is definitively and permanently registered in the name of the relevant Owner under an Approved Flag;

(d) the Relevant Ship is in the absolute and unencumbered ownership of the relevant Owner save as contemplated by the Finance Documents;

(e) the Relevant Ship maintains the highest available class with such first-class classification society which is a member of IACS as the Agent may approve free of all recommendations and conditions of such classification society;

(f) the Mortgage relative to the Relevant Ship has been duly registered or recorded (as the case may be) against the Relevant Ship as a valid first priority or preferred ship mortgage in accordance with the laws of the relevant Approved Flag State; and

(g) the Relevant Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.

5 A copy of the Management Agreement and a duly executed original of the Manager’s Undertaking in relation to the Relevant Ship.

6 Copies of:

(a) the document of compliance (DOC) and safety management certificate (SMC) referred to in paragraph (a) of the definition of the ISM Code Documentation in respect of the Relevant Ship and the Approved Manager certified as true and in effect by the Owner of the Relevant Ship; and

(b) the ISPS Code Documentation in respect of the Relevant Ship and the Owner thereof certified as true and in effect by the relevant Owner.

7 A survey report of the Relevant Ship dated no later than 20 days prior to the relevant Drawdown Date in form, scope and substance satisfactory to the Agent and its legal and technical advisors.

8 Two valuations of the Relevant Ship, addressed to the Agent, stated to be for the purpose of this Agreement and dated not earlier than 30 days before the relevant Drawdown Date, each prepared (at the expense of the Borrower) by an Approved Broker in accordance with Clause 15.4 which shows the value of the Relevant Ship in an amount acceptable to the Agent.

9 Evidence satisfactory to the Agent that the Owner of the Relevant Ship remains a direct or indirect wholly-owned subsidiary of the Borrower.

10 A favourable legal opinion from lawyers appointed by the Agent on such matters concerning the laws of the Approved Flag State where the Relevant Ship is registered and such other relevant jurisdictions as the Agent may require.

11 A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances for the Relevant Ship as the Agent may require.

12 If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

Every other 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 Borrower or any other person acceptable to the Agent in its sole discretion.

SCHEDULE 5

TRANSFER CERTIFICATE

The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.

To: HSH Nordbank AG for itself and for and on behalf of the Borrower, each Security Party, the Security Trustee, the Swap Bank and each Lender, as defined in the Loan Agreement referred to below.

[ ]

1 This Certificate relates to a Loan Agreement (the “Loan Agreement”) dated 18 December 2006 and made between (1) Paragon Shipping Inc. as borrower (the “Borrower”), (2) the banks and financial institutions named therein as Lenders, (3) HSH Nordbank AG as Agent, (4) HSH Nordbank AG as Swap Bank, (5) HSH Nordbank AG as Lead Arranger, Bookrunner and Underwriter and (6) HSH Nordbank AG as Security Trustee in respect of a term loan facility of up to US$95,322,060.

2 In this Certificate:

“the Relevant Parties” means the Agent, the Borrower, each Security Party, the Security Trustee, the Swap Bank and each Lender;

“the Transferor” means [full name] of [lending office];

“the Transferee” means [full name] of [lending office].

Terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate.

3 The effective date of this Certificate is 200 Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date.

4 The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [ ] per cent, of the Contribution outstanding to the Transferor (or its predecessors in title) which is set out below:

Contribution

Amount transferred

5 By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[ ]] [from [ ] per cent, of its Commitment, which percentage represents $[ ]] and the Transferee acquires a Commitment of $[ ].

6 The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect.

7 The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement.

8 The Transferor:

(a) warrants to the Transferee and each Relevant Party:

(i) that the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and

(ii) that this Certificate is valid and binding as regards the Transferor;

(b) warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4 above;

(c) undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee’s title under this Certificate or for a similar purpose.

9 The Transferee:

(d) confirms that it has received a copy of the Loan Agreement and each other Finance Document;

(e) agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Security Trustee, the Swap Bank or any Lender in the event that:

(i) the Finance Documents prove to be invalid or ineffective,

(ii) the Borrower or any Security Party fails to observe or perform its obligations, or to discharge its liabilities, under the Finance Documents;

(iii) it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge

the liabilities of the Borrower or any Security Party under the Finance Documents;

(f) agrees that it will have no rights of recourse on any ground against the Agent, the Security Trustee, the Swap Bank or any Lender in the event that this Certificate proves to be invalid or ineffective;

(g) warrants to the Transferor and each Relevant Party (i) that it has full capacity to enter into this transaction and has taken all corporate action and obtained all official consents which it needs to take or obtain in connection with this transaction; and (ii) that this Certificate is valid and binding as regards the Transferee; and

(h) confirms the accuracy of the administrative details set out below regarding the Transferee.

10 The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent’s or the Security Trustee’s own officers or employees.

13 The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 above as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it.

[Name of Transferor]	[Name of Transferee]

By:	By:

Date:	Date:

Agent

Signed for itself and for and on behalf of itself
as Agent and for every other Relevant Party

HSH NORDBANK AG

By:

Date:

Administrative Details of Transferee

Name of Transferee:

Lending Office:

Contact Person
(Loan Administration Department):

Telephone:

Telex:

Fax:

Contact Person
(Credit Administration Department):

Telephone:

Telex:

Fax:

Account for payments:

Note: This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor’s interest in the security constituted by the Finance Documents in the Transferor’s or Transferee’s jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose.

SCHEDULE 6

DESIGNATION NOTICE

To: HSH Nordbank AG
Gerhart-Hauptmann-Platz 50
D-20095 Hamburg
Germany

[•]

Dear Sirs

Loan Agreement dated 18 December 2006 made between (inter alia) (i) ourselves as Borrower, (ii) the Lenders, (iii) yourselves as Agent and Security Trustee and (iv) yourselves as swap bank (the “Loan Agreement”)

We refer to:

1 the Loan Agreement;

2 the Master Agreement dated [•] made between ourselves and [•]; and

3 a Confirmation delivered pursuant to the said Master Agreement dated [•] and addressed by [•] to us.

In accordance with the terms of the Loan Agreement, we hereby give you notice of the said Confirmation and hereby confirm that the Transaction evidenced by it will be designated as a “Designated Transaction” for the purposes of the Loan Agreement and the Finance Documents.

Yours faithfully,



for and on behalf of PARAGON SHIPPING INC.

SCHEDULE 7

FORM OF COMPLIANCE CERTIFICATE

To: HSH Nordbank AG
Gerhart-Hauptmann-Platz 50
D-20095 Hamburg
Germany

[•] 200[•]

Dear Sirs,

We refer to a loan agreement dated 18 December 2006 (the “Loan Agreement”) made between (amongst others) yourselves and ourselves in relation to a term loan facility of up to $95,322,060.

Words and expressions defined in the Loan Agreement shall have the same meaning when used in this compliance certificate.

We enclose with this certificate a copy of the [audited]/[unaudited] consolidated accounts for the Group for the [Financial Year] [3-month period] ended [•]. The accounts (i) have been prepared in accordance with all applicable laws and GAAP all consistently applied, (ii) give a true and fair view of the state of affairs of the Group at the date of the accounts and of its profit for the period to which the accounts relate and (iii) fully disclose or provide for all significant liabilities of the Group.

We also enclose copies of the valuations of all the Fleet Vessels which were used in calculating the Market Value Adjusted Total Assets of the Group as at [•].

The Borrower represents that no Event of Default or Potential Event of Default has occurred as at the date of this certificate [except for the following matter or event [set out all material details of matter or event]]. In addition as of [•], the Borrower confirms compliance with the financial covenants set out in Clause 12.4 of the Loan Agreement for the 3 months ending as of the date to which the enclosed accounts are prepared.

We now certify that, as at [•]:

(a) the ratio of Total Liabilities to EBITDA is [•]:[•];

(b) the Market Value Adjusted Net Worth of the Group is $[•];

(c) Liquid Assets available to the Group are $[•] in aggregate of which an aggregate amount of $[•] is standing to the credit of the Earnings Accounts and the Swap Account;

(d) the ratio of Total Liabilities to Market Value Adjusted Total Assets is [•]:[•]; and

(e) the Security Cover Percentage is [•] per cent.

This certificate shall be governed by, and construed in accordance with, English law.


[•] Chief Financial Officer of Paragon Shipping Inc.

SCHEDULE 8

MANDATORY COST FORMULA

1 The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Financial Services Authority (or any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

2 On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the Loan) and will be expressed as a percentage rate per annum.

3 The Additional Cost Rate for any Lender lending from a lending office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in the Loan) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that lending office.

4 The Additional Cost Rate for any Lender lending from a lending office in the United Kingdom will be calculated by the Agent as follows:

	E x 0.01	per cent. per annum
	300	per cent. per annum

Where:

E is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Lenders to the Agent pursuant to paragraph 6 below and expressed in pounds per £1,000,000.

5 For the purposes of this Schedule:

(a) “Special Deposits” has the meaning given to it from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

(b) “Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;

(a) “Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate);

(b) “Participating Member State” means any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to European Monetary Union; and

6 If requested by the Agent, each Lender lending from a lending office in the United Kingdom shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that Lender to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Lender as being the average of the Fee Tariffs applicable to that Lender for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Lender.

7 Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender:

(a) the jurisdiction of its lending office; and

(b) any other information that the Agent may reasonably require for such purpose.

Each Lender shall promptly notify the Agent in writing of any change to the information provided by it pursuant to this paragraph.

8 The rates of charge of each Lender lending from a lending office in the United Kingdom for the purpose of calculating E shall be determined by the Agent based upon the information supplied to it pursuant to paragraph 6 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a lending office in the same jurisdiction as its lending office.

9 The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender pursuant to paragraphs 3, 6 and 7 above is true and correct in all respects.

10 The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender pursuant to paragraphs 3, 6 and 7 above.

11 Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties.

The Agent may from time to time, after consultation with the Borrower and the Lenders, determine and notify to all parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Financial Services Authority or the European Central Bank (or, in any case,

any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties

EXECUTION PAGES

BORROWER

SIGNED by CHRISTOPHER THOMAS	)	/s/ Christopher Thomas
for and on behalf of	)
PARAGON SHIPPING INC.	)


LENDERS

SIGNED by ERICA LACOMBE	)	/s/ Erica Lacombe
for and on behalf of	)
HSH NORDBANK AG	)


AGENT

SIGNED by ERICA LACOMBE	)	/s/ Erica Lacombe
for and on behalf of	)
HSH NORDBANK AG	)


SECURITY TRUSTEE

SIGNED by ERICA LACOMBE	)	/s/ Erica Lacombe
for and on behalf of	)
HSH NORDBANK AG	)


SWAP BANK

SIGNED by ERICA LACOMBE	)	/s/ Erica Lacombe
for and on behalf of	)
HSH NORDBANK AG	)

LEAD ARRANGER/ BOOKRUNNER/UNDERWRITER

SIGNED by ERICA LACOMBE	)	/s/ Erica Lacombe
for and on behalf of	)
HSH NORDBANK AG	)


Witness to all the	)	/s/ Maria-Chryssoula Karpida
above signatures	)

Name:

Address:

MARIA-CHRYSSOULA KARPIDA
WATSON, FARLEY & WILLIAMS
2, DEFTERAS MERARCHIAS
PIRAEUS 185 36 - GREECE

EX-10.2 9 a2178205zex-10_2.htm EXHIBIT 10.2

Exhibit 10.2

ALLSEAS MARINE S.A.

MANAGEMENT AGREEMENT

VESSEL: M.V. “ ”

TABLE OF CONTENTS

1. APPOINTMENT

2. TERM

3. THE MANAGERS GENERAL OBLIGATIONS

4. MANAGER’S POWERS

5. TECHNICAL MANAGEMENT SERVICES

* CREWING

* REPAIRS

6. COMMERCIAL MANAGEMENT SERVICES

* SALE AND PURCHASE

* CHARTERS

* OPERATIONS AND FREIGHT COLLECTION

* INSURANCE

* ACCOUNTING

* AUDITING

* BUDGETS AND MANAGEMENT OF FUNDS

7. ADMINISTRATION

8. REMUNERATION

9. INDEMNITY

10. HIMALAYA

11. FORCE MAJEURE

12. TERMINATION

13. MODIFICATION

14. ASSIGNABILITY OF AGREEMENT

15. CONFIDENTIALITY

16. GOVERNING LAW

17. ARBITRATION

18. NOTICES

19. ENTIRE AGREEMENT

MANAGEMENT AGREEMENT

This Agreement is made as of the 2006, between of Marshall Islands (hereinafter called the “Owner”) and Allseas Marine S.A. of Liberia, (hereinafter called the “Manager”)

Whereas

(A) The “Owner” is the registered owner of the ship (the “Vessel”) particularly described in Schedule A annexed hereto.

(B) The Owner wishes to retain the Manager to provide, subject to the terms and conditions set forth herein, technical and commercial management services in respect of the Vessel.

(C) The Manager is willing and is able to provide such technical and commercial management services upon the terms and conditions set forth below.

Now therefore the parties hereto agree as follows:

1. APPOINTMENT

The Manager is hereby appointed by the Owner as Technical and Commercial Manager of the Vessel and the Manager hereby accepts such appointment on the terms and conditions of this Agreement.

1.0.1 With effect from the date hereof and continuing, unless and until terminated as provided herein, the Owner hereby appoint the Manager and the Manager hereby agrees to act as Manager of the Vessel.

1.0.2 The Manager undertakes to use its best endeavours to provide its Management Services specified in the clauses agreed hereinbelow, on behalf of the Owner in accordance with sound ship management practice.

1.0.3 The Manager may at its sole discretion appoint sub-managers, at any time throughout the duration of this Agreement, to discharge any of the Manager’s duties.

2. TERM

This Agreement shall come into effect on the date hereof and shall continue for a period of five years.

Thereafter it shall continue for further continuous periods of five years. Notice to terminate shall not be effective until 30 days following its having been delivered, unless otherwise mutually agreed in writing.

3. THE MANAGER’S GENERAL OBLIGATIONS

3.01 The Manager shall, on behalf of the Owner, attend to the day-to-day technical and commercial management of the Vessel in accordance with sound technical and commercial shipping industry standards.

3.02 In the exercise of its duties hereunder the Manager shall act fully in accordance with the reasonable policies, guidelines and instructions from time to time communicated to it by the Owner and serve the Owner faithfully and diligently in the performance of this Agreement, according to technical and commercial shipping industry standards.

3.03 In the performance of this Agreement, the Manager shall protect the interests of the Owner in all matters directly or indirectly relating to the Vessel. The Manager shall ensure that adequate manpower is employed by it to perform its obligations under this agreement. Insofar as practicable, it shall use its best efforts to ensure fair distribution of available manpower, supplies and services as between the Vessel and all other vessels under its management.

4. MANAGER’S POWER

4.01 The Manager is entitled to carry out its duties under the terms of this Agreement as provided in relative clauses herein as the Owner’s agent at its own discretion.

4.02 In the performance of this Agreement, the Manager shall be authorized to perform the services described in Clauses 5 and 6 and to do all such things or take all such actions related to such performance in accordance with technical and commercial industry standards.

4.03 The Manager is under no circumstances authorized to mortgage or otherwise encumber the Vessel, as security for loans or other amounts due. To the extent permitted by law, the Manager will take all reasonable measures to avoid creating liens on the Vessel for services or necessaries, which are not the responsibility of the Owner.

5. TECHNICAL MANAGEMENT SERVICES

* CREWING

5.01 The Manager shall provide adequate and properly qualified Crew for the Vessel as required by the Owner, provision of which includes but is not limited to the following functions:

• Employment of master, officers, and crew (hereinafter collectively referred to as the “Crew”) of the Vessel;

• Arrangement of transportation of the Crew, including repatriation;

• Training of the Crew;

• Supervision of the efficiency of the Crew and administration of all other Crew matters such as planning for the manning of the Vessel;

• Payroll arrangement;

• Arrangements and administration of pensions and Crew insurance;

• Discipline and union negotiations;

• Enforcement of appropriate standing orders.

* REPAIRS AND MAINTENANCE

The Manager shall provide technical management which includes, but is not limited to the following functions:

5.02 Provisions of competent personnel to supervise the maintenance and general efficiency of the Vessel;

5.03 Arrangement and supervision of drydockings, repairs, alterations and upkeep of the Vessel to the standards required by the Owner provided that the Manager shall be entitled to incur the necessary expenditure to ensure that the Vessel will comply with all requirements and recommendations of the classification society and with the laws and regulations of the country of registry of the Vessel and of the places where the Vessel trades;

5.04 Arrangement of the supply of necessary provisions, stores, spares and lubricating oil;

5.05 Appointment of surveyors and technical consultants as the Manager may consider from time to time to be necessary;

5.06 Development, implementation and maintenance of a Safety Management System (SMS) in accordance with the ISM Code;

5.07 Maintaining Vessel in such condition as to be acceptable to major charterers as well oil majors’ vetting standards;

5.08 Arranging surveys (including oil major vetting) associated with the commercial operation of the Vessel.

6. COMMERCIAL MANAGEMENT SERVICES

6.01 The Manager shall identify vessels for purchase, perform class records review and physical inspection and make recommendation to the Owner as to whether any vessel should be bought. Any costs incurred by the manager for inspection of such vessels for possible purchase to be fully reimbursed by the owner.

6.02 After approval has been granted by the company for the purchase of the identified vessel, the Manager shall on behalf of the owners proceed to purchase same under the best possible terms and conditions in accordance with industry standards.

6.03 The Manager shall perform all functions necessary to allow owners to take physical delivery of the vessel and proceed with commercially managing same.

6.04 The Manager shall also sell vessel(s) on behalf of the Company at the Company’s request.

6.05 The Manager shall proceed to market the vessel for sale, solicit offers, negotiate the sale of any Company vessel under the best possible terms and conditions in accordance with industry standards.

6.06 The Manager shall perform all functions necessary to enable the Owner to physically deliver the vessel to her contractual buyer.

* CHARTERS

6.07 Seek and negotiate employment for the Vessel under voyage or period charter or under any other form of contract and on behalf of the Owner to approve, conclude and execute any such contract.

6.08 The Manager shall have the authority to fix voyage charters in accordance with the trading restrictions defined in Clause 6.10.

6.09 Fix the Vessel and Manager’s other managed vessels (each an “Other Vessel”) in a fair manner.

6.10 The Manager will use due diligence to ensure that the Vessel will be employed between safe ports, safe anchorages and safe berths, so far as this can be established by exercising due diligence.

The Manager will include in the Charter Parties an appropriate War Risks Clause, Clause Paramount and any other Owner’s protective clauses where applicable in accordance with the custom of trade.

6.11 To arrange the scheduling of the Vessel according to the terms of the Vessel’s employment.

6.12 To carry out all necessary communications with shippers, charterers and others involved with their receiving and handling of the Vessel at the loading and discharging ports, including notices required under the terms of the Vessel’s employment.

On behalf of and in the name of the Owner to issue or cause to be issued to shippers customary bills of lading or other documents required under the terms of the Vessel’s employment.

The Owner authorizes the Manager to permit cargo discharge in accordance with Letter of Indemnities issued, or invocation of same, and signed by the charterers and/or bank, working as per Owner’s P&I Club regulations and instructions.

6.13 To invoice on behalf of the Owner all freights and other sums due to Owner and accounts receivables arising from the operation of the Vessel. To give receipts therefore, to make any and all claims for monies due to Owner and to issue releases upon receipt of payment of such claims and in connection with the settlement of such claims.

To furnish the Master of the Vessel with appropriate voyage instructions and monitor voyage performance.

The Manager will use its best efforts to achieve the most economical, efficient and quick dispatch of the Vessel between ports and at ports and terminals.

6.14 With prior consent of the Owner, to institute, defend, intervene in, settle, compromise or abandon any legal proceedings by or against Owner or by or against the Vessel or which in any way concerns the Vessel, their freight, earnings and disbursements or concerning the crews and officers on board the Vessel and for the purposes of this clause the expression “Legal Proceedings” shall include arbitration, civil, regulatory and criminal proceedings of all kinds. The handling of all such claims and legal matters shall always be consistent with the instructions and requirements of the Vessels’ P&I Club, Hull Underwriters, or other insurers.

To provide Owner the following services:

• Appoint and negotiate fees for vessel husbandry agents at ports when necessary.

• Negotiate, arrange and stem fuel requirements as required for intended trading.

• Arranging berths or anchorages.

• Arranging for entry and clearance of the Vessel and all other services relating to the Vessel’s movements in port, including tugs and pilots.

• Preparing laytime statements and or hire statements including obtaining port documents and expense supports necessary for such calculation.

* INSURANCE

6.15 The Manager shall arrange such insurances as the Owner shall have instructed or agreed, in particular as regards insured values, deductibles and franchises.

All insurance policies shall be in the joint names of the Owner and the Manager provided that, unless the Manager give express prior consent, no liability to pay premiums or P&I calls shall be imposed on the Manager, notwithstanding the restrictions on P&I cover which would thereby result.

* ACCOUNTING

6.16 The Manager shall establish an accounting system which meets the requirements of the Owner and provide regular accounting services, supply regular reports and records in accordance herewith;

Maintain the records of all costs and expenditures incurred hereunder as well as data necessary or proper for the settlement of accounts between the parties.

* AUDITING

6.17 The Manager shall at all times maintain and keep true and correct accounts and shall make the same available for inspection and auditing by the Owner and such times as may be mutually agreed.

BUDGETS AND THE MANAGEMENT OF FUNDS

6.18 The Manager shall present to the Owner annually a budget for the following twelve months in such form as the Owner requires. The budget for the first year hereof is set out in Appendix “A” hereto.

Subsequent annual budgets shall be prepared by the Manager and submitted to the Owner not less than one month before the anniversary date of the Manager’s financial year.

The Owner shall indicate to the Manager its acceptance and approval of the annual budget within one month of presentation and in the absence of any such indication the Manager shall be entitled to assume that the Owner has accepted the said budget.

Following the agreement of the budget, the Manager shall prepare and present to the owner its estimated for the working capital requirement of the Vessel and the manager shall each month update this estimate. Based thereon, the Manager shall each month request the Owner for the funds required to run the Vessel for the ensuing month, including the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers of provisions. Such funds shall be received by the Manager within ten days after the receipt of such request and shall be held to the credit of the Owner in a separate account.

The Owner shall place with the Manager for the duration of this Agreement an amount equal to one months’ estimated running expenses as a working capital reserve. Upon termination of this Agreement all moneys remaining within the working capital reserve shall be returned to the Owner subject to the terms and conditions of this Agreement.

The Manager shall produce a quarterly comparison between budgeted and actual expenditure of the Vessel, if required to do so by the Owner.

Notwithstanding anything contained herein, the Manager shall in no circumstances be required to use or commit its own funds to finance the provision of the management Services.

7. ADMINISTRATION

The Manager shall, at its own expense, provide all office accommodations, office equipment, communication, office stationery and office staff, as is required for the provision of its services hereunder.

The manager shall handle and settle all claims arising out of the Management Services hereunder.

The Manager shall also have power to obtain legal or technical or other outside expert advice in relation to the handling and settlement of claims and disputes or all other matters effecting the interest of the Owner in respect of the Vessel.

The Owner shall arrange for the provision of any necessary guarantee, bond or security.

Any costs incurred by the Manager in carrying out its obligations according to this Agreement shall be settled by the Owner.

8. REMUNERATION

8.01 In consideration of the obligations undertaken by the Manager under this Agreement, Owner shall pay the Manager a commission fee equal to one and a quarter of one per cent (1,25 %) calculated on the gross freight, demurrage and charter hire obtained for the employment of the Vessel on contracts or charter parties entered into by the Manager during the term of this Agreement, payable to the Manager on the dates

when such freight demurrage of charter-hire, as the case may be, is paid or otherwise collected.

8.02 The Owner shall also pay a commission fee equal to one percent (1.0%) calculated on the MOA price for any vessel bought or sold for and on behalf of the Owner.

8.03 In addition to the commission fees due to Manager under Clauses 8.01 and 8.0.2 above and for as long as this Agreement is in effect, Owner shall also pay the Manager a Management Fee of US$ 650.- per day per vessel, payable monthly in advance (the first payment to be made upon signature of the Agreement).

The above Management fee is based on a parity of Euro/US dollar exchange rate of 1.268: 1,00 At the beginning of each calendar quarter date the daily Management fee for the next 3 months will be adjusted quarterly based on the US$/Euro exchange rate as quoted by EFG Eurobank Ergasias S.A. two days prior to the end of the previous calendar quarter. The management fee will be increased commensurate with inflation on an annual basis, commencing on January 1, 2008 by reference to the official Greek Inflation rate for the previous year, as published by the Greek national Statistical Office.

8.04 The Manager shall at no extra cost to the Owner, provide its own office Accommodation, office staff and stationary.

8.05 Unless the Agreement is terminated by the Owner in accordance with Clauses 13.03 (iii) and (iv) of this Agreement or by reason of default by gross negligence or misconduct of Manager, its Directors, officers and/or employees in the performance under this Agreement, upon termination of this Agreement in relation to the Vessel, the Management Fee will be continued at the above rate in effect for 90 days from the date of termination. This is to cover operational and accounting costs of finalizing the Vessels’ disbursements, demurrage, etc. In addition, the Owner shall continue to pay the following:

i) Crew support costs for a further period of three calendar months

ii) An equitable proportion of any management staff redundancy costs which may materialise.

8.06 SUPERINTENDENTS’ FEES

When necessary or desirable to evaluate the Vessel’s physical condition, and/ or supervise ship board activities, and/or attend to repairs and drydockings the Manager shall arrange for visitations by a Superintendent at various intervals during the term of this Agreement.

Should it be necessary for a Superintendent to visit the Vessel for a period of greater than 5 days during any successive twelve month term (the first term commencing from the date of this Agreement) the Manager shall be entitled to charge the Owner with US $ 550 for every additional day.

9. INDEMNITY

9.01 Except as provided in 9.02 below, neither the Manager nor any officer, director, shareholder or employee thereof shall be liable to Owner or to any third party, including any Master, Officer or Crewmember employed on the Vessel or in connection therewith, for any loss or damage arising directly or indirectly out of the performance by the Manager of any of its obligations in respect of the Vessel under this Agreement, the Owner shall indemnify and hold harmless and defend the Manager of any of its obligations in respect of the Vessel under this Agreement. The Owner shall indemnify and hold harmless and defend the Manager, its officers, directors, shareholders and employees against any and all claims and demands (including costs and reasonable attorneys fees of defending such claim or demand) and any other losses or liabilities arising directly or indirectly out of the performance by the Manager of any of its duties in respect of the Vessel under this Agreement.

9.02 The provisions of Clause 9.01 shall not apply with respect to any loss, Damage, claim, demand, or liability if and to the extent that the same results for manager’s, its officers’, Directors’, Shareholders’ or Employees’ gross negligence or willful misconduct in the performance of its duties under this Agreement.

9.03 Clause 9 shall survive termination of this Agreement.

10. HIMALAYA

“Himalaya”. It is hereby expressly agreed that no employee or agent of the Manager (including every sub-contractor form time to time employed by the Manager) shall in any circumstances whatsoever be under any liability whatsoever to the Owner for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of, or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Clause 9, every exemption, limitation, condition and liberty herein contained and every right, exemption form liability, defense and immunity of whatsoever nature applicable to the Manager or to which the Manager is entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Manager acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 9 the

Manager is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.

11. FORCE MAJEURE

1. Neither party shall be liable to the other for loss or damage resulting from delay or failure to perform this Agreement, or any contract hereunder, either in whole or in part, when any such delay or failure shall be due to causes beyond its control due to civil war, insurrections, strikes, riots, fires, floods, explosions, earthquakes, serious accidents, or any acts of God, or failure of transportation, epidemics, quarantine restrictions, or labor trouble causing cessation, slow down, or interruption of work.

2. In the event that a situation giving rise to force majeure which prevents a party from performing under this Agreement, the parties shall confer as to the further fulfillment or termination of this Agreement.

12. TERMINATION

12.01 The Manager shall be entitled to terminate the Agreement by notice in writing if any moneys payable by the Owner shall not have been received in the Manager’s nominated account within ten days of payment having been requested in writing by the Manager. The Manager shall also be entitled to terminate this Agreement by notice in writing if after the receipt of written notice of objection thereto from the Manager to the Owner, the Owner proceeds to employ the Vessel in a trade or in a manner which is, in the opinion of the Manager, likely to be detrimental to its reputation as Manager or be prejudicial to the commercial interest of the Manager.

12.02 The Owner shall be entitled to terminate Manager’s appointment hereunder by providing notice as per clause 2 to the Manager if:

a) any money payable to Owner under or pursuant to this Agreement are not paid or accounted for in full by Manager in accordance with the provisions of this Agreement, or

b) Manager repeatedly neglects of falls to perform its principal duties or to meet his material obligations under his Agreement

12.03 Notwithstanding the provision in Clause 2 and Clause 12.01 of this Agreement and without prejudice to the accrued rights, if any, or Remedies of the parties under or pursuant to this Agreement.

(i) if Owner ceases to be the owner of a Vessel by reason of a sale thereof; or

(ii) if a Vessel becomes an actual or constructive or compromised or arranged total loss; or

(iii) if a Vessel is requisitioned for title or any other compulsory acquisition of a Vessel occurs, otherwise than by requisition for hire; or

(iv) if a Vessel is captured, seized, detained or confiscated by any government or persons acting or purporting to act on behalf of any government and is not released from such capture, seizure, detention or confiscation; the Agreement shall no longer apply to that ship; or

(v) if Owner or the Manager ceased to carry on business, or a substantial of the business, properties or assets of either such party is seized or appropriated.

(vi) if an order is made against the Owner the Manager by any competent court of the other appropriate authority or resolution passed for bankruptcy, dissolution or winding-up or for the appointment of a liquidator, manager, receiver or trustee of a party or of all or a substantial part of its assets, save for the purposes of amalgamation or re-organization (not involving or arising out of insolvency)

12.04 For the purpose of clause 12.03 hereof

(i) the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the Owner ceases to be registered as Owners of the Vessel.

(ii) the Vessel shall not be deemed to be lost unless either the Vessel has become an actual total loss or agreement has been reached with the Underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with the Underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the vessel has occurred.

(iii) the termination of this Agreement shall be without prejudice to all rights accrued due between the Manager and Owner prior to the date of termination.

13. MODIFICATION OF AGREEMENT

No modification or any further representation, promise, or agreement in connection with subject matter under this Agreement shall be binding, unless made in writing and signed on behalf of the parties by duty authorized representatives.

14. ASSIGNABILITY OF AGREEMENT

This Agreement is not assignable by either party without the prior written consent of the other.

15. CONFIDENTIALITY

Except as may be required by applicable law, any non-public or confidential information relating to the business or affairs of Owner or Owner’s principals obtained by Manager in the performance of this Agreement shall be kept strictly confidential.

Except as may be required by applicable law this Agreement including all terms, details conditions and period is to be kept private and confidential and beyond the reach of any third party.

Except as may be required by applicable law, any non-public or confidential information relating to the business or affairs of Manager and/or Manager’s Principals obtained by Owner or Owner’s Principals in the performance of this Agreement shall be kept strictly confidential.

16. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with English Law.

17. ARBITRATION

17.01 All disputes arising out of this Agreement shall be arbitrated at London in the following manner. One arbitrator is to be appointed by each of the parties hereto and a third by the two so chose. Their decision or that of any two of them shall be final and for the purpose of enforcing any award, this Agreement may be made a rule of the court. The arbitrators shall be commercial persons, conversant with shipping matter. Such arbitration is to be conducted in accordance with the rules of the London Maritime Arbitrators Association terms current at the time when the arbitration proceeding are commenced and in accordance with the Arbitration Act 1996 Or any statutory modification or reenactment thereof.

17.02 In the event that Owner or Manager shall state a dispute and designated an Arbitrator, in writing, the other party shall have twenty (20) days, excluding Saturdays, Sundays and legal holidays and legal holidays to designated it’s arbitrator, failing which the appointed arbitrator can render an award hereunder.

17.03 Until such time as the arbitrators finally close the hearings, either party shall have the right by written notice served on the arbitrators and on the other party to specify further disputes or differences under this Agreement for hearing and determination.

17.03 The arbitrators may grant any relief, and render an award, which they or a majority of them deem just and equitable and within the scope of the Agreement of the parties, including but not limited to the posting of security. Awards pursuant to this Clause may include costs, including a reasonable allowance for attorneys fee’s and judgments may be entered upon any award made herein in any court having jurisdiction.

18. NOTICES

18.01 Any notice or other communication required to be given or made hereunder shall be in writing and may be served by sending same by registered airmail electronic-mail, telex, facsimile or by delivering the same (against receipt) to the address of the party to be served to such address as may from time to time be notified by that party for the purpose.

18.02 Any notice served by post as aforesaid shall be deemed conclusively duly Served five days after the same shall have posted. Notices served by telex aforesaid shall be deemed conclusively to have been served on the day following of the same, provided evidence of transmission appears on the particular notice.

18.03 Notices to the Manager shall be made as follows:

ALLSEAS MARINE S.A.
102-104 VAS. PAVLOU STREET
166 73 VOULA ATHENS, GREECE
PHONE : + 30 210 89 14 600
FAX : + 30 210 89 95 085
E-MAIL : Allseas@otenet.gr

Notices to Owner shall be made as follows:

19. ENTIRE AGREEMENT

This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, either verbal or written, between the parties with respect to such subject matter, and no amendment of any provision hereof will be binding upon any party unless in writing and signed by the party agreeing to such amendment.

ADDENDUM Nr. 1

to a Management Agreement (“the Agreement”) relating to the ship M.V dated 200 between of hereinafter called the Owner and ALLSEAS MARINE S.A. of Liberia hereinafter called the Manager.

The Agreement is amended to the effect that following Rider clause to Section 6.07 of the Management Agreement between the Owner and the Manager is agreed:

In the event Manager is managing any drybulk ships that are not owned by the Owner, the Manager agrees that consistent with the availability, suitability and positioning of the Owner’s vessels, any chartering contract of a duration of six months or more will be offered in the first instance to drybulk carriers operated by the Owner.

This th day of 2006.

For the Owner

For the Manager

EX-10.3 10 a2178205zex-10_3.htm EXHIBIT 10.3

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

Dated as of November 21, 2006

by and among

PARAGON SHIPPING INC.,

INNOVATION HOLDINGS S.A.

and

CANTOR FITZGERALD & CO.
CRT CAPITAL GROUP LLC
OPPENHEIMER & CO. INC.

This Registration Rights Agreement (this “Agreement”) is made and entered into as of November 21, 2006, by and among Paragon Shipping Inc., a Marshall Islands corporation (the “Company”), Innovation Holdings S.A. (“Innovation Holdings”), Cantor Fitzgerald & Co., CRT Capital Group LLC and Oppenheimer & Co. Inc. (each, an “Initial Purchaser” and, together, the “Initial Purchasers”), which have agreed, pursuant to the Purchase Agreement (defined below), to purchase 7,562,000 units (“Units”), each consisting of one share of Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”), of the Company and one-fifth of one warrant (“Warrants”) exercisable to purchase Class A Common Stock (such shares of Class A Common Stock issuable upon exercise of the Warrants, “Warrant Shares”) and expiring five years from the date of issuance pursuant to a warrant agreement, dated as of the date hereof, between the Company and Computershare Trust Company, Inc., as warrant agent. The Initial Purchasers have been granted an option under Section 1(a) of the Purchase Agreement to purchase up to an additional 1,512,400 Units. Such transaction described in the preceding two sentences is referred to herein as the “Private Offering.” The Company has also agreed to issue an aggregate of 174,000 Units to the several Initial Purchasers as part of the Initial Purchasers’ compensation in respect of the Private Offering.

This Agreement is made pursuant to the Purchase Agreement, dated November 15, 2006, between the Company and the Initial Purchasers (the “Purchase Agreement”). In order to induce the Initial Purchasers to purchase the Units pursuant to the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 4 of the Purchase Agreement.

The parties hereby agree as follows:

As used in this Agreement, the following capitalized terms shall have the following meanings:

Act: The Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated by the Commission thereunder.

Affiliate: Any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

Broker-Dealer: Any broker or dealer registered under the Exchange Act.

Business Day: Any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York or at a place of payment are authorized by law, regulation or executive order to remain closed.

Class A Common Stock: As defined in the preamble to this Agreement.

Closing Date: The date hereof.

Commission: The U.S. Securities and Exchange Commission.

Common Stock: The Class A Common Stock and the Class B Common Stock of the Company, collectively.

Consummate: An Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof and (c) the delivery of the same number of Exchange Securities by the Company to the Transfer Agent and Registrar as the number of Initial Securities that were tendered by Holders thereof pursuant to the Exchange Offer. An initial public offering shall be deemed “consummated” for purposes of this agreement upon the sale to the underwriters of the number of firm securities described in the final prospectus relating to the initial public offering.

Exchange Act: The Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated by the Commission thereunder.

Exchange Offer: The exchange and issuance by the Company of a number of Exchange Securities (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the number of outstanding Initial Securities that are tendered by such Holders in connection with such exchange and issuance.

Exchange Offer Consummation Deadline: As defined in Section 3(b) hereof.

Exchange Offer Effectiveness Deadline: As defined in Section 3(a) hereof.

Exchange Offer Filing Deadline: As defined in Section 3(a) hereof.

Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus.

Exchange Securities: Units, Warrants and shares of Class A Common Stock, including Warrant Shares, to be issued by the Company (i) in the Exchange Offer, or (ii) as contemplated by Section 4 hereof.

Holders: As defined in Section 2 hereof.

Indemnified Holder: As defined in Section 9(a) hereof.

indemnified party: As defined in Section 9(c) hereof.

indemnified person: As defined in Section 9(c) hereof.

Initial Public Offering: An underwritten initial public offering of the Company’s Class A Common Stock in the United States.

Initial Purchaser Registration Rights Agreement: The Initial Purchaser Registration Rights Agreement, dated as of November 21, 2006, among the Company and the Initial Purchasers.

IPO Consummation Deadline: As defined in Section 5(a) hereof.

IPO Filing Deadline: As defined in Section 5(a) hereof.

Initial Securities: The Units, and the Warrants and Class A Common Stock (including the Warrant Shares issuable upon exercise of the Warrants) comprising the Units, issued in the Private Offering and as compensation to the Initial Purchasers in respect of the Private Offering.

IPO Registration Statement: The Registration Statement relating to the underwritten initial public offering of the Company’s Class A Common Stock, including the related Prospectus.

Person: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

Piggyback Holder: As defined in Section 5(b)(i) hereof.

Piggyback Registration: As defined in Section 5(b)(i) hereof.

Private Offering: As defined in the preamble hereto.

Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

Purchase Agreement: As defined in the preamble to this Agreement.

Recommencement Date: As defined in Section 7(d) hereof.

Registration Default: As defined in Section 6 hereof.

Registration Expenses: As defined in Section 8(a) hereof.

Registration Statement: Any registration statement of the Company relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer, (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement or (c) the initial public offering of the Company’s Class A Common Stock, that is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein and all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

Rule 144: Rule 144 promulgated under the Act.

Share Cancellation: As defined in Section 6 hereof.

Shelf Registration Statement: As defined in Section 4 hereof.

Suspension Notice: As defined in Section 7(d) hereof.

Transfer Agent and Registrar: As defined in Section 7(c)(xvi) hereof.

Transfer Restricted Securities: Each Initial Security until the earliest to occur of (a) the date on which such Initial Security has been exchanged by a Person other than a Broker-Dealer for an Exchange Security in the Exchange Offer, (b) following the exchange by a Broker-Dealer in the Exchange Offer of an Initial Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the Prospectus contained in the Exchange Offer Registration Statement, (c) the date on which a Shelf

Registration Statement with respect to such Initial Security shall have been declared effective under the Act and such Initial Security shall have been disposed of in accordance with the Shelf Registration Statement, (d) the disposition of any Transfer Restricted Security pursuant to the IPO Registration Statement or (e) the date on which such Initial Security is distributed to the public pursuant to Rule 144.

Units: As defined in the preamble hereto.

Warrants: As defined in the preamble hereto.

Warrant Shares: As defined in the preamble hereto.

SECTION 2. HOLDERS

A Person is deemed to be a holder of Transfer Restricted Securities (each, a “Holder”) whenever such Person owns Transfer Restricted Securities; provided, that, neither Innovation Holdings nor any Affiliate of the Company shall be deemed to be a Holder.

SECTION 3. REGISTERED EXCHANGE OFFER

(a) Unless the Exchange Offer shall not be permitted by applicable law or Commission policy, the Company shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as promptly as practicable after the date hereof (ii) use its commercially reasonable efforts to cause such Exchange Offer Registration Statement to become effective on or prior to 150 days after the Closing Date (such 150th day being the “Exchange Offer Effectiveness Deadline”), (iii) in connection with the foregoing, use their respective commercially reasonable efforts to (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Exchange Securities to be made under the blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer; provided, however, that the Company shall not be required to take any action that would subject them to general service of process or taxation in any jurisdiction where they are not already so subject, and (iv) as promptly as practicable after the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and (ii) resales of Exchange Securities by Broker-Dealers that tendered into the Exchange Offer Initial Securities that such Broker-Dealer acquired for its own account as a result of market-making activities or other trading activities (other than Initial Securities acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below.

(b) Unless the Exchange Offer shall not be permitted by applicable law or Commission policy, the Company shall use its commercially reasonable efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company shall cause the Exchange Offer to comply in all material respects with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. The Company shall use its commercially reasonable efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 180 days after

the consummation of the Private Offering, or longer, if required by the federal securities laws (such 180th day (or longer) being the “Exchange Offer Consummation Deadline”).

(c) The Company shall include a “Plan of Distribution” section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such “Plan of Distribution” section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. See the Shearman & Sterling no-action letter (available July 2, 1993).

Because such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Exchange Securities received by such Broker-Dealer in the Exchange Offer, the Company shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the Prospectus contained in the Exchange Offer Registration Statement is available for sales of Exchange Securities by Broker-Dealers, the Company agrees to use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by and subject to the provisions of Sections 7(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the Exchange Offer Consummation Deadline or such shorter period ending on the date when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon reasonable request at any time during such period.

SECTION 4. SHELF REGISTRATION

(a) Shelf Registration. If (i) the Company is not permitted to Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy, (ii) any Holder of Transfer Restricted Securities notifies the Company prior to 20 Business Days following Consummation of the Exchange Offer that (A) such Holder was prohibited by applicable securities law or Commission policy from participating in the Exchange Offer, (B) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Initial Securities acquired directly from the Company or any of its Affiliates or (iii) the Company is not permitted to register Warrant Shares on the Exchange Offer Registration Statement because the Warrant Shares are not permitted to be so registered by applicable law or Commission policy, then:

(x) with respect to the circumstances described in clause (a)(i) or clause (a)(ii) above, the Company shall use its commercially reasonable efforts as promptly as practicable after the earlier of (i) the date as of which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above (provided that such filing date shall not be earlier than 30 days after the date of the consummation of the Private Offering), to file a

shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the “Shelf Registration Statement”)), relating to all Transfer Restricted Securities of Holders (including, if permitted, the Initial Purchasers) that have provided the information required pursuant to Section 4(b) hereof and to cause such Shelf Registration Statement to become effective; and

(y) with respect to the circumstances described in clause (a)(iii) above, the Company shall use its commercially reasonable efforts as promptly as practicable after the date as of which the Company determines that the Warrant Shares cannot be registered on the Exchange Offer Registration Statement (provided that such filing date shall not be earlier than 30 days after the date of the consummation of the Private Offering) to file a Shelf Registration Statement relating to all Warrant Shares which are Transfer Restricted Securities of Holders that have provided the information required pursuant to Section 4(b) hereof and to cause such Shelf Registration Statement to become effective; provided, however, that if all Warrant Shares which are Transfer Restricted Securities shall have been included on a Shelf Registration Statement filed with the Commission as a result of the circumstances described under clause (a)(i) or (a)(ii) above, the requirements of this clause (y) shall be deemed to have been satisfied, provided that, in such event, the Company shall remain obligated to use its commercially reasonable efforts to cause the Shelf Registration Statement to become effective in accordance with clause (x) of this Section 4(a).

If, after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted as a result of the circumstances described under applicable federal law or Commission policy (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of the first paragraph of this Section 4(a); provided that, in such event, the Company shall remain obligated to use its commercially reasonable efforts to cause the Shelf Registration Statement to become effective in accordance with the first paragraph of this Section 4(a).

To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 7(b)(ii) hereof, the Company shall use its commercially reasonable efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented and amended as required by and subject to the provisions of Sections 7(b) and (c) hereof and in conformity in all material respects with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 7(d) hereof) following the consummation of the Private Offering, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto.

(b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until (i) such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or Item 508 of Regulation S-K, as applicable, of the Act and any other information required by the Commission for use in connection with any Shelf Registration Statement or Prospectus or preliminary prospectus included therein, (ii) such Holder (other than any Initial Purchaser) furnishes to the Company an executed agreement substantially in the form of Exhibit A hereto and (iii) in the case of an underwritten offering, such Holder completes and executes all questionnaires, powers of attorney, underwriting agreements, lock-up letters and other documents reasonably requested by the Company in

connection with the terms of such underwritten offering. Furthermore, no Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 10 Business Days after receipt of a request therefor, such Holder’s comments to the disclosure relating to such Holder in the Shelf Registration Statement. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not incomplete or misleading in any material respect.

SECTION 5. INITIAL PUBLIC OFFERING

(a) The Company, subject to market conditions, shall (i) cause the IPO Registration Statement to be filed with the Commission substantially concurrently with the Exchange Offer Registration Statement(such date being the “IPO Filing Deadline”), (ii) make application to list the Class A Common Stock on the NASDAQ Global Market substantially concurrently with the filing of the IPO Registration Statement, (iii) use its commercially reasonable efforts to resolve any comments to the IPO Registration Statement from the Commission within 180 days of the date of the Consummation of the Private Offering, (iv) use its commercially reasonable efforts to cause the IPO to be Consummated not later than the 12-month anniversary of the date of the consummation of the Private Offering (such date being the “IPO Consummation Deadline”), and (v) in connection with the foregoing, use its commercially reasonable efforts to (A) file all pre-effective amendments to such IPO Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such IPO Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Class A Common Stock to be made under the blue sky laws of such jurisdictions as are necessary to permit Consummation of the IPO; provided, however, that the Company shall not be required to take any action that would subject it to general service of process or taxation in any jurisdiction where it is not already so subject.

(b)(i) In connection with the Initial Public Offering described in the foregoing paragraph 5(a), the Company shall give written notice to each holder (a “Piggyback Holder”) of Transfer Restricted Securities (or Exchange Securities received in exchange for such Transfer Restricted Securities in the Exchange Offer) of its intention to publicly file the IPO Registration Statement within twenty (20) Business Days of such public filing date, and such notice shall offer each Piggyback Holder the opportunity to register (a “Piggyback Registration”) on the same terms and conditions such number of shares of Class A Common Stock held by the Piggyback Holder as the Piggyback Holder may request. The Company shall include in such registration all shares of Class A Common Stock with respect to which the Company has received a written request for inclusion therein from the Piggyback Holders within ten (10) Business Days after such Piggyback Holder’s receipt of the Company’s notice, provided, however, that the number of shares of Class A Common Stock to be sold by Piggyback Holders (excluding any Initial Purchaser that is a Piggyback Holder) shall be limited to 50% of the total number of shares proposed to be sold pursuant to the IPO Registration Statement and subject to the limitations described below in Section 5(b)(ii). Such requests for inclusion shall specify the number of shares of Class A Common Stock intended to be disposed of.

(ii) If the managing underwriter(s) of the Initial Public Offering advise the Company in writing that, in their judgment, the number of shares of Class A Common Stock requested by Piggyback Holders to be included in the IPO Registration Statement are such that the success of the Initial Public Offering would be materially and adversely affected, the Company shall include any securities the Company is so advised can be sold in such Piggyback Registration in the following order: (a) first, the shares of Class A Common Stock which the Company proposes to sell; (b) second, on a pro rata basis the Class A Shares requested to be included in such registration by the Piggyback Holders (excluding any Initial Purchaser

that is a Piggyback Holder), provided, that if the managing underwriters determine in good faith that a lower number of shares of Class A Common Stock should be included than those requested to be included by Piggyback Holders pursuant to paragraph (b)(i) above, then the Company shall be required to include in such registration only that lower number of shares of Class A Common Stock; and (c) third, any other shares of Class A Common Stock proposed to be included in the IPO Registration Statement (including any Class A Common Stock held by a Piggyback Holder that is an Initial Purchaser).

SECTION 6. CLASS B SHARE CANCELLATION

Subject to the Company’s rights set forth in Section 7(b)(iii) and 7(d) hereof, if (i) any Exchange Offer Registration Statement required by this Agreement is not declared effective by the Commission on or prior to 180 days after the consummation of the Private Offering or (ii) the Company does not comply with its obligations under Section 4(a) of this Agreement with respect to the effectiveness of any Shelf Registration Statement (each such event referred to in clauses (i) and (ii), a “Registration Default”), Innovation Holdings hereby agrees to surrender to the Company (“Share Cancellation”) for cancellation, in exchange for $0.001 per share, the number of shares of Class B Common Stock set forth on Annex A hereto for the first 30-day period immediately following the occurrence of such Registration Default, and for each 30-day period thereafter until no Registration Default is in effect, up to a maximum for all Registration Defaults of 643,921 shares of Class B Common Stock surrendered and cancelled.

This Section 6 represents the sole financial consequence to the holders of the Class B Common Stock and the Company for any failure by the Company to comply with its obligations under Sections 3, 4, 5 and 10 hereof. The Initial Purchasers and the Holders will not have any financial remedy in connection with any failure by the Company to comply with its obligations under Sections 3, 4, 5 and 10 hereof. Without limiting the remedies available to the Initial Purchasers and the Holders, the Company acknowledges that any failure by the Company to comply with its obligations under Sections 3 and 4 hereof may result in damages to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company’s obligations under Sections 3 and 4 hereof.

SECTION 7. REGISTRATION PROCEDURES

(a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company shall (x) comply with all applicable provisions of Section 7(c) below, (y) use its commercially reasonable efforts to effect such exchange and to permit the resale of Exchange Securities by Broker-Dealers that tendered in the Exchange Offer Initial Securities that such Broker-Dealer acquired for its own account as a result of its market-making activities or other trading activities (other than Initial Securities acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof set forth in the Registration Statement, and (z) comply with all of the following provisions:

(b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Company shall:

(iii) At any time after the effectiveness of the Shelf Registration Statement, if the Company determines in good faith for valid business reasons not to disclose the existence of or

facts surrounding any proposed or pending material corporate transaction or other material development involving the Company, the Company may allow the Shelf Registration Statement to fail to be effective or the Prospectus contained therein to be unusable as a result of such nondisclosure for up to forty-five (45) days in any three-month period or ninety (90) days in any year during the two-year period of effectiveness required by Section 4 hereof and no Share Cancellation will be required as a result of any such Shelf Registration Statement failing to be effective or any such Prospectus being unusuable pursuant to this Section 7(b)(iii). Upon the occurrence of a transaction or development described above, the Company shall notify the Holders as promptly as practicable and, if requested by such Holders, confirm such notice in writing.

(c) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement, the Company shall:

(d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 7(b)(iii), Section 7(c)(iv)(C), or any notice from the Company of the existence of any fact of the kind described in Section 7(c)(iv)(D) hereof (in each case, a “Suspension Notice”), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (x) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 7(c)(iv) hereof, or (y) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the “Recommencement Date”). Each Holder receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder’s possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the Recommencement Date.

SECTION 8. REGISTRATION EXPENSES

(a) All expenses (the “Registration Expenses”) incident to the Company’s performance of or compliance with this Agreement (other than any underwriting discounts and commissions) will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state securities laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company; (v) all application and filing fees in connection with listing the Exchange Securities on a national securities exchange or automated quotation system or the OTC Bulletin Board pursuant to the requirements thereof; and (vi) all fees and disbursements of independent registered public accounting firms of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance).

The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company.

(b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement) regardless of whether a Registration Statement becomes effective, the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Securities in the Exchange Offer and/or selling or reselling Initial Securities or Exchange Securities pursuant to the “Plan of Distribution” contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Morgan, Lewis & Bockius LLP, unless another firm shall be chosen by the Holders of a majority of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared; provided that the Company’s reimbursement obligation with respect to such fees and disbursements shall not exceed $25,000.

SECTION 9. INDEMNIFICATION

(a) The Company agrees to indemnify and hold harmless each Holder and each underwriter, if any, for each such Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) or any such underwriter (collectively, an “Indemnified Holder”), from and against any and all losses, claims, damages, liabilities, judgments, and expenses (including without limitation, any reasonable legal fees or other expenses reasonably incurred in connection with investigating, preparing or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities, judgments and expenses are caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of Exchange Securities or registered Initial Securities, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to the Holders furnished to the Company in writing by the Holders expressly for use therein.

(b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, and its directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company to the same extent as the foregoing indemnity from the Company set forth in section (a) above to each of the Indemnified Holders, but only with reference to information relating to such Indemnified Holder furnished to the Company in writing by such Indemnified Holder expressly for use in any Registration Statement. In no event shall any Indemnified Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the net proceeds received by such Indemnified Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds the amount of any damages that such Indemnified Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

(c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 9(a) or 9(b) (the “indemnified party”), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the “indemnifying person”) in writing, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity

agreement. The indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 9(a) and 9(b), an Indemnified Holder shall not be required to assume the defense of such action pursuant to this Section 9(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Indemnified Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party within a reasonable time after notice of commencement of the action or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Indemnified Holders, in the case of the parties indemnified pursuant to Section 9(a), and by the Company, in the case of parties indemnified pursuant to Section 9(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if (A) such settlement is entered into more than 60 days after receipt by the indemnifying party of a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party), (B) the indemnifying party shall not have reimbursed the indemnified party in accordance with such request or disputed in good faith the indemnified party’s entitlement to such reimbursement prior to the date of such settlement, and (C) such indemnified party shall have given the indemnifying party at least 30 days prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party.

(d) To the extent that the indemnification provided for in this Section 9 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Indemnified Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 9(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 9(d)(i) above but also the relative fault of the Company, on the one hand, and of the Indemnified Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The

relative fault of the Company, on the one hand, and of the Indemnified Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by the Indemnified Holder, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any claim or action.

The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 9(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 9, no Holder, or its related Indemnified Holders, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 9(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint.

SECTION 10. EXCHANGE ACT REGISTRATION; OTC BULLETIN BOARD

Promptly upon the Consummation of the Exchange Offer, the Company will use its reasonable best efforts to obtain the quotation of the Class A Common Stock and Warrants on the OTC Bulletin Board and, in furtherance thereof, will register the Class A Common Stock and Warrants as a class under Section 12(g) of the Exchange Act.

SECTION 11. RULE 144A AND RULE 144

The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to (a) make available on its website quarterly reports containing selected unaudited financial data for the first three quarters of each fiscal year within 60 days of the end of such fiscal quarter and an annual report containing audited financial statements for each fiscal year within 150 days of such fiscal year end and (b) to the extent not already available on the Company’s website, make available, upon request of any Holder, to such Holder or beneficial owner of such Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Act, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all filings required thereby in a timely manner, in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144.

SECTION 12. SELECTION OF UNDERWRITERS

(a) The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an underwritten offering. In any such underwritten offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority of the Transfer Restricted Securities included in such offering; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

(b) No Holder may participate in any underwritten offering pursuant to the Shelf Registration Statement unless such Holder (i) agrees to sell such Holder’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the Holder’s entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

SECTION 13. SUBMISSION TO JURISDICTION

By the execution and delivery of this Agreement, the Company submits to the non-exclusive jurisdiction of any federal or state court in the State of New York in any suit or proceeding arising out of or relating to this Agreement or brought under federal or state securities laws. By receiving the rights and benefits under this Agreement, each Holder also submits to the non-exclusive jurisdiction of any federal or state court in the State of New York in any suit or proceeding arising out of or relating to this Agreement or brought under federal or state securities laws. The Company irrevocably appoints Seward & Kissel LLP, One Battery Park Plaza, New York, NY 10004, as its authorized agent in the Borough of Manhattan in The City of New York upon which process may be served in any suit or proceeding, and agrees that service of process upon such agent, and written notice of said service to the Company, by the person serving the same to the address provided in Section 14(e), shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding.

SECTION 14. MISCELLANEOUS

(a) Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company’s obligations under Sections 3 and 4 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(b) No Inconsistent Agreements. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Other than the Initial Purchaser Registration Rights Agreement, the Company has not previously entered into, nor is currently party to, any agreement granting any registration rights with respect to its securities to any Person that would require such securities to be included in any Registration Statement filed hereunder, including, for the avoidance of doubt, that certain registration rights agreement between the Company and Innovation Holdings. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s securities under any agreement in effect on the date hereof.

(c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of a majority of the Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the Transfer Restricted Securities subject to such Exchange Offer.

(d) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder.

By acquiring Transfer Restricted Securities, a Holder will be deemed to have agreed to indemnify and hold harmless the Company and its directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company to the same extent as the indemnity from the Company set forth in Section 9(a) hereof, but only with reference to information relating to such Holder and provided in writing by such Holder for inclusion in any Shelf Registration Statement. In no event shall any such Holder be liable or responsible for any amount in excess of the amount by which such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Shelf Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

(e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), facsimile or air courier guaranteeing overnight delivery:

Paragon Shipping Inc.

Voula Center

102-104, V. Parlou Str.

GR 16673, Voula

Greece

Facsimile No.: + 30-210-899-5086

Attention: Chief Executive Officer

With a copy to:

Seward & Kissel LLP

One Battery Park Plaza

New York, NY 10004

Facsimile No.: (212) 480-8421

Attention: Gary Wolfe

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

AVERAGE DAILY RESULTS

Time charter equivalent(6)

Vessel operating expenses(7)

Management fees

General and administrative expenses(8)

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

		PARAGON SHIPPING INC.


		By:	/s/ Christopher Thomas
			Name: Christopher Thomas
			Title: Chief Financial Officer

		INNOVATION HOLDINGS S.A.


		By:	/s/ Michael Bcdouroglow
			Name: Michael Bcdouroglow
			Title: President and Secretary


CANTOR FITZGERALD & CO.


By:	/s/ Mark J. Blafer
	Name: Mark J. Blafer
	Title: Global Head of Investment Banking


CRT CAPITAL GROUP LLC


By:	/s/ ERIC SEAL
	Name: Eric Seal
	Title: Senior Vice President


OPPENHEIMER & CO. INC.


By:	HENRY P. WILLIAMS
	Name: Henry P. Williams
	Title: Managing Director

Annex A

Class B Common Stock Cancellation Schedule

	Class B Common Shares	Share Reduction	Total Number of Units, Shares of Class A and Class B Common Stock Outstanding^*	Class B as a Percentage of Total Number of Units, Shares of Class A and B Common Stock Outstanding*
No Registration Default	1,738,588	None	11,590,588	15.0	%
First 30 Day Period after Registration Default	1,603,814	134,774	11,455,814	14.0	%
Second 30 Day Period after Registration Default	1,472,138	131,676	11,324,138	13.0	%
Third 30 Day Period after Registration Default	1,343,455	128,683	11,195,455	12.0	%
Fourth 30 Day Period after Registration Default	1,217,663	125,792	11,069,663	11.0	%
Fifth 30 Day Period after Registration Default	1,094,667	122,996	10,946,667	10.0	%
Total:		643,921

*Excludes 174,000 Units issued to the Initial Purchasers as compensation pursuant to the Purchase Agreement.

Exhibit A

Form of Lock-Up Agreement

[Date]

Paragon Shipping Inc.

Voula Center

102-104, V. Parlou Str.

GR 16673, Voula

Greece

Ladies and Gentlemen:

The undersigned wishes to benefit from the terms of that certain Registration Rights Agreement (the “Registration Rights Agreement”), dated as of November 21, 2006, by and among Paragon Shipping Inc., a company formed under the laws of the Republic of the Marshall Islands (the “Company”), Innovation Holdings S.A., Cantor Fitzgerald & Co., CRT Capital Group LLC and Oppenheimer & Co. Inc., with respect to the units, consisting of one share of Class A Common Stock (the “Class A Common Stock”) of the Company and one-fifth of one warrant to purchase Class A Common Stock. The undersigned also understands that the Registration Rights Agreement contemplates that the Company will use its commercially reasonable efforts to effect an underwritten initial public offering (“IPO”) of its Class A Common Stock on Form F-1 (or other appropriate form) (the “IPO Registration Statement”) to be filed with the Securities and Exchange Commission.

In order to benefit from the terms of the Registration Rights Agreement and facilitate the IPO, the undersigned hereby irrevocably agrees that it will not, directly or indirectly, offer, sell, contract to sell, transfer the economic risk of ownership in, grant an option to purchase, make any short sale of, pledge or otherwise dispose (a “Disposition”) of any shares of Class A Common Stock, options or warrants to acquire any shares of Class A Common Stock, or any securities convertible into, exchangeable or exercisable for, or any other rights to purchase or acquire, any shares of Class A Common Stock, including options, warrants, securities and rights held as of the date hereof or acquired after the date hereof (collectively, the “Securities”), without the prior written consent of the Company, for a period beginning on the date thirty (30) days prior to the date of the final prospectus relating to the IPO, such date to be provided to the undersigned by the Company at the address set forth on the books and records for the Transfer Agent and Registrar for the Class A Common Stock, and ending sixty (60) days thereafter (the “Lock-Up Period”). The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of Securities even if such Securities would be disposed of by someone other than the undersigned.

The foregoing paragraph shall not apply to Dispositions by the undersigned (i) to any donee who receives such Securities as a bona fide gift and who has executed a lock-up agreement substantially in the form of this letter, (ii) to any affiliate of the undersigned who has executed a lock-up agreement substantially in the form of this letter, (iii) to any person or entity with the prior written consent of the Company or (iv) under the IPO Registration Statement in connection with the “piggyback rights” set forth in the Registration Rights Agreement.

Notwithstanding anything to the contrary set forth herein, if the undersigned is an individual, he or she may transfer any Securities either during his or her lifetime or on death by will or intestacy to his or her immediate family or to a trust, the beneficiaries of which are exclusively the undersigned and/or a member or members of his or her immediate family; provided, however, that, prior to any such transfer, each transferee shall execute an agreement, satisfactory to the Company, pursuant to which each transferee shall agree to receive and hold such Securities subject to the provisions hereof. For the purposes of this paragraph, “immediate family” shall mean the spouse, lineal descendant, father, mother, brother or sister of the transferor. In addition, if the undersigned is an entity, the entity may transfer any Securities to any affiliate of such entity; provided, however, that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such Securities subject to the provisions of this Agreement and there shall be no further transfer of such Securities except in accordance with this Agreement, and provided further that any such transfer shall not involve a disposition for value.

If (i) the Company issues an earnings release or material news, or a material event relating to the Company occurs, during the last 17 days of the Lock-Up Period, or (ii) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this Agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless the Company waives, in writing, such extension.

The undersigned hereby acknowledges that the Company will provide written notice of any event that would result in an extension of the Lock-Up Period pursuant to the previous paragraph to the undersigned and agrees that any such notice properly delivered to the address of the undersigned set forth in the register for the Class A Common Stock maintained by the Transfer Agent and Registrar for the Class A Common stock will be deemed to have given to, and received by, the undersigned. The undersigned hereby further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this Agreement during the period from the first day of the Lock-up Period to and including the 34th day following the expiration of the initial Lock-Up Period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as such may have been extended pursuant to the previous paragraph) has expired.

Whether or not the IPO actually occurs depends on a number of factors, including market conditions. Any offering will only be made pursuant to an underwriting agreement, the terms of which are subject to negotiation between the underwriters for the IPO and the Company.

If the Company notifies you in writing that (i) it does not intend to proceed with the IPO, or (ii) the IPO Registration Statement is withdrawn, this Agreement shall be terminated and the undersigned shall be released from the undersigned’s obligations hereunder.

The undersigned understands that the Company is relying upon this Lock-Up Agreement in effecting the exchange offer contemplated by the Registration Rights Agreement and pursuing the IPO. The undersigned further understands that the agreements of the undersigned are irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns. The undersigned agrees and consents to the entry of stop transfer instructions with the Company’s Transfer Agent and Registrar against the transfer of any Securities held by the undersigned except in compliance with this Agreement.

	Very truly yours,

	By:
		Name:
		Title:

EX-10.4 11 a2178205zex-10_4.htm EXHIBIT 10.4

Exhibit 10.4

INITIAL PURCHASER

REGISTRATION RIGHTS AGREEMENT

dated as of November 21, 2006

PARAGON SHIPPING INC.

TABLE OF CONTENTS

			Page
ARTICLE I		DEMAND REGISTRATION	1

	1.1	Requests for Registration	1

	1.2	Number of Demand Registrations; Expenses	2

	1.3	Effective Registration Statement	2

	1.4	Priority on Demand Registrations	2

	1.5	Selection of Underwriters	3

	1.6	Revocation of Request for Demand Registration	3

ARTICLE II		PIGGY-BACK REGISTRATIONS	3

	2.1	Right to Piggy-back	3

	2.2	Piggy-back Expenses	4

	2.3	Priority on Company Registrations	4

	2.4	Priority on Securityholder Registrations	4

ARTICLE III		REGISTRATION PROCEDURES	4

ARTICLE IV		REGISTRATION EXPENSES	8

	4.1	Registration Expenses	8

	4.2	Counsel	8

	4.3	Underwriting Discounts and Commissions	9

ARTICLE V		INDEMNIFICATION	9

	5.1	Indemnification by the Company	9

	5.2	Indemnification by Holders	10

	5.3	Conduct of Indemnification Proceedings	10

	5.4	Indemnity in Underwriting Agreement	11

	5.5	Contribution	11

ARTICLE VI		TRANSFER RESTRICTIONS	12

ARTICLE VII		ADDITIONAL REGISTRATION RIGHTS	13

ARTICLE VIII		DEFINITIONS	13

ARTICLE IX		MISCELLANEOUS	15

	9.1	Amendments and Waivers	15

	9.2	Successors and Assigns	15

	9.3	Remedies	15

	9.4	Notices	16

	9.5	Effective Date	16

	9.6	Headings	16

	9.7	Gender	16

	9.8	Invalid Provisions	17

	9.9	Controlling Law	17

	9.10	Counterparts	17

	9.11	Entire Agreement	17

Schedule A — List of Initial Purchasers

REGISTRATION RIGHTS AGREEMENT, dated as of November 21, 2006, by and among Paragon Shipping Inc., a Marshall Islands corporation (the “Company”), and the Initial Purchasers as listed on Schedule A hereto.

RECITALS

WHEREAS, pursuant to the Purchase Agreement, dated November 15, 2006 (the “Purchase Agreement”), by and among the Company and the Initial Purchasers, the Company is issuing to the Initial Purchasers Units (the “Units”) consisting of one share of Class A Common Stock and one-fifth of one Warrant of the Company as compensation for their services;

WHEREAS, in connection with the Purchase Agreement, the Company has agreed to provide the Initial Purchasers with the registration rights set forth in this Agreement; and

WHEREAS, this Agreement, with respect to each Holder, shall be effective and enforceable against such Holder as of the Effective Date.

NOW, THEREFORE, the parties hereto hereby agree as follows:

ARTICLE I
DEMAND REGISTRATION

1.1 Requests for Registration. At any time later than 180 days after the Closing Date, any of the Holders may request in writing registration under the Securities Act of all or part of their Registrable Securities on Form F-1 or any similar long-form Registration Statement (a “Long-Form Registration”); or (ii) on Form F-3 or any similar short form Registration Statement if the Company qualifies to use such short form (a “Short-Form Registration”). The Company shall have the right to delay the registration of the Registrable Securities for no more than four months from the date of the receipt of the request in writing if (a) an investment banking firm of recognized national standing shall advise the Company and any Holder that effecting the registration would materially and adversely affect an offering of securities of the Company which had been contemplated and with respect to which a registration statement in good faith was contemplated to be filed within 45 days or would materially and adversely affect any other material transaction which had been anticipated by the Company or (b) the Company is in possession of material non-public information the disclosure of which during the period specified in such notice the Company believes, in good faith after seeking advice of counsel, would be substantially disadvantageous to the Company; provided, however, that the Company shall have such right to delay the registration only once within any 12-month period. Each request in writing for registration under the Securities Act will specify the number of Registrable Securities proposed to be sold and will also specify the intended method of disposition thereof. All registrations requested pursuant to this Section 1.1 are referred to herein as “Demand Registrations.” Within ten days after receipt of any such request for a Demand Registration, the Company will give written notice of such request to all other holders of

Registrable Securities. As soon as practicable thereafter, the Company will use its best efforts to effect the registration under the Securities Act of all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice, subject to the provisions of Section 1.4.

1.2 Number of Demand Registrations; Expenses.

(a) Subject to Section 1.3, the Company shall have no obligation to effect more than one (1) Long-Form Registration at the request of the Holders; provided, however, that in the event that the Company does not qualify for use of a Short-Form Registration after the filing of such Long-Form Registration, the Holders shall have the right to request that the Company effect one (1) additional Long-Form Registration in each 12 month period until the Company shall so qualify for use of a Short-Form Registration. In addition to the Long-Form Registrations, the Holders will each be entitled to request one (1) Short-Form Registration in any 12 month period.

(b) The Company will pay all Registration Expenses in connection with each Demand Registration, including any Registration Statement in connection with any Demand Registration that is not deemed to be effected pursuant to the provisions of Section 1.3 hereof.

(c) At the request of any Holder, the Company shall prepare and file, from time to time, amendments and supplements to each Prospectus included in a Registration Statement filed pursuant hereto or, if necessary, an amendment to such a Registration Statement to reflect any changes in the identities of the selling securityholders, or information relating to the selling securityholders, or in the plan of distribution for any Registrable Securities.

1.3 Effective Registration Statement. A registration demanded pursuant to Section 1.1 of this Agreement shall not be deemed to have been effected (i) unless a Registration Statement with respect thereto has been declared effective by the Commission and the Company has complied in all material respects with its obligations under this Agreement with respect thereto, (ii) if after it has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason and, as a result thereof, the Registrable Securities covered thereby have not been sold, (iii) the Registration Statement does not remain effective for a period of at least nine (9) months beyond the effective date thereof or, with respect to an underwritten offering of Registrable Securities, until 45 days after the commencement of the distribution by the holders of the Registrable Securities included in such Registration Statement or (iv) if after any Registration Statement requested pursuant to Section 1.1 becomes effective the Maximum Offering Size (as defined below) is reduced in accordance with Section 1.4 such that less than 75% of the Registrable Securities of the Holders requested to be included in such registration are included. If a registration requested pursuant to this Article I is deemed not to have been effected as provided in this Section 1.3, then the Company shall continue to be obligated to effect the number of Demand Registrations set forth in Section 1.2(a) without giving effect to such requested registration.

1.4 Priority on Demand Registrations. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their

opinion the number of Registrable Securities and other securities requested to be included exceeds the number of Registrable Securities and other securities which can be sold in such offering within a price range acceptable to the holders of a majority (by number of Registrable Securities) of the Registrable Securities held by the Holders requested to be included in such registration (the “Maximum Offering Size”), the Company will include in such registration, (i) first, the Registrable Securities of the Holders requested to be included in such registration, pro rata among the Holders based upon the number of securities which each Holder proposes to sell, (ii) second, if all Registrable Securities requested to be included in such registration by the Holders are included in such registration, the Registrable Securities of the Company requested to be included in such registration, (iii) third, if all the Registrable Securities of the Company requested to be included in such registration are included in the registration, the Registrable Securities of holders other than the Holders requested to be included in such registration, pro rata, based upon the number of securities which each such securityholder proposes to sell, and (iv) fourth, if all Registrable Securities requested to be included in such registration are included in the registration, other securities requested to be included in such registration.

1.5 Selection of Underwriters.

(a) If pursuant to the written notice referred to in Section 1.1 the Holders elect to sell their Registrable Securities in the form of an underwritten offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders, acting by majority based on the number of Registrable Securities requested to be included in such registration; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

(b) No Holder may participate in an underwritten offering unless such Holder (i) agrees to sell its Registrable Securities on the basis reasonably provided in any underwriting arrangements approved by the Holder’s entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangement.

1.6 Revocation of Request for Demand Registration. A Holder requesting a registration under Section 1.1 may, at any time prior to the filing of the registration statement relating to such registration, revoke such request by providing a written notice to the Company revoking such request, in which case such request, so revoked, shall not be considered a Demand Registration.

ARTICLE II
PIGGY-BACK REGISTRATIONS

2.1 Right to Piggy-back. If the Company proposes to register any of its equity securities under the Securities Act for sale to the public (other than pursuant to a Demand Registration), and the registration form to be used may be used for the registration of Registrable Securities (a “Piggy-back Registration”), the Company will give prompt written notice to each

Holder of its intention to effect such a registration and will include in such registration (and in any underwritten offering related thereto) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 10 days after the receipt of the Company’s notice; provided, however, that the number of Registrable Securities to be sold by the Holders shall be limited to 30% of the total number of securities proposed to be sold pursuant to such Piggy-back Registration. Such requests for inclusion shall specify the number of Registrable Securities intended to be disposed of and the intended method of distribution thereof.

2.2 Piggy-back Expenses. The Registration Expenses of the Holders will be paid by the Company in all Piggy-back Registrations.

2.3 Priority on Company Registrations. If a Piggy-back Registration is an underwritten registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their good faith opinion the number of securities requested to be included in such registration exceeds the largest number of securities which can be sold without having a material adverse effect on such offering, including the price at which such securities can be sold, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the securities requested to be included therein by the holders of the Company’s securities (other than the Holders) and (iii) third, the Registrable Securities requested to be included in such registration. If a reduction in the number of Registrable Securities is required pursuant to the preceding sentence, the Company shall be required to include in the underwriting only that lower number of Registrable Securities, and the Holders who have requested registration shall participate in the underwriting pro rata based upon the number of Registrable Securities requested to be registered by the Holders.

2.4 Priority on Securityholder Registrations. If a Piggy-back Registration is not a Demand Registration pursuant to Article I but is an underwritten secondary registration on behalf of holders of the Company’s securities (other than the Holders), and the managing underwriters advise the Company in writing that in their good faith opinion the number of securities requested to be included in such registration exceeds the largest number of securities which can be sold without having a material adverse effect on such offering, including the price at which such securities can be sold, the Company will include in such registration (i) first, the securities requested to be included therein by the Holders requesting such registration, (ii) second, the securities the Company desires to sell and (ii) third, the Registrable Securities requested to be included in such registration. If a reduction in the number of Registrable Securities is required pursuant to the preceding sentence, the Company shall be required to include in the underwriting only that lower number of Registrable Securities, and the Holders who have requested registration shall participate in the underwriting pro rata based upon the number of Registrable Securities requested to be registered by the Holders.

ARTICLE III
REGISTRATION PROCEDURES

Whenever the Holders have requested that any Registrable Securities be registered as permitted pursuant to this Agreement, the Company will use its best efforts to effect

the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof as quickly as practicable, and pursuant thereto the Company will as expeditiously as possible (or, in the case of clause (1) below, will not):

(a) promptly prepare and file with the Commission a Registration Statement with respect to such Registrable Securities (such Registration Statement to include all information which the Holders requesting registration thereby shall reasonably request) and use its best efforts to cause such Registration Statement to become and remain effective until the completion of the distribution contemplated thereby; provided, however, that as promptly as practicable prior to filing a Registration Statement or Prospectus or any amendments or supplements thereto, the Company will (i) furnish to each Holder copies of such registration statement or prospectus (or amendment or supplement) as proposed to be filed (including, upon the request of a Holder, documents to be incorporated by reference therein) which documents will be subject to the reasonable review and comments of such Holder (and its counsel) during such period, and (ii) notify each Holder covered by such Registration Statement of (x) any request by the Commission to amend such Registration Statement or amend or supplement any Prospectus, or (y) any stop order issued or threatened by the Commission, and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered;

(b) (i) prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement and (ii) comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

(c) furnish to each seller of Registrable Securities, without charge, such number of conformed copies of such Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus and, in each case including all exhibits) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities covered by such Registration Statement;

(d) use its best efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any seller thereof or, in the case of an underwritten public offering, the managing underwriter, shall reasonably request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller, provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this clause (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction;

(e) in the event of an underwritten public offering, furnish to each seller of Registrable Securities a signed copy, addressed to such seller and the underwriters, of an opinion of counsel for the Company dated the effective date of such Registration Statement and dated the date of the closing under the underwriting agreement, stating that such registration statement has become effective under the Securities Act and that (A) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, (B) the registration statement, the related prospectus and each amendment or supplement thereto comply as to form in all material respects with the requirements of the Securities Act (except that such counsel need not express any opinion as to financial statements contained therein) and (C) to such other effects as reasonably may be requested by counsel for the underwriters;

(f) notify each seller of Registrable Securities, at a time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event known to the Company as a result of which the Prospectus included in such Registration Statement, as then in effect, contains an untrue statement of a material fact or omits to state any fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish such seller a reasonable number of copies of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

(g) use its reasonable best efforts to obtain the qualification of all such Registrable Securities for trading on each securities exchange or automated quotation system on which the Registrable Securities are then listed or quoted and, in furtherance thereof, will register the Registrable Securities as a class under Section 12(b) or 12(g), as applicable, of the Exchange Act;

(h) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such Registration Statement;

(i) in the event of an underwritten public offering, use its best efforts to obtain a “comfort” letter, dated the effective date of such Registration Statement and dated the date of the closing under the underwriting agreement, signed by the independent public accountants who have certified the Company’s financial statements, addressed to each seller, and to the underwriters, if any, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five (5) Business

Days prior to the date of such letter) with respect to such registration as such underwriters reasonably may request;

(j) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make available to its securityholders, in each case as soon as practicable, an earning statement covering a period of at least twelve months, beginning with the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of the Securities Act;

(k) promptly notify the Holders of (i) the issuance of any stop order by the Commission or the issuance by any state securities commission or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Securities under state securities or “blue sky” laws, or the initiation or threatening of any proceeding for such purpose, or (ii) any request by the Commission for amendments or post-effective amendments to the registration statement or supplements to the prospectus or for additional information; and use every reasonable effort to obtain the lifting at the earliest possible time of any stop order suspending the effectiveness of any Registration Statement or of any such other order;

(1) at any time file or make any amendment to a Registration Statement, or any amendment of or supplement to a Prospectus (including amendments of the documents incorporated by reference into the Prospectus), of which each seller of Registrable Securities or the managing underwriters shall not have previously been advised and furnished a copy or to which the sellers of Registrable Securities, the managing underwriters, or counsel for such sellers or for the underwriters shall reasonably object;

(m) during the period when the Prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the Commission pursuant to Section 13 (a), 13(c), 14 or 15 (d) of the Exchange Act;

(n) make available for inspection by any Holder, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any such Holder or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and shall use its reasonable best efforts to cause (i) the Company’s officers, directors and employees to supply all information reasonably requested by any Inspectors and (ii) in the event of an underwritten public offering, the senior management of the Company and its subsidiaries to participate in any “road show” presentations to investors, in each case in connection with such registration statement. Each such Holder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates unless and until such information is made generally available to the public. Each such Holder further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed

confidential; provided, that the Company’s obligation to make the Records available to any underwriter shall be conditioned on comparable confidentiality undertakings by such underwriter; and

(o) with a view to making available to the Holders the benefits of certain rules and regulations of the Commission which permit the sale of Registrable Securities to the public without registration, the Company agrees to (i) make and keep public information available as those terms are understood and defined in Rule 144 promulgated under the Securities Act (“Rule 144”)(including paragraph (c)(2) of such Rule), (ii) file with the Commission in a timely manner reports and other documents, if any, required of the Company under the Securities Act and the Exchange Act and (iii) furnish to the Holders forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Securities Act and the Exchange Act (if applicable), a copy of the most recent annual or quarterly report of the Company filed with the Commission, if any, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Holders may reasonably request in availing themselves of any rule or regulation of the Commission allowing the Holders to sell securities without registration.

ARTICLE IV
REGISTRATION EXPENSES

4.1 Registration Expenses. All expenses (the “Registration Expenses”) incident to the Company’s performance of or compliance with this Agreement (other than any underwriting discounts and commissions) will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees (including, without limitation, fees and expenses (x) with respect to filings required to be made with the National Association of Securities Dealers, Inc. and (y) with the Commission and otherwise relating to compliance with federal and state securities laws ), (ii) printing expenses (including, without limitation, expenses of printing any Registration Statement, Prospectus and any supplement or amendment thereto and certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company), (iii) duplication expenses relating to copies of any Registration Statement or Prospectus or any supplement or amendment thereto delivered to any Holders hereunder, (iv) fees and disbursements of counsel for the Company in connection with a Registration Statement (subject to Section 4.2), (v) reasonable fees and disbursements of the transfer agent and registrar for the Registrable Securities, (vi) Securities Act liability insurance obtained by the Company in its sole discretion and (vii) fees and disbursements of all independent certified public accountants (including the expenses of any annual audit and “cold comfort” letters required by or incident to such performance). The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties) and the fees and expenses of any Person, including special experts, retained by the Company.

4.2 Counsel. In connection with any Registration Statement required by this Agreement regardless of whether a Registration Statement becomes effective, the Company will reimburse the Holders who are reselling Registrable Securities for the reasonable fees and

disbursements of not more than one counsel, which firm shall be chosen by the a majority of the Holders for whose benefit such Registration Statement is being prepared.

4.3 Underwriting Discounts and Commissions. The Company shall have no obligation to pay any underwriting discounts or commissions attributable to the sale of Registered Securities, which expenses will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered by each seller.

ARTICLE V
INDEMNIFICATION

5.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder covered by any Registration Statement referred to herein, each underwriter for any such Holder, the general partners, limited partners, stockholders, members, officers, directors, managers, employees and agents of such Holder or underwriter, and each Person, if any, who controls such Holder or underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the general partners, limited partners, stockholders, members, officers, directors, managers, employees and agents of such controlling Person (collectively, the “Controlling Person”), from and against any loss, claim, damage, liability, reasonable attorneys’ fees, cost or expense and reasonable costs and expenses of investigating and defending any such claim and any action in respect thereof (collectively, the “Damages”) to which such Holder or underwriter, its general partners, limited partners, stockholders, members, officers, directors, managers, employees and agents, and any such Controlling Person may become subject under the Securities Act or otherwise, insofar as such Damages (or proceedings in respect thereof) arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus or any preliminary Prospectus, or arises out of, or are based upon, any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; provided, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Holder or underwriter expressly for use in the preparation of any Registration Statement (or any amendment or supplement thereto), including all documents incorporated therein by reference, or in any preliminary Prospectus or Prospectus (or any amendment or supplement thereto); and provided, further, that the Company will not be liable to any Holder or underwriter under the indemnity agreement in this Section 5.1, with respect to any preliminary Prospectus or the final Prospectus or the final Prospectus as amended or supplemented, as the case may be, to the extent that any such loss, liability, claim, damage or expense of such controlling Person, Holder or underwriter results from the fact that such Holder or underwriter sold Registrable Securities to a Person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the final Prospectus or of the final Prospectus as then amended or supplemented,

whichever is most recent, if the Company has previously and timely furnished copies thereof to such Holder or underwriter. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder, underwriter or any such director, officer, general partner, or other controlling person and shall survive the transfer of such securities by such seller.

5.2 Indemnification by Holders. In connection with any Registration Statement in which a Holder is participating, each such selling Holder agrees to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 5.1 of this Agreement), to the extent permitted by law, the Company, its officers, directors, managers, employees and agents and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the general partners, limited partners, stockholders, members, officers, directors, managers, employees and agents of such controlling Person, with respect to any statement or alleged statement in or omission or alleged omission from such Registration Statement or Prospectus or any amendment or supplement thereto, or any preliminary Prospectus, if such statement or alleged statement or omission or alleged omission was made about such Holder in reliance upon or in conformity with written information furnished to the Company by or on behalf of such Holder, specifically stating that it is for use in the preparation of such Registration Statement or Prospectus or any amendment or supplement thereto, or any preliminary Prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of its directors, officers or controlling Persons and shall survive the transfer of such securities by such Holder. In no event shall any Holder be liable for indemnity which is greater than the net proceeds received by such Holder from the sale involving the Registration Statement giving rise to such indemnity hereunder.

5.3 Conduct of Indemnification Proceedings. Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding involving a claim referred to in Section 5.1 or Section 5.2 of this Agreement, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 5.1 or Section 5.2 of this Agreement except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified, to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, in which case the indemnifying party shall not be liable for the fees and expenses of (i) more than one counsel for the Holders (which counsel shall be reasonably satisfactory to the Company) or (ii) more than one counsel for the Company in connection with any one action or separate but similar or related

actions. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of, more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, which counsel shall be selected by the Holders, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of additional counsel or counsels. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim. The indemnifying party will not, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not such indemnified party or any Person who controls such indemnified party is a party to such claim, action, suit or proceeding), unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability arising out of such claim, action, suit or proceeding and does not attribute any fault to the indemnifying party. Whether or not the defense of any claim or action is assumed by the indemnifying party, such indemnifying party will not be subject to any liability for any settlement made without its consent, which consent will not be unreasonably withheld.

5.4 Indemnity in Underwriting Agreement. The Company and each Holder requesting registration shall provide for the foregoing indemnity (with appropriate modifications) in any underwriting agreement with respect to any required registration or other qualification of securities under any federal or state law or regulation of any governmental authority other than the Securities Act.

5.5 Contribution. If the indemnification provided for in Sections 5.1 and 5.2 of this Agreement are unavailable or insufficient to hold harmless an indemnified party under such Sections, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in Section 5.1 or Section 5.2 of this Agreement in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand, and the indemnified party on the other. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statements or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 5.5 were to be determined by pro rata or per capita allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the second sentence of this Section 5.5. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this Section 5.5 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim (which shall be limited as provided in Section 5.3 of this Agreement if the indemnifying party has assumed

the defense of any such action in accordance with the provisions thereof) which is the subject of this Section 5.5. Promptly after receipt by an indemnified party under this Section 5.5 of notice of the commencement of any action against such party in respect of which a claim for contribution may be made against an indemnifying party under this Section 5.5, such indemnified party shall notify the indemnifying party in writing of the commencement thereof if the notice specified in Section 5.3 of this Agreement has not been given with respect to such action; provided, that the omission to so notify the indemnifying party shall not relieve the indemnifying party from any liability which it may otherwise have to any indemnified party under this Section 5.5, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. The Company and each Holder of Registrable Securities agrees with each other and the underwriters of the Registrable Securities, if requested by such underwriters, that (i) the underwriters’ portion of such contribution shall not exceed the underwriting discount and (ii) that the amount of such contribution shall not exceed an amount equal to the net proceeds actually received by such indemnifying party from the sale of Registrable Securities in the offering to which the losses, liabilities, claims, damages or expenses of the indemnified parties relate. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

ARTICLE VI
TRANSFER RESTRICTIONS

Each Initial Purchaser of the Registrable Securities, by its acceptance thereof, agrees that it will not sell, transfer, assign, pledge, hypothecate or otherwise dispose of the Registrable Securities for a period of 180 days following the Effective Date; provided, however, that such Initial Purchaser may transfer or assign the Registrable Security in whole or in part to (a) within the initial 180-day period following the Effective Date, (i) any Initial Purchaser, or (ii) a bona fide officer or partner of any such Initial Purchaser and (b) following the expiration of the initial 180-day period, to (i) any Initial Purchaser or a bona fide officer or partner thereof, or (ii) upon prior written notice to the Company, (x) a subsidiary or affiliate of an Initial Purchaser, or (y) so long as not transferred in violation of applicable federal or state securities laws or rules of the National Association of Securities Dealers, Inc., any other third-party; provided, that, in each case, such entity, subsidiary, affiliate or third party, as the case may be, shall agree to be bound by the terms of this Section 6. Notwithstanding anything in this paragraph to the contrary, on and after the first anniversary of the Effective Date, transfers to others may be made subject to compliance with the following paragraph.

The Registrable Securities shall not be transferred by any Holder unless and until (i) the Company has received the opinion of counsel for such Holder that the Registrable Securities may be transferred pursuant to an exemption from registration under the Securities Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of the Company, or (ii) a Registration Statement relating to such securities has been filed by the

Company and declared effective by the Commission and compliance with applicable state securities law has been established to the reasonable satisfaction of the Company.

ARTICLE VII
ADDITIONAL REGISTRATION RIGHTS

In addition to this Agreement, the Holders shall also have the registration rights provided for in that other certain Registration Rights Agreement, dated November 21, 2006, by and among the Company, Innovation Holdings S.A. and the Initial Purchasers, as such agreement may be amended, modified or supplemented from time to time.

ARTICLE VIII
DEFINITIONS

As used in this Agreement, the following defined terms shall have the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person that controls, is controlled by or is under common control with such Person. For the purposes of this definition, “control” (including, with its correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of securities, by contract or otherwise.

“Business Day” means a day other than Saturday, Sunday or any day on which banks located in the City of New York are authorized or obligated to close.

“Closing Date” means the date hereof.

“Commission” means the U.S. Securities and Exchange Commission.

“Class A Common Stock” means the Class A Common Stock, $.001 par value per share, of the Company.

“Company” has the meaning ascribed to it in the forepart of this Agreement.

“Controlling Person” has the meaning ascribed to it in Section 5.1.

“Damages” has the meaning ascribed to it in Section 5.1.

“Demand Registration” has the meaning ascribed to it in Section 1.1.

“Effective Date” means, with respect to any Holder, the date on which such Holder first owns Registrable Securities.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect, and any reference to a particular section thereof shall include a reference to the equivalent section, if any, of any such similar federal statute, and the rules and regulations thereunder.

“Holder” means an Initial Purchaser and each person to whom an Initial Purchaser transfers Registrable Securities.

“Long-Form Registration” has the meaning ascribed to it in Section 1.1.

“Purchase Agreement” has the meaning ascribed to it in the forepart of this Agreement.

“Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, limited liability partnership, proprietorship, other business organization, trust, union, association or governmental or regulatory authority.

“Piggy-back Registration” has the meaning ascribed to it in Section 2.1.

“Initial Purchasers” means those parties listed on Schedule A attached hereto and any of their respective permitted assignees or transferees.

“Prospectus” means the prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such prospectus.

“Registrable Securities” means (i) any Units, Class A Common Stock, Warrants or Warrant Shares owned or issuable to any Holder and (ii) any securities issued by the Company subsequent to the date hereof and deemed to be Registrable Securities by the Board. As to any particular Registrable Securities, such securities will cease to be Registrable Securities when they have (x) been effectively registered under the Securities Act and disposed of in accordance with the Registration Statement covering them or (y) been transferred pursuant to Rule 144 (or any similar rule then in force) under the Securities Act or been otherwise transferred and new certificates for them not bearing a restrictive Securities Act legend have been delivered by the Company and can be sold without complying with the registration requirements of the Securities Act. References to “Registrable Securities” herein include any other securities issued as a dividend or other distribution with respect to Registrable Securities or as a result of a subdivision, combination, reorganization or reclassification of any Registrable Securities.

“Registration Expenses” has the meaning ascribed to it in Section 4.1.

“Registration Statement” means any registration statement of the Company filed pursuant to the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such

Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute then in effect, and any reference to a particular section thereof shall include a reference to a comparable section, if any, of any such similar federal statute, and the rules and regulations thereunder.

“Short-Form Registration” has the meaning ascribed to it in Section 1.1.

“Unit” has the meaning ascribed to it in the forepart of this Agreement.

“Warrant” shall mean those warrants issued by the Company to purchase shares of Class A Common Stock at the price of $10.00 per share.

“Warrant Shares” means the Class A Common Stock issuable upon exercise of the Warrants, the number of which is subject to adjustment from time to time.

ARTICLE IX
MISCELLANEOUS

9.1 Amendments and Waivers. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement will be effective against the Company or any Initial Purchaser, unless such modification, amendment or waiver is approved in writing by the Company, on the one hand, and the Initial Purchasers, on the other hand. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

9.2 Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of Initial Purchasers are also for the benefit of, and enforceable by, any subsequent holder of the Registrable Securities of such Initial Purchaser, except to the extent reserved to or by the transferor in connection with any such transfer. Notwithstanding anything contained herein to the contrary, no party may transfer its rights hereunder to any Person except to an Affiliate of such Initial Purchaser.

9.3 Remedies. The parties hereto acknowledge and agree that in the event of any breach of this Agreement, the parties would be irreparably harmed and could not be made whole by monetary damages. Each party hereto accordingly agrees (i) not to assert by way of defense or otherwise that a remedy at law would be adequate and (ii) that the parties agree, in addition to any other remedy to which they may be entitled, that the remedy of specific performance of this Agreement is appropriate in any action in court.

9.4 Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally against written receipt or by facsimile transmission or mailed by prepaid first class mail, return receipt requested or mailed by overnight courier prepaid to the parties at the following addresses or facsimile numbers:

(i) If to the Company:

Paragon Shipping Inc.
102-104 V. Pavlou Street
Voula 16673
Athens, Greece
Attention: Chief Executive Officer

with a copy to:

Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
Attention: Gary J. Wolfe

And a copy to each Holder.

(ii) If to any Holder, to the last address for such Person set forth in the records of the Company.

All such notices, requests and other communications will (x) if delivered personally to the address as provided in this Section 9.4, be deemed given upon delivery, and (y) if delivered by mail in the manner described above to the address as provided in this Section 9.4 upon the earlier of the third Business Day following mailing or upon receipt and (z) if delivered by overnight courier to the address as provided in this Section 9.4, be deemed given on the earlier of the first business day following the date sent by such overnight courier or upon receipt, (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice is to be delivered pursuant to this Section 9.4). Any party from time to time may change its address or other information for the purpose of notices to that party by giving notice specifying such change to the other parties hereto.

9.5 Effective Date. This Agreement, with respect to each Holder, shall be effective and enforceable against such Holder as of the Effective Date.

9.6 Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

9.7 Gender. Whenever the pronouns “he” or “his” are used herein they shall also be deemed to mean “she” or “hers” or “it” or “its” whenever applicable. Words in the

singular shall be read and construed as though in the plural and words in the plural shall be construed as though in the singular in all cases where they would so apply.

9.8 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

9.9 Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of New York. Each of the parties irrevocably submits to the exclusive jurisdiction of the state and federal courts of competent jurisdiction sitting in the City of New York and waives any objection to venue in said courts.

9.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

9.11 Entire Agreement. This Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement among the parties hereto with respect to the subject matter hereof. The Company has not, other than pursuant to this Agreement, granted registration rights (whether in the nature of piggy-back rights or otherwise) to any holder of any of the securities of the Company.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

			PARAGON SHIPPING INC.


			By:
				Name:
				Title:


			INITIAL PURCHASERS

			CANTOR FITZGERALD & CO.


			By:
				Name:
				Title:


			CRT CAPITAL GROUP LLC


			By:
				Name:
				Title:


			OPPENHEIMER & CO. INC.


			By:
				Name:
				Title:

[Signature Page to Initial Purchaser Registration Rights Agreement]

SCHEDULE A

Initial Purchasers

1.) Cantor Fitzgerald & Co.

2.) CRT Capital Group LLC

3.) Oppenheimer & Co. Inc.

EX-10.5 12 a2178205zex-10_5.htm EXHIBIT 10.5

Exhibit 10.5

REGISTRATION RIGHTS AGREEMENT

by and among

PARAGON SHIPPING INC.

and

INNOVATION HOLDINGS S.A.

Dated as of November 21, 2006

REGISTRATION RIGHTS AGREEMENT dated as of November 21, 2006, by and between PARAGON SHIPPING INC., a company formed under the laws of the Republic of the Marshall Islands (the “Company”, and INNOVATIONS HOLDINGS S.A., a company formed under the laws of the Republic of Panama (the “Shareholder”).

In consideration of the mutual covenants and agreements herein contained and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

1. Certain Definitions.

In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings:

1.1 “Affiliate” of any Person means any other Person which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) as used with respect to any Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

1.2 “Agreement” means this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to this Registration Rights Agreement as the same may be in effect at the time such reference becomes operative.

1.3 “Class A Common Shares” means the Class A common shares, par value $0.001 per common share, of the Company and any other common shares into which such Class A common shares are converted pursuant to a recapitalization or reorganization.

1.4 “Company” has the meaning set forth in the introductory paragraph.

1.5 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

1.6 “Exchange Offer” means the our offer to exchange shares of Class A Common Stock and warrants to purchase shares of Class A Common Stock registered under the Securities Act for the shares of Class A Common Stock and warrants to purchase shares of Class A Common Stock issued to the initial purchasers of the Company’s sale of up to 11,148,400 shares of Class A Common Stock and 2,229,680 warrants to purchase Class A Common Stock pursuant to Rule 144A and Regulation S of the Securities Act.

1.7 “Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

1.8 “Holder” means any holder of record of Registrable Class A Common Shares and any transferees of at least 50% of such Registrable Class A Common Shares from any such Holder. For purposes of this Agreement, the Company may deem and treat the registered

holder of Registrable Class A Common Shares as the Holder and absolute owner thereof, and the Company shall not be affected by any notice to the contrary.

1.9 “Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, Governmental Entity or any other entity.

1.10 “Prospectus” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Class A Common Shares covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

1.11 “Registrable Class A Common Shares” means the Class A Common Shares held by the Shareholder or affiliates of the Shareholder as of the date the Company is eligible to file a registration statement on Form F-3 (or any successor form), together with the one fifth of one warrant to purchase shares of Class A Common Stock, provided however, Registrable Class A Common Shares shall not include any securities sold by a Person to the public either pursuant to a Registration Statement or Rule 144.

1.12 “Registration Expenses” has the meaning set forth in Section 4(a) hereof.

1.13 “Registration Statement” means any registration statement of the Company which covers any of the Registrable Class A Common Shares pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.

1.14 “SEC” means the United States Securities and Exchange Commission.

1.15 “Securities Act” means the Securities Act of 1933, as amended.

1.16 “Shareholder” has the meaning set forth in the introductory paragraph.

1.17 “Suspension Notice” has the meaning set forth in Section 3(f) hereof.

1.18 “Underwritten registration or underwritten offering” means a registration in which securities of the Company are sold to underwriters for reoffering to the public.

2. Shelf Registration.

(a) (i) Upon the later of (i) 12 months from the completion of the Exchange Offer and (ii) such time as the Company is able to use Form F-3 under the Securities Act (or any successor form) for sales of Registrable Class A Common Shares by a Holder, at the request of Holders of the lesser of (x) 5% of the Registrable Class A Common Shares (without reduction for Class A Common Shares that cease to be Registrable Class A Common Shares) and (y) Registrable Class A Common Shares having an aggregate market value of at least $10 million, the Company shall use its commercially reasonable efforts to effect, as expeditiously as possible, the registration under the Securities Act of any number of Registrable Class A Common Shares for which it receives requests in accordance with this Section 2(a) (the “Shelf Registration”). The Company shall use its commercially reasonable best efforts to cause such

Registration Statement to become effective as promptly as practicable and maintain the effectiveness of such Registration Statement (subject to the terms and conditions herein) for a period ending on the earlier of (i) two years following the date on which such Registration Statement first becomes effective (but one year if the Company is not able to use Form F-3 under the Securities Act (or any successor form)), and (ii) the date on which all Registrable Class A Common Shares covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed or have become freely tradeable pursuant to Rule 144 without regard to volume.

(b) The Shelf Registration Statement pursuant to this Section 2 shall to the extent possible under applicable law, be effected to permit sales on a continuous basis pursuant to Rule 415 under the Securities Act. Any takedown under the Shelf Registration pursuant to this Section 2 may or may not be underwritten. The Company shall be entitled to effect the Shelf Registration on any available form under the Securities Act.

(c) In the event of a request for a Shelf Registration pursuant to Section 2(a), the Company shall give written notice of the proposed filing of the Registration Statement in connection therewith to all Holders of Registrable Class A Common Shares offering to each such Holder the opportunity to have any or all of the Registrable Class A Common Shares held by such Holder included in such registration statement. Each Holder of Registrable Class A Common Shares desiring to have its Registrable Class A Common Shares registered under this Section 2(c) shall so advise the Company in writing within 15 days after the date of such notice from the Company (which request shall set forth the amount of Registrable Class A Common Shares for which registration is requested), and the Company shall include in such Registration Statement all such Registrable Class A Common Shares so requested to be included therein.

(d) The number, percentage, fraction or kind of Class A Common Stock referred to in this Section 2 shall be appropriately adjusted for any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution in respect of the Class A Common Stock.

(e) The Company, and any other holder of the Company’s securities who has registration rights, may include its securities in any Shelf Registration effected pursuant to this Section 3.

3. Registration Procedures.

(a) Whenever the Holders request that any Registrable Class A Common Shares be registered pursuant to this Agreement, the Company shall use its commercially reasonable best efforts to effect the registration and the sale of such Registrable Class A Common Shares in accordance with the intended methods of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(i) prepare and file with the SEC a Registration Statement with respect to such Registrable Class A Common Shares and use its commercially reasonable best efforts to cause such Registration Statement to become effective as soon as practicable thereafter; and before filing a Registration Statement or Prospectus or any amendments or supplements thereto, furnish to the Holders of Registrable Class A Common Shares covered by such Registration Statement and the underwriter or underwriters, if any, copies of all such documents proposed to be filed, including documents incorporated by reference in the Prospectus and, if requested by such Holders, the exhibits incorporated by reference, and such Holders shall have the opportunity to object to any information pertaining to such Holders that is contained therein and the Company will make the corrections

reasonably requested by such Holders with respect to such information prior to filing any Registration Statement or amendment thereto or any Prospectus or any supplement thereto;

(ii) prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period of not less than two years or such shorter period as is necessary to complete the distribution of the securities covered by such Registration Statement and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

(iii) furnish to each seller of Registrable Class A Common Shares such number of copies of such Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Class A Common Shares owned by such seller;

(iv) use its commercially reasonable best efforts to register or qualify such Registrable Class A Common Shares under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Class A Common Shares owned by such seller (provided, that the Company will not be required to (1) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph 6(a)(iv), (2) subject itself to taxation in any such jurisdiction, or (3) consent to general service of process in any such jurisdiction);

(v) notify each seller of such Registrable Class A Common Shares, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Class A Common Shares, such Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;

(vi) in the case of an underwritten offering, enter into such customary agreements (including underwriting agreements in customary form with customary indemnification provisions) and take all such other actions as the Holders of a majority of the Registrable Class A Common Shares being sold or the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Class A Common Shares (including, without limitation, making members of senior management of the Company available to participate in, and cause them to cooperate with the underwriters in connection with,

“road-show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Class A Common Shares)) and cause to be delivered to the underwriters and the sellers, if any, opinions of counsel to the Company in customary form, covering such matters as are customarily covered by opinions for an underwritten public offering as the underwriters may request and addressed to the underwriters and the sellers;

(vii) make available, for inspection by any seller of Registrable Class A Common Shares, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such Registration Statement;

(viii) use its commercially reasonable best efforts to cause all such Registrable Class A Common Shares to be listed on each securities exchange on which securities of the same class issued by the Company are then listed;

(ix) if requested, cause to be delivered, immediately prior to the effectiveness of the Registration Statement (and, in the case of an underwritten offering, at the time of delivery of any Registrable Class A Common Shares sold pursuant thereto), letters from the Company’s independent certified public accountants addressed to each selling Holder (unless such selling Holder does not provide to such accountants the appropriate representation letter required by rules governing the accounting profession) and each underwriter, if any, stating that such accountants are independent public accountants within the meaning of the Securities Act and the applicable rules and regulations adopted by the SEC thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent certified public accountants delivered in connection with primary or secondary underwritten public offerings, as the case may be;

(x) make generally available to its stockholders a consolidated earnings statement (which need not be audited) for the 12 months beginning after the effective date of a Registration Statement as soon as reasonably practicable after the end of such period, which earnings statement shall satisfy the requirements of an earning statement under Section 11(a) of the Securities Act; and

(xi) promptly notify each seller of Registrable Class A Common Shares and the underwriter or underwriters, if any:

(A) when the Registration Statement, any pre-effective amendment, the Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective;

(B) of any comments of the SEC or of any written request by the SEC for amendments or supplements to the Registration Statement or Prospectus;

(C) of the notification to the Company by the SEC of its initiation of any proceeding with respect to the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement; and

(D) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Class A Common Shares for sale under the applicable securities or blue sky laws of any jurisdiction.

(b) The Company shall ensure that no Registration Statement (including any amendments or supplements thereto and Prospectuses contained therein) shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading (except, with respect to any Holder, for an untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in reliance on and in conformity with written information furnished to the Company by or on behalf of such Holder specifically for use therein).

(c) The Company shall make available to each Holder whose Registrable Class A Common Shares are included in a Registration Statement (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of each Registration Statement and any amendment thereto, each preliminary Prospectus and Prospectus and each amendment or supplement thereto, each letter written by or on behalf of the Company to the SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), and each item of correspondence from the SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), in each case relating to such Registration Statement (other than any portion thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary Prospectus, and all amendments and supplements thereto and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Class A Common Shares owned by such Holder. The Company will promptly notify each Holder by facsimile of the effectiveness of each Registration Statement or any post-effective amendment. The Company will promptly respond to any and all comments received from the SEC, with a view towards causing each Registration Statement or any amendment thereto to be declared effective by the SEC as soon as practicable and shall file an acceleration request as soon as practicable following the resolution or clearance of all SEC comments or, if applicable, following notification by the SEC that any such Registration Statement or any amendment thereto will not be subject to review.

(d) At all times after the Company has filed a registration statement with the SEC pursuant to the requirements of either the Securities Act or the Exchange Act, the Company shall file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and take such further action as any Holders may reasonably request, all to the extent required to enable such Holders to be eligible to sell Registrable Class A Common Shares pursuant to Rule 144 (or any similar rule then in effect).

(e) the Company may require each seller of Registrable Class A Common Shares as to which any registration is being effected to furnish to the Company any other information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

(f) Each seller of Registrable Class A Common Shares agrees by having its Common Shares treated as Registrable Class A Common Shares hereunder that, upon notice of the happening of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any material fact necessary to make the statements therein not misleading (a “Suspension Notice”), such seller will forthwith discontinue disposition of Registrable Class A Common Shares for a reasonable length of time not to exceed 60 days until such seller is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by Section 6(c) hereof, and, if so directed by the Company, such seller will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such seller’s possession, of the Prospectus covering such Registrable Class A Common Shares current at the time of receipt of such notice; provided, however, that such postponement of sales of Registrable Class A Common Shares by the Holders shall not exceed 90 days in the aggregate in any one year. If the Company shall give any notice to suspend the disposition of Registrable Class A Common Shares pursuant to a Prospectus, the Company shall extend the period of time during which the Company is required to maintain the Registration Statement effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date such seller either is advised by the Company that the use of the Prospectus may be resumed or receives the copies of the supplemented or amended Prospectus contemplated by Section 6(e). In any event, the Company shall not be entitled to deliver more than three (3) Suspension Notices in any one year.

4. Registration Expenses.

(a) All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, listing application fees, printing expenses, transfer agent’s and registrar’s fees, cost of distributing Prospectuses in preliminary and final form as well as any supplements thereto, and fees and disbursements of counsel for the Company and all independent certified public accountants and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”) (but not including any underwriting discounts or commissions attributable to the sale of Registrable Class A Common Shares or fees and expenses of more than one counsel representing the Holders of Registrable Class A Common Shares), shall be borne by the Company. In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which they are to be listed.

(b) The obligation of the Company to bear the expenses described in Section 7(a) and to reimburse the Holders for the expenses described in Section 7(b) shall apply irrespective of whether a registration, once properly demanded, if applicable, becomes effective, is withdrawn or suspended, is converted to another form of registration and irrespective of when any of the foregoing shall occur, provided, however, that Registration Expenses for any Registration Statement withdrawn solely at the request of a Holder of Registrable Class A Common Shares or any supplements or amendments to a Registration Statement or Prospectus resulting from a misstatement furnished to the Company by a Holder shall be borne by such Holder.

5. Indemnification.

(a) The Company shall indemnify, to the fullest extent permitted by law, each Holder, its officers, directors and Affiliates and each Person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in any Registration Statement,

Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation or alleged violation by the Company of the Securities Act, the Exchange Act or applicable “blue sky” laws, except insofar as the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered). In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders.

(b) In connection with any Registration Statement in which a Holder of Registrable Class A Common Shares is participating, each such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, shall indemnify, to the fullest extent permitted by law, the Company, its officers, directors Affiliates, and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such Holder with a sufficient number of copies of the same; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders and the liability of each such Holder shall be in proportion to and limited to the net amount received by such Holder from the sale of Registrable Class A Common Shares pursuant to such Registration Statement.

(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification, provided that the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under this Section 5 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to an indemnified party otherwise than under this Section 5 and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party there may be one or more legal or equitable defenses available to such indemnified party which are in addition to or may conflict with those available to another indemnified party with respect to such claim. Failure to give prompt written notice shall not release the indemnifying party from its obligations hereunder.

(d) The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.

(e) If the indemnification provided for in or pursuant to this Section 5 is due in accordance with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified Person as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which result in such losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations. The relative fault of the indemnifying party on the one hand and of the indemnified Person on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, and by such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. In no event shall the liability of any selling Holder be greater in amount than the amount of net proceeds received by such Holder upon such sale or the amount for which such indemnifying party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 5(a) or 5(b) hereof had been available under the circumstances.

6. Participation in Underwritten Registrations.

No Holder may participate in any registration hereunder which is underwritten unless such Holder (a) agrees to sell such Holder’s securities on the basis provided in any underwriting arrangements approved by the Holder or Holders entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

7. Rule 144.

The Company covenants that following the effectiveness of the Company’s registration statement relating to the Exchange Offer (or such earlier time as the Company becomes subject to the reporting requirements of the Exchange Act) it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request to make available adequate current public information with respect to the Company meeting the current public information requirements of Rule 144(c) under the Securities Act, to the extent required to enable such Holder to sell Registrable Class A Common Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such information and requirements.

8. Miscellaneous.

(a) Notices. All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by registered or certified mail or by facsimile transmission (with immediate telephone confirmation thereafter):

If to the Company:			If to the Stockholder:
		Paragon Shipping Inc.		Innovation Holdings S.A.
		Voula Center		c/o Mr. Michael Bodouroglou
		102-104 V. Pavlou Street		c/o Paragon Shipping Inc.
		Voula 16673,		Voula Center
		Athens, Greece		102-104 V. Pavlou Street
		Facsimile No: +30 210 8995085		Voula 16673,
		Athens, Greece
		Facsimile No: +30 210 8995085

with a copy to:
	Seward & Kissel LLP
	One Battery Park Plaza
	New York, New York 10004
	Attention: Gary J. Wolfe, Esq.
	Facsimile No.: (212) 480-8421

or if to another Holder, to the addresses set forth on the counterpart signature pages of this Agreement signed by such Holders.

If to a transferee Holder, to the address of such Holder set forth in the transfer documentation provided to the Company or at such other address as such party may specify by written notice to the others, and each such notice, request, consent and other communication shall for all purposes of the Agreement be treated as being effective or having been given when delivered personally or upon receipt of facsimile confirmation if transmitted by facsimile, or, if sent by mail, at the time of its receipt.

(b) No Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

(c) Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, it being understood that subsequent Holders of the Registrable Class A Common Shares are intended third party beneficiaries of this Agreement.

(d) Governing Law. The laws of the State of New York shall govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties, without regard to the principles of conflicts of laws thereof.

(e) Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in any federal or state court located in the County and State of New York, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate

courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 10(a) shall be deemed effective service of process on such party.

(f) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(g) Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts (including by facsimile) and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

(h) Entire Agreement. This Agreement contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes and replaces all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof.

(i) Captions. The headings and other captions in this Agreement are for convenience and reference only and shall not be used in interpreting, construing or enforcing any provision of this Agreement.

(j) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

(k) Amendments. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the prior written consent of the Holders of a majority of the Registrable Class A Common Shares (as constituted on the date hereof); provided, however, that without a Holder’s written consent no such amendment, modification, supplement or waiver shall affect adversely such Holder’s rights hereunder in a discriminatory manner inconsistent with its adverse effects on rights of other Holders hereunder (other than as reflected by the different number of Class A common shares held by such Holder); provided, further, that the consent or agreement of the Company shall be required with regard to any termination, amendment, modification or supplement of, or waivers or consents to departures from, the terms hereof, which affect the Company’s obligations hereunder. This Agreement cannot be changed, modified, discharged or terminated by oral agreement.

(1) Aggregation of Common Shares. All Registrable Class A Common Shares held by or acquired by any Affiliated Persons will be aggregated together for the purpose of determining the availability of any rights under this Agreement.

(m) Equitable Relief. Without limiting the remedies available, the parties hereto acknowledge that any failure by the Company to comply with its obligations under this Agreement will result in material irreparable injury to the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, any Holder shall have the right to obtain such relief as may be required to specifically enforce the Company’s obligations under this Agreement.

[Signature page follows]

IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by each of the parties hereto as of the date first written above.

PARAGON SHIPPING INC.		INNOVATION HOLDINGS S.A.


By:	/s/ [ILLEGIBLE]	By:	/s/ Michael Bodouroglou
Name:	[ILLEGIBLE]	Name:	MICHAEL BODOUROGLOU
Title:	Secretary	Title:	President & Secretary

EX-10.6 13 a2178205zex-10_6.htm EXHIBIT 10.6

Exhibit 10.6

WARRANT AGREEMENT

between

PARAGON SHIPPING INC.

and

COMPUTERSHARE TRUST COMPANY, N.A. and
COMPUTERSHARE, INC.

Dated as of November 21, 2006

Warrants to Purchase Shares of Common Stock

WARRANT AGREEMENT

THIS WARRANT AGREEMENT, dated as of November 21, 2006, is entered into between PARAGON SHIPPING INC., a Marshall Islands corporation (the “Company”), and Computershare, Inc. a Delaware corporation and its fully owned subsidiary Computershare Trust Company, N.A. a federally chartered trust company, having its principal office at 250 Royall Street, Canton, MA 02021 (Collectively (“Warrant Agent”), or individually “Computershare” and the “Trust Company”, respectively), agree as follows:, as warrant agent (the “Warrant Agent”).

RECITALS

A. The Company proposes to issue Warrants, as hereinafter described (the “Warrants”), each to purchase at the Warrant Price (as defined below) one share of Class A Common Stock, par value $.001 per share, of the Company.

B. The Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to act on behalf of the Company, in connection with the issuance of the Warrant Certificates (as defined below) and the other matters provided herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

“Additional Common Stock” shall mean all Common Stock issued or issuable by the Company after the date of this Agreement, other than the Warrant Shares.

“Affiliate” shall mean, as to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control of such Person. For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing. Notwithstanding the foregoing, “Affiliate” shall not include any wholly-owned Subsidiary of the Company.

“Agreement” shall mean this Warrant Agreement, as the same may be amended, modified or supplemented from time to time.

“Approval Date” shall mean the date on which the sale of the number of firm shares stated in the final prospectus related to a Qualified IPO is consummated.

“Beneficial Owner” shall have the meaning given to such term in Section 2.5(b) hereof.

“Book-Entry Warrant Certificate” shall have the meaning given to such term in Section 2.1 hereof.

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which the New York Stock Exchange in New York, New York is not open.

“Capital Stock” of any Person shall mean any and all shares, interests, participations or other equivalents however designated of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such Person.

“Class A Common Stock” shall mean the Class A Common Stock, $0.001 par value per share, of the Company.

“Class B Common Stock” shall mean the Class B Common Stock, $0.001 par value per share, of the Company.

“Common Stock” shall mean (i) the Class A Common Stock, par value U.S. $0.001 per share, of the Company, as constituted on the original issuance of the Warrants, (ii) any Capital Stock into which such Common Stock may thereafter be changed and (iii) any share of the Company of any other class issued to holders of such Common Stock upon any reclassification thereof.

“Company” shall mean the company identified in the preamble hereof and its successors and assigns.

“Company Order” shall mean a written request or order signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer, its President, any Vice President, its Chief Financial Officer and by its Treasurer, any Assistant Treasurer its Secretary or any Assistant Secretary, and delivered to the Warrant Agent.

“Consummation of an Exchange Offer” shall mean the consummation of an offer by the Company to exchange and issue a number of registered Units, registered shares of Class A Common Stock, registered Warrants and, if permitted, registered Warrant Shares (registered pursuant to an effective registration statement filed with the SEC under the Securities Act) equal to number of securities tendered in connection with such exchange and issuance.

“Corporate Agency Office” shall mean an office maintained by the Warrant Agent in the United States of America, where Warrant Certificates may be surrendered for registration of transfer or exchange and where Warrant Certificates may be surrendered for exercise of Warrants evidenced thereby, which office is Computershare Trust Company, N.A., 350 Indiana Street, Suite 800, Golden, Colorado, 80401, on the date hereof. The Warrant Agent will give prompt written notice to the Company of any change in the location of such office.

“Countersigning Agent” shall mean any Person authorized by the Warrant Agent to act on behalf of the Warrant Agent to countersign Warrant Certificates.

“Current Market Price” of the shares of Common Stock or other capital stock or similar equity interests on any date shall mean (i) on the Approval Date, the public offering price in a Qualifying IPO or (ii) on any date after the Approval Date the closing sale price per share (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported on the principal United States securities exchange or inter-dealer quotation system, including the OTC Bulletin Board, on which shares of Common Stock or such other capital stock or similar equity interests are traded. In the absence of such a quotation, the Board of Directors of the Company shall be entitled to determine in good faith the Current Market Price on such basis as it considers appropriate. The Current Market Price shall be determined without reference to extended or after hours trading.

“Depository” shall have the meaning given to such term in Section 2.3 hereof.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Expiration Date” shall mean November 21, 2011, or such earlier date as determined in accordance with Article 5.

“Holder” or “Warrantholder” shall mean have the meaning given in Section 2.5(a) hereof.

“Initial Purchaser Registration Rights Agreement” shall mean the Initial Purchaser Registration Rights Agreement, dated as of November 21, 2006, among the Company and Cantor Fitzgerald & Co., CRT Capital Group LLC and Oppenheimer & Co. Inc. (collectively, the “Initial Purchasers”), as such agreement may be amended, modified or supplemented from time to time.

“Initial Purchasers’ Option” shall have the meaning set forth in Section 6.2 hereof.

“IPO Price” shall have the meaning set forth in Section 6.1(f) hereof.

“Non-Surviving Combination” shall mean any merger, consolidation or other business combination by the Company with one or more other entities in a transaction in which the Company is not the surviving entity.

“Participant” shall have the meaning given to such term in Section 2.3 hereof.

“Person” shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Purchase Agreement” shall mean the Purchase Agreement, dated November 15, 2006, between the Company and the Initial Purchasers.

“Qualified Institutional Buyer” shall have the meaning given such term in Rule 144A under the Securities Act.

“Qualified IPO” shall mean any public offering of the Company’s Class A Common Stock that raises at least $50.0 million in gross proceeds for the Company.

“Recipient” shall have the meaning given such term in Section 3.2(e).

“Registration Rights Agreement” shall mean that certain Registration Rights Agreement, dated November 21, 2006, by and among the Company, Innovation Holdings S.A. and the Initial Purchasers as such agreement may be amended, modified or supplemented from time to time.

“Regulation S” shall mean Regulation S under the Securities Act.

“Regulation S Securities” shall mean Warrants offered and sold in reliance on Regulation S under the Securities Act.

“Restricted Period” shall mean the “one-year distribution compliance period” (within the meaning of Rule 903(b)(2) of Regulation S) following the date of this Agreement.

“Restricted Warrants” shall have the meaning given such term in Section 2.2(b).

“Restricted Warrant Legend” shall mean the legend so designated on the Warrant Certificate attached hereto as Exhibit A.

“Rule 144” shall mean Rule 144 promulgated under the Securities Act.

“Rule 144A Securities” shall mean shall mean Warrants offered and sold in reliance on Rule 144A under the Securities Act.

“SEC” shall mean the U.S. Securities and Exchange Commission or any successor agency thereto.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Separation Date” shall have the meaning given to such term in Section 2.1.

“Subsidiary” shall mean, with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof.

“Unit” shall mean units, consisting of one share of Class A Common Stock and one-fifth of one Warrant, issued by the Company.

“Warrant Agent” shall mean the warrant agent named in the preamble hereof or the successor or successors of such Warrant Agent appointed in accordance with the terms hereof.

“Warrant Certificates” shall mean those certain warrant certificates evidencing the Warrants, substantially in the form of Exhibit A attached hereto.

“Warrant Price” shall mean the exercise price per Warrant Share, initially set at $10.00, subject to adjustment as provided in Section 6.1.

“Warrant Register” shall have the meaning given such term in Section 2.3(f).

“Warrant Shares” shall mean the Common Stock issuable upon exercise of the Warrants, the number of which is subject to adjustment from time to time in accordance with Article 6.

“Warrants” shall mean those warrants issued hereunder to purchase initially up to an aggregate of 2,299,680 Warrant Shares at the Warrant Price, subject to adjustment pursuant to Article 6.

ARTICLE 2

WARRANT CERTIFICATES

Section 2.1 Issuance of Warrants. Each Warrant shall represent the right, subject to the provisions contained herein and therein, to purchase one share of Class A Common Stock at the Exercise Price, subject to adjustment as provided in Article 6. One-fifth of one Warrant shall be issued together with one share of Common Stock as part of a single Unit, and shall not be separately transferable before the Consummation of an Exchange Offer or, if no Exchange Offer is conducted, the date on which a registration statement covering the resale of Units, and the Class A Common Stock and Warrants forming components of the Units, and the Warrant Shares, by the Holders thereof is declared effective by the SEC, unless Cantor Fitzgerald & Co. determines that an earlier date is acceptable (such date of transferability, the “Separation Date”). All of the Warrants shall initially be represented by one or more Book-Entry certificates (each, a “Book-Entry Warrant Certificate”). Each Warrant Certificate included in such Unit shall evidence one-fifth of one Warrant.

Section 2.2 Form, Execution and Delivery of Warrant Certificate.

(a) One or more Warrant Certificates evidencing Warrants to purchase not more than 2,299,680 shares of Class A Common Stock (except as provided in Article 6) may be executed by the Company and delivered to the Warrant Agent upon the execution of this Agreement or from time to time thereafter.

(b) Each Warrant Certificate, whenever issued, shall be in registered form substantially in the form set forth in Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement (but which do not affect the rights, duties or responsibilities of the Warrant Agent). Each Warrant Certificate will bear the Restricted Warrant Legend unless removed in accordance with Section 2.5(e) (the Warrants represented by such Warrant Certificate(s), “Restricted Warrants”) Each Book-Entry Warrant Certificate shall bear such legend or legends as may be required by the Depository (as defined below) in order for it to accept the Warrants for its book-entry settlement system. Each Warrant Certificate shall be printed, lithographed, typewritten, mimeographed or engraved or otherwise reproduced in any other manner as may be approved by the officers executing the same (such execution to be conclusive evidence of such approval) and may have such letters, numbers or other marks of identification or designation and such legends or

endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (such execution to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto, or with any regulation of any stock exchange or electronic market on which the Units, Class A Common Stock or Warrants may be listed, or to conform to usage. Each Warrant Certificate shall be signed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer or any Vice President. The signature of any such officer on any Warrant Certificate may be manual or facsimile. Each Warrant Certificate, when so signed on behalf of the Company, shall be delivered to the Warrant Agent together with an order for the countersignature and delivery of such Warrants.

(c) The Warrant Agent shall, upon receipt of any Warrant Certificate duly executed on behalf of the Company, countersign such Warrant Certificate and deliver such Warrant Certificate to or upon the order of the Company. Each Warrant Certificate shall be dated the date of its countersignature.

(d) No Warrant Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, and no Warrant evidenced thereby may be exercised, unless such Warrant Certificate has been countersigned by the manual or facsimile signature of the Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that such Warrant Certificate has been duly issued under the terms of this Agreement.

(e) If any officer of the Company who has signed any Warrant Certificate either manually or by facsimile signature shall cease to be such officer before such Warrant Certificate shall have been countersigned and delivered by the Warrant Agent, such Warrant Certificate nevertheless may be countersigned and delivered as though the person who signed such Warrant Certificate had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Warrant Certificate, shall be the proper officers of the Company as specified in this Section 2.2, regardless of whether at the date of the execution of this Agreement any such person was such officer.

(f) The Holders (as defined below) shall, except as stated below with respect to Warrants evidenced by a Book-Entry Warrant Certificate, be entitled to receive Warrants in physical, certificated form.

(g) A Book-Entry Warrant Certificate may be exchanged for a new Book-Entry Warrant Certificate, or one or more new Book-Entry Warrant Certificates may be issued, to reflect the issuance by the Company of additional Warrants. To effect such an exchange, the Company shall deliver to the Warrant Agent one or more new Book-Entry Warrant Certificates duly executed on behalf of the Company as provided in this Section 2.2. The Warrant Agent shall countersign each new Book Entry Warrant Certificate as provided in this Section 2.2 and shall deliver each new Book-Entry Warrant Certificate to the Depository. The Warrant Agent shall cancel each Book-Entry Warrant Certificate delivered to it by the Depository in exchange for each new Book-Entry Warrant Certificate it delivers to the Depository.

Section 2.3 Transfer of Warrants.

(a) All of the Warrants shall initially be represented by one or more Book-Entry Warrant Certificates deposited with The Depository Trust Company (the “Depository”) and registered in the name of Cede & Co., a nominee of the Depository and, subject to Section 2.5(e) hereof, shall bear the Restricted Warrant Legend. Except as provided for in Section 2.3(b) hereof, no person acquiring Warrants with book-entry settlement through the Depository shall receive or be entitled to receive physical delivery of definitive Warrant Certificates evidencing such Warrants. Ownership of beneficial interests in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained by (i) the Depository or its nominee for each Book-Entry Warrant Certificate, or (ii) institutions that have accounts with the Depository (such institution, with respect to a Warrant in its account, a “Participant”).

(b) If the Depository subsequently ceases to make its book-entry settlement system available for the Warrants, the Company may instruct the Warrant Agent in writing regarding making other arrangements for book-entry settlement. In the event that the Warrants are not eligible for, or it is no longer necessary to have the Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depository to deliver to the Warrant Agent for cancellation each Book-Entry Warrant Certificate, and the Company shall instruct the Warrant Agent in writing to deliver to the Depository definitive Warrant Certificates in physical form evidencing such Warrants. Such definitive Warrant Certificates shall be in the form annexed hereto as Exhibit A with appropriate insertions, modifications and omissions, as provided above.

(c) Prior to the Separation Date, Warrants may be transferred or exchanged only together with the Units in which such Warrants are included, and only for the purpose of effecting, or in conjunction with, a transfer or exchange of such Units. Furthermore, prior to the Separation Date, each transfer of Units on the register relating to such Units shall operate also to transfer the Warrants included in such Units. From and after the Separation Date, this Section 2.3(c) shall be of no further force and effect.

(d) A Warrant Certificate may be transferred at the option of the Holder thereof upon surrender of such Warrant Certificate at the stock transfer division of the Warrant Agent, properly endorsed or accompanied by appropriate instruments of transfer and written instructions for transfer, all in form satisfactory to the Company and the Warrant Agent; provided, however, that except as otherwise provided herein or in any Book-Entry Warrant Certificate, each Book-Entry Warrant Certificate may be transferred only in whole and only to the Depository, to another nominee of the Depository, to a successor depository, or to a nominee of a successor depository. Upon any such registration of transfer, the Company shall execute, and the Warrant Agent shall countersign and deliver, as provided in Section 2.2, in the name of the designated transferee a new Warrant Certificate or Warrant Certificates of any authorized denomination evidencing in the aggregate a like number of unexercised Warrants.

(e) After the Separation Date, upon surrender at the stock transfer division of the Warrant Agent, properly endorsed or accompanied by appropriate instruments of transfer and written instructions for such exchange, all in form satisfactory to the Company and the Warrant Agent, one or more Warrant Certificates may be exchanged for one or more Warrant Certificates

in any other authorized denominations; provided, that such new Warrant Certificate(s) evidence the same aggregate number of Warrants as the Warrant Certificate(s) so surrendered. Upon any such surrender for exchange, the Company shall execute, and the Warrant Agent shall countersign and deliver, as provided in Section 2.2, in the name of the Holder of such Warrant Certificates, the new Warrant Certificates.

(f) The Warrant Agent shall keep or cause to be kept, at its stock transfer division, books in which it shall register Warrant Certificates in accordance with Section 2.2 and transfers, exchanges, exercises and cancellations of outstanding Warrant Certificates (the “Warrant Register”). Whenever any Warrant Certificates are surrendered for transfer or exchange in accordance with this Section 2.3, an authorized officer of the Warrant Agent shall countersign and deliver the Warrant Certificates that the Holder making the transfer or exchange is entitled to receive. Until a Warrant Certificate is transferred in the Warrant Register, the Company and the Warrant Agent may treat the person in whose name the Warrant Certificate is registered as the absolute owner thereof and of the Warrants represented thereby for all purposes, notwithstanding any notice to the contrary. Neither the Company nor the Warrant Agent will be liable or responsible for any registration or transfer of any Warrants that are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary.

(g) No service charge shall be made for any transfer or exchange of Warrant Certificates, but the Company may require payment of a sum sufficient to cover any stamp or other tax or governmental charge that may be imposed in connection with any such transfer or exchange. The Warrant Agent shall promptly forward any such sum collected by it to the Company or to such persons as the Company shall specify by written notice. The Warrant Agent shall have no duty or obligation under this Section unless and until it is satisfied that all such taxes and/or governmental charges have been paid

Section 2.4 Cancellation of Warrant Certificates. Any Warrant Certificate surrendered for the purpose of transfer, exchange or exercise of the Warrants evidenced thereby shall, if surrendered to the Company, be delivered to the Warrant Agent for cancellation or in cancelled form, or, if surrendered to the Warrant Agent, will be promptly canceled by the Warrant Agent and shall not be reissued and, except as expressly permitted by this Agreement, no Warrant Certificate shall be issued hereunder in lieu thereof. Any Warrant Certificate surrendered to the Company for transfer, exchange or exercise of the Warrants evidenced thereby shall be promptly delivered to the Warrant Agent and such transfer, exchange or exercise shall not be effective until such Warrant Certificate has been received by the Warrant Agent. The Company will deliver to the Warrant Agent for cancellation and retirement, and the Warrant Agent will so cancel and retire, any other Warrant Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Warrant Agent will destroy the cancelled and retired Warrant Certificates and notify the Company of the destruction of such Warrant Certificates.

Section 2.5 Treatment of Holders and Beneficial Owners of Warrant Certificates.

(a) The term “Holder”, as used herein, shall mean any person in whose name at the time any Warrant Certificate shall be registered upon the Warrant Register or, prior to the Separation Date, the person in whose name the Unit in which such Warrant Certificate was initially included is registered upon the Warrant Register relating to such Units.

(b) The term “Beneficial Owner” as used herein shall mean any person in whose name ownership of beneficial interests in Warrants evidenced by a Book-Entry Warrant Certificate is recorded in the records maintained by the Depository or its nominee, or by a Participant or, prior to the Separation Date, the person in whose name the Unit in which such Warrant Certificate was initially attached is registered upon the Warrant Register relating to such Units.

(c) Every Holder and every Beneficial Owner consents and agrees with the Company, the Warrant Agent and with every subsequent Holder and Beneficial Owner that until the Warrant Certificate is transferred on the books of the Warrant Agent, the Company and the Warrant Agent may treat the registered Holder of such Warrant Certificate as the absolute owner of the Warrants evidenced thereby for any purpose and as the person entitled to exercise the rights attaching to the Warrants evidenced thereby, any notice to the contrary notwithstanding.

(d) If a Holder of a Restricted Warrant wishes at any time to transfer such Restricted Warrant to a Person who wishes to take delivery thereof in the form of a Restricted Warrant, such holder may, subject to the restrictions on transfer set forth herein and in such Restricted Warrant, cause the exchange of such Restricted Warrants for one or more Restricted Warrants of any authorized denomination or denominations and exercisable for the same aggregate number of Warrant Shares. Upon receipt by the Warrant Agent at its Corporate Agency Office of (1) such Restricted Warrant, duly endorsed as provided herein, (2) instructions from such holder directing the Warrant Agent to authenticate and deliver one or more Restricted Warrants exercisable for the same aggregate number of Warrant Shares as the Restricted Warrant to be exchanged, such instructions to contain the name or names of the designated transferee or transferees, the authorized denomination or denominations of the Restricted Warrants to be so issued and appropriate delivery instructions, (3) a certificate in the appropriate form of Exhibit B attached hereto given by the Person acquiring the Restricted Warrants, to the effect set forth therein, and (4) an opinion of counsel to the transferor of such Restricted Warrant substantially to the effect set forth in Exhibit C hereto, to the effect set forth therein, then the Warrant Agent shall (i) in the case of definitive Warrant Certificates cancel or cause to be cancelled such Restricted Warrant and, concurrently therewith, the Company shall execute, and the Warrant Agent shall authenticate and deliver, one or more Restricted Warrants to the effect set forth therein, in accordance with the instructions referred to above or (ii) in the case of Book-Entry Warrant Certificates, instruct the Depository to reduce or reflect on its records a reduction of the Rule 144A Security by the aggregate principal amount of the beneficial interest in such Rule 144A Security to be so exchanged or transferred and the Warrant Agent, shall instruct the Depository, to, concurrently with such reduction, increase or reflect on its records an increase of the principal amount of such Regulation S Security by the aggregate principal amount of the beneficial interest in such Rule 144A Security to be so exchanged or transferred, and to credit or cause to be credited to the account of the Holder specified in such instructions (who shall be the agent member of Euroclear or Clearstream Banking, or both, as the case may be) a beneficial interest in such Regulation S Security equal to the reduction in the principal amount of such Rule 144A Security.

(e) If Warrants are issued upon the transfer, exchange or replacement of Warrants bearing the Restricted Warrant Legend, or if a request is made to remove such Restricted Warrant Legend, the Warrants so issued shall bear the Restricted Warrant Legend; or

the Restricted Warrant Legend shall not be removed, as the case may be, unless (i) there is delivered to the Company satisfactory evidence, which may include an opinion of counsel as may be reasonably required by the Company to the effect that neither the Restricted Warrant Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of the Securities Act or, with respect to Restricted Warrants, that such Warrants are not “restricted” within the meaning of Rule 144 under the Securities Act or (ii) there is an Effective Registration with respect to the Warrants then in effect or the Warrants as to which the Restricted Warrant Legend is sought to be removed have been disposed of in accordance with the Warrants Shelf Registration. Upon (i) provision of such satisfactory evidence, or (ii) notification by the Company to the Warrant Agent of an the Consummation of an Exchange Offer or an Effective Registration with respect to the Warrants, the Warrant Agent, at the direction of the Company, shall authenticate and deliver Warrant Certificates that do not bear the Restricted Warrant Legend with respect to the Warrants issued upon Consummation of the Exchange Offer or included in the shelf registration statement covering the Warrants.

(f) In the event of the Consummation of an Exchange Offer or the effective date of a shelf registration statement covering the Warrants and the Warrant Shares, the Company shall notify the Warrant Agent within two Business Days after the Consummation of an Exchange Offer or the effective date of such a shelf registration statement, respectively. Promptly after delivering to the Warrant Agent notice of the Consummation of an Exchange Offer or an Effective Registration, the Company shall cause to be delivered to the Warrant Agent certificates for Warrants without legends and the Warrant Agent shall authenticate and deliver Book-Entry Warrant Certificates to the Depository and registered in the name of Cede & Co., a nominee of the Depository, without the Restricted Warrant Legend and if Holders are entitled to receive definitive Warrant Certificates in accordance with Section 2.2(f) and Section 2.3(b) hereof, certificated Warrants without legends to Holders presenting their certificated Warrants for exchange to transferees of Warrants tendered in the exchange offer or covered by the shelf registration covering the Warrants in the names and denominations specified by them.

ARTICLE 3

EXERCISE AND EXPIRATION OF WARRANTS

Section 3.1 Right to Acquire Warrant Shares Upon Exercise. Each Warrant Certificate shall, when countersigned by the Warrant Agent, entitle the Holder thereof, subject to the provisions thereof and of this Agreement, to acquire from the Company, for each Warrant evidenced thereby, one Warrant Share at the Warrant Price, subject to adjustment as provided in this Agreement. The Warrant Price shall be adjusted from time to time as required by Section 6.1.

Section 3.2 Exercise and Expiration of Warrants. (a) Exercise of Warrants. Subject to the terms and conditions set forth herein, including, without limitation, the exercise procedure described in Section 3.2(c), a Holder of a Warrant Certificate may exercise all or any whole number of the Warrants evidenced thereby, on any Business Day from and after the Approval Date until 5:00 p.m., New York City time, on the Expiration Date (subject to earlier expiration pursuant to Article 5) for the Warrant Shares purchasable thereunder.

(b) Expiration of Warrants. The Warrants shall terminate and become void as of 5:00 p.m., New York time on the Expiration Date, subject to earlier expiration in accordance with Article 5. In the event that the Warrants are to expire by reason of Article 5, the term “Expiration Date” shall mean such earlier date for all purposes of this Agreement.

(c) Method of Exercise. All or any of the Warrants are exercisable by the Holder in a “cash” exercise by delivering to the Warrant Agent at the Corporate Agency Office (i) a written notice of such Holder’s election to exercise Warrants, duly executed by such Holder in the form set forth on the reverse of, or attached to, such Warrant Certificate, which notice shall specify the number of Warrant Shares to be delivered to such Holder and the amount of cash that is being delivered to the Company in respect of the Warrant Price for such exercise., and (ii) the Warrant Certificate evidencing such Warrants or, in the case of a Book-Entry Warrant Certificate, the Warrants to be exercised (the “Book-Entry Warrants”) free on the records of the Depository to an account of the Warrant Agent at the Depository designated for such purpose in writing by the Warrant Agent to the Depository from time to time.

(d) Partial Exercise. If fewer than all the Warrants represented by a Warrant Certificate are exercised, such Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be executed by the Company. The Warrant Agent shall countersign the new Warrant Certificate, registered in such name or names, subject to the provisions of Article 9, as may be directed in writing by the Holder, and shall deliver the new Warrant Certificate to the Person or Persons in whose name such new Warrant Certificate is so registered. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly executed on behalf of the Company for such purpose.

(e) Issuance of Warrant Shares. Upon surrender of a Warrant Certificate evidencing Warrants in conformity with the foregoing provisions and payment of the Warrant Price in respect of the exercise of one or more Warrants evidenced thereby, the Warrant Agent shall, when such payment is received, deliver to the Company the notice of exercise received pursuant to Section 3.2(c). The Company shall thereupon, as promptly as practicable, and in any event within three Business Days after receipt by the Company of such notice of exercise, in execute or cause to be executed and deliver or cause to be delivered to the Recipient (as defined below) a certificate or certificates representing the aggregate number of Warrant Shares issuable upon such exercise (based upon the aggregate number of Warrants so exercised), determined in accordance with Section 3.5 together with an amount in cash in lieu of any fractional share(s) determined in accordance with Section 6.5.. The certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as such Holder shall request in such notice of exercise and shall be registered or otherwise placed in the name of, and delivered to, the Holder or, such other Person as shall be designated by the Holder in such notice (the Holder or such other Person being referred to herein as the “Recipient”).

(f) Time of Exercise. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the date on which all requirements set forth in Section 3.2(c) applicable to such exercise have been satisfied. Subject to Section 6.1(g)(iv), certificate(s) evidencing any Warrant Shares issued upon the exercise of such Warrant shall be deemed to have been issued and, for all purposes of this Agreement, the Recipient shall, as

between such Person and the Company, be deemed to be and entitled to all rights of the holder of record of such Warrant Shares as of such time.

Section 3.3 Payment of Taxes. The Company shall pay any and all taxes of any kind (other than income taxes) and other charges that may be payable in respect of the issue or delivery of Warrant Shares on exercise of Warrants pursuant hereto. The Company shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of any certificates for Warrant Shares or payment of cash to any Recipient other than the Holder of the Warrant Certificate surrendered upon the exercise of a Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or the Company or (b) it has been established to the Company’s satisfaction that any such tax or other charge that is or may become due has been paid.

Section 3.4 Surrender of Certificates. Any Warrant Certificate surrendered for exercise shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by such Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall destroy such cancelled Warrant Certificates and deliver its certificate of instruction to the Company, unless the Company shall otherwise direct.

Section 3.5 Shares Issuable. The number of Warrant Shares “issuable upon exercise” of Warrants at any time shall be the number of Warrant Shares into which such Warrants are then exercisable. The number of Warrant Shares “into which each Warrant is exercisable” initially shall be one share, subject to adjustment as provided in Section 6.1.

ARTICLE 4

Section 4.1 Registration Rights. The Warrantholders and holders of Warrant Shares shall have the registration rights provided for in the Registration Rights Agreement and, in the case of the Initial Purchasers, the Initial Purchaser Registration Rights Agreement. The Warrant Agent shall keep copies of the Registration Rights Agreement available for inspection by the Holders during normal business hours at its office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of the Registration Rights Agreement as the Warrant Agent may request.

Section 4.2 No Rights as Holders of Shares Conferred by Warrants or Warrant Certificates. No Warrant Certificate or Warrant evidenced thereby shall entitle the Holder thereof to any of the rights of a holder of any Class A Common Stock, including, without limitation, the right to receive dividends, if any, or, subject to Article V, payments upon the liquidation, dissolution or winding up of the Company or to exercise voting rights, if any.

Section 4.3 Holder and Beneficial Owner of Warrant May Enforce Rights. Notwithstanding any of the provisions of this Agreement, any Holder or any Beneficial Owner of any Warrant, without the consent of the Warrant Agent or, in the case of a Beneficial Owner, the

consent of the Holder of any Warrant, may, on such Holder’s or Beneficial Owner’s own behalf and for his, her or its own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise in respect of, such Holder’s or Beneficial Owner’s right to exercise the Warrants evidenced by any Warrant Certificate in the manner provided in this Agreement and such Warrant Certificate.

ARTICLE 5

DISSOLUTION, LIQUIDATION OR WINDING UP

If, on or prior to the Expiration Date, the Company (or any other Person controlling the Company) shall propose a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, the Company shall give written notice thereof to the Warrant Agent and all Holders of Warrant Certificates in the manner provided in Article 13 prior to the date on which such transaction is expected to become effective or, if earlier, the record date for such transaction. Such notice shall also specify the date as of which the holders of record of the Common Stock shall be entitled to exchange their shares for monies, securities or other property deliverable upon such dissolution, liquidation or winding up, as the case may be, on which date each Holder of Warrant Certificates shall be entitled to receive the monies, securities or other property which such Holder would have been entitled to receive had such Holder been the holder of record of the Warrant Shares into which the Warrants were exercisable immediately prior to such dissolution, liquidation or winding up (net of the then applicable Warrant Price) and the rights to exercise the Warrants shall terminate.

In case of any such voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall deposit with the Warrant Agent any monies, securities or other property which the Holders are entitled to receive under this Agreement, together with a Company Order as to the distribution thereof. After receipt of such deposit from the Company and after any Holder has surrendered a Warrant Certificate to the Warrant Agent, the Warrant Agent shall make payment in the appropriate amount to such Person or Persons as it may be directed in writing by the Holder surrendering such Warrant Certificate. The Warrant Agent shall not be required to pay interest on any money deposited pursuant to the provisions of this Article 5 except such as it shall agree with the Company to pay thereon. Any monies, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Article 5 shall be, and are hereby, assigned, transferred and set over to the Warrant Agent in trust for the purpose for which such monies, securities or other property shall have been deposited; provided that monies, securities or other property need not be segregated from other monies, securities or other property held by the Warrant Agent except to the extent required by law.

ARTICLE 6

ADJUSTMENTS

Section 6.1 Adjustments. The number of Warrant Shares into which each Warrant is exercisable and/or the Warrant Price shall be subject to adjustment from time to time after the date hereof in accordance (and only in accordance) with the provisions of this Article 6:

(a) Stock Dividends, Subdivisions and Combinations. In case at any time or from time to time after the date of this Warrant Agreement the Company shall:

(i) pay to the holders of its Common Stock a dividend payable in, or make any other distribution on any class of its capital stock in, Common Stock (other than a dividend or distribution upon a merger or consolidation or sale to which Section 6.1(i) applies);

(ii) subdivide its outstanding Common Stock into a larger number of shares of Common Stock (other than a subdivision upon a merger or consolidation or sale to which Section 6.1(i) applies); or

(iii) combine its outstanding Common Stock into a smaller number of shares of Common Stock (other than a combination upon a merger or consolidation or sale to which Section 6.1(i) applies);

then, (x) in the case of any such dividend or distribution, effective immediately after the opening of business on the day after the date for the determination of the holders of Common Stock entitled to receive such dividend or distribution or (y) in the case of any subdivision or combination, effective immediately after the opening of business on the day after the day upon which such subdivision or combination becomes effective, the number of Warrant Shares into which each Warrant is exercisable shall be adjusted to that number of Warrant Shares determined by (A) in the case of any such dividend or distribution, multiplying the number of Warrant Shares into which each Warrant is exercisable at the opening of business on the day after the day for determination by a fraction (not to be less than one), (1) the numerator of which shall be equal to the sum of the number of shares of Common Stock outstanding at the close of business on such date for determination and the total number of shares constituting such dividend or distribution and (2) the denominator of which shall be equal to the number of shares of Common Stock outstanding at the close of business on such date for determination, or (B) in the case of any such combination, by proportionately reducing, or, in the case of any such subdivision, by proportionately increasing, the number of Warrant Shares into which each Warrant is exercisable at the opening of business on the day after the day upon which such subdivision or combination becomes effective.

(b) Reclassifications. A reclassification of the Common Stock (other than any such reclassification in connection with a merger or consolidation or sale to which Section 6.1(j) applies) into Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock and, if the outstanding number of shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding Common Stock for the purposes and within the meaning of Section 6.1(a) (and the effective date of such reclassification shall be deemed to be “the day upon which such subdivision or combination becomes effective” for the purposes and within the meaning of Section 6.1(a)).

(c) Distribution of Warrants or Other Rights to Holders of Common Stock. In case at any time or from time to time after the date of this Warrant Agreement the Company shall

make a distribution to all holders of Common Stock of any warrants, options or other rights to subscribe for or purchase any Additional Common Stock or securities convertible into or exchangeable for Additional Common Stock (other than a distribution of such warrants, options or rights upon a merger or consolidation or sale to which Section 6.1(j) applies), whether or not the rights to subscribe or purchase thereunder are immediately exercisable, and the consideration per share for which Additional Common Stock may at any time thereafter be issuable pursuant to such warrants or other rights shall be less than the Current Market Price per share of Common Stock on the date fixed for determination of the holders of Common Stock entitled to receive such distribution, then, for each such case, effective immediately after the opening of business on the day after the date for determination, the number of Warrant Shares into which each Warrant is exercisable shall be adjusted to that number determined by multiplying the number of Warrant Shares into which each Warrant is exercisable at the opening of business on the day after such date for determination by a fraction (not less than one), (i) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on such date for determination plus the maximum number of Additional Common Stock issuable pursuant to all such warrants or other rights and (ii) the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on such date for determination plus the number of shares of Common Stock that the minimum consideration received and receivable by the Company for the issuance of such maximum number of shares of Additional Common Stock pursuant to the terms of such warrants or other rights would purchase at such Current Market Price.

(d) Sale of Additional Shares of Common Stock. If at any time after the date hereof and prior to the Consummation of a Qualifying IPO (except as hereinafter provided) issue or sell Additional Common Stock in exchange for consideration in an amount per additional share of Common Stock less than the Warrant Price in effect immediately prior to such issuance or sale of Additional Common Stock, then the Warrant Price as to the Class A Common Stock into which this Warrant is exercisable immediately prior to such adjustment shall be adjusted by multiplying the Warrant Price by a fraction, of which:

(A) the numerator shall be (x) the number of shares of Common Stock outstanding immediately prior to such issuance or sale of Additional Common Stock plus (y) the number of shares of Class A Common Stock which the aggregate amount of consideration, if any, received by the Company for the total number of such Additional Common Stock so issued or sold would purchase at the greater of (i) the Market Price per share of the Class A Common Stock in effect immediately prior to such issuance or sale of Additional Common Stock or (ii) the Warrant Price in effect immediately prior to such issuance or sale of Additional Common Stock, and

(B) the denominator shall be the number of shares of Common Stock outstanding immediately after such issuance or sale of Additional Common Stock;

provided, however, that such adjustment shall be made only if the Warrant Price determined from such adjustment shall be less than the Warrant Price in effect immediately prior to the issuance of such Additional Common Stock.

The provisions of this Section 6.1(d) shall not apply to any issuance of Additional Common Stock for which an adjustment is provided under Section 6.1(a), (c) or (f).

(e) (i) Issuance of Warrants or Other Rights. If at any time prior to the Consummation of a Qualifying IPO (i) the Company shall in any manner (whether directly or by assumption in a merger in which the Company is the surviving corporation) issue or sell any warrants or other rights to subscribe for or purchase any Additional Common Stock or any securities convertible into Common Stock, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the consideration received for such warrants or other rights or such convertible securities shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, then the Warrant Price shall be adjusted as provided in Section 6.1(d). No further adjustments of the Warrant Price shall be made upon the actual issue of such Common Stock or of such convertible securities upon exercise of such warrants or other rights or upon the actual issue of such Common Stock upon such conversion or exchange of such convertible securities.

(ii) Issuance of Convertible Securities. If at any time prior to the Consummation of a Qualifying IPO the Company shall in any manner (whether directly or by assumption in a merger in which the Company is the surviving corporation) issue or sell, any securities convertible into Common Stock, whether or not the rights to convert thereunder are immediately exercisable, and the consideration received for such convertible securities shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, then the Warrant Price shall be adjusted as provided in Section 6.1(d). No adjustment of the Warrant Price shall be made under this Section 6.1(e)(ii) upon the issuance of any convertible securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to Section 6.1(e)(i). No further adjustments of the Warrant Price shall be made upon the actual issue of such Common Stock upon conversion of such convertible securities and, if any issue or sale of such convertible securities is made upon exercise of any warrant or other right to subscribe for or to purchase any such convertible securities for which adjustments of the Warrant Price have been or are to be made pursuant to other provisions of this Section 6, no further adjustments of the Warrant Price shall be made by reason of such issue or sale.

The provisions of this Section 6.1(e) shall not apply to any issuance of Additional Common Stock for which an adjustment is provided under Section 6.1(a), (c), (d) or (f).

(f) Qualifying IPO Adjustment. If the price per share to the public (the “IPO Price”) in a Qualifying IPO is less than the Exercise Price in effect immediately prior to the consummation of the sale of the firm shares in the Qualifying IPO, the Warrant Price shall be adjusted to the IPO Price.

(g) Superseding Adjustment of Number of Warrant Shares into Which Each Warrant is Exercisable. In case at any time after any adjustment of the number of Warrant Shares into which each Warrant is exercisable shall have been made pursuant to Section 6.1(c)

on the basis of the distribution of warrants or other rights or after any new adjustment of the number of Warrant Shares into which each Warrant is exercisable shall have been made pursuant to this Section 6.1(g), such warrants or rights shall expire, and all or a portion of such warrants or rights shall not have been exercised, then, and in each such case, upon the election of the Company by written notice to the Warrant Agent, such previous adjustment in respect of such warrants or rights which have expired without exercise shall be rescinded and annulled as to any then outstanding Warrants, and the Additional Common Stock that were deemed for purposes of the computations set forth in Section 6.1(c) to have been issued or sold by virtue of such adjustment in respect of such warrants or rights shall no longer be deemed to have been distributed.

(h) Other Provisions Applicable to Adjustments under this Section. The following provisions shall be applicable to the making of adjustments of the number of Warrant Shares into which each Warrant is exercisable and to the Warrant Price under this Section 6.1:

(i) Treasury Stock. The sale or other disposition (other than any shares specified in the definition of “Additional Common Stock”) of any issued Common Stock owned or held by or for the account of the Company shall be deemed an issuance or sale of Additional Common Stock for purposes of this Article 6. The Company shall not pay any dividend on or make any distribution on Common Stock held in the treasury of the Company. For the purposes of this Section 6.1, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of Common Stock.

(ii) When Adjustments Are to be Made. The adjustments required by Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e) and 6.1(f) shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Warrant Shares into which each Warrant is exercisable that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases the Warrant Shares into which each Warrant is exercisable immediately prior to the making of such adjustment by at least 1%. Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made as soon as such adjustment, together with other adjustments required by Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e) and 6.1(f) and not previously made, would result in such minimum adjustment.

(iii) Fractional Interests. In computing adjustments under this Article 6, fractional interests in Common Stock shall be taken into account to the nearest one-thousandth of a share.

(iv) Deferral of Issuance upon Exercise. In any case in which this Article 6 shall require that an adjustment to the Warrant Shares into which each Warrant is exercisable be made effective pursuant to Section 6.1(a)(i) or 6.1(c) prior to the occurrence of a specified event and any Warrant is exercised after the time at which the adjustment became effective but prior to the occurrence of such specified event the

Company may elect to defer until the occurrence of such specified event the issuing to the Holder of the Warrant Certificate evidencing such Warrant (or other Person entitled thereto) of, and may delay registering such Holder or other Person as the recordholder of, the Warrant Shares over and above the Warrant Shares issuable upon such exercise determined in accordance with Section 3.5 on the basis of the Warrant Shares into which each Warrant is exercisable prior to such adjustment determined in accordance with Section 3.5; provided, however, that the Company shall deliver to such Holder or other person a due bill or other appropriate instrument evidencing the right of such Holder or other Person to receive, and to become the record holder of, such Additional Common Stock, upon the occurrence of the event requiring such adjustment.

(i) Warrant Price Adjustment. Whenever the number of Warrant Shares into which a Warrant is exercisable is adjusted as provided in this Section 6.1 (other than pursuant to Section 6.1(d) or 6.1(e)), the Warrant Price payable upon exercise of the Warrant shall simultaneously be adjusted by multiplying such Warrant Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of Warrant Shares into which such Warrant was exercisable immediately prior to such adjustment, and the denominator of which shall be the number of Warrant Shares into which such Warrant was exercisable immediately thereafter.

(j) Merger, Consolidation or Combination. In the event the Company merges, consolidates or otherwise combines with or into any Person, then, as a condition of such merger, consolidation or combination, lawful and adequate provisions shall be made whereby Warrantholders shall, in addition to their other rights hereunder, thereafter have the right to purchase and receive upon the basis and upon the terms and conditions specified in this Agreement upon exercise of the Warrants and in lieu of the Warrant Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding Common Stock equal to the number of Warrant Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, and in any such case appropriate provision shall be made with respect to the rights and interests of the Warrantholders to the end that the provisions hereof (including, without limitation, provisions for adjustments of the number of Warrant Shares) shall thereafter be applicable, as nearly as may be practicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof.

(k) Compliance with Governmental Requirements. Before taking any action that would cause an adjustment reducing the Warrant Price below the then par value of any of the Warrant Shares into which the Warrants are exercisable, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares at such adjusted Warrant Price.

(l) Optional Tax Adjustment. The Company may at its option, at any time during the term of the Warrants, increase the number of Warrant Shares into which each Warrant is exercisable, or decrease the Warrant Price, in addition to those changes required by Section 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(f) or 6.1(h), as deemed advisable by the Board of

Directors of the Company, in order that any event treated for federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the Recipients.

(m) Warrants Deemed Exercisable. For purposes solely of this Article 6, the number of Warrant Shares which the holder of any Warrant would have been entitled to receive had such Warrant been exercised in full at any time or into which any Warrant was exercisable at any time shall be determined assuming such Warrant was exercisable in full at such time, although such Warrant may not be exercisable in full at such time pursuant to Section 3.2(a).

(n) In the event of any transaction not covered by a specific formula or any provision herein, the Company and the Board of Directors shall take such actions as are necessary and equitable to adjust the number of Warrant Shares into which a Warrant is exercisable and/or the Warrant Price or to permit the holders of the Warrants to participate in the transaction on a basis that the Board of Directors determines, in good faith, to be fair and appropriate in light of the basis on which the holders of Common Stock are permitted to participate.

Section 6.2 Exception to Adjustment of Exercise Price. Anything herein to the contrary notwithstanding, the Company shall not make adjustments to the Exercise Price or the number of Warrant Shares for which the Warrants are exercisable: (i) issuance of any Units upon any exercise of the Initial Purchasers’ option (the “Initial Purchasers’ Option”) to purchase 1,512,400 pursuant to Section 1(a) of the Purchase Agreement, (ii) issuance of any Class B Common Stock as a result of the exercise of the Initial Purchasers’ Option, (iii) issuance of Class A Common Stock upon conversion of the shares of Class B Common Stock or (iv) any issuances of Class A Common Stock or other equity awards under the Company’s 2006 Equity Incentive Plan.

Section 6.3 Notice of Adjustment. Whenever the number of Warrant Shares into which a Warrant is exercisable is to be adjusted, or the Warrant Price is to be adjusted, in either case as herein provided, the Company shall compute the adjustment in accordance with Section 6.1, shall, promptly after such adjustment becomes effective, cause a notice of such adjustment or adjustments to be given to all Holders in accordance with Section 11.1(b) and shall deliver to the Warrant Agent a certificate of the Chief Financial Officer of the Company setting forth the number of Warrant Shares into which each Warrant is exercisable after such adjustment, or the adjusted Warrant Price, as the case may be, and setting forth in brief a statement of the facts requiring such adjustment and the computation by which such adjustment was made. As provided in Section 9.1, the Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time to any Holder desiring an inspection thereof during reasonable business hours.

Section 6.4 Statement on Warrant Certificates. Irrespective of any adjustment in the number or kind of shares into which the Warrants are exercisable, Warrant Certificates theretofore or thereafter issued may continue to express the same price and number and kind of shares initially issuable pursuant to this Agreement.

Section 6.5 Fractional Interest. The Company shall not issue fractional Warrant Shares on the exercise of Warrants. If Warrant Certificates evidencing more than one Warrant

shall be presented for exercise at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such exercise thereof shall be computed on the basis of the aggregate number of Warrants so to be exercised. If any fraction of a Warrant Share would, except for the provisions of this Section 6.5, be issuable on the exercise of any Warrant (or specified portion thereof), the Company shall, in lieu of issuing any fractional Warrant Shares, pay an amount in cash calculated by it to be equal to the then Current Market Price per Common Stock on the date of such exercise multiplied by such fraction computed to the nearest whole cent. The Holders, by their acceptance of the Warrant Certificates, expressly waive their right to receive any fraction of a Warrant Share or a stock certificate representing a fraction of a Warrant Share.

ARTICLE 7

LOSS OR MUTILATION

Upon (i) receipt by the Company and the Warrant Agent of an affidavit of non-receipt; and an open penalty bond of indemnity in a form and substance and from a surety company satisfactory to the Warrant Agent and (ii) surrender, in the case of mutilation, of the mutilated Warrant Certificate to the Warrant Agent and cancellation thereof, then, in the absence of notice to the Company or the Warrant Agent that the Warrants evidenced thereby have been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver to the registered Holder of the lost, stolen, destroyed or mutilated Warrant Certificate, in exchange therefor or in lieu thereof, a new Warrant Certificate of the same tenor and for a like aggregate number of Warrants. At the written request of such registered Holder, the new Warrant Certificate so issued shall be retained by the Warrant Agent as having been surrendered for exercise, in lieu of delivery thereof to such Holder, and shall be deemed for purposes of Section 3.2 to have been surrendered for exercise on the date the conditions specified in clauses (i) and (ii) of the preceding sentence were first satisfied.

Upon the issuance of any new Warrant Certificate under this Article 7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses (including the fees and expenses of the Warrant Agent and of counsel to the Company) in connection therewith.

Every new Warrant Certificate executed and delivered pursuant to this Article 7 in lieu of any lost, stolen or destroyed Warrant Certificate shall constitute an additional contractual obligation of the Company, whether or not the allegedly lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder.

The provisions of this Article 7 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, lost, stolen, or destroyed Warrant Certificates.

ARTICLE 8

RESERVATION AND AUTHORIZATION OF WARRANT SHARES

The Company shall at all times reserve and keep available, free from preemptive rights, solely for issue upon the exercise of Warrants as herein provided, such number of its authorized but unissued shares of Class A Common Stock deliverable upon the exercise of Warrants as will be sufficient to permit the exercise in full of all outstanding Warrants. The Company covenants that all Warrant Shares will, at all times that Warrants are exercisable, be duly approved for listing subject to official notice of issuance on each securities exchange, if any, on which the Common Stock are then listed. The Company covenants that (i) all Warrant Shares that may be issued upon exercise of Warrants shall upon issuance be duly and validly authorized, issued and fully paid and nonassessable and free of preemptive or similar rights and (ii) the stock certificates issued to evidence any such Warrant Shares will comply with the Marshall Islands Business Corporations Act and any other applicable law.

The Company hereby authorizes and directs its current and future transfer agents for the Common Stock at all times to reserve stock certificates for such number of authorized shares as shall be requisite for such purpose. The Warrant Agent is hereby authorized to requisition from time to time from any such transfer agents stock certificates required to honor outstanding Warrants upon exercise thereof in accordance with the terms of this Agreement, and the Company hereby authorizes and directs such transfer agents to comply with all such requests of the Warrant Agent. The Company will supply such transfer agents with duly executed stock certificates for such purposes. Promptly after the date of expiration of all of the Warrants in accordance with Section 3.2(b), the Warrant Agent shall certify to the Company the aggregate number of Warrants then outstanding, and thereafter no Warrant Shares shall be reserved in respect of such Warrants.

ARTICLE 9

CONCERNING THE WARRANT AGENT

Section 9.1 Nature of Duties and Responsibilities Assumed. The Company hereby appoints the Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the terms and conditions set forth in this Agreement and in the Warrant Certificates or as the Company and the Warrant Agent may hereafter agree, by all of which the Company and the Holders of Warrant Certificates, by their acceptance thereof, shall be bound; provided, however, that the terms and conditions contained in the Warrant Certificates are subject to and governed by this Agreement or any other terms and conditions hereafter agreed to by the Company and the Warrant Agent.

The Warrant Agent shall not, by countersigning Warrant Certificates or by any other act hereunder, be deemed to make any representations as to validity or authorization of (i) the Warrants or the Warrant Certificates (except as to its countersignature thereon), (ii) any securities or other property delivered upon exercise of any Warrant, (iii) the accuracy of the computation of the number or kind or amount of stock or other securities or other property

deliverable upon exercise of any Warrant or (iv) the correctness of any of the representations of the Company made in such certificates that the Warrant Agent receives. The Warrant Agent shall not at any time have any duty to calculate or determine whether any facts exist that may require any adjustments pursuant to Article 6 hereof with respect to the kind and amount of shares or other securities or any property issuable to Holders upon the exercise of Warrants required from time to time. The Warrant Agent shall have no duty or responsibility to determine the accuracy or correctness of such calculation or with respect to the methods employed in making the same. The Warrant Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any Warrant Shares or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Article 6 hereof, and it makes no representation with respect thereto. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any Warrant Shares or stock certificates or other securities or property upon the surrender of any Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Article 6 hereof or to comply with any of the covenants of the Company contained in Article 10 hereof.

The Warrant Agent shall not (i) be liable for any recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, offered or omitted by it in good faith on the belief that any Warrant Certificate or any other documents or any signatures are genuine or properly authorized, (ii) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in the Warrant Certificates or (iii) be liable for any act or omission in connection with this Agreement except for its own gross negligence, bad faith or willful misconduct.

The Warrant Agent is hereby authorized to accept and is protected in accepting instructions with respect to the performance of its duties hereunder by Company Order and to apply to any such officer named in such Company Order for instructions (which instructions will be promptly given in writing when requested), and the Warrant Agent shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with the instructions in any Company Order.

The Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, provided that reasonable care has been exercised in the selection and in the continued employment of any such attorney, agent or employee. The Warrant Agent shall not be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof, unless first indemnified to its satisfaction, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against it arising out of or in connection with this Agreement.

The Company shall perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Warrant Agent in order to enable it to carry out or perform its duties under this Agreement.

The Warrant Agent shall act solely as agent of the Company hereunder and does not assume any obligation or relationship of agency or trust for or with any of the Holders or any beneficial owners of Warrants. The Warrant Agent shall not be liable except for the failure to perform such duties as are specifically set forth herein or specifically set forth in the Warrant Certificates, and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent whose duties and obligations shall be determined solely by the express provisions hereof or the express provisions of the Warrant Certificates.

Section 9.2 Right to Consult Counsel. The Warrant Agent may at any time consult with legal counsel satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder for any action taken, suffered or omitted by it in good faith in accordance with the opinion or advice of such counsel.

Section 9.3 Compensation, Reimbursement and Indemnification. The Company agrees to pay the Warrant Agent from time to time compensation for all fees and expenses relating to its services hereunder as the Company and the Warrant Agent may agree from time to time and to reimburse the Warrant Agent for reasonable expenses and disbursements, including reasonable counsel fees and expenses incurred in connection with the execution and administration of this Agreement. The Company further agrees to indemnify the Warrant Agent for and save it harmless against any losses, liabilities or reasonable expenses arising out of or in connection with the acceptance and administration of this Agreement, including the reasonable costs, legal fees and expenses of investigating or defending any claim of such liability, except that the Company shall have no liability hereunder to the extent that any such loss, liability or expense results from the Warrant Agent’s own gross negligence, bad faith or willful misconduct.

Section 9.4 Warrant Agent May Hold Company Securities. The Warrant Agent, any Countersigning Agent and any stockholder, director, officer or employee of the Warrant Agent or any Countersigning Agent may buy, sell or deal in any of the Warrants or other securities of the Company or its Affiliates, become pecuniarily interested in transactions in which the Company or its Affiliates may be interested, contract with or lend money to the Company or its Affiliates or otherwise act as fully and freely as though it were not the Warrant Agent or the Countersigning Agent, respectively, under this Agreement. Nothing herein shall preclude the Warrant Agent or any Countersigning Agent from acting in any other capacity for the Company or for any other legal entity.

Section 9.5 Resignation and Removal; Appointment of Successor. (a) The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent’s own gross negligence or willful misconduct) after giving thirty (30) days’ prior written notice to the Company. The Company may remove the Warrant Agent upon thirty (30) days’ written notice, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the expense of the Company, cause notice to be given in accordance with Section 11.1(b) to each Holder of a Warrant Certificate of said notice of resignation or notice of removal, as the case may be. Upon such resignation or removal, the Company shall appoint in writing a new Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) calendar days after it has been notified in writing of

such resignation by the resigning Warrant Agent or after such removal, then the Holder of any Warrant Certificate, or the Warrant Agent, may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent, whether appointed by the Company or by such a court, shall be a corporation doing business under the laws of the United States or any state thereof in good standing, authorized under such laws to act as Warrant Agent, and having a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new Warrant Agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such Warrant Agent prior to its appointment, provided that such reports are published at least annually pursuant to law or to the requirements of a Federal or state supervising or examining authority. After acceptance in writing of such appointment by the new Warrant Agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be reasonably necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the reasonable expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall file notice thereof with the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section 9.5(a), however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of a new Warrant Agent, as the case may be.

(b) Any corporation into which the Warrant Agent or any new Warrant Agent that be merged, or any corporation resulting from any consolidation to which the Warrant Agent or any new Warrant Agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further act, provided that such corporation would be eligible for appointment as successor to the Warrant Agent under the provisions of Section 9.5(a). Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent to be given in accordance with Section 11.1(b) to each Holder of a Warrant Certificate at such Holder’s last address as shown on the Warrant Register.

Section 9.6 Appointment of Countersigning Agent. (a) The Warrant Agent may appoint a Countersigning Agent or Agents which shall be authorized to act on behalf of the Warrant Agent to countersign Warrant Certificates issued upon original issue and upon exchange, registration of transfer or pursuant to Article 2, and Warrant Certificates so countersigned shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. Wherever reference is made in this Agreement to the countersignature and delivery of Warrant Certificates by the Warrant Agent or to Warrant Certificates countersigned by the Warrant Agent, such reference shall be deemed to include countersignature and delivery on behalf of the Warrant Agent by a Countersigning Agent and Warrant Certificates countersigned by a Countersigning Agent. Each Countersigning Agent shall be acceptable to the Company and shall at the time of appointment be a corporation doing business under the laws of the United States of America or any State thereof in good standing, authorized under such laws to act as Countersigning Agent, and having a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new Countersigning Agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such

Countersigning Agent prior to its appointment, provided that such reports are published at least annually pursuant to law or to the requirements of a Federal or state supervising or examining authority.

(b) Any corporation into which a Countersigning Agent may be merged, or any corporation resulting from any consolidation to which such Countersigning Agent shall be a party, shall be a successor Countersigning Agent without any further act, provided that such corporation would be eligible for appointment as a new Countersigning Agent under the provisions of Section 9.6(a), without the execution or filing of any paper or any further act on the part of the Warrant Agent or the Countersigning Agent. Any such successor Countersigning Agent shall promptly cause notice of its succession as Countersigning Agent to be given in accordance with Section 11.1(b) to each Holder of a Warrant Certificate at such Holder’s last address as shown on the Warrant Register.

(c) A Countersigning Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to the Warrant Agent and to the Company. The Warrant Agent may at any time terminate the agency of a Countersigning Agent by giving thirty (30) days’ prior written notice thereof to such Countersigning Agent and to the Company.

(d) The Warrant Agent agrees to pay to each Countersigning Agent from time to time reasonable compensation for its services under this Section, and the Warrant Agent shall be entitled to be reimbursed for such payments, subject to the provisions of Section 9.3.

(e) Any Countersigning Agent shall have the same rights and immunities as those of the Warrant Agent set forth in Section 9.1.

ARTICLE 10

ADDITIONAL COVENANTS OF THE COMPANY

Section 10.1 Reports to Holders. (a) The Company agrees with each Holder, for so long as any Warrants remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to (a) make available on its website quarterly reports containing selected unaudited financial data for the first three quarters of each fiscal year within 60 days of the end of such fiscal quarter and an annual report containing audited financial statements for each fiscal year within 150 days of such fiscal year end and (b) to the extent not already available on the Company’s website, make available, upon request of any Holder, to such Holder or beneficial owner of such Warrants in connection with any sale thereof and any prospective purchaser of such Warrants designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Securities Act, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all filings required thereby in a timely manner, in order to permit resales of such Warrants to Rule 144.

(b) The Company shall provide the Warrant Agent with a sufficient number of copies of all reports and other documents and information that the Warrant Agent may be required to deliver to the Holders of the Warrants under this Section 10.1.

Section 10.2 Compliance with Agreements. The Company shall comply in all material respects with the terms and conditions of the Registration Rights Agreement and the Initial Purchaser Registration Rights Agreement.

Section 10.3 Maintenance of Office. The Company hereby initially designates the office of the Warrant Agent at Computershare Trust Company, N.A.., 350 Indiana St., Suite 800, Golden, CO 80401, or such other location as the Company may designate upon notice from the Warrant Agent as the office or agency for each such purpose In case the Company shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Agency Office.

ARTICLE 11

NOTICES

Section 11.1 Notices Generally. (a) Any request, notice, direction, authorization, consent, waiver, demand or other communication permitted or authorized by this Agreement to be made upon; given or furnished to or filed with the Company or the Warrant Agent by the other party hereto or by any Holder shall be sufficient for every purpose hereunder if in writing (including telecopy communication) and telecopied or delivered by hand (including by courier service) as follows:

If to the Company, to it at:

Paragon Shipping Inc.
Voula Center
102-104, V. Pavlou Str.
GR, Greece 16 673
Attention: Chief Executive Officer
Facsimile: 30 210 899 5086

with a copy to

Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
Attention: Gary Wolfe, Esq.
Facsimile: (212) 480-8421

If to the Warrant Agent, to it at:

Computershare, Inc.

350 Indiana Street, Suite 800

Golden, CO 80401

Attention: Corporate Actions

Facsimile: 303-262-0604

or, in either case, such other address as shall have been set forth in a notice delivered in accordance with this Section 11.1(a).

All such communications shall, when so telecopied or delivered by hand, be effective when telecopied with confirmation of receipt or received by the addressee, respectively.

Any Person that telecopies any communication hereunder to any Person shall, on the same date as such telecopy is transmitted, also send, by first class mail, postage prepaid and addressed to such Person as specified above, an original copy of the communication so transmitted.

(b) Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Warrant Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made by a method approved by the Warrant Agent as one which would be most reliable under the circumstances for successfully delivering the notice to the addressees shall constitute a sufficient notification for every purpose hereunder.

Section 11.2 Required Notices to Holders. In case the Company shall propose (i) to pay any dividend payable in stock of any class to the holders of its Common Stock or to make any other distribution to the holders of its Common Stock for which an adjustment is required to be made pursuant to Article 6, (ii) to distribute to the holders of its Common Stock rights to subscribe for or to purchase any Additional Common Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Common Stock, (iv) to effect any transaction described in Section 6.1(j) or (v) to effect the liquidation, dissolution or winding up of the Company, then, and in each such case, the Company shall cause to be filed with the Warrant Agent and shall give to each Holder of a Warrant Certificate, in accordance with Section 11.1(b), a notice of such proposed action or event. Such notice shall specify (x) the date on which a record is to be taken for the purposes of such dividend or distribution; and (y) the date on which such reclassification, transaction, event, liquidation, dissolution or winding up is expected to become effective and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities, cash or other property deliverable upon such reclassification, transaction, event, liquidation, dissolution or winding up. Such notice shall be given, in the case of any action covered by clause (i) or (ii) above, at least ten (10) days prior to the record date for determining holders of the Common Stock for purposes of such action or, in the case of any action covered by clauses (iii) through (v), at least twenty (20) days prior to the applicable effective or expiration date specified above or, in any such case, prior to such earlier time as notice thereof shall be required to be given pursuant to Rule 10b-17 under the Exchange Act, if applicable.

If at any time the Company shall cancel any of the proposed transactions for which notice has been given under this Section 11.2 prior to the consummation thereof, the Company shall give each Holder prompt notice of such cancellation in accordance with Section 11.1(b) hereof.

ARTICLE 12

APPLICABLE LAW

THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

EACH OF THE PARTIES HERETO CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT LOCATED WITHIN THE CITY, COUNTY AND STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE

PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF VIA OVERNIGHT COURIER, TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FOURTEEN CALENDAR DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST THE OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.

ARTICLE 13

PERSONS BENEFITING

This Agreement shall be binding upon and inure to the benefit of the Company and the Warrant Agent, and their respective successors and assigns and the Holders from time to time. Nothing in this Agreement is intended or shall be construed to confer upon any Person, other than the Company, the Warrant Agent and the Holders, any right, remedy or claim under or by reason of this Agreement or any part hereof. Each Holder agrees to all of the terms and provisions of this Agreement applicable thereto.

ARTICLE 14

COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

ARTICLE 15

AMENDMENTS

The Company and the Warrant Agent may, without the consent or concurrence of the Holders, by supplemental agreement or otherwise, amend this Agreement for any of the following purposes:

(i) to cure any ambiguity or to correct or supplement any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained;

(ii) to add to the covenants and agreements of the Company in this Agreement further covenants and agreements of the Company thereafter to be observed, or surrender any rights or powers reserved to or conferred upon the Company in this Agreement;

(iii) to comply with any requirement of the SEC in connection with the registration of the Units, Warrants or Warrant Shares or in relation to the requirements of any securities exchange or interdealer quotation system on which the Units, Warrants or Warrant Shares are or are to be listed or quoted on; or

(iv) to make any other change that does not adversely affect the rights or interests of the Holders hereunder in any material respect.

This Agreement may otherwise be amended by the Company and the Warrant Agent only with the consent of the Holders of a majority of the then outstanding Warrants. Any such amendment shall be binding upon all Holders of Warrants. Notwithstanding the foregoing, the consent of each Holder affected shall be required for any amendment pursuant to which the Warrant Price would be increased or the number of Warrant Shares purchasable upon exercise of Warrants would be decreased (other than pursuant to adjustments provided herein).

The Warrant Agent shall join with the Company in the execution and delivery of any such amendment unless such amendment affects the Warrant Agent’s own rights, duties or immunities hereunder, in which case the Warrant Agent may, but shall not be required to, join in such execution and delivery. Upon execution and delivery of any amendment pursuant to this Article 15, such amendment shall be considered a part of this Agreement for all purposes and every Holder theretofore or thereafter countersigned and delivered hereunder shall be bound thereby.

Promptly after the execution by the Company and the Warrant Agent of any such amendment, the Company shall give notice to the Holders, setting forth in general terms the substance of such amendment, in accordance with the provisions of Section 11.1(b). Any failure of the Company to mail such notice or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.

ARTICLE 16

INSPECTION

The Warrant Agent shall cause a copy of this Agreement to be available at all reasonable times at the Corporate Agency Office of the Warrant Agent for inspection by the Holder of any Warrant Certificate. The Warrant Agent may require such Holder to submit his Warrant Certificate for inspection by it.

ARTICLE 17

SUCCESSOR TO THE COMPANY

So long as Warrants remain outstanding, the Company will not enter into any Non-Surviving Combination unless the acquirer shall expressly assume by a supplemental agreement, executed and delivered to the Warrant Agent, in form reasonably satisfactory to the Warrant Agent, the due and punctual performance of every covenant of this Agreement on the part of the Company to be performed and observed and shall have provided for exercise rights in accordance with Section 6.1(j). Upon the consummation of such Non-Surviving Combination,

the acquirer shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such acquirer had been named as the Company herein.

ARTICLE 18

ENTIRE AGREEMENT

This Agreement sets forth the entire agreement of the parties hereto as to the subject matter hereof and supersedes all previous agreements among all or some of the parties hereto with respect thereto, whether written, oral or otherwise.

ARTICLE 19

HEADINGS

The descriptive headings of the several Sections of this Agreement are inserted for convenience and shall not control or affect the meaning or construction of any of the provisions hereof.

[Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

PARAGON SHIPPING INC.


By:	/s/ GEORGE SKRIMIZEAS
	Name:	GEORGE SKRIMIZEAS
	Title:	Secretary


COMPUTERSHARE TRUST COMPANY, N.A. Inc.


By:	/s/ Theresa Henshaw
	Name:	Theresa Henshaw
	Title:	Operations Manager & Trust Officer


By:	/s/ John M. Wahl
Name:		John M. Wahl
Title:		Corporate Trust Officer

EXHIBIT A

FORM OF WARRANT CERTIFICATE

NEITHER THIS SECURITY NOR THE WARRANT SHARES ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY AND THE WARRANT SHARES ISSUABLE UPON ITS EXERCISE IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR THE WARRANT SHARES ISSUABLE UPON ITS EXERCISE, PRIOR TO THE DATE WHICH IS [IN THE CASE OF RULE 144A SECURITIES: TWO YEARS] [IN THE CASE OF REGULATION S SECURITIES: ONE YEAR] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY, ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT THAT SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

A-1

1974, AS AMENDED (“ERISA”), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, “SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

THIS SECURITY (I) WAS INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE SHARE OF THE COMPANY’S CLASS A COMMON STOCK AND ONE-FIFTH OF A WARRANT TO PURCHASE ONE SHARE OF THE COMPANY’S CLASS A COMMON STOCK. PRIOR TO THE EARLIER TO OCCUR OF (1) THE CONSUMMATION OF AN EXCHANGE OFFER FOR THE UNITS OR, IF AN EXCHANGE OFFER IS NOT CONDUCTED, THE DATE A REGISTRATION STATEMENT COVERING THE RESALE OF UNITS, AND THE CLASS A COMMON STOCK AND WARRANTS FORMING COMPONENTS OF THE UNITS, AND THE WARRANT SHARES, BY THE HOLDERS THEREOF IS DECLARED EFFECTIVE BY THE SEC AND (2) SUCH DATE AS CANTOR FITZGERALD & CO., IN ITS SOLE DISCRETION SHALL DETERMINE, THE CLASS A COMMON STOCK AND THE WARRANTS MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM EACH OTHER, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY AS A UNIT AND (II) CANNOT BE EXERCISED IN WHOLE OR IN PART UNTIL THE COMPANY’S COMPLETION OF A QUALIFIED IPO.

EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT

AGENT AS PROVIDED HEREIN.

Warrant Certificate evidencing Warrants to Purchase

Common Stock, par value $.001

PARAGON SHIPPING INC.

No.

CUSIP No.

VOID AFTER 5:00 P.M., NEW YORK TIME,

ON NOVEMBER 21, 2011, OR UPON EARLIER REDEMPTION

This certifies that or registered assigns is the registered holder of warrants to purchase certain securities (each a “Warrant”). Each Warrant entitles the holder thereof, subject to the provisions contained herein and in the Warrant Agreement (as defined below), to purchase from Paragon Shipping Inc., a

A-2

Marshall Islands corporation (the “Company”), one share of the Company’s Common Stock (each, a “Share”), at the Exercise Price set forth below. The exercise price of each Warrant (the “Exercise Price”) shall be $10.00 initially, subject to adjustments as set forth in the Warrant Agreement (as defined below).

Subject to the terms of the Warrant Agreement, each Warrant evidenced hereby may be exercised in whole but not in part at any time, as specified herein, on any Business Day (as defined below) occurring during the period (the “Exercise Period”) commencing on the Company’s Completion (as defined below) of a Qualified IPO (as defined below) and ending at 5:00 P.M., New York time, on November 21, 2011 (the “Expiration Date”). Each Warrant remaining unexercised after 5:00 P.M., New York time, on the Expiration Date shall become void, and all rights of the holder of this Warrant Certificate evidencing such Warrant shall cease.

The holder of the Warrants represented by this Warrant Certificate may exercise any Warrant evidenced hereby by delivering, not later than 5:00 P.M., New York time, on any Business Day during the Exercise Period (the “Exercise Date”) to Computershare Trust Company N.A. (the “Warrant Agent”, which term includes any successor warrant agent under the Warrant Agreement described below) at its stock transfer division at , (i) this Warrant Certificate and the Warrants to be exercised (the “Book-Entry Warrants”) free on the records of The Depository Trust Company (the “Depository”) to an account of the Warrant Agent at the Depository designated for such purpose in writing by the Warrant Agent to the Depository, (ii) an election to exercise (“Notice of Exercise”), properly executed by the holder hereof attached hereto as Exhibit 1 properly executed by the institution in whose account the Warrant is recorded on the records of the Depository (the “Participant”), and substantially in the form included on the reverse of hereof.

If any of (a) this Warrant Certificate or the Book-Entry Warrants, or (b) the Notice of Exercise is received by the Warrant Agent after 5:00 P.M., New York time, on the specified Exercise Date, the Warrants will be deemed to be received and exercised on the Business Day next succeeding the Exercise Date. If the date specified as the Exercise Date is not a Business Day, the Warrants will be deemed to be received and exercised on the next succeeding day which is a Business Day. If the Warrants to be exercised are received or deemed to be received after the Expiration Date, the exercise thereof will be null and void and any funds delivered to the Warrant Agent will be returned to the holder as soon as practicable. The validity of any exercise of Warrants will be determined by the Warrant Agent in its sole discretion and such determination will be final and binding upon the holder of the Warrants and the Company. Neither the Warrant Agent nor the Company shall have any obligation to inform a holder of Warrants of the invalidity of any exercise of Warrants.

“Business Day” means any day that is not a Saturday or Sunday and is not a United States federal holiday or a day on which the New York Stock Exchange in New York, New York is not open.

“Qualified IPO” shall mean any public offering of the Company’s Class A Common Stock that raises at least $50.0 million in gross proceeds for the Company.

A-3

“Completion” shall mean such time as the sale of the number of firm shares stated in the final prospectus related to a Qualified IPO is consummated.

“Consummation of an Exchange Offer” shall mean the consummation of an offer by the Company to exchange and issue a number of registered Units, registered shares of Class A Common Stock, registered Warrants and, if permitted, registered Warrant Shares (registered pursuant to an effective registration statement filed with the Securities Exchange Commission under the Securities Act) equal to number of securities tendered in connection with such exchange and issuance.

Warrants may be exercised only in whole numbers of Warrants. If fewer than all of the Warrants evidenced by this Warrant Certificate are exercised, a new Warrant Certificate for the number of Warrants remaining unexercised shall be executed by the Company and countersigned by the Warrant Agent as provided in Section 2.2 of the Warrant Agreement, and delivered to the holder of this Warrant Certificate at the address specified on the books of the Warrant Agent or as otherwise specified by such registered holder.

This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of November 21, 2006 (the “Warrant Agreement”), between the Company and the Warrant Agent and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the holder of this Warrant Certificate and the beneficial owners of the Warrants represented by this Warrant Certificate consent by acceptance hereof. Copies of the Warrant Agreement are on file and can be inspected at the above-mentioned office of the Warrant Agent.

The accrual of dividends, if any, on the Shares issued upon the valid exercise of any Warrant will be governed by the terms generally applicable to such Shares. From and after the issuance of such Shares, the former holder of the Warrants exercised will be entitled to the benefits generally available to other holders of Shares and such former holder’s right to receive payments of dividends and any other amounts payable in respect of the Shares shall be governed by, and shall be subject to, the terms and provisions generally applicable to such Shares.

The Exercise Price and the number of Warrants for which this Warrant is exercisable shall be subject to adjustment as provided pursuant to Section 6.1 of the Warrant Agreement.

Prior to the Separation Date, the Warrants represented by this Warrant Certificate may be exchanged or transferred only together with the Shares to which such Warrants are attached (together, the “Units”), and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Units. Additionally, prior to the Separation Date, each transfer of such Units on the register of the Units shall operate also to transfer the Warrants included in such Units. From and after the Separation Date, the provisions of the two preceding sentences shall be of no further force and effect. Upon due presentment for registration of transfer or exchange of this Warrant Certificate at the stock transfer division of the Warrant Agent, the Company shall execute, and the Warrant Agent shall countersign and deliver, as provided in Section 2.2 of the Warrant Agreement, in the name of the designated transferee one or more new Warrant Certificates of any authorized denomination evidencing in the aggregate a like number of unexercised Warrants, subject to the limitations provided in the Warrant Agreement.

A-4

Neither this Warrant Certificate nor the Warrants evidenced hereby shall entitle the holder hereof or thereof to any of the rights of a holder of the Shares, including, without limitation, the right to receive dividends, if any, or, subject to Article V of the Warrant Agreement, payments upon the liquidation, dissolution or winding up of the Company or to exercise voting rights, if any.

The Warrant Agreement and this Warrant Certificate may be amended as provided in the Warrant Agreement including, under certain circumstances described therein, without the consent of the holder of this Warrant Certificate or the Warrants evidenced thereby.

THIS WARRANT CERTIFICATE AND ALL RIGHTS HEREUNDER AND UNDER THE WARRANT AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS FORMED AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

This Warrant Certificate shall not be entitled to any benefit under the Warrant Agreement or be valid or obligatory for any purpose, and no Warrant evidenced hereby may be exercised, unless this Warrant Certificate has been countersigned by the manual signature of the Warrant Agent.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated as of , 200

	PARAGON SHIPPING INC.


	By:
		Authorized Officer

COMPUTERSHARE TRUST COMPANY, N.A.
as Warrant Agent

By:
	Authorized Officer

A-5

Notice of Exercise

To: Paragon Shipping Inc.

The undersigned hereby irrevocably elects to exercise, on , (the “Exercise Date”), Warrants, evidenced by this Warrant Certificate.

The undersigned elects to pay the Warrant Price in cash pursuant to the cash exercise provisions of Section 3.2(c) and herewith delivers payment of the Warrant Price.

Dated:	,

Name		(Please Print)

/ / / / - / / /- / / / / /
(Insert Social Security
or Other Identifying
Number of Holder)						Address

Signature

A-1

EXHIBIT B-1

FORM OF TRANSFER CERTIFICATE
FOR EXCHANGE OR TRANSFER FROM RULE 144A CERTIFICATE
TO REGULATION S CERTIFICATE
PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD

COMPUTERSHARE TRUST COMPANY, N.A.

350 Indiana Street, Suite 800

Golden, CO 80401

Attention: Corporate Actions

Re: Paragon Shipping Inc. Warrant to Purchase Common Stock

Reference is hereby made to the Warrant Agreement, dated as of November 21, 2006 (the “Warrant Agreement”), between Paragon Shipping Inc. (the “Company”) and Computershare Trust Company, N.A., as warrant agent. Capitalized terms not defined in this Certificate shall have the meanings given to them in the Warrant Agreement.

This Certificate relates to [ ] principal amount of Certificates represented by a beneficial interest in the Rule 144A Global Certificate (CUSIP No. ) held with the The Depository Trust Company (the “Depositary”) by or on behalf of [ ] as beneficial owner (the “Transferor”). The Transferor has requested an exchange or transfer of its beneficial interest for an interest in the Regulation S Certificate (CUSIP (CINS) No. ) to be held (ISIN Code ) (Common Code •) through the Depositary.

In connection with such request and in respect of such Certificates, the Transferor does hereby certify that such exchange or transfer has been effected in accordance with the transfer restrictions set forth in the Certificates and pursuant to and in accordance with Rule 903 or Rule 904 (as applicable) of Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), and accordingly the Transferor does hereby certify that:

(1) the Transferor is not a distributor of the Certificates, an affiliate of the Company or any such distributor or a person acting on behalf of any of the foregoing;

(2) the offer of the Certificates was not made to a person in the United States;

(3) either: (A) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, or

(B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor

B-1

nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States;

(4) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;

(5) if the Transferor is a dealer in securities or has received a selling concession, fee or other remuneration in respect of the Certificates covered by this transfer certificate then the requirements of Rule 904(c)(1) have been satisfied;

(6) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and

(7) upon completion of the transaction, the beneficial interest being transferred as described above is to be held with the Depositary.

This Certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchaser of such Certificates being exchanged or transferred.

	[Insert Name of Transferor]

	By:
		Name:
		Title:

Dated:

cc: Paragon Shipping Inc.

B-2

EXHIBIT B-2

FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OR EXCHANGE FROM RULE 144A CERTIFICATE
TO REGULATION S CERTIFICATE AFTER THE
EXPIRATION OF THE RESTRICTED PERIOD

Computershare Trust Company, Inc.

350 Indiana Street, Suite 800

Golden, CO 80401

Attention: Corporate Actions

Re: Paragon Shipping Inc. Warrant to Purchase Common Stock

Reference is hereby made to the Warrant Agreement, dated as of November 21, 2006 (the “Warrant Agreement”), between Paragon Shipping Inc. (the “Company”) and Computershare Trust Company, N.A.., as warrant agent. Capitalized terms not defined in this Certificate shall have the meanings given to them in the Warrant Agreement.

This Certificate relates to [ ] principal amount of Certificates represented by a beneficial interest in the Rule 144A Global Certificate (CUSIP No. ) held with The Depository Trust Company (the “Depositary”) by or on behalf of [ ] as beneficial owner (the “Transferor”). The Transferor has requested an exchange or transfer of its interest for an interest in the Regulation S Global Certificate (CUSIP (CINS) No. ) to be held (ISIN Code ) (Common Code •) through the Depositary.

In connection with such request and in respect of such Certificates, the Transferor does hereby certify that such exchange or transfer has been effected in accordance with the transfer restrictions set forth in the Certificates and that, with respect to transfers made in reliance on Regulation S under the Securities Act, pursuant to and in accordance with Regulation S under the Securities Act, and accordingly the Transferor does hereby further certify that:

(1) (A) the offer of the Certificates was not made to a person in the United States;

(B) either:

(i) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, or

(ii) the transaction was executed in, on or through the facilities of a designated offshore Securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States;

B-3

(C) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable; and

(D) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

(2) With respect to transfers made in reliance on Rule 144 under the Securities Act, the Certificates are being transferred in a transaction permitted by Rule 144 under the Securities Act.

This Certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchaser of such Certificates being exchanged or transferred.

	[Insert Name of Transferor]

	By:
		Name:
		Title:

Dated:

cc: Paragon Shipping Inc.

B-4

EXHIBIT B-3

FORM OF TRANSFER CERTIFICATE FOR TRANSFER OR
EXCHANGE FROM REGULATION S CERTIFICATE
TO RULE 144A CERTIFICATE AFTER THE EXPIRATION
OF THE RESTRICTED PERIOD

Computershare Trust Company, N.A.

350 Indiana Street, Suite 800

Golden, CO 80401

Attention: Corporate Actions

Re: Paragon Shipping Inc. Warrant to Purchase Common Stock

This Certificate relates to [ ] principal amount of Certificates which are held in the form of the Regulation S Certificate (CUSIP No. ) (ISIN Code ) (Common Code •) through the Depositary by or on behalf of transferor as beneficial owner (the “Transferor”). The Transferor has requested an exchange or transfer of its interest in the Certificates for an interest in the Rule 144A Certificate (CUSIP No. ).

In connection with such request, and in respect of such Certificates, the Transferor does hereby certify that such transfer is being effected in accordance with the transfer restrictions set forth in the Declaration of Trust and pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), to a transferee that the Transferor reasonably believes is purchasing the Certificates for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

B-1

This Certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchaser of the Certificates being transferred.

	[Insert Name of Transferor]

	By:
		Name:
		Title:

Dated:

cc: Paragon Shipping Inc.

B-2

EXHIBIT C

FORM OF LEGAL OPINION ON TRANSFER

, 20

COMPUTERSHARE TRUST COMPANY, N.A.

350 Indiana Street, Suite 800

Golden, CO 80401

Attention: Corporate Actions

Re: Paragon Shipping Inc. Warrants to Purchase Common Stock

Ladies and Gentlemen:

This opinion is being furnished to you in connection with the sale by (the “Transferor”) to (the “Purchaser”) of Warrants to purchase Common Stock exercisable for an aggregate of shares of Class A Common Stock, par value $0.001 per share (“Class A Common Stock”), of Paragon Shipping Inc. (the “Warrants”).

We have examined such documents and records as we have deemed appropriate. In our examination of the foregoing, we have assumed the authenticity of all documents, the genuineness of all signatures and the due authorization, execution and delivery of the aforementioned by each of the parties thereto. We have further assumed the accuracy of the representations contained in the Transferee Certificate executed and delivered by the Purchaser in connection with its purchase of the Warrants made by the parties executing such document. We have also assumed that the sale of the Warrants to the Transferor was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”).

Based on the foregoing, we are of the opinion that the sale to the Purchaser of the Warrants does not require registration of such Warrants or the Class A Common Stock issuable upon exercise thereof under the Securities Act.

Very truly yours,

C-1

EX-10.7 14 a2178205zex-10_7.htm EXHIBIT 10.7

Exhibit 10.7

RIGHT OF FIRST REFUSAL AGREEMENT

This Right of First Refusal Agreement (this “Agreement”) is made effective as of November 20, 2006 by and between PARAGON SHIPPING INC., a Marshall Islands corporation (the “Company” or “Paragon”) and Michael Bodouroglou, an individual residing in Greece, (the “Grantor”).

WHEREAS, the Company is engaged in the business of owning, operating, managing and chartering drybulk carriers.

WHEREAS, the Grantor is employed by the Company as the Company’s President and Chief Executive Officer pursuant to an employment agreement between the Grantor and the Company dated as of the date of this Agreement (the “Employment Agreement”).

WHEREAS, the Grantor desires to grant to the Company, subject to the terms and conditions set forth herein, a right of first refusal over any opportunities that the Grantor or any affiliated entity may obtain during the term of the Employment Agreement to purchase drybulk carriers.

AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor and Paragon agree to the following:

1. Right of First Refusal

(a) During the term of the Employment Agreement, Grantor agrees that he shall use all commercially reasonably efforts to allow the Company to exercise a right of first refusal to acquire any drybulk carrier that the Grantor, either directly or through one or more Affiliated Entities, enters into a definitive agreement setting forth the terms upon which he or an Affiliated Entity may acquire a drybulk carrier (each an “Opportunity”).

(b) For purposes of this Agreement, an “Affiliated Entity” of the Grantor shall mean any other person or entity directly or indirectly controlled by or under direct or indirect common control with the Grantor. For purposes of this Section l(b), “control,” means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities or other beneficial interest, by contract or otherwise.

2. Exercise of Right of First Refusal

(a) Upon the Grantor or an Affiliated Entity of the Grantor acquiring an Opportunity, the Grantor shall notify, or cause the Affiliated Entity to notify (each a “Notice”), a committee consisting of the Company’s independent directors of the terms of such Opportunity, which terms shall be no less favorable than the terms offered to the Grantor an Affiliated Entity of the Grantor. For purposes of this Agreement, notice delivered to the Secretary of the Company addressed to the “Independent Members of the Board of Directors” shall be deemed to be given to a committee consisting of the Company’s independent directors. Upon receipt of Notice, the Company shall have a period of not less than seven (7) calendar days in the case of a Notice relating to an Opportunity relating to the acquisition of a single drybulk carrier, or fourteen (14) calendar days in the case of Notice relating to more than one drybulk carrier, to either accept or decline the

Opportunity, and the Grantor shall not, and shall cause the Affiliated Entity not to, acquire the vessel during such period.

(b) In the event that the Company accepts an Opportunity, the Grantor shall, or shall cause the Affiliated Entity to, use his or its commercially reasonable efforts to permit the Company to acquire the drybulk carrier on the terms set forth in the Opportunity.

3. Notices. All notices, requests, demands and other communications to any party hereunder shall be in writing (including prepaid overnight courier, facsimile transmission, email transmission or similar writing) and shall be given to such party at its respective address or facsimile number set forth below or at such other address or facsimile numbers as such party may hereafter specify for the purpose by notice to the other party hereto. Each such notice, request or other communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 3 and telephonic confirmation of receipt thereof is obtained or (ii) if given by mail, prepaid overnight courier or any other means, when received at the address specified in this Section or when delivery at such address is refused.

Grantor:	Mr. Michael Bodouroglou
	c/o Paragon Shipping Inc.
	Voula Center
	102-104 V. Pavlou Street
	Voula 16673, Athens
	Greece

Company:	Paragon Shipping Inc.
	Attn: Secretary
	Voula Center, 102-104 V. Pavlou Street,
	Voula 16673,
	Athens, Greece

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

5. Further Assurances. The Grantor agrees to execute, or to cause an Affiliated Entity to, acknowledge and deliver all such instruments and take all such actions as Paragon from time to time may reasonably request in order to further effectuate the purposes of this Agreement and to carry out the terms hereof.

6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, executors, administrators, successors and assigns.

7. Severability. If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, then this Agreement shall be construed without such provision.

7. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of such counterparts together shall constitute one agreement. To facilitate execution of this Agreement, the parties may execute and exchange counterparts of signature pages by telephone facsimile.

EXECUTED as of the date set forth above.

		MICHAEL BODOUROGLOU

		PARAGON SHIPPING LTD


		By:

		Name:

		Title:

EX-21.1 15 a2178205zex-21_1.htm EXHIBIT 21.1

Exhibit 21.1

List of Subsidiaries of Paragon Shipping Inc.

1. Camelia Navigation S.A.

2. Explorer Shipholding Ltd.

3. Fairplay Maritime Ltd.

4. Frontline Marine Co.

5. Opera Navigation Co.

6. Trade Forde Shipping S.A.

EX-23.2 16 a2178205zex-23_2.htm EXHIBIT 23.2
QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form F-1 of our report dated April 25, 2007 except for Note 18 (c) as to which the date is May 7, 2007 and Note 18 (e) as to which the date is May 15, 2007, and Note 18 (d), as to which the date is May 17, 2007 relating to the consolidated financial statements of Paragon Shipping Inc. appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Prospectus.

\s\ Deloitte

Deloitte.
Hadjipavlou, Sofianos & Cambanis S.A.
Athens, Greece
May 31, 2007

QuickLinks

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-23.3 17 a2178205zex-23_3.htm EXHIBIT 23.3

Exhibit 23.3

Drewry Shipping Consultants Ltd., Drewry House, Meridian Gate, 213 Marsh Wall, London E14 9FJ, England

Telephone: +44 (0) 20 7538 0191 Facsimile: +44 (0) 20 7987 9396 Email: enquiries@drewry.co.uk Website: www.drewry.co.uk

May , 2007

Paragon Shipping Inc.

Voula Center

102-104 V. Pavlou Street

Voula 16673

Athens, Greece

Dear Sir/Madam:

Reference is made to the Form F-1 registration statement filed with the U.S. Securities and Exchange Commission (the “SEC”) (File No. 333-139306) on May , 2006 (the “Registration Statement”) relating to the registration of the Class A Common Shares and Warrants of Paragon Shipping Inc. (the “Company”). We hereby consent to all references to our name in the prospectus which constitutes part of the Registration Statement (the “Prospectus”) and to the use of the statistical information supplied by us set forth in “Industry” section of the Prospectus. We further advise the Company that our role has been limited to the provision of such statistical data supplied by us. With respect to such statistical data, we advise you that:

(1) we have accurately described The international dry bulk shipping industry, subject to the availability and reliability of the data supporting the statistical and graphical information presented; and

(2) our methodologies for collecting information and data may differ from those of other sources and does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the dry bulk shipping industry.

We hereby consent to the filing of this letter as an exhibit to the Registration Statement filed with the SEC on May , 2007.

Yours faithfully

Nigel Gardiner

Managing Director

Drewry Shipping Consultants Ltd

Drewry Shipping Consultants Limited – registered in London, England No. 3289135

GRAPHIC 19 ex233i001.jpg EX233I001.JPG begin 644 ex233i001.jpg M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``H'!P@'!@H("`@+"@H+#A@0#@T- M#AT5%A$8(Q\E)"(?(B$F*S7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#V6BBB@`HH MHH`****`"BBB@`HHJM?W]MIEE)>7<@CBC&2?Z#WH2N#=BS17*>%]>O?$VJ75 MVW[BQM@$BA'5F/=CWXKJZJ47%V9,9*2N@HHHJ2@HHHH`****`"BBB@`HHHH` M****`"O,OB/K37.I)I43'RK8;I`/XG/^`_G7IM>'^(93/XBOY&ZF=OTX_I75 MA8ISOV.;$RM&QW'PO=#I=Z@'S+,"3ZY'%=Q7E?P[U9+#6WM)FPEXH53VWCI_ MA7I=_?VVF63W5<_>^M>E(Z2QK)&P9'`92.A!K.=.4+7+A4C/8=11169H%%%%`!1110`4 M444`%%%%`!7CGC73FT[Q-OZU['6%XK\.)XAT[RU*I=1'=#(? MU!]C6]"IR2UV,:T.>.AY%96MS>WL5O9HSSNPV!>H/K[5U7CFSUV""Q?4;K[3 M`J!2R#`$G?/O[UVGAGPS;>'K,``273C][,1U]AZ"KNN:='JNC75G(/OQG:?1 MAR#^=;2Q"=166B,HT&H.^YX;7KW@.]:\\*V^\Y:!FB)]<HKU7 MX<6[P^&/,8$>=.SK].!_0UKBK1MJ3QLWHK@FI:`"BBB@`HHHH`****`"D.-ISTQ2U7OQO26=HF]YKA@N.@&X\_2O:--L8]-TVWLHONPH%SZ^I_ M.LKPSX4MO#T1D+>?>2#$DQ'Z#T%;]=%>KSNRV1A1I\FKW84445SFX5Y=X7\- M:=XAU35A?+)^XD!3RVV]2V<_D*]1KA/AW_R%=<_ZZ+_-JWI-QA)KR,:B3G%/ MS)+[X;6<<)ET>YGM[E!E=SY#'TSVJ[X'U^XU*WFT^_R;RR.TL>K+TY]^*ZJN M`\-;1\2M6$6`G[S('KN%-2=2#4N@G%0DG'J=Z)(SNPZG;][GI]:%=77TMGYFG+ M_,J9]:7L5SH_:NW,UH=LM]:/.8%NH6E'\`<9J5Y$CQO=5STR<9KSN_LO! M`TMEL-1BBO8E+13B4[V;WI[RS^*?ART\C%[RQ;=O[G;_`%Q3]BM'T%[5['H? M;--5U==R,&'J#FN2N?$8?X=?V@C_`+Z2(0#'7>?EJO\`#^>73WO=#NSMDAQ, MH]B`3_2H]D^5OL5[1)M M7UUN8X@88,_3&1^`_6L;PEX?D\00W<5Q>2PV,JL]&/VFCNM3L`8^$_$&FZ%JFKG4)FC\Z0;-J%LX+9Z?45Z=50Z3IK,6;3K4 MD\DF%>?TK6$TDT^IG.+;370YC4/B/IRPE-+BFN[AAA/D*J#[]ZE\#Z!=Z>+C M4]2R+N\.=AZJ,YY]S72PV%E;MO@LX(F]4C"G]!5BAS2CRQ0E!MWDSC?!?_(Q M>(/^OC^IIGC>R>VU;3M>^S"YMK<[+B/;N^7/4CTYKL(K:"%W>*".-I#EV1`" MQ]_6I&4,I5@"",$$<&G[7W^8/9^YRG)W&M^#H].:ZABL)7V_)"L*[RW88QFM M/PVL]SH0:]T^"R:?.884V#:>Y'K5V+1=+@G,\6GVR2?WA$,CZ>E7:F4E:R'& M+O=GE%C87)\1Q^%I.;:"],Y'^R!_+I6MX\\_1=;@U:T&UKF!H&^N,?R-=X+: MW%P;@01"8C!DV#=CZ]:)[:WN5"W$$,R2?4C/^%8_P`-/^0?J'_7S79X&,8X]*C@MK>V!6W@CA#')$:! MKGBKQ986EE>Z;!*9-0(\H1!#P2.OIT-:GA;2SI'AZUM67$NW? M)_O'G_ZWX5=W&E9]2+*530UZ***YS<****`"BBB@`HHHH`****`"BBB@`HHH >H`KG3[(W/VHV GRAPHIC 20 ex233i002.jpg EX233I002.JPG begin 644 ex233i002.jpg M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``H'!P@'!@H("`@+"@H+#A@0#@T- M#AT5%A$8(Q\E)"(?(B$F*S7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#V:BBB@`HH MHH`****`"BBB@`HHHH`****`"BBB@`HHHH`2EHJO?:A9Z;;-1@ M!0!8HK`.LZMJG&BZ9Y<)Z7E_F-2/58_O-^.VF_\`"*F]^?7-5N]1)ZPJY@A' MT1,9_$F@#5N-7TRT)%SJ-I`1U$DRK_,TRWUW2+N01VVJVAVJ!(-(LD`_P"F"D_GBG7/A[1;Q"MQI-G(#ZP+G\\4`:-%&]:L[. MVGE?3+\M&MO*Y5(D'5G8`#\34E0&SMFE,K0H[G^)AN/X9Z4`4SK]@W_' MN9KH_P#3O`\@_,#'ZT?VG?R_ZC1;C'K/(D?Z9)_2M*EH`RC)X@DY6VT^`>CS M/(?T44>1X@D'S:A8P_\`7.U9OYO4.L6.HS2O/;B MN7\KQGX@C>.RU2-],C='6YG@:UDN\'.%*9(3@?-@9[<4`=;_`&?K1ZZXH_W; M-?ZDTAT[6^VO_G9I_C58ZUK]L<7?AB24#J]E=)(#^#;32_\`"86,?_'Y9:G9 M?]=[&3'YJ"*`)C9^(XN8]8LYO]F:R(S^*O33?>([16LKC#`?[K@ M9_[ZI(_&GAJ0E?[9M4([2/L/_CV*>WC#PVO77;#TP)U/\C0!/INO6&J2O!$[ MQ748S):SH8Y4'J5/;W&16E7$>(]9TK7+=5T5+J]U>$YL[BS@;]R_O(0%"GHP M)Z5O2>(([/4++3+U,74UL9YW5@(X0,`DDGH6X&*`-FBHK:YAN[=+BWD$D3C* MNO0US+"[\4:S?Q_VA6]Q*!ER7ZA5R!@=3F@#JZAN[NVL+9[ MF[GC@A09:21@H'XFO/+S4M>M]2@A\%MJ&LPABL\]Y*)+8=MH<@$D>H;'UJE: M>%_B#&US=W$.E7-\\K2QS7=P\OE$]HX\;%^IH`[4ZOJVLDIH=I]FMSUO[V,@ M$>L34KX?\`+S=$,5_W%^Z@^@KE['P#K&L0Q7GB M;Q-JXN2-QMX)EC6)O8KD5'_PC=]IA:+5]'NO$L63MNX]0?S"O;=$S`9_W30, M]!:X@0X::-3Z%@*>&##*D$'N*X`6.D,`L7PUNV;_`*:QP@?]]%Z8?#&JR'=H MVA+X>E[3+JKV(4!YM'@1;C/NKYR/=>?:I-.U'P38W(NY9;EKX=9M1AF>93[;EX_"@ M#7L/M>O:U!J\UO)::?9JPLXY1MDF9A@R,O\`",9`!YY)-=%6#_PE]G,/]`L- M3OL]/)LW4?\`?3A1^M.^W^)+H?Z-HUO:`]&O+K)_[Y0'^=`&Y45Q=6]I$9;F M>.",=7D<*!^)K(.D:U=@?;M?DB!^]'80K$/^^FW-_*GP^$]%CE$TMF+N;_GK M>.9V_P#'R01WI:Y>/PWJNAG'AO4U%H.1I]^#)&OLCCYD'MR*F&NZ]:C_3_ M``O._/W[&X28?D=I_2@#HJ*YW_A,H%'[W1-"2["_ MO6@4JA/L#S0!9HHHH`****`"D.<'&,]LTM%`&4^B+?S+-J\@NPIREOC$*'UV M_P`1]VS[`5J``#`X%+10`4444`1R0Q2\21(_^\H-,6RM4;HC`-3T4` M)5'5-$T_6$07D`:2(YBF4[9(CZJPY!X%7ZIZIJ4.DV+74JO(7F^0L"WU"IC_@1K:K,U'2YIKN/4-/N1;7L2>62Z[HY4SG:XX/ M7D$'(Y]:`-.BLQ5UZ0!7DL(/5D5Y#^`./ZUH1*R1JKR&1@.6(`S^5`#Z***` M"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`* M***`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HH 9HH`****`"BBB@`HHHH`****`"BBB@#__V3\_ ` end GRAPHIC 21 g886415.jpg G886415.JPG begin 644 g886415.jpg M_]C_X``02D9)1@`!`0$!KP&O``#__@!#35),3%]'4D%02$E#4SI;4$%204=/ M3E]32$E04$E.1U])3D-=4$%204=/3E]32$E04$E.1U]&4$]?3$]'3RY%4%/_ MVP!#``<%!@8&!0<&!@8("`<)"Q(,"PH*"Q<0$0T2&Q<<'!H7&AD=(2HD'1\H M(!D:)3(E*"PM+S`O'2,T.#0N-RHN+R[_VP!#`0@("`L*"Q8,#!8N'AH>+BXN M+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN+BXN M+B[_P``1"`!,`4@#`2(``A$!`Q$!_\0`'``!``(#`0$!``````````````4& M!`<(`P$"_\0`2A```0,#`00&!@4&"PD``````0(#!``%$08'$B$Q$Q0B05%A M,E)Q@9&A%2,SL=$(%D)RE-(E-#K'M M'Z67P[I/SK8 MWY04/4%YN-IM]JL]QEQ8S:W7%QXRUH*U'`&0,9`!^-:=_,W5_P#5>\?L3GX5 MZ&'IT\EY6N<.(G//:)]E:SU9+.9&H9[ASGB[C[JP7;_?'5!3EWFJ(Y$O*K-_ M,S5^,_FO>/V)S\*'1FKQ_LM>/V)S\*Z>[Y6.;O'U/%K5.I&EA2+Y.2H\?L3GX4_,W5_\`5:\?L3GX4:I/ M6Q*=1:7-P;)-IVI=0:HC6&\&+):>;<5TX;W'$E*=X"G7XRD(!*"!DD8KIRO-Q*BI]D]"@Y.':%*4K`V%*4H!2E* M`4I2@%*4H!2E*`4I2@%*4H!2E*`4I2@%*4H!2E*`4I2@%*4H!2E*`4I2@%*5 M@WF2J);)+Z#VTH.[[3P%5G)1BY/D3&+DTES-7ZB#UPO,N2W>+S'0I>ZEN//6 MV@`<."0<#EFO&VZ>NMQ=W(U\U"4CTEJNCH2GWYJU6/3#T@A^Y!3;1X]$>"E> MWP%6:1,AVQM$.,R%O8^KC,CB?P'F:\:A#$S[RM-QCT/7KSP\.[I04I=2GSM` M2VXH7$U3J)V0D9*%7-T!?LX\*BK/I*Y3Y*VUZAU"PAHX@G=4<-RT#"%>1\#7G>M/1KBDR8I0U(5QWAZ+GMQ]]":Y,IVB8K[6HHZUW>[R4[J\MR9RW4'LGFDG%;2K7^FXL MB'J1IF2TIMP)7P/?V>8/?6P*UV;.I.D]ZW>_/T,]H0IQJK=Z66@I7Y<)2VI0 MY@$UHO2^J=KFJ;>Y<;.BQJC(>4T>E1N*WAY9\Z]2,')-GFRGE=C>U*U_LUUK M/O[UTLM_A(B7RU*W9`;]!8R1D<3CB/'P-3Z-9Z37/^CDZBMIE[VYT0D)SGP] MM0X-.Q*DFKEAI6#,NUM@R8D69.CL/RU;L=MQP)4Z>'!([^8^->2;_956]^Y" MZQ.I,+4V[(Z4;B%)Y@JY9%19EKDG2H6S:HT[?'5LVB]0ICJ!E2&7@I0'CBOW M=]26&S/LQ[K=X<-Y[T$/NA)5W9QX4L[V(NM27I4?!O5IN$N1#@W&+(DQL=,T MTZ%*;SRR!RK!N6KM,6N;U"X7Z!&E<`6G'@%#/B.[WTL]!=$]2L*?=;;;H!N, MZ='CPACZ]QP!''EQY<:P5ZKTVBXLVU5\@":\$EMGIT[R@1D?'NI9L71-TI6J MM0ZGUA=]=2M(:/7`A=192Y(ERT[^<@'@/>!R/?RJ8Q<$X40,<<$<@0?;7I8->K5JW5\"_SH,2V6IU"6'%X M;."2.))XG@*LZ;XE'-<9^T2PZ%%/N%0MBO-UD:SU!`FS[2NW0T)4PRPZ#(:\2X,\ M*96+HN-*KKFMM)-PD3EZCMHBK<+:7>L)PI0Y@5,IG0E01<$RV3#*.DZ<+&YN M^.]RQ1IK473,FE5YG6FDWHSDIO45M4PVL-J7UA.`H\A[ZL"2%)"DD$$9!%&F MM0FGH?:50$:INJMKB]*?4?1B8`?^S[>_CUL\O=5C?U9IJ.)I>OD!'4E!$G>? M'U*B2`%>!R#P\JEQ:"DF3E*PK7=+==H:9MLFL2XRB0'65A2W.A#Z=[>\/;468NB>I2E02*KVJ+LJVF(&@E3A7OE"N12.'^M6 M&M(Z1WFXCV^/.JA$E/Q'TR([A0XGD?\`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`WL;N-[AQ]`>%>VM=&VO M6$6,S<%OLO17.DCR(Z]U;:CC./@/A4*JNRN2&[?$T[<(4VW;6M%JEV:U6=UY MP8CVYPJ.[DCMG`&>8X>=2FDK-:-5[3];+U/%:F2H[W1QX[VG;A=95UA.!SK4B3TBG2#P"LC&!Q&!CF:I.T5K2HUL\]J+3 MU_@J*`$W*W+)1+``X82.!QP)Y\!5U-/@NG[*N+7%]3%V>-L6;4VTENP+WFX4 M9SJF.U@IWB`/'!&/=4ALGTEI>_:`=NMYALS)TQQ\RI+Q)6@A1[\\#CC[ZR]B M-F6U>-27QBTR+;:):D-P69`(4I`).>/$]W'Q)\*E[EL?T]*G2)$6X72WQY*R MM^)%?W6EDG)&".`\J3FKM7Z"$79.W4UA'DOO;`;S'6\MV+$NB6HJU?[O?0<# MRR2??4MM*TG8+/LEM-RM]N:9G@QR9*<](LK3E63WY/W"MM3M!V"3HX:0;:=C M6P%)PRO"\A6]DJ._LBM:7VR:0U3KR4U`O4^TZNB('2.1B4%8`&#Q& M%8!'(\JVE'93'CM,(SN-H"!GG@#%4[66SJPZJF-W&29,.XH2$B5$M)[-+!IRY"[=+,N-R2"$29KN^ M4#R'('S\ZF+)I.VV:_7B^15OF3=5)4^E:@4@@D]D8XZUOK!W=[?SN\.'IGY50=KFG(^G=DL2QVE,AYEB>A2-[MKX[ZCR'B:T MC54IKS7L4E3:B_)F!M$TWI>V;);=<[7&89EM".N/+:(#CJE8WB5?I=Y\L>5> M6MFF;WKK9RUJ!I.Y-A-F4VK@%*)R4GR*N'OJTVS9%IU\VV=(E7)<1"&WA;7' M]YA*MT$X!X@$]V:C-J%G8O.U31]NEQW7(+S"T.]'O)W1E1':'(Y`I"2;M?J3 M*+UMT//6%NM^G=K.B'K!&:AORUEJ2U'3NA3>\$Y('#D5#W>59&DOY5MHO_#" MK1I79G9=/7OZ;ZPN095V0$ M/I4O*0/[(QPK/>*UO#]ELCO?Q-0;(M):?NVS:[7*Y6UF3,4M]M+S@RIM*4`C M=/=QX\*@GI<@;`K1'+RD17[N6GU#N;WE*Q[,C/NK?FEM(6S3.GWK#`./`57;WI:UZ:V;R;'%L/#C5]\G) M^97=67H4';+I'2%CTC:YUGC,Q9:WD(;4V3F0@IR2?'D#G\:W["_B'GD;[DX**8C8YI!]$#/,^`KJ>.V6F&VR/#G[:VNG2=M3K)6K@X_P#2"HXCE.\.CW?'&.=?-/:1MEAO-XN\-R0J1=7> ME?#BP4@[Q/9&.'%1JN\5K+I8G=N_'J:1TT[*M&B]J35I"DB/*Z-M*3]FV5J0 MHCV(^ZK#9M$;/G]EELNEWZ.%OQVW'[FAS=<0X5<1GB.?9QBMDV#1=FLAO88# MK[=X=4Y*;?4%).=[(`QR[1JJM[%M+)FI<5*N:X"'.D3;U2/J0?#EG%:.LG?B MU_"JIM>)L*RNQE6F"8TU4MA3*.B?65*C+GI.V7&_6:]N*?;? MM((CMM*"6\'N(Q2N9V-E M*C>HM"KQU3#2M3YG11^D/Z0TI_C(_=H%7-)"DW'2@4#D8O0_=KG3"?5'PIA/ MJCX46P<+_P`^_P`C_;Q/7V^#I>;=-036&V9%YTLM*/T3>@,^WL\:QX\B[Q7T MOQ[II5MQ/$$7H?NUSAA/JCX4PGU1\*N]C8=RS-2^#I*;-O M4Y[II5UTJM>,#^&A@#R&[6/_``A_2&E/\9'[MGP=4Z+ZX=11NEEV!Q`0O*8=R#SA[/B?\`\LUUG6;PM/#=BFN!=8F>)[<]12E*$BE*4`I2E`*4I0"E*4`I2E`* M4I0"E*4`I2E`*4I0"E*4`I2E`*4I0"E*4`I2E`*4I0'-_P"4A>3(OUML;:OJ MXC'3N#^VO@/@D?.M+U>-JF]+VAW]QYQ1*9/1IX\DI2`!52ZLCUE?*O7HI1II M'EUKRFV8E?:RNK(]97RIU9'K*^5:W,LK,2OM975D>LKY4ZLCUE?*EQE9B5]K M*ZLCUE?*G5D#])7RI<967O83_*7;/[I__+-=95RIL-92C:1;5`G[%_G_`'9K MJNO-Q?Y^AZ&%_`4I2N4Z12E*`4I2@%*4H!2E*`4I2@%*4H!2E*`4I2@%*4H! 62E*`4I2@%*4H!2E*`4I2@%*4H#__V3\_ ` end GRAPHIC 22 g154991.jpg G154991.JPG begin 644 g154991.jpg M_]C_X``02D9)1@`!`0$!L`&P``#__@!"1$E32S$R,3I;,#=:0E8Q+C`W6D)6 M-#`W,#$N3U544%5473$U,C`W7S%?0E5,2U]44D%$15]$159?0T],+D504__; M`$,`!P4&!@8%!P8&!@@(!PD+$@P+"@H+%Q`1#1(;%QP<&A<:&1TA*B0='R@@ M&1HE,B4H+"TO,"\=(S0X-"XW*BXO+O_```L(`14!I`$!$0#_Q``<``$``P`# M`0$`````````````!08'`0,$`@C_Q`!8$```!0(!!`L'$@0$!0,%`````0(# M!`4&$0<2$R$4%18Q-E56=92ST3=!47%TLK07(B,R,S0U87*1DY6EL=+3XN-2 M9H&D)$*AQ"4F152#4Y+A0T1C@O#_V@`(`0$``#\`UJM7M+I-TQ*2]0'=KY$M MF&B:I\DK=<<+'%IK#%Q"=1*5B6&)ZCP';>5X2:#-9I]-HQU28<-Z>\C9!,DW M':P)1D>:>W0Y(0E2?&1GJ'7NCM_CRF]+;[0W1V_P`>4WI;?:&Z M.W^/*;TMOM#=';_'E-Z6WVANCM_CRF]+;[0W1V_QY3>EM]H;H[?X\IO2V^T- MT=O\>4WI;?:&Z.W^/*;TMOM#=';_`!Y3>EM]H;H[?X\IO2V^T-T=O\>4WI;? M:&Z.W^/*;TMOM#=';_'E-Z6WVANCM_CRF]+;[0W1V_QY3>EM]H;H[?X\IO2V M^T-T=O\`'E-Z6WVANCM_CRF]+;[0W1V_QY3>EM]H;H[?X\IO2V^T-T=O\>4W MI;?:&Z.W^/*;TMOM#=';_'E-Z6WVANCM_CRF]+;[0W1V_P`>4WI;?:&Z.W^/ M*;TMOM#=';_'E-Z6WVANCM_CRF]+;[0W1V_QY3>EM]H;H[?X\IO2V^T-T=O\ M>4WI;?:&Z.W^/*;TMOM#=';_`!Y3>EM]H;H[?X\IO2V^T-T=O\>4WI;?:&Z. MW^/*;TMOM#=';_'E-Z6WVANCM_CRF]+;[0W1V_QY3>EM]H;H[?X\IO2V^T-T M=O\`'E-Z6WVANCM_CRF]+;[0W1V_QY3>EM]H;H[?X\IO2V^T-T=O\>4WI;?: M&Z.W^/*;TMOM')7#03WJU3C\4IOM%5N&SJS6KDC2GJO$52F)C,QDG(N,J(;> M::FVG",L$K-)8XZ]9EK'DJMJ735TQZJBIPXM8.+,ISYOQC-"HKKF*%$E*O6K M2E*3WS(^^/,SDREQ)+-/AU=DK>5(A2I#+C)F^IR,A"22E1'@25:-!GB6):\! M[K/L.H46JTUV?5(\F!18\B-3&VF5(L;$``*S=/PW:'.B_1)`LP`````` M`````````````````````,:R]H2[*MEEPC4V9RE&G.,B,R2W@>KQF,IVOA?] MN7_N5VAM?"_["IUBD4DFSJE4 MA02;(99?2M;)^!22/%/]1$73\-VASHOT20+,`````````` M`````````````I.5Z5*AV%/>ARGXSVEC()UAPVUD2GT$>"BUEB1F7]1AASZO MCP@KGUF_^(-GU?E#7/K-_P#$+IDAJ%3=OA4615JC*CKIKRS;DRW'DYQ.-$1D M2C/`\%'\XW4`&.9=_?\`;'BE^:V,Q`:5D+^&KE\GA^<\-G&.Y6N$<;R-/GK' MQ=":9/RB[6)I_W\1ZLF$-Y%>MB,S3I,:=2: M=.8K2W(ZFRTBWDFA)K,L%F:B4LL#/4>(N%YTZNNW);CD>XM`R[4U$PUL)"M` M>Q7L3Q,_7:B46O\`B^(2^TMV\L_LMKM#:6[>6?V6UVAM+=O+/[+:[0VENWEG M]EM=H;2W;RS^RVNT-I;MY9_9;7:&TMV\L_LMKM#:6[>6?V6UVAM+=O+/[+:[ M0VENWEG]EM=H;2W;RS^RVNT-I;MY9_9;7:&TMV\L_LMKM#:6[>6?V6UVAM+= MO+/[+:[0VENWEG]EM=H;2W;RS^RVNT-I;MY9_9;7:&TMV\L_LMKM#:6[>6?V M6UVAM+=O+/[+:[0VENWEG]EM=H;2W;RS^RVNT-I;MY9_9;7:&TMV\L_LMKM# M:6[>6?V6UVAM+=O+/[+:[0VENWEG]EM=HC+ECW?1K>JM71=R7E0HCL@FU4UH MB6:$FK`SQ^(9.64/*69$>W%(UEC[Q_\`D<^J%E+XYI'0?_D>JE7YE%EUFF09 M-:IJ6IDMJ,I;4$LY.>K#$L3PU#8-I;MY9_9;7:&TMV\L_LMKM#:6[>6?V6UV MBGY5*9<,:RI;TZYMF1DR(N>QL!MO/]G1AZXCQ+7K&4GO@+)DWBU"7>Z&Z;4] MKWBIKYF[H$O8ITC7K<%:O!K^(;%M+=O+/[+:[0VENWEG]EM=H;2W;RS^RVNT M9CE<@U>'4;=.J5O;$E%*S"V*AG,/-;Q/UIZ\11P%UR2PJM,K5?VKK6UV9'BZ M3_"H>TF*GL/;'JPU_.-1VENWEG]EM=HRS*;3JZS7HR95Q;(7L1)DO82$8%GK MU8$8W[`=4>.Q&92S':0TTG'!*"P+6>)_ZF9CM#`5FZ?ANT.=%^B2!9@````` M````````!29F4ZS(P`5O*+P!N;FN3U:A^<4^T3XB' M(]E#X3V[SM%\\A^I2WB`!0\M'<]G^41?2&QA1[X"YY'NZ"7-3_6LC?@`8YEW M]_VQXI?FMC,0&E9"_AJY?)X?G/#9QCN5KA'&\C3YZQL0``K-T_#=HRZ^25)Q+$L2[VHR,>3U1K%Y64GI M*0]4:Q>5=)Z2D6.FSX54@LSZ=*:E1'BSFWF5$I*RQPU&7QD/4`#\K5(SV\KF MO_JLSKUCSXGX1Y:F9[`?U]XO.(?KL`%;RB\`;FYKD]6H?G%/M$^(AR/90^$] MN\[1?/(?J4MX@`4/+1W/9_E$7TAL84>^`N>1[N@ES4_UK(WX`&.9=_?]L>*7 MYK8S$!I60OX:N7R>'YSPV<8[E:X1QO(T^>L;$``*S=/PW:'.B_1)`LPBJ_<- M&MV,U)K509ALNKT:%.8^N5@9X%@7@(Q`>J=8?*6'\ROPAZIUA\I8?S*_"):W M[MMRXGWF*+5H\QUE)+<0WCBE)G@1ZR+OB>`!0LH-]R;3J-/@QJ.W.7*9<>-3 MDHV202%)3AJ0K''.^+>%5]6&KK#5N2D3ZS/\H7[)_=+EVT>1/> M@)A.L2EQE-)>TI&:22>)*S2_B\`M(`/S9?QF64*Y<#/WPSZ.T(+$_"?SCE)G MG%K/?\(WC(YW.*-_YNO<%W`!^5:E\.5SG69UZQT#RU/W@_XB\XA^NP`5O*+P M!N;FN3U:A^<4^T3XB'(]E#X3V[SM%\\A^I2WB`!0\M'<]G^41?2&QA1[X"YY M'NZ"7-3_`%K(WX`&.9=_?]L>*7YK8S$!I60OX:N7R>'YSPV<8[E:X1QO(T^> ML6&YKIN6BW+&;5!IY4=^;&AQVEJ,Y4TW/='&\%8))O$L2-.LB,\2U#MOBYZ[ M3JLU2+>8@KDHILBIO+F)4:5-M&DB;3FF6"E&KVQZB\!B!CY2JO-?:J\2!#3; MJ)4"(^AS..2:I+:%9Z3(\TB2;J"PP/'6>)"0LJ^*U6*K2"JL2$W3Z]%D2J>4 MF\[IH42Y+M2=[PB7W?VGQL7T#OX1G.5VY:-6FJ`S2YNF=;F.+41-K3@6@66/KB+OF M0S_.5_$KYPSE?Q*^<6K)?7*;1;NG/524;+;E.2E!FA2\3)T_X2,:YN_M/C8O MH'?PAN_M/C8OH'?PAN_M/C8OH'?PC*,JUI$AJ74ZM*87GLO5*6XA6!EBDWEF1X&/D>2JJ) M-.D*4>!)21GXL2'Z2W?6F7_5B^@=_"&[^T^-B^@=_"&[^T^-B^@=_"("^KWM MB795PQ8]3SWGJ<^A"=`X6*C;,B+$TC%D^U3XB'([J=)8AURARY*\QAFIQEK5 M@9X$2RQ/`M8_0!7_`&GA\+%]`[^$<[O[3XV+Z!W$;O[3XV+Z!W\(IV52[[> MJEE2X,&H:62Y(C9B-"XG'!]!GK-)%O$,I/?`63)O5Z?1;X1*J4C0,JIKZ"5F M*5BK2-'A@DC/O&-CW?VGQL7T#OX0W?VGQL7T#OX0W?VGQL7T#OX1F&5RX*17 M*C;J:7+TYLE*-?L:TX$:6\/;$0HX"ZY):_2:'6J_MI+T&FCQ='[&I6=@I['V MI'X2&I;O[3XV+Z!W\(RS*;=-"G5Z,]%G:1!1$I,]$LM>>OPI^,:4_9+B[S8IL5Y*"3#;=62ED1D6*CU$ M1&>\18"0NGX;M#G1?HD@67#Q_.,HR[^\[<\O8V--P\?SAAX_G'&'C^,;QD<[G%&_\W7N"\8>/YPP\?SA@/RK4OARN6I^\'_$7G$/UU@./YQ6\HA?\@W-S7)ZM0_.*?:)\1#D>RA$ M[=YVB^>0_4A%J[_SCG#Q_.&'C^<4/+/W/9_E$7TAL84>^`N>1_N@ES5(ZUD; M]AX_G##Q_.&'C^<8YEV]_P!L>*7YK8S$!I60OX:N7R>'YSPV?#Q_.,=RM<(X MWD:?/6-B``%9NGX;M#G1?HD@689/EW]YVYY>YU#@R8!?,BO#.I,;QD; M[G%&_P#-U[@O``/RK4OARN6I^\'_$7G$/UV`"MY1>`-SK4/ MSBGVB?$0Y'LH?">W>=HOGD/U*6\0`*'EH[GL_P`HB^D-C"CWP%SR/=T$N:G^ MM9&_``QS+O[_`+8\4OS6QF(#2LA?PU1I\]8V(``5FZ M?ANT.=%^B2!9AD^7?WG;GE[G4.#)@%\R*\,ZES8CKC&Z@`Q'+APHH?D,CK&A MG@#9,A7!FJ\[/>8V--`!^:[^[H5R^4,^CM""'*?;%XQO&1ON<4;_`,W7N"\` M`_*M2^'*YSK,Z]8Z!Y:G[P?\1><0_78`*WE%X`W-S7)ZM0_.*?:)\1#D>RA\ M)[=YVB^>0_4I;Q``H>6CN>S_`"B+Z0V,*/?`7/(]W02YJ?ZUD;\`#*:\]HDYI):QUX'KUEJP%*W`7I_V%+^L?VPW`7I_P!A2_K' M]L7+)#1ZI1;BN*+5F8[3ZXD-Q),/:5.;G/EOX%KU'J&LC'YU#@R$@Q+PD&)>$AB. M6_A/0_(9'6-#/`&R9"S_`.6:KSL]YC8TW$O"08EX2'&)>$A^;+^[H5R^4,^C MM""'*?;%XQO&1PR]3BC:_P#UNO<%XQ+PD&)>$@Q+PC\JU+XRA\)[= MYVB^>0_4A&6!:R'.)>$@Q+PD*9E6B[/LUV#IC:V1-A-:1*24:,Z2V6.!ZCP% M(/)0>)_\UR^@M=H>I0?*N7T%KM$A9=J;F,H,3&K.SMDTJ5[HPAK,S76/X=_' M'_0:UB7A(,2\)!B7A(4^XN&]M>23_N9$L`BJ'P\KG-D'K)(M^)>$ACN5HRW1 MQO(T^>L6VNT!QW*):M=ATUO-8*6F;+0E)*P4R26R4>^K7B1;^`J5YE5;@V+6 MZ=0+@1-*',AQ'Z944-FQ()W-3I"(RQ;4;:59V<98%@:3'GF6]=+E4DTJ32'' MWJE5:;4EU5O,T#9,MM$]B>)&2B4VK`B+7G=X>G)[0*]&J]LQ9U&?@MVY!F19 M$EPTZ.4IUQ.9HS(S-18)SC,R+`SPWQ8+SH&R+DMQ_;JL-;)J:DZ-J5FH:PBO M'B@L/6GZW_4_")?<>?*BY.G_`*1G&5ZA[5LT!W;>JS<^:XG,F2=*E/L"SQ(L M"P/4,_`6O)=2]M+NG-;8SX693DJSH;VC4KV4]1G@>)#7-QY\J+DZ?^D-QY\J M+DZ?^D-QY\J+DZ?^D91E6I.U5R4A&V50FZ2"^>,U_2FG!QO>U%AOBG@-)R14 M#;.AU21MU5X>%3=3HX"J9.F*4[2 M):+BJCBMM8C>&8TV99SI%B2DIQ(R[PTHK//#A1?*BY.G_I#<>?* MBY.G_I$#>%N'`I<67M]6Y694H/L4F7GMJQE-EK+#7OBW'OGXP%7J]-VTO>BQ M]GS8>;39B])#>T:S]DCE@9X'JUB8W'GRHN3I_P"D-QY\J+DZ?^D-QY\J+DZ? M^D0DBC;57S0#VUJW58>QB)/.>E9RO;KU8X; MPWT<$E)$1$1$1;Q$.0%9NGX;M#G1?HD@689/EW]YVYY>YU#@R8!?,BO#.IQ+?K*:E4IQ5#9#U5G9^BG.-IU27"+!)'@6HA(>IA M:G\-5^LG>T0UWY/;;IUKU6?&*HZ>.P;B-)/=6G$C+#%)G@9?$-L`!7,H?`.Y M>;)'5J'>W[FCY)?]Z1SU`ZXA>2WB`!5LH?!YGG*!Z6T/>>^?C`0Y= MT&C\U3>MCBY``J%Q\-[:\DG_`',B5`15#X>5SFR#UDD6\8[E:X1QO(T^>L;$ M``*S=/PW:'.B_1)`LPR?+QG;"MW-;=V+_Z*?#XAY,FA$5H1B(B(BDRR M(B+`B_Q+HM8`*/9WP7+YUJ'I3HGA72*^\A?``5S*'P#N7FR1U:AWM M^YH^27W#Z$!=WO>D<]0.N(7DMX@`5;*'P>9YR@>EM#WGOGXP$.7=!H_-4WK8 MXN0`*AVO))_W,B5`15#X>5SFR#UDD6\8[E:X1QO(T^>L;$``*S=/PW:' M.B_1)`LPJ-VF97):1D9E_BY.]Y*Z)7/7_&KYS#/7_&KYS$+#,SRC%B9G_P`$ M[_E!BY@`IU4[H<+F:1U[(EQP>\8CK']]75STYU+(M@`*51>$%W(W)KP1C^4R_271:@`4>SO@N7SK4/2G1/"NY0.!%>\D5]Y"^``KF4 M/@'](YZ@=<0O);Q``JV4/@\SSE`]+:'O/?/Q M@(23_`+F1*@(JA\/*YS9!ZR2+>,=RM<(XWD:? M/6+%<"JI'RJ6@1U9Y5.EIF%L%*22A)H8(\XS+6L\3[^]WA#91)Q52NM0T5M^ M-2VJ%/GLO0I:FR5):4E)&:D&6=F>N/-/5CCB0JD"N5F=H[CEU2:BLL5*CQ6H M:7EI;4T^RT;B#:QP5GFXM6)ECZW498"9R:5&H*K-JRUU69,>KM.G/U-IY]3B M$N-O))"DH,\&\#-2,"(BP+PBUWE-N%%R6XB-0HKS+=34<=Q4_,-X]BO8D:=& M>9J-7?/>+PZI?;2\N2<#ZX_9$'59==DW3:J:M1HT%HI$DT+:G:(M8"JS)%5CY0&E4FFL3G#HQDM#LK0$DMD'@9'FJQ$WMI>?).!]?).!]?).!]3?\`'.K4MB"I-'?T9-2]/GEIV<<3S$X= M[P[XM0X/>,52WIMPQZG=**70XLV/MPLS==GZ`\[0LXEFZ-7SXB=VTO/DG`^N M/V0VTO/DG`^N/V0VTO+DG`^N/V1$VH[,>J=U.5"(W%E'4T9[+;VE2G_"L88* MP+'5@>\+*/I'NB/E%]XIMCS[G9MU#<"W8)"4VTO+DI`^N/V0VTO/DG` M^N/V0VTO/DG`^N/V1!7Q4;L!B6*J7EAP3@? M7'[(;:7GR3@?7'[(;:7GR3@?7'[(@;QGW,_2XK=0MZ)$BG4H.>\W4M*I/^*; MP];HRQUX%OBVGOGXP%8JS]3CWO15TJGLSGSILPE-NR=`1)TD?7G9JL=>&K#O MB8VTO/DG`^N/V0VTO/DG`^N/V0VTO/DG`^N/V1"295:DWS0-MJ1'@$F'.T9M M3-/GG@SCCZQ.'^HM0"K(E5F-?=6VHI,>?G4R'I-+,T&9[)(PP]8K''7X-X36 MVEY\DX'UQ^R,LRG3;AO'1D-U>AQ'I4>6]&:QVWJ$]5F*R[2(2ZDPDDM2E,)-Q!%O$2L,2PQ/Q8CFG4"B4R=*J%/ MI,.+,EGB^^RRE*W=>.LR+7KU^,1MT_#=HG.I9%L`!2J+P@N[G-OT1 M@38^F_=$?*+[Q&Y->",?RF7Z2Z+4`"CV=\%R^=:AZ4Z)X5W*!P(KWDBOO(7P M`%(`%6RA\'F>,1UC^^KJYZ2*^\A?``5S*'P#N7FR1U:AW MM^YH^27W#Z$!=WO>D<]0.N(7DMX@`5;*'P>9YR@>EM#WGOGXP$.7=!H_-4WK M8XN0`*AVO))_W,B5`15#X>5SFR#UDD6\8[E:X1QO(T^>L;$``*S=/PW: M'.B_1)`LPJ-W<)+2\KD^BNB4`0T+NC%S)_N#%S`!3JIW0X7,TCKV1+C@]XQ' M6/[ZNKGISJ61;``4JB\(+NYS;]$8$V/IOW1'RB^\1N37@C'\IE^DNBU``H]G M?!E.B>%=R@<"*]Y(K[R%\`!7,H?`.Y>;)'5J'>W[FCY)?]Z M1SU`ZXA>2WB`!5LH?!YGG*!Z6T/>>^?C`0Y=T&C\U3>MCBY``J%Q\-[:\DG_ M`',B5`15#X>5SFR#UDD6\8[E:X1QO(T^>L;$*WCQ2A!I(S,W%I+?61%K$?.R@4^%6]JW:=/T;3D9F9*(D:.&Z_[DA?KL3,\2 MQ-)&18EB>L?=`ORFUJLM4YJ%,8:E:$=I>5R?171*`(:%W1BYD_W!BY@`IU4[H4+F:1U[(EQP M>\8CK']]75STYU+(M@`*51>$%W(S)KP1C^4R_271:P M`4>SO@N7SI4/2G1/"NY0.!%>\D5]Y"^``KF4+@'](YZ@=<0O!;PY`5;*'P>9YR@>E-#WGOGXP$.7=!H_-4WK8XN0`*AV MO))_W,B5`15#X>5SFR#UDD6\8[E:X1QO(T^>L;$,[RF6E4;D=3L2D4*>AR$[ M$)RH9Z'8:UGJ>;41*(\-_-P(\2+!0BYMA7"J=*@-RXLFEU-VFO3)CSBDOMJB MD@E8(S3)1KT23Q-18&9XXCU6I95:=4IV5LA1F6>@TD M2,U)F1X&>)X#W7G:UO2[DMR3)I$5UZ94U)D+4C$W2**\9$?AUI3\Q"7W`V;R M<@?1"#JMMT*B73:K])I4:(ZY(DH4II&!FG8SAX?.1"U@*K+HM*K>4!IFK0&) M;;=&-2$NIQ))G(/$R$YN!LWDY3_H@W`V;R3E/^B$&W0Z11+_C M(I-/8AI=H[YN$RG#.,GV<,?G,6H<'O&*I;UKV]6:I=,NJ4B++D%6%H)QU&)Y MI,LX%_J)[<#9O)RG_1!N!LWDY3_HAQN!LWDY`^B$3:D"'3*G=4&GQFX\5NIH MS&FRP2G&*P9_ZF8LH^F_=$?*+[Q3K&L^V*G;J)T^B0Y$EV5+-;KC>*E'LEPM M8L.X&S>3E/\`H@W`V;R$L2$KN!LT]>YRG_1!N!LWDY3_`*(-P-F\ MG*?]$(&^;)M.)9E?E1J!!:?9I[ZVUI;P-*B09D9?U%J;]S1\DON'T*U?,9B9 M3:;$E-)=CO5B"AQM98DI)O%B1B6*P;-PX.0/HASN!LWDY3_H@W`V;R']#,6T]\_&`K%6I%,K-\46+583 M,MA--F+2AU.)$K21RQ^8S$SN!LWDY3_H@W`V;R3E/^B$'*M^B MT.^:`JDTR/#-Z'.)PV4X9Q$3.&(M0"K(H%&KE]U;;>FQYFAID/1Z9..;BY(Q MP^8A-[@;-Y.4_P"B&5Y3K6MZ#7HS,2D1&6SB)4:4(P(SSUZ_]!O@``K-T_#= MHG.I9%L`!2J+P@N[G-OT1@38^F_=$?*+[Q&Y->",?RF7Z2Z+4`"CV M=\%R^=:AZ4Z)X5W*!P(KWDBOO(7P`%(`%6RA\'F>,1UC^^KJYZ2*^\A?``5S*'P#N7FR1U:AWM^YH^27W#Z$!=WO>D<]0.N(7DMX@`5;* M'P>9YR@>EM#WGOGXP$.7=!H_-4WK8XN0`*AVO))_W,B5`15#X>5SFR#U MDD6\8[E:X1QO(T^>L;$`#X0ZVXI:4.)4I!X*(CQS3\!^`5RZ?ANT.=%^B2!9 MA4;NX26EY7)]%=$H`AH7=&+F3_<&+F`"G53NAPN9I'7LB7'![QB.L?WU=7/3 MG4LBV``I5%X07=SFWZ(P)L?3?NB/E%]XC\]\_&`AR[H-'YJF];'%R`!4+CX;VUY)/^YD2H"*H? M#RNLDBWC',+=Z$_\`FB.J-#O6H3J;->JE`2N`XMQM*83V M"C4VIL\?9?`HS\8].UU[\86[T)_\T-KKWXPMWH3_`.:/(W0;T;KFW*:I0=/L M78N9L)[-S<_/Q]UQQQ$GHK]XPMWH3_YH\+TJ_6ZS%IFGH"B?CNOZA/_FAM=>_&%N]"?\`S1YZ51+UI;E0<8JE`6<694I:*G0%+GR"?<)4)[!*B;0 MW@6#N]@@C\9F/7M=>_&%N]"?_-`J??!&1E4+=U'C[R?_`#1YZ%1;VHM-13XU M4H#C2'''"4Y">QQ6XI9[SOA49"0T5^\86[T)_P#-'@I$N_:BU)<-^@,:&4]' MP7"?]>2%FG/+V7>/#$>_17YQA;O0G_S1%4NW[SIL=QAJIT!:7)#T@S7">QSG M'%.&6IW>(U&1?$/;M=>_&%N]"?\`S1X:U;MY5>DS*6_5*"VU*;-M:VX3V<1' MX,71I$$K-.$_B6)8X>ZCS5JD7O6*/.I4BIT!#,QA;"UHA/9R4J29& M98N[^L=B:;>Z4DDJA;NHL/>3_P":.=KKWXPMWH3_`.:/%4[>O.HHC(=JE!04 M>4S*2:(3VM3:B41'B[O&9:Q*Z&_.,+=Z$_\`FCP5N7?M+IZIA/T"2:7&D:-N M$_B>>XE&/NI[V=C_`$$AHK\XPMWH3_YHCZU1;VK$),215*`A"7V7\40GL<6W M$N$6MW>,TD1_$.\Z=>^/PA;O0G_S0VNO?C"W>A/_`)H\NT-Z;A/_FB/F3+]C52G4_34%PIFEQ=3 M"?S6LQ)*U^R]_'`2&BOWC"W>A/\`YHC9M#O695H%4_&%N]"?_-#:Z]^,+=Z$_P#FCS1:'>L:L2ZJW4Z`;TEA MIA2#A/9I);4LR,O9<<3TAX^(A(Z*_>,+=Z$_^:,RRD0KQ=KD=3ZZ<^O8J2SH MT-XDD6>O5K6>L;L`#X0TVA2U(;2E2SQ49%@:C^/PC[``#$,0``#$,0``#$,0 MQ```,0#$```Q#$,0``#$````,0Q(",C+$CQ(<$9&6)'B0Y````&>97I%`CTV ME[?NR'FU2L&*8T^3*9[N89)2XLS+-0G'.,S,B+`L<=1#+:R:H])=36;CV54Z M7;3$BD26)AJ2J3IW",VE$?LBB,FVS/69D7QCUNSIC55?JL26\=XKKM0B.L$Z MHU[%3&<4A.CQPS$YK:BU;YXBRY(G(C5P1F*-,7(ARK:B3*A[.;I;-4LR-2C, MSS5J+.Q+5O%JU#90`8WEA727:]%A%5E-W`Y#PA)>G%&CTWV3$Y:E8EZ[5@1: MS/-PPWS$%+EOMW+(J4::ZY=A70N$VV3IFI<'8QFE.BQPT>&"R/##'7B/9DQ0 MW)J5/AT:MRVMLK81+JK[#Y.K1-TJ2SSSR427#Q<+66\6]J%\R,*<5DUHANNK M=7@\1K6K.4K!YPL3/OF+R`#%*DY37\J1IHM76=;CSTNS9!:CWSQU"DM3UQ+87*H=5E+GSK9=DUI2)"EK2\4AM*G%:_6K(E/)\. M!?$)NH2+5I[]RJ.S-JC-3D(8(ERF7M,A>L\")?^;`L$X]_-%E`<+,DI,S422(L3,^ M\/S@S+8;I=V5*S:T\XTS1Y2'9+LXE2JD_I"-4DFB/%"4)SR)>!;Y8%@0[G-J M&[@.WXD\SL=RJT\GB*4HV<]<5U2D&O'>4M+1F6.^?QB,J4F"_92)95U]RKTQ MMTZ>F3,6V:(:9BR0_'U8.O&2206*M9$6/Q_IMI6>VA>"BSB(\%%@9>,?0")N MM<5NVJJJ;4G*;&**YI9C1X+83FGBI._K+O?&,'@G`=IK!Q)NQ;0J-<@,N4]4 M_2+:8T;FB)Y:6\4F?>UX&9CQ+D1I,*7&JM4>32*=2JL[07E2E))3C4 MHTM+0O'UZTI)))W]0L+%49N*,S M_A0@C\(WH`%*RK2*+&M4G:_,E,P"E-9T>,HDJFF1XDQB>'K58:]9:B/$R+$9 M.\W'.GT^#<-7:32T4JJS(26*CI&XT@G$FTT3J5>R+:0>!;^'>'$"H2)$Z-6* MI.D%=K52HS,=DW5$M3#C+1NI)O'6E6"4XYQ)+!*3(TF6O?&W@,\RO2*!'IM+V_=D/-JE8,4QI\F M4SWLS(OC$I)F2$7)(J;,IW=<5T+A)8)U1KV%L8S)&BQPT?^;' M#?UXXBOT.H/LVM,AIE-F]5:;`5+F1)KCJ2)^2EIW3I49DE\R4K$RPU'AAJ(Q M>:M>-9IE>JL:%6*Q<^EPE;$5G1\6$'H3\*-7K3\0[$TZGIJ"JDF#&*>[H&DHSU?Q'@6L_C,>L`'BETJES7-+,IT M20YAAG.L)6>'@Q,A]%3:<4\JB4",4TD:,I!,ITF;_#G88X?%B$*G4^"M]R%! MC1EOKSWE,M)0;BO"K`M9_&8[V&68[266&D--IWD(222+^A#L`!X3I-+.44PZ M;#V22L_3:!.?G>'.PQQ^,?4>ETV,N4Y'I\5EHR,>*-2*5%<-V-38;+BDFDU-L)29D>^6)%O#X11*,BG.4Q%)@I M@.'G+C%'032CW\31A@?S#[=I%*>V(;M,AN;$PV-G,)/08;V9J];_`$'N`!UO MLM2&ELOM(=:66"D+22B,OC(QXRHM'*,_%*E02CR"(GFBCHS7"+>SBPP/^HY> MH])?8C1WJ9#<9BF1QVUL(-+)EO&DC+!.'Q#UK996XVXMI"G&S,T*4DC-)F6! MF1][4.P`'1+AQ)K9-3(S,ALCQ)+K9+(C\.!CRN4.C.QFXKE)@KCM.:1#2HZ# M2A?\1%A@1_&.YRG4]R>U47(,9Q<^EP ME;$5G1\6$'H3\*-7K3\0[-KJ?MAMEL&-L_,S-DZ).ES?X<_#'#XL1X*A;%#G M4NITQ=.CM1ZDDRDFPVEM3BC_`,YF1>V(]9&>LC(=5-M6D0*E+JF@*3/DOD^< MB0A*UH63:6S-!X$:<206.'?,_$/90J-#HD5Z/$TBC?D.27G'%8K==<4:E*4> MKQ?$1$7>$F```````````````````````````````````````````````#/# MHM`JMXW5)KT*)(;BMQ<')/M6D:)1GK/41=\QVPJ)DLGR418+-NR9"\!$K$]0\*XV2=$^M4]=.IR95&9T\Y!QEEHD8$>..&"M1E[7'?(2=#MK M)W7:3&J]+H'W"M2P9STUF/;T,UPWM"]GQE M((EX$>HU$1*+`RUEB0]NX*S-_GNOJ- M"3(C4>C2K`L3+?$K2K3R?U>G1ZE3:+3),.0@EM.H;U*+_P#N]OD(Z92\F$*H M.TZ328")33L9E:-C*/!<@S)DL2+#UQI/Q8:\!-G85EEOV[3R_P#&.J79=APH MZY4RB4J/';+%;KR20E)?&9G@0\4&@9,*A(*-`C6_*?,C,FF'4.*,BWSP)6(@ MSD9&RH]0K.PZ?L&GR-BR7-B.8H03C;B$8I6DRQ(R/OD9")72LF")IP54B`4@IZ:<:=C*]\*;TA(QPP]IKQW MN]CB)K<%9>K_`)[E*@PVC>DR(#+33988K4<=1$6O M5K,(Z),^X+<4Q:=0IZ(*E)U8"L5^R[BDW?49L6 M`O8E4JR8TM>ZV;+J+]2MHZW2Y"*7#3/>:C.R,=B$J0VN,TO!7K MC2DC,BUD6!>`2>4"CU-^]Z=56*?<#\%%,>CKJ2X\?.BM+TAF MI*VS4DE*/UV&!ZS/7@,_R9VY78E^4^?+MJ;3XK+,@EO/-MI+%22(B]:H_`(M M>3Z[#I\B$FE+V/+BS9+R,]..RD'+3'3O_P"8GVS_`/U+>%DDVA<$R2J/)ISZ MX#E8I+CB-*1$<=N(E#V\K>)1&1EW_C'D5:,ZGOH9J-JS*K:\:IU$V:5'6E6: MAS1Z!PD&LB-)8.$6OUIJQP$U9%FUA%P42==,9UY=.H;"&W%R,]+6U-(DK-EHH&C4[ACKP7J\..L5RM6E<3M.MY3-IR]FQH&QE M159K[.R$O&HW,_2I6RI>I>F)1G@>!D6&O9+DSMM[-SRP5MFK$L<<#V(_WQ:` M````````````````````&-7'?NXV_P"OL;5;-V2U$U/$=/JX M?RO_`'W[8>KA_+']]^V'JX?RO_??MCJ8RTL1T*0Q:3;25*-9DB822-1GB9ZF M]\QV^KA_+']]^V'JX?RO_??MAZN'\K_WW[8>KA_*_P#??MAZN'\K_P!]^V'J MX_RQ_??MAZN'\K_WW[8>KA_*_P#??MAZN'\L?WW[8>KA_*_]]^V'JX_RQ_?? MMAZN'\K_`-]^V'JX?RO_`'W[8>KA_+']]^V'JX?RO_??MC[I.47=?>5KT[:? =8>BFNO:39.DQPC/%AAF%_%_H-H`````````?_]D_ ` end GRAPHIC 23 g783770.jpg G783770.JPG begin 644 g783770.jpg M_]C_X``02D9)1@`!`0$!L`&P``#__@!#1$E32S$R,3I;,#=:0E8Q+C`W6D)6 M-#`W,#$N3U544%5473$U,C`W7S%?5$].7TU)3$5?1$5-04Y$7TU43BY%4%/_ MVP!#``<%!@8&!0<&!@8("`<)"Q(,"PH*"Q<0$0T2&Q<<'!H7&AD=(2HD'1\H M(!D:)3(E*"PM+S`O'2,T.#0N-RHN+R[_P``+"`$5`7H!`1$`_\0`'``!``(# M`0$!``````````````8'`00%`@,(_\0`5!```00!`@(%!0D,!0D)`0```0`" M`P0%!A$2(0<3%#%6%B)!49,R87%R@9&4L=(5%R,S-#5"4G6AM--#4W22LB0V M5%5B8W/!T41D@H.$HJ3"X[/_V@`(`0$``#\`N/-:MFP^H_N;:Q,C:`QUF]VS MK6DR"$,+FM8.?Z?>[;WMUS='=('W

9R]VG!79C8&VG102O>_JS&9!N'L8= M]AL"-VGGL3LM"KTA9RQ-7Q/D[49G+CH'U8C>)@,4L,DH<]_!N'-$3FD!IY[; M'99PW2=/EK&/GAP8CQ4]BM1L2OL_A8K,S.(`,X=G,:=FEVX//<#DIEEM5Z