EXECUTION COPY

 
EAGLE BULK SHIPPING INC.
 
5,400,000 Shares
 
Common Stock
($0.01 par value per share)
 
UNDERWRITING AGREEMENT
 
February 28, 2007

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UNDERWRITING AGREEMENT
 
February 28, 2007
 
UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
 
Ladies and Gentlemen:

Eagle Bulk Shipping Inc., a Marshall Islands corporation (the “Company”),
proposes to sell to UBS Securities LLC (the “Underwriter”) an aggregate of
5,400,000 shares (the “Initial Shares”) of common stock, $.01 par value (the
“Common Stock”), of the Company). In addition, solely for the purpose of
covering over-allotments, the Company proposes to grant to the Underwriter the
option to purchase up to 810,000 shares of Common Stock (the “Additional
Shares”). The Initial Shares and the Additional Shares are hereinafter
collectively sometimes referred to as the “Shares.” The Shares are described in
the Prospectus which is referred to below.
 
The Company has prepared and filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the “Act”), with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (File No. 333-139745)
including a prospectus, which registration statement incorporates by reference
documents which the Company has filed, or will file, in accordance with the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “Exchange Act”). Amendments to such
registration statement, if necessary or appropriate, have been similarly
prepared and filed with the Commission in accordance with the Act. Such
registration statement, as so amended, has become effective under the Act.
 
Except where the context otherwise requires, “Registration Statement,” as used
herein, means the registration statement, as amended at the time of such
registration statement’s effectiveness for purposes of Section 11 of the Act, as
such section applies to the Underwriter (the “Effective Time”), including (i)
all documents filed as a part thereof or incorporated or deemed to be
incorporated by reference therein, (ii) any information contained or
incorporated by reference in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act, to the extent such information is deemed, pursuant to
Rule 430A, Rule 430B or Rule 430C under the Act, to be part of the registration
statement at the Effective Time, and (iii) any registration statement filed to
register the offer and sale of Shares pursuant to Rule 462(b) under the Act.
 
The Company has furnished to you, for use by the Underwriter and by dealers in
connection with the offering of the Shares, copies of one or more preliminary
prospectus supplements, and the documents incorporated by reference therein,
relating to the Shares. Except where the context otherwise requires,
“Pre-Pricing Prospectus,” as used herein, means each such preliminary prospectus
supplement, in the form so furnished, including any basic
 

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UBS Securities LLC
February 28, 2007
Page 2
 
prospectus (whether or not in preliminary form) furnished to you by the Company
and attached to or used with such preliminary prospectus supplement. Except
where the context otherwise requires, “Basic Prospectus,” as used herein, means
any such basic prospectus and any basic prospectus furnished to you by the
Company and attached to or used with the Prospectus Supplement (as defined
below).
 
Except where the context otherwise requires, “Prospectus Supplement,” as used
herein, means the final prospectus supplement, relating to the Shares, filed by
the Company with the Commission pursuant to Rule 424(b) under the Act on or
before the second business day after the date hereof (or such earlier time as
may be required under the Act), in the form furnished by the Company to you for
use by the Underwriter and by dealers in connection with the offering of the
Shares.
 
Except where the context otherwise requires, “Prospectus,” as used herein, means
the Prospectus Supplement together with the Basic Prospectus attached to or used
with the Prospectus Supplement.
 
“Permitted Free Writing Prospectuses,” as used herein, means any document that
is (i) required to be filed with the Commission by the Company or (ii) exempt
from filing pursuant to Rule 433(d)(5)(i) because it contains a description of
the Shares or the offering that does not reflect the final terms, listed on
Schedule C attached hereto. The Underwriter has not offered or sold and will not
offer or sell, without the Company’s consent, any Shares by means of any “free
writing prospectus” (as defined in Rule 405 under the Act) that is required to
be filed by the Underwriter with the Commission pursuant to Rule 433 under the
Act or that is exempt from filing pursuant to Rule 433(d)(5)(i) because it
contains a description of the Shares or the offering that does not reflect the
final terms, other than a Permitted Free Writing Prospectus.

“Disclosure Package,” as used herein, means any Pre-Pricing Prospectus or Basic
Prospectus, in either case together with the Permitted Free Writing Prospectus
identified on Schedule C hereto.

Any reference herein to the Registration Statement, any Basic Prospectus, any
Pre-Pricing Prospectus, the Prospectus Supplement, the Prospectus or any
Permitted Free Writing Prospectus shall be deemed to refer to and include the
documents, if any, incorporated by reference, or deemed to be incorporated by
reference, therein (the “Incorporated Documents”), including, unless the context
otherwise requires, the documents, if any, filed as exhibits to such
Incorporated Documents. Any reference herein to the terms “amend,” “amendment”
or “supplement” with respect to the Registration Statement, any Basic
Prospectus, any Pre-Pricing Prospectus, the Prospectus Supplement, the
Prospectus or any Permitted Free Writing Prospectus shall be deemed to refer to
and include the filing of any document under the Exchange Act on or after the
initial effective date of the Registration Statement, or the date of such Basic
Prospectus, such Pre-Pricing Prospectus, the Prospectus Supplement, the
Prospectus
 

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UBS Securities LLC
February 28, 2007
Page 3
 
or such Permitted Free Writing Prospectus, as the case may be, and deemed to be
incorporated therein by reference.

As used in this Agreement, “business day” shall mean a day on which the New York
Stock Exchange (the “NYSE”) is open for trading. The terms “herein,” “hereof,”
“hereto,” “hereinafter” and similar terms, as used in this Agreement, shall in
each case refer to this Agreement as a whole and not to any particular section,
paragraph, sentence or other subdivision of this Agreement. The term “or,” as
used herein, is not exclusive.
 
The Company and the Underwriter agree as follows:
 
1.  Sale and Purchase. Upon the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Underwriter and the Underwriter agrees to purchase from the Company the
number of Shares set forth opposite the name of the Underwriter in Schedule A
attached hereto at a purchase price of $18.50 per Share. The Company is advised
by you that the Underwriter intends (i) to make a public offering of the Shares
as soon after the effectiveness of this Agreement as in your judgment is
advisable and (ii) initially to offer the Shares upon the terms set forth in the
Prospectus. You may from time to time increase or decrease the public offering
price after the initial public offering to such extent as you may determine.
 
In addition, the Company hereby grants to the Underwriter the option to
purchase, and upon the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Underwriter shall have the
right to purchase from the Company all or a portion of the Additional Shares as
may be necessary to cover over-allotments made in connection with the offering
of the Shares by the Company, at the same purchase price per share to be paid by
the Underwriter to the Company for the Shares. This option may be exercised by
the Underwriter at any time and from time to time on or before the thirtieth day
following the date of the Prospectus Supplement, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the “additional time of purchase”); provided, however, that the additional
time of purchase shall not be earlier than the “time of purchase” (as defined
below) nor earlier than the second business day after the date on which the
option shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised.
 
2.  Payment and Delivery. Payment of the purchase price for the Initial Shares
shall be made to the Company by Federal Funds wire transfer, against delivery of
the certificates for the Initial Shares to you through the facilities of The
Depository Trust Company (“DTC”) for the account of the Underwriter. Such
payment and delivery shall be made at 10:00 A.M., New York City time, on March
6, 2007 (unless another time shall be agreed to by you and the Company)
(hereinafter sometimes called the “time of purchase”). Electronic transfer of
the Firm Shares shall be made to you at the time of purchase in such names and
in such denominations as you shall specify.
 

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UBS Securities LLC
February 28, 2007
Page  4
 
Payment of the purchase price for the Additional Shares shall be made to the
Company by Federal Funds wire transfer, against delivery of the certificates for
the Additional Shares to you through the facilities of DTC for the account of
the Underwriter. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on the date when the Additional Shares are to be delivered.
Electronic transfer of the Additional Shares shall be made to you at the time of
purchase in such names and in such denominations as you shall specify.
 
Deliveries of the documents described in Section 7 hereof with respect to the
purchase of the Shares shall be made at the offices of Seward & Kissel, LLP, One
Battery Park Plaza, New York, New York 10004, at 9:00 A.M., New York City time,
on the date of the closing of the purchase of the Shares.
 
3.  Representations and Warranties of the Company. The Company represents and
warrants to and agrees with the Underwriter that:
 
(a)  the Registration Statement has heretofore become effective under the Act
or, with respect to any registration statement to be filed to register the offer
and sale of Shares pursuant to Rule 462(b) under the Act, will be filed with the
Commission and become effective under the Act no later than 10:00 P.M., New York
City time, on the date of determination of the public offering price for the
Shares; no stop order of the Commission preventing or suspending the use of any
Basic Prospectus, any Pre-Pricing Prospectus, the Prospectus Supplement, the
Prospectus or any Permitted Free Writing Prospectus, or the effectiveness of the
Registration Statement, has been issued, and no proceedings for such purpose
have been instituted or, to the Company’s knowledge, are contemplated by the
Commission;
 
(b)  the Registration Statement complied when it became effective, complies as
of the date hereof and, as amended or supplemented, at the time of purchase, any
additional time of purchase and at all times during which a prospectus is
required by the Act to be delivered (whether physically or through compliance
with Rule 172 under the Act or any similar rule) in connection with any sale of
Shares, will comply, in all material respects, with the requirements of the Act;
the conditions to the use of Form “S-3” in connection with the offering and sale
of the Shares as contemplated hereby have been satisfied; the Registration
Statement meets, and the offering and sale of the Shares as contemplated hereby
complies with, the requirements of Rule 415 under the Act; the Registration
Statement did not, as of the Effective Time, contain 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; each Pre-Pricing
Prospectus complied, at the time it was filed with the Commission, and complies
as of the date hereof, in all material respects with the requirements of the
Act; at no time during the period that begins on the earlier of the date of such
Pre-Pricing Prospectus and the date such Pre-Pricing Prospectus was filed with
the Commission and ends at the time of purchase or, as the case may be, the
applicable additional time of purchase, if any, did or will any Pre-Pricing
Prospectus, as then amended or supplemented, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances
 

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UBS Securities LLC
February 28, 2007
Page  5
 
under which they were made, not misleading, and at no time during such period
did or will any Pre-Pricing Prospectus, as then amended or supplemented,
together with any combination of one or more of the then issued Permitted Free
Writing Prospectuses, if any, include an untrue statement of a material fact or
omit 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;
each Basic Prospectus complied or will comply, as of its date and the date it
was or will be filed with the Commission, complies as of the date hereof (if
filed with the Commission on or prior to the date hereof) and, at the time of
purchase, any additional time of purchase and at all times during which a
prospectus is required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in connection with
any sale of Shares, will comply, in all material respects, with the requirements
of the Act; at no time during the period that begins on the earlier of the date
of such Basic Prospectus and the date such Basic Prospectus was filed with the
Commission and ends at the time of purchase or any additional time of purchase
did or will any Basic Prospectus, as then amended or supplemented, include an
untrue statement of a material fact or omit 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, and at no time during such period did or
will any Basic Prospectus, as then amended or supplemented, together with any
combination of one or more of the then issued Permitted Free Writing
Prospectuses, if any, include an untrue statement of a material fact or omit 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; each of
the Prospectus Supplement and the Prospectus will comply, as of the date that it
is filed with the Commission, the date of the Prospectus Supplement, the time of
purchase, any additional time of purchase and at all times during which a
prospectus is required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in connection with
any sale of Shares, in all material respects, with the requirements of the Act
(in the case of the Prospectus, including, without limitation, Section 10(a) of
the Act); at no time during the period that begins on the earlier of the date of
the Prospectus Supplement and the date the Prospectus Supplement is filed with
the Commission and ends at the later of the time of purchase or, as the case may
be, the applicable additional time of purchase, if any, and the end of the
period during which a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any similar
rule) in connection with any sale of Shares did or will any Prospectus
Supplement or the Prospectus, as then amended or supplemented, include an untrue
statement of a material fact or omit 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; at no time during the period that begins on the
date of such Permitted Free Writing Prospectus and ends at the time of purchase
did or will any Permitted Free Writing Prospectus include an untrue statement of
a material fact or omit 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; provided, however, that the Company makes no
representation or warranty in this Section with respect to any statement
contained in the Registration Statement, any Pre-Pricing Prospectus, the
Prospectus or any
 

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UBS Securities LLC
February 28, 2007
Page  6
 
Permitted Free Writing Prospectus in reliance upon and in conformity with
information concerning the Underwriter and furnished in writing by or on behalf
of the Underwriter through you to the Company expressly for use in the
Registration Statement, such Pre-Pricing Prospectus, the Prospectus or such
Permitted Free Writing Prospectus; each Incorporated Document, at the time such
document was filed with the Commission or at the time such document became
effective, as applicable, complied, in all material respects, with the
requirements of the Exchange Act and did not include an untrue statement of a
material fact or omit 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;
 
(c)  prior to the execution of this Agreement, the Company has not, directly or
indirectly, offered or sold any Shares by means of any “prospectus” (within the
meaning of the Act) or used any “prospectus” (within the meaning of the Act) in
connection with the offer or sale of the Shares, in each case other than the
Pre-Pricing Prospectuses and the Permitted Free Writing Prospectuses, if any;
the Company is not and will continue not to be an “ineligible issuer” (as
defined in Rule 405 under the Act) for purposes of Rules 164 and 433 under the
Act with respect to the offering of the Shares contemplated by the Registration;
 
(d)  as of the date of this Agreement, the Company has an authorized and
outstanding capitalization as set forth in the section of the Registration
Statement and the Prospectus entitled “Capitalization”; all of the issued and
outstanding shares of capital stock, including the Common Stock, of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right, resale
right, right of first refusal or similar right; no further approval or authority
of the stockholders or the Board of Directors of the Company are required for
the issuance and sale of the Shares; and the Shares are duly listed, and
admitted and authorized for trading, subject to official notice of issuance and
evidence of satisfactory distribution, on the National Association of Securities
Dealers Automated Quotation National Market System (“NASDAQ”);
 
(e)  the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Marshall Islands, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement, the Disclosure
Package and the Prospectus to execute and deliver this Agreement and to issue,
sell and deliver the Shares as contemplated herein;
 
(f)  the Company is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified and in good standing would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, financial condition, results of operation or
 

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UBS Securities LLC
February 28, 2007
Page 7
 
prospects of the Company and the Subsidiaries (as hereinafter defined) taken as
a whole (a “Material Adverse Effect”);
 
(g)  the Company has no subsidiaries (as defined under the Act) other than the
Subsidiaries named in Schedule B hereto (collectively, the “Subsidiaries”); the
Company owns all of the issued and outstanding capital stock of each of the
Subsidiaries; other than the capital stock of the Subsidiaries, the Company does
not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity; complete and
correct copies of all articles of incorporation, bylaws, certificates of
formation, limited liability company agreements and other organizational
documents of the Company and the Subsidiaries and all amendments thereto have
been delivered to you, and except as set forth in the exhibits to the
Registration Statement no changes therein will be made on or after the date
hereof and on or prior to the time of purchase or, if later, any additional time
of purchase; each Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement, the Disclosure Package and the Prospectus; each Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to
be so qualified and in good standing would not, individually or in the
aggregate, have a Material Adverse Effect; each Subsidiary is in compliance in
all respects with the laws, orders, rules, regulations and directives issued or
administered by such jurisdictions, except where the failure to be in compliance
would not, individually or in the aggregate, have a Material Adverse Effect; all
of the outstanding shares of capital stock of each of the Subsidiaries have been
duly authorized and validly issued, are fully paid and non-assessable, have been
issued in compliance with all applicable securities laws, were not issued in
violation of any preemptive right, resale right, right of first refusal or
similar right and are owned by the Company subject to no security interest,
other encumbrance or adverse claims; and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligation into shares of capital stock or ownership interests in the
Subsidiaries are outstanding;
 
(h)  the Shares have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued, fully paid and non-assessable and free of statutory and contractual
preemptive rights, resale rights, rights of first refusal and similar rights;
and the Shares, when issued and delivered against payment therefor as provided
herein, will be free of any restriction upon the voting or transfer thereof
pursuant to the Company’s articles of incorporation or bylaws or other governing
documents or any agreement or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or affected;
 

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UBS Securities LLC
February 28, 2007
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(i)  the capital stock of the Company, including the Shares, conforms in all
material respects to the description thereof contained in the Registration
Statement, the Disclosure Package and the Prospectus and the certificates for
the Shares are in due and proper form and the holders of the Shares will not be
subject to personal liability by reason of being such holders;
 
(j)  this Agreement has been duly authorized, executed and delivered by the
Company;
 
(k)  neither the Company nor any of the Subsidiaries is in breach or violation
of or in default under (nor has any event occurred which with notice, lapse of
time or both would result in any breach or violation of, constitute a default
under or give the holder of any indebtedness (or a person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a part of such indebtedness under) (A) its respective articles of
incorporation, bylaws, certificate of formation, limited liability company
agreement or other organizational documents, or (B) any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of indebtedness,
or any license, lease, contract or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or affected, or (C) any federal, state,
local or foreign law, regulation or rule, or (D) any rule or regulation of any
self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, the rules and regulations of the NASDAQ), or (E)
any decree, judgment or order applicable to the Company or any of the
Subsidiaries or any of their respective properties; except, in each case, for
such breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect;
 
(l)  the execution, delivery and performance of this Agreement, the issuance and
sale of the Shares by the Company pursuant hereto and the consummation of the
transactions contemplated hereby will not conflict with, result in any breach or
violation of or constitute a default under (nor constitute any event which with
notice, lapse of time or both would result in any breach or violation of or
constitute a default under or give the holder of any indebtedness (or a person
acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a part of such indebtedness under) (or result in the
creation or imposition of a lien, charge or encumbrance on any property or
assets of the Company or any Subsidiary pursuant to) (A) articles of
incorporation, bylaws, certificate of formation, limited liability company
agreement or other organizational document of the Company or any of the
Subsidiaries, (B) any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease, contract or
other agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their respective properties may be
bound or affected, (C) any federal, state, local or foreign law, regulation or
rule, (D) any rule or regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the rules
and regulations of the NASDAQ, or (E)
 

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UBS Securities LLC
February 28, 2007
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any decree, judgment or order applicable to the Company or any of the
Subsidiaries or any of their respective properties, except, in the case of
clause (B), for such breaches, violations or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect;
 
(m)  no approval, authorization, consent or order of or filing with any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency, or of or with any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the
NASDAQ), or approval of the stockholders of the Company, is required in
connection with the issuance and sale of the Shares to be sold by the Company
pursuant hereto or the consummation by the Company of the transactions
contemplated hereby other than registration of the Shares under the Act, which
has been effected, any other approvals, authorizations, consents, orders or
filing that have been obtained or made and are in full force and effect and any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriter or under
the rules and regulations of the National Association of Securities Dealers,
Inc. (the “NASD”);
 
(n)  except as set forth in the Registration Statement, the Disclosure Package
and the Prospectus (i) no person has the right, contractual or otherwise, to
cause the Company to issue or sell to it any shares of Common Stock or shares of
any other capital stock or other equity interests of the Company, (ii) no person
has any preemptive rights, resale rights, rights of first refusal or other
rights to purchase any shares of Common Stock or shares of any other capital
stock of or other equity interests in the Company, and (iii) no person has the
right to act as an underwriter or as a financial advisor to the Company in
connection with the offer and sale of the Shares, in the case of each of the
foregoing clauses (i), (ii) and (iii), whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Shares as
contemplated thereby or otherwise; no person has the right, contractual or
otherwise, to cause the Company to register under the Act any shares of Common
Stock or shares of any other capital stock of or other equity interests in the
Company, or to include any such shares or interests in the Registration
Statement or the offering contemplated thereby, whether as a result of the
filing or effectiveness of the Registration Statement or the sale of the Shares
as contemplated thereby or otherwise;
 
(o)  each of the Company and the Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary licenses, authorizations, consents and approvals from
other persons, in order to conduct its respective business, except where the
failure to have such licenses, authorizations, consents and approvals or to make
such filings would not, individually or in the aggregate, have a Material
Adverse Effect; neither the Company nor any of the Subsidiaries is in violation
of, or in default under, or has received notice of any proceedings relating to
revocation or modification of, any such license, authorization, consent or
approval or any federal, state, local or foreign law, regulation or rule or any
decree, order or judgment applicable to the
 

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UBS Securities LLC
February 28, 2007
Page  10
 
Company or any of the Subsidiaries, except where such violation, default,
revocation or modification would not, individually or in the aggregate, have a
Material Adverse Effect;
 
(p)  all legal or governmental proceedings, affiliate transactions, off-balance
sheet transactions (including, without limitation, transactions related to, and
the existence of, “variable interest entities” within the meaning of Financial
Accounting Standards Board Interpretation No. 46), contracts, licenses,
agreements, properties, leases or documents of a character required to be
described in the Registration Statement, the Disclosure Package or the
Prospectus or to be filed as an exhibit to the Registration Statement have been
so described or filed as required;
 
(q)  there are no actions, suits, claims, investigations or proceedings pending
or threatened or contemplated to which the Company or any of the Subsidiaries or
any of their respective directors or officers is or would be a party or of which
any of their respective properties is or would be subject at law or in equity,
before or by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or before or by any
self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, the rules and regulations of the NASDAQ), except
any such action, suit, claim, investigation or proceeding which would not result
in a judgment, decree or order having, individually or in the aggregate, a
Material Adverse Effect or prevent consummation of the transactions contemplated
hereby;
 
(r)  Ernst & Young LLP, whose audit report on the consolidated financial
statements of the Company and the Subsidiaries is included or incorporated by
reference in the Registration Statement, the Disclosure Package and the
Prospectus, are independent registered public accountants as required by the Act
and by the rules of the Public Company Accounting Oversight Board;
 
(s)  the audited and unaudited financial statements included or incorporated by
reference in the Registration Statement, the Disclosure Package and the
Prospectus, together with the related notes and schedules, present fairly the
consolidated financial position of the Company and the Subsidiaries as of the
dates indicated and the consolidated results of operations and cash flows of the
Company and the Subsidiaries for the periods specified and have been prepared in
compliance with the requirements of the Act and in conformity with generally
accepted accounting principles applied on a consistent basis during the periods
involved; the other financial and statistical data set forth in the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any, are accurately and fairly presented and prepared
on a basis consistent with the financial statements and books and records of the
Company; there are no financial statements (historical or pro forma) that are
required to be included in the Registration Statement, any Pre-Pricing
Prospectuses or the Prospectus (including, without limitation, as required by
Rules 3-12 or 3-05 or Article 11 of Regulation S-X under the Act) that are not
included or incorporated by reference as required; the Company and the
Subsidiaries do not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet
 

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UBS Securities LLC
February 28, 2007
Page  11
 
obligations), not disclosed in the Registration Statement, each Pre-Pricing
Prospectus and the Prospectus;
 
(t)  subsequent to the respective dates as of which information is given in the
Registration Statement, the Disclosure Package and the Prospectus, there has not
been (i) any material adverse change, or any development involving a prospective
material adverse change, in the business, properties, management, financial
condition or results of operations of the Company and the Subsidiaries taken as
a whole, (ii) any transaction which is material to the Company and the
Subsidiaries taken as a whole, (iii) any obligation, direct or contingent
(including any off-balance sheet obligations), incurred by the Company or the
Subsidiaries, which is material to the Company and the Subsidiaries taken as a
whole, (iv) any change in the capital stock or outstanding indebtedness of the
Company or the Subsidiaries or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company;
 
(u)  the Company has obtained for the benefit of the Underwriter the agreement
(a “Lock-Up Agreement”), in the form set forth as Exhibit A hereto, of each of
its directors and officers named in Exhibit A-1 hereto;
 
(v)  the Company is not and, after giving effect to the offering and sale of the
Shares , 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”) or a “passive foreign investment
company” or a “controlled foreign corporation” as such terms are defined in the
Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”);
 
(w)  the Company and each of the Subsidiaries has good and marketable title to
all property (real and personal) described the Registration Statement, the
Disclosure Package and the Prospectus as being owned by each of them, free and
clear of all liens, claims, security interests or other encumbrances; and all
the property described in the Registration Statement, the Disclosure Package and
the Prospectus as being held under lease by the Company or a Subsidiary is held
thereby under valid, subsisting and enforceable leases;
 
(x)  neither the Company nor any of the Subsidiaries is engaged in any unfair
labor practice (as defined in the National Labor Relations Act); except for
matters which would not, individually or in the aggregate, have a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or,
to the Company’s knowledge after due inquiry, threatened against the Company or
any of the Subsidiaries before the National Labor Relations Board, and no
grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending or threatened, (B) no strike, labor dispute,
slowdown or stoppage pending or, to the Company’s knowledge, threatened against
the Company or any of the Subsidiaries and (C) no union representation dispute
currently existing concerning the employees of the Company or any of the
Subsidiaries, and (ii) to the Company’s knowledge, there has been no violation
of any federal, state, local or foreign
 

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UBS Securities LLC
February 28, 2007
Page  12
 
law relating to discrimination in the hiring, promotion or pay of employees, any
applicable wage or hour laws or any provision of the Employee Retirement Income
Security Act of 1974 (“ERISA”) or the rules and regulations promulgated
thereunder concerning the employees of the Company or any of the Subsidiaries;
 
(y)  the Company and the Subsidiaries and their properties, assets and
operations are in compliance with, and hold all permits, authorizations and
approvals required under, Environmental Laws (as defined below), except to the
extent that failure to so comply or to hold such permits, authorizations or
approvals would not, individually or in the aggregate, have a Material Adverse
Effect; except as described in the Registration Statement, the Disclosure
Package and the Prospectus, there are no past or present events, conditions,
circumstances, activities, practices, actions, omissions or plans that could
reasonably be expected to give rise to any material costs or liabilities to the
Company or the Subsidiaries under, or to interfere with or prevent compliance by
the Company or the Subsidiaries with, Environmental Laws; except as would not,
individually or in the aggregate, have a Material Adverse Effect, neither the
Company nor any of the Subsidiaries (i) is the subject of any investigation,
(ii) has received any notice or claim, (iii) is a party to or affected by any
pending or threatened action, suit or proceeding, (iv) is bound by any judgment,
decree or order or (v) has entered into any agreement, in each case relating to
any alleged violation of any Environmental Law or any actual or alleged release
or threatened release or cleanup at any location of any Hazardous Materials (as
defined below) (as used herein, “Environmental Law” means any federal, state,
local or foreign law, statute, ordinance, rule, regulation, order, decree,
judgment, injunction, permit, license, authorization or other binding
requirement or common law (including any applicable regulations and standards
adopted by the International Maritime Organization) relating to health, safety
or the protection, cleanup or restoration of the environment or natural
resources, including those relating to the distribution, processing, generation,
treatment, storage, disposal, transportation, other handling or release or
threatened release of Hazardous Materials, and “Hazardous Materials” means any
material (including, without limitation, pollutants, contaminants, hazardous or
toxic substances or wastes) that is regulated by or may give rise to liability
under any Environmental Law);
 
(z)  in the ordinary course of its business, the Company and each of the
Subsidiaries conducts a periodic review of the effect of the Environmental Laws
on its business, operations and properties, in the course of which it identifies
and evaluates associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for cleanup, closure of
properties or compliance with the Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties);
 
(aa)  all tax returns required to be filed by the Company and each of the
Subsidiaries have been filed, and all taxes and other assessments of a similar
nature (whether imposed directly or through withholding) including any interest,
additions to tax or penalties applicable thereto due or claimed to be due from
such entities have been paid,
 

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UBS Securities LLC
February 28, 2007
Page 13
 
other than those being contested in good faith and for which adequate reserves
have been provided;
 
(bb)  the Company and each of the Subsidiaries maintains insurance or a
membership in a mutual protection and indemnity association covering its
properties, operations, personnel and businesses as the Company deems adequate;
such insurance or membership insures against such losses and risks to an extent
which the Company deems is adequate in accordance with customary industry
practice; all such insurance is fully in force on the date hereof and will be
fully in force at the time of purchase and any additional time of purchase;
there are no material claims by the Company or any Subsidiary under any
insurance policy or instrument as to which any insurance company or mutual
protection and indemnity association is denying liability or defending under a
reservation of rights clause; neither the Company nor any of the Subsidiaries is
currently required to make any payment, or is aware of any facts that would
require the Company or any Subsidiary to make any payment, in respect of a call
by, or a contribution to, any mutual protection and indemnity association; and
neither the Company nor any Subsidiary has reason to believe that it will not be
able to renew any such insurance or membership in a mutual protection and
indemnity association as and when such insurance or membership expires or is
terminated;
 
(cc)  since the date of the last audited financial statements included in the
Registration Statement, the Disclosure Package and the Prospectus, (i) there has
not been a material loss (whether actual or constructive or partial or total) of
or to any of the vessels that are described in the Registration Statement, the
Disclosure Package and the Prospectus as owned or to be acquired by the Company
or any Subsidiary, (ii) no such vessel has been arrested or requisitioned for
title or hire and (iii) neither the Company nor any of the Subsidiaries has
sustained any material loss or interference with its respective business from
fire, explosion, flood or other calamity or from any labor dispute or court or
governmental action, order or decree;
 
(dd)  the Company has not sent or received any communication regarding the
termination, amendment, modification or waiver of, or intent not to renew, or
intent not to consummate any transaction contemplated by, any of the material
contracts or agreements referred to or described in the Disclosure Package and
the Prospectus, or referred to or described in, or filed as an exhibit to, the
Registration Statement, and no such termination, amendment, modification,
waiver, non-renewal or intention not to consummate has been threatened by the
Company or, to the Company’s knowledge after due inquiry, any other party to any
such material contract or agreement;
 
(ee)  the Company and each of the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
 

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UBS Securities LLC
February 28, 2007
Page  14
 
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
 
(ff)  the Company has established and maintains and evaluates “disclosure
controls and procedures” (as such term is defined in Rule 13a-15 and 15d-15
under the Exchange Act) and “internal control over financial reporting” (as such
term is defined in Rule 13a-15 and 15d-15 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to the Company’s Chief Executive Officer and Chief Financial Officer
by others within those entities, and such disclosure controls and procedures are
effective to perform the functions for which they were established; the
Company’s auditors and the Audit Committee of the Board of Directors of the
Company have been advised of: (i) any significant deficiencies in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize, and report financial data; and (ii) any
fraud, whether or not material, that involves management or other employees who
have a role in the Company’s internal controls; any material weaknesses in
internal controls have been identified for the Company’s auditors; since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses; and the
Company has taken all necessary actions to ensure that, upon effectiveness of
the Registration Statement, the Company and the Subsidiaries and their
respective officers and directors, in their capacities as such, will be in
compliance in all material respects with the provisions of the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”) and the rules and regulations promulgated
thereunder;
 
(gg)  the Company has not, directly or indirectly, including through any of the
Subsidiaries extended credit, arranged to extend credit, or renewed any
extension of credit, in the form of a personal loan, to or for any director or
executive officer of the Company, or to or for any family member or affiliate of
any director or executive officer of the Company;
 
(hh)  each “forward-looking statement” (within the meaning of Section 27A of the
Act or Section 21E of the Exchange Act) contained or incorporated by reference
in the Registration Statement, the Disclosure Package and the Prospectus has
been made or reaffirmed with a reasonable basis and has been disclosed in good
faith;
 
(ii)  any statistical and market-related data included or incorporated by
reference in the Registration Statement, the Disclosure Package and the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained the written consent to the
use of such data from such sources to the extent required;
 
(jj)  neither the Company nor any of the Subsidiaries nor, to the knowledge of
the Company, any director, officer, agent, employee or affiliate of the Company
or any of the Subsidiaries is aware of or has taken any action, directly or
indirectly, that would result in a
 

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UBS Securities LLC
February 28, 2007
Page  15
 
violation by such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “Foreign Corrupt
Practices Act”); and the Company, the Subsidiaries and, to the knowledge of the
Company, its affiliates have conducted their businesses in compliance with the
Foreign Corrupt Practices Act and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith;
 
(kk)  the operations of the Company and the Subsidiaries are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes and the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency to which such operations are
subject (collectively, the “Money Laundering Laws”); and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator or non-governmental authority involving the Company or any of the
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened;
 
(ll)  neither the Company nor any of the Subsidiaries nor, to the knowledge of
the Company, any director, officer, agent, employee or affiliate of the Company
or any of the Subsidiaries is currently subject to any United States sanctions
administered by the Office of Foreign Assets Control of the United States
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 Subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently
subject to any United States sanctions administered by OFAC;
 
(mm)  except as described in the Registration Statement, the Disclosure Package
and the Prospectus, no Subsidiary is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary’s capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary’s property or assets to the Company or any other
Subsidiary of the Company, except as described in the Registration Statement,
the Disclosure Package and the Prospectus; all dividends and other distributions
declared and payable on the shares of Common Stock of the Company and on the
capital stock of each Subsidiary may under the current laws and regulations of
the Marshall Islands be paid in United States dollars and freely transferred out
of the Marshall Islands; and all such dividends and other distributions are not
subject to withholding or other taxes under the current laws and regulations of
the Marshall Islands and are otherwise free and clear of any withholding, stamp,
transfer, excise or other tax and may be declared and paid 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 Marshall
Islands;
 

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UBS Securities LLC
February 28, 2007
Page  16
 
(nn)  the issuance and sale of the Shares to be sold by the Company pursuant
hereto will not cause any holder of any shares of capital stock, securities
convertible into or exchangeable or exercisable for capital stock or options,
warrants or other rights to purchase capital stock or any other securities of
the Company to have any right to acquire any shares of preferred stock of the
Company;
 
(oo)  the Company is in compliance with the Marketplace Rules of the NASDAQ,
including, without limitation, the requirements for initial and continued
designation of the Common Stock as a NASDAQ security;
 
(pp)  except pursuant to this Agreement, neither the Company nor any of the
Subsidiaries has incurred any liability for any finder’s or broker’s fee or
agent’s commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby or by the
Registration Statement, the Disclosure Package and the Prospectus;
 
(qq)  neither the Company nor any of the Subsidiaries nor any of their
respective directors, officers or affiliates has taken, directly or indirectly,
any action designed, or which has constituted or might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares; and
 
(rr)  to the Company’s knowledge, there are no affiliations or associations
between (i) any member of the NASD and (ii) the Company or any of the Company’s
officers, directors or 5% or greater securityholders or any beneficial owner of
the Company’s unregistered equity securities that were acquired at any time on
or after the 180th day immediately preceding the date the Registration Statement
was initially filed with the Commission, except as set forth in the Registration
Statement, the Disclosure Package and the Prospectus; and
 
(ss)  no stamp duty, stock exchange tax, value-added tax, withholding tax or any
other similar duty or tax is payable in the United States, the Marshall Islands,
or any other jurisdiction in which either the Company or any of its Subsidiaries
is engaged in business for tax purposes, (including, in each case, any political
subdivision thereof or any authority thereof having power to tax), in connection
with the execution, delivery or performance of this Agreement by the Company or
the issuance, sale or delivery of the Shares by the Company to the Underwriters
or the initial resales of the Shares by the Underwriters in the manner
contemplated by this Agreement, the Registration Statement, the Disclosure
Package and the Prospectus.
 
In addition, any certificate signed by any officer of the Company or any of the
Subsidiaries and delivered to the Underwriter or counsel for the Underwriter in
connection with the offering of the Shares shall be deemed to be a
representation and warranty by the Company or Subsidiary, as the case may be, as
to matters covered thereby, to each Underwriter.
 

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UBS Securities LLC
February 28, 2007
Page  17
 
4.  Certain Covenants of the Company. The Company hereby agrees with the
Underwriter:
 
(a)  to furnish such information as may be required and otherwise to cooperate
in qualifying the Shares for offering and sale under the securities or blue sky
laws of such states or other jurisdictions as you may reasonably designate and
to maintain such qualifications in effect so long as you may reasonably request
for the distribution of the Shares; provided, however, that the Company shall
not be required to qualify as a foreign corporation or to consent to the service
of process under the laws of any such jurisdiction (except service of process
with respect to the offering and sale of the Shares); and to promptly advise you
of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Shares for offer or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
 
(b)  to make available to the Underwriter in New York City, as soon as
practicable after this Agreement becomes effective, and thereafter from time to
time to furnish to the Underwriter, as many copies of the Prospectus (or of the
Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) as the Underwriter may request for the purposes contemplated by the
Act; in case the Underwriter is required to deliver (whether physically or
through compliance with Rule 172 under the act or any similar rule), a
prospectus after the nine-month period referred to in Section 10(a)(3) of the
Act in connection with the sale of the Shares, the Company will prepare, at its
expense, promptly upon request such amendment or amendments to the Registration
Statement and the Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act;
 
(c)  if, at the time this Agreement is executed and delivered, it is necessary
for any post-effective amendment to the Registration Statement to be declared
effective before the Shares may be sold, the Company will use its best efforts
to cause such post-effective amendment to become effective as soon as possible
and the Company will advise you promptly and, if requested by you, will confirm
such advice in writing, (i) when any such post-effective amendment thereto has
become effective, and (ii) if Rule 430A under the Act is used, when the
Prospectus is filed with the Commission pursuant to Rule 424(b) under the Act
(which the Company agrees to file in a timely manner under such Rule);
 
(d)  if, at any time during the period when a prospectus is required by the Act
to be delivered (whether physically or through compliance with Rule 172 under
the Act or any similar rule) in connection with any sale of Shares, the
Registration Statement shall cease to comply with the requirements of the Act
with respect to eligibility for the use of the form on which the Registration
Statement was filed with the Commission, to (i) promptly notify you, (ii)
promptly file with the Commission a new registration statement under the Act,
relating to the Shares, or a post-effective amendment to the Registration
Statement, which new registration statement or post-effective amendment shall
comply with the requirements of the Act and shall be in a form satisfactory to
you, (iii) use its best efforts to cause such
 

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UBS Securities LLC
February 28, 2007
Page  18
 
new registration statement or post-effective amendment to become effective under
the Act as soon as practicable, (iv) promptly notify you of such effectiveness
and (v) take all other action necessary or appropriate to permit the public
offering and sale of the Shares to continue as contemplated in the Prospectus;
all references herein to the Registration Statement shall be deemed to include
each such new registration statement or post-effective amendment, if any;
 
(e)  to advise you promptly, confirming such advice in writing, of any request
by the Commission for amendments or supplements to the Registration Statement,
any Pre-Pricing Prospectus, the Prospectus or any Permitted Free Writing
Prospectus or for additional information with respect thereto, or of notice of
institution of proceedings for, or the entry of a stop order, suspending the
effectiveness of the Registration Statement and, if the Commission should enter
a stop order suspending the effectiveness of the Registration Statement, to use
its best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement the
Registration Statement, any Pre-Pricing Prospectus or the Prospectus and to
provide you and the Underwriter’s counsel copies of any such documents for
review and comment a reasonable amount of time prior to any proposed filing and
to file no such amendment or supplement to which you shall reasonably object in
writing;
 
(f)  subject to Section 4(e) hereof, to file promptly all reports and documents
and any preliminary or definitive proxy or information statement required to be
filed by the Company with the Commission in order to comply with the Exchange
Act subsequent to the date of the Prospectus and for so long as the delivery of
a prospectus is required (whether physically or through compliance with Rule 172
under the act or any similar rule) in connection with the offering or sale of
the Shares; and to provide you with a copy of such reports and statements and
other documents to be filed by the Company pursuant to Section 13, 14 or 15(d)
of the Exchange Act during such period a reasonable amount of time prior to any
proposed filing, and to promptly notify you of such filing;
 
(g)  if necessary or appropriate, to file a registration statement pursuant to
Rule 462(b) under the Act;
 
(h)  to advise the Underwriter promptly of the happening of any event within the
time during which a prospectus relating to the Shares is required to be
delivered under the Act (whether physically or through compliance with Rule 172
under the act or any similar rule) which could require the making of any change
in the Prospectus then being used so that the Prospectus would not include an
untrue statement of material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
are made, not misleading, and, during such time, subject to Section 4(e) hereof,
to prepare and furnish, at the Company’s expense, to the Underwriter promptly
such amendments or supplements to such Prospectus as may be necessary to reflect
any such change;
 

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UBS Securities LLC
February 28, 2007
Page  19
 
(i)  to make generally available to its security holders, and to deliver to you,
an earnings statement of the Company (which will satisfy the provisions of
Section 11(a) of the Act) covering a period of twelve months beginning after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act) as soon as is reasonably practicable after the termination of such
twelve-month period but not later than March 6, 2008;
 
(j)  to furnish to its shareholders as soon as practicable after the end of each
fiscal year an annual report (including a consolidated balance sheet and
statements of income, shareholders’ equity and cash flow of the Company and the
Subsidiaries for such fiscal year, accompanied by a copy of the certificate or
report thereon of nationally recognized independent certified public
accountants);
 
(k)  to furnish to you three copies of the Registration Statement, as initially
filed with the Commission, and of all amendments thereto (including all exhibits
thereto and documents incorporated by reference therein);
 
(l)  to furnish to you as early as practicable prior to the time of purchase and
any additional time of purchase, as the case may be, but not later than two
business days prior thereto, a copy of the latest available unaudited interim
and monthly consolidated financial statements, if any, of the Company and the
Subsidiaries which have been read by the Company’s independent registered public
accountants, as stated in their letter to be furnished pursuant to Section 7(f)
hereof;
 
(m)  to comply with Rule 433(d) under the Act and with Rule 433(g) under the
Act;
 
(n)  to apply the net proceeds from the sale of the Shares in the manner set
forth under the caption of “Use of Proceeds” in the Prospectus;
 
(o)  for a period of 45 days after the date hereof (the “Lock-Up Period”),
without the prior written consent of the Underwriter, not to (i) sell, offer to
sell, contract or agree to sell, hypothecate, pledge, grant any option to
purchase or otherwise dispose of or agree to dispose of, directly or indirectly,
or establish or increase a put equivalent position or liquidate or decrease a
call equivalent position within the meaning of Section 16 of the Exchange Act
and the rules and regulations of the Commission promulgated thereunder, with
respect to, any Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other securities of the Company that are substantially similar to
Common Stock, (ii) file or cause to be declared effective a registration
statement under the Act relating to the offer and sale of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for Common
Stock or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock, (iii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of Common Stock or any
securities convertible
 

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UBS Securities LLC
February 28, 2007
Page 20 
 
into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock or any such securities, whether any such
transaction is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise or (iv) publicly announce an intention to
effect any transaction specified in clause (i), (ii) or (iii), except, in each
case, for (A) the registration of the Shares and the sales to the Underwriter
pursuant to this Agreement, (B) issuances of Common Stock upon the exercise of
options or warrants disclosed as outstanding in the Registration Statement, the
Disclosure Package and the Prospectus, and (C) the issuance of employee stock
options not exercisable during the Lock-Up Period pursuant to stock option plans
described in the Registration Statement and the Prospectus; provided, however,
that if (a) during the period that begins on the date that is fifteen calendar
days plus three business days before the last day of the Lock-Up Period and ends
on the last day of the Lock-Up Period, the Company issues an earnings release or
material news or a material event relating to the Company occurs, or (b) prior
to the expiration of the Lock-Up Period, the Company announces that it will
release earnings results during the sixteen day period beginning on the last day
of the Lock-Up Period, the restrictions imposed by this Section 4(o) shall
continue to apply until the expiration of the date that is fifteen calendar days
plus three business days after the date on which the issuance of the earnings
release or material news or the material event occurs; provided, however, that
this sentence shall not apply if the research published or distributed with
respect to the Company is issued in compliance with or pursuant to Rule 139 of
the Securities Act of 1933, as amended, and the Company’s securities are
“actively traded” as such term is defined in Rule 101(c)(1) of Regulation M of
the Exchange Act;
 
(p)  to use its best efforts to cause the Shares to be listed for quotation on
the NASDAQ;
 
(q)  to maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar for the Common Stock;
 
(r)  prior to the time of purchase or any additional time of purchase, as the
case may be, to issue no press release or other communication directly or
indirectly and hold no press conferences with respect to the Company or any
Subsidiary, the financial condition, results of operations, business,
properties, assets, or liabilities of the Company or any Subsidiary, or the
offering of the Shares, without your prior consent;
 
(s)  not, at any time on or after the execution of this Agreement, to distribute
any “prospectus” (within the meaning of the Act) or offering material in
connection with the offering or sale of the Shares other than the Registration
Statement and the then most recent Prospectus; and
 
(t)  not to, take, directly or indirectly, any action designed, or which has
constituted or might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
 

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UBS Securities LLC
February 28, 2007
Page 21 
 
5. Payment of Expenses. The Company agrees to pay all costs, expenses, fees and
taxes in connection with (i) the preparation and filing of the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses and any amendments or supplements thereto, and the printing
and furnishing of copies of each thereof to the Underwriter and to dealers
(including costs of mailing and shipment), (ii) the registration, sale and
delivery of the Shares including any stock or transfer taxes and stamp or
similar duties payable upon the sale, issuance or delivery of the Shares by the
Company to the Underwriter, (iii) the qualification of the Shares for offering
and sale under state or foreign laws and the determination of their eligibility
for investment under state or foreign law as aforesaid (including the legal fees
and filing fees and other disbursements of counsel for the Underwriter) and the
printing and furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriter and to dealers, (iv) any listing of the Shares on any
securities exchange or qualification of the Shares for quotation on the NASDAQ
and any registration thereof under the Exchange Act, (v) any filing for review
of the public offering of the Shares by the NASD, including the legal fees and
filing fees and other disbursements of counsel to the Underwriter relating to
NASD matters, (vi) the fees and disbursements of any transfer agent or registrar
for the Shares, (vii) the costs and expenses of the Company relating to
presentations or meetings undertaken in connection with the marketing of the
offering and sale of the Shares to prospective investors and the Underwriter’s
sales forces, 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, travel,
lodging and other expenses incurred by the officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, (viii) the fees and expenses of the Company’s accountants and the fees and
expenses of counsel (including local and special counsel) for the Company; and
(ix) all other costs and expenses incident to the performance by the Company of
their obligations hereunder.  
 
It, however, is understood that, except as provided in this Section 5, Section 6
and Section 9, the Underwriter will pay all of their own costs and expenses,
including the fees and expenses of their counsel, transfer and other taxes on
resale of any Shares by them and any advertising expenses connected with any
offer they make.
 
6. Reimbursement of Underwriter’s Expenses. If the Shares are not delivered for
any reason other than the termination of this Agreement pursuant to clause (i),
(iii), (iv) or (v) of Subsection (y) of the second paragraph of Section 8 or the
default by the Underwriter in its obligations hereunder, the Company shall, in
addition to paying the amounts described in Section 5 hereof, reimburse the
Underwriter for all of its actual accountable out-of-pocket expenses, including
the fees and disbursements of their counsel.
 
7. Conditions of Underwriter’s Obligations. The obligations of the Underwriter
hereunder are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof, at the time of purchase and, if
applicable, at each additional time of purchase, the performance by the Company
of each of their respective obligations hereunder and to the following
additional conditions precedent:
 

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(a)  The Company shall furnish to you at the time of purchase and, if
applicable, any additional time of purchase, an opinion and negative assurance
letter of Skadden, Arps, Slate, Meagher & Flom LLP, special United States
counsel for the Company, addressed to the Underwriter, and dated the time of
purchase or the additional time of purchase, as the case may be, in form and
substance satisfactory to Seward & Kissel, counsel for the Underwriter, in the
forms set forth in Exhibit B-1 and Exhibit B-2 hereto.
 
(b)  You shall have received at the time of purchase and, if applicable, any
additional time of purchase, an opinion of Seward & Kissel LLP, addressed to the
Underwriter, and dated the time of purchase or the additional time of purchase,
as the case may be, in form and substance satisfactory to the Underwriter, in
the form set forth in Exhibit C-1 hereto.
 
(c)  You shall have received at the time of purchase and, if applicable, any
additional time of purchase, the written opinion of Seward & Kissel LLP, ,
addressed to the Underwriter, and dated the time of purchase in form and
substance satisfactory to the Underwriter, in the form set forth in Exhibit C-2
hereto.
 
(d)  You shall have received at the time of purchase and, if applicable, any
additional time of purchase, an opinion of Seward & Kissel LLP, addressed to the
Underwriter, and dated the time of purchase or the additional time of purchase,
as the case may be, in form and substance satisfactory to the Underwriter, in
the form set forth in Exhibit D hereto.
 
(e)  The Company shall furnish to you at the time of purchase and, if
applicable, any additional time of purchase, an opinion of Reeder & Simpson
P.C., special Marshall Islands counsel for the Company, addressed to the
Underwriter, and dated the time of purchase or the additional time of purchase,
as the case may be, in form and substance satisfactory to Seward & Kissel LLP,
counsel for the Underwriter, in the form set forth in Exhibit E hereto.
 
(f)  You shall have received from Ernst & Young LLP letters dated, respectively,
the date of this Agreement, the time of purchase and, if applicable, any
additional time of purchase, and addressed to the Underwriter in the forms
heretofore approved by the Underwriter.
 
(g)  You shall have received at the time of purchase and, if applicable, any
additional time of purchase, the favorable opinion and negative assurance
statement of Seward & Kissel LLP, counsel for the Underwriter, dated the time of
purchase or the additional time of purchase, as the case may be, in form and
substance reasonably satisfactory to the Underwriter.
 
(h)  No Prospectus or amendment or supplement to the Registration Statement or
the Prospectus shall have been filed to which you reasonably object in writing.

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UBS Securities LLC
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(i)  The Registration Statement shall have been filed and any registration
statement required to be filed, prior to the sale of the Shares, under the Act
pursuant to Rule 462(b) shall have been filed and shall have become effective
under the Act no later than 10:00 p.m. New York City time on the date of
determination of the public offering price for the shares. The Prospectus
Supplement shall have been filed with the Commission pursuant to Rule 424(b)
under the Act at or before 5:30 P.M., New York City time, on the second full
business day after the date of this Agreement.
 
(j)  Prior to and at the time of purchase and, if applicable, any additional
time of purchase, (i) no stop order with respect to the effectiveness of the
Registration Statement shall have been issued under the Act or proceedings
initiated under Section 8(d) or 8(e) of the Act; (ii) the Registration Statement
and all amendments thereto shall not contain 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; (iii) the Prospectus, and any
amendment or supplement thereto, shall not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading; and (iv) the Disclosure Package, and any amendment or supplement
thereto, shall not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
 
(k)  Between the time of execution of this Agreement and the time of purchase or
each additional time of purchase, as the case may be, (A) no material adverse
change or any development involving a prospective material adverse change in the
business, properties, management, financial condition or results of operations
of the Company and the Subsidiaries taken as a whole shall occur or become
known, and (B) no transaction which is material and adverse to the Company has
been entered into by the Company or any of the Subsidiaries.
 
(l)  There shall not have been a material loss (whether actual or constructive
or partial or total) of or to any of the vessels that are described in the
Registration Statement, the Disclosure Package and the Prospectus as owned or to
be acquired by the Company or any Subsidiary and no such vessel shall have been
arrested or requisitioned for title or hire.
 
(m)  The Company will, at the time of purchase and, if applicable, at each
additional time of purchase, deliver to you a certificate of its Chief Executive
Officer and its Chief Financial Officer, dated the time of purchase or each
additional time of purchase, as the case may be, in the form attached as Exhibit
F hereto.
 
(n)  You shall have received signed Lock-up Agreements referred to in Section
3(u) hereof, and each such Lock-Up Agreement shall be in full force and effect
at the time of purchase and each additional time of purchase, as the case may
be.

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UBS Securities LLC
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(o)  The Shares shall have been approved for quotation on NASDAQ, subject only
to notice of issuance at or prior to the time of purchase and each additional
time of purchase, as the case may be.
 
(p)  The Company shall have furnished to you such other documents and
certificates as you may reasonably request.
 
8. Effective Date of Agreement; Termination. This Agreement shall become
effective when the parties hereto have executed and delivered this Agreement.
 
The obligations of the Underwriter hereunder shall be subject to termination in
the absolute discretion of the Underwriter, if (x) since the time of execution
of this Agreement or the earlier respective dates as of which information is
given in the Registration Statement, the Disclosure Package and the Prospectus,
there has been any material adverse change or any development involving a
prospective material adverse change in the business, properties, management,
financial condition or results of operations of the Company and the Subsidiaries
taken as a whole, which would, in the Underwriter’s judgment, make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the terms and in the manner contemplated in the Registration
Statement, the Disclosure Package and the Prospectus, or (y) since of execution
of this Agreement, there shall have occurred: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ; (ii) a suspension or material
limitation in trading in the Company’s securities on the NASDAQ; (iii) a general
moratorium on commercial banking activities declared by either federal or New
York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv) an
outbreak or escalation of hostilities or acts of terrorism involving the United
States or a declaration by the United States of a national emergency or war; or
(v) any other calamity or crisis or any change in financial, political or
economic conditions in the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in the Underwriter’s judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the terms and in the manner contemplated in the Registration
Statement, the Disclosure Package and the Prospectus, or (z) since the time of
execution of this Agreement, there shall have occurred any downgrading, or any
notice or announcement shall have been given or made of (i) any intended or
potential downgrading or (ii) any watch, review or possible change that does not
indicate an affirmation or improvement in the rating accorded any securities of
or guaranteed by the Company or any Subsidiary by any “nationally recognized
statistical rating organization,” as that term is defined in Rule 436(g)(2)
under the Act.
 
If the Underwriter elects to terminate this Agreement as provided in this
Section 8, the Company shall be notified promptly in writing.
 
If the sale to the Underwriter of the Shares, as contemplated by this Agreement,
is not carried out by the Underwriter for any reason permitted under this
Agreement or if such sale is not carried out because the Company shall be unable
to comply with any of the terms of this Agreement, the Company shall not be
under any obligation or liability under this Agreement

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UBS Securities LLC
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(except to the extent provided in Sections 5, 6 and 9 hereof), and the
Underwriter shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof).
 
9. Indemnity and Contribution.
 
(a)  The Company agrees to indemnify, defend and hold harmless the Underwriter,
their partners, directors and officers, and any person who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which the Underwriter or any such person may
incur under the Act, the Exchange Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or arises out of
or is based upon any omission or alleged omission to state a material fact
required to be stated in either such Registration Statement or necessary to make
the statements made therein not misleading, except insofar as any such loss,
damage, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in, and in
conformity with information concerning the Underwriter furnished in writing by
or on behalf of the Underwriter through you to the Company expressly for use in
the Registration Statement or arises out of or is based upon any omission or
alleged omission to state a material fact in such Registration Statement in
connection with such information, which material fact was not contained in such
information and which material fact was necessary in order to make the
statements in such information, in the light of the circumstances under which
they were made, not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact included in any Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Basic Prospectus, any
Pre-Pricing Prospectus, the Prospectus Supplement, the Prospectus and any
amendments or supplements to the foregoing), in any Permitted Free Writing
Prospectus, in any “issuer information” (as defined in Rule 433 under the Act)
of the Company or in any Prospectus together with any combination of one or more
of the Permitted Free Writing Prospectuses, if any, or arises out of or is based
upon any omission or alleged omission 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, except, with respect to such Prospectus or
Permitted Free Writing Prospectus, except insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in, and in conformity
with information concerning the Underwriter furnished in writing by or on behalf
of the Underwriter through you to the Company expressly for use in, such
Prospectus or Permitted Free Writing Prospectus or arises out of or is based
upon any omission or alleged omission to state a material fact in such
Prospectus or Permitted Free Writing Prospectus in connection with such
information, which material fact was not contained in such information and which
material fact was necessary in order to make the

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UBS Securities LLC
February 28, 2007
Page 26 
 
statements in such information, in the light of the circumstances under which
they were made, not misleading.
 
(b)  The Underwriter agrees to indemnify, defend and hold harmless the Company,
its directors or officers and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the
successors and assigns of all of the foregoing persons, from and against any
loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company or any such person may
incur under the Act, the Exchange Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or arises out of
or is based upon any omission or alleged omission to state a material fact
required to be stated in either such Registration Statement or necessary to make
the statements made therein not misleading but only with reference to
information concerning the Underwriter furnished in writing by or on behalf of
the Underwriter through you to the Company expressly for use in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or (ii) any untrue statement or alleged untrue
statement of a material fact contained in, and in conformity with information
concerning the Underwriter furnished in writing by or on behalf of the
Underwriter through you to the Company expressly for use in, a Prospectus or a
Permitted Free Writing Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in such Prospectus,
Permitted Free Writing Prospectus or Prospectus together with any combination of
one or more of the Permitted Free Writing Prospectuses in connection with such
information, which material fact was not contained in such information and which
material fact was necessary in order to make the statements in such information,
in the light of the circumstances under which they were made, not misleading.
 
(c)  If any action, suit or proceeding (each, a “Proceeding”) is brought against
the Underwriter or any such person in respect of which indemnity may be sought
against the Company pursuant to Section 9(a), the Underwriter or such person
shall promptly notify the Company, in writing of the institution of such
Proceeding and the Company, as the case may be, shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that
the omission to so notify the Company shall not relieve the Company from any
liability which the Company may have to the Underwriter or any such person or
otherwise. The Underwriter or such person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of the Underwriter or of such person unless the
employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such Proceeding or the
indemnifying party shall not have, within a reasonable period of time in light
of the circumstances, employed counsel to have charge of the defense of such
Proceeding or such indemnified party or parties shall have reasonably concluded
that there

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UBS Securities LLC
February 28, 2007
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may be defenses available to it or them which are different from, additional to
or in conflict with those available to the indemnifying party (in which case the
indemnifying party shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the indemnifying party and paid
as incurred (it being understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The indemnifying party shall not be liable for any settlement of
any Proceeding effected without its written consent but if settled with the
written consent of the indemnifying party, the indemnifying party agrees to
indemnify and hold harmless the Underwriter and any such person from and against
any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this Section 9(d), then the
indemnifying party 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 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have fully
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement and (iii) 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 of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on behalf of such
indemnified party.
 
(d)  If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against the Underwriter pursuant to
Section 9(b) hereof, the Company or such person shall promptly notify the
Underwriter in writing of the institution of such Proceeding and the Underwriter
shall assume the defense of such Proceeding, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all fees and
expenses; provided, however, that the omission to so notify the Underwriter
shall not relieve the Underwriter from any liability which the Underwriter may
have to the Company, or any such person or otherwise. The Company, or such
person shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the Company, or
such person unless the employment of such counsel shall have been authorized in
writing by the Underwriter in connection with the defense of such Proceeding or
the Underwriter shall not have, within a reasonable period of time in light of
the circumstances, employed counsel to defend such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or

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UBS Securities LLC
February 28, 2007
Page 28 
 
additional to or in conflict with those available to the Underwriter (in which
case the Underwriter shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but the Underwriter
may employ counsel and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of the Underwriter), in any of
which events such fees and expenses shall be borne by the Underwriter and paid
as incurred (it being understood, however, that the Underwriter shall not be
liable for the expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Underwriter shall not be liable for any settlement of any such
Proceeding effected without the written consent of the Underwriter but if
settled with the written consent of the Underwriter, the Underwriter agree to
indemnify and hold harmless the Company, and any such person from and against
any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this Section 9(d), then the
indemnifying party 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 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) 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 of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding.
 
(e)  If the indemnification provided for in this Section 9 is unavailable to an
indemnified party under subsections (a) or (b) of this Section 9 or insufficient
to hold an indemnified party harmless in respect of any losses, damages,
expenses, liabilities or claims referred to therein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriter on the other hand
from the offering of the Shares 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 of the Underwriter on
the other in connection with the statements or omissions which resulted in such
losses, damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriter on the other shall be deemed to be in the same
respective proportions as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the total

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UBS Securities LLC
February 28, 2007
Page 29 
 
underwriting discounts and commissions received by the Underwriter, bear to the
aggregate public offering price of the Shares. The relative fault of the Company
on the one hand and of the Underwriter on the other shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission relates to
information supplied by the Company or by the Underwriter 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, damages, expenses, liabilities and claims referred to in
this subsection shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating, preparing to
defend or defending any Proceeding.
 
(f)  The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 9 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 subsection (e) above.
Notwithstanding the provisions of this Section 9, the Underwriter shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by the Underwriter and distributed to the
public were offered to the public exceeds the amount of any damage which the
Underwriter has otherwise been required to pay by reason of such untrue
statement 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.
 
(g)  The indemnity and contribution agreements contained in this Section 9 and
the covenants, warranties and representations of the Company contained in this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the Underwriter, their partners, directors or officers
or any person (including each partner, officer or director of such person) who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, or by or on behalf of the Company, its directors or
officers or any person who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, and shall survive any termination
of this Agreement or the issuance and delivery of the Shares. The Company and
the Underwriter agree promptly to notify each other of the commencement of any
Proceeding against it and, in the case of the Company, against any of the
Company’s officers or directors in connection with the issuance and sale of the
Shares, or in connection with the Registration Statement, any Pre-Pricing
Prospectus, the Prospectus or any Permitted Free Writing Prospectus.
 
10. Information Furnished by the Underwriter. The statements set forth in the
last paragraph on the cover page of the Prospectus and the statements set forth
in the section of the Prospectus entitled “Underwriting” in (i) the first
paragraph listing the Underwriter and the number of shares to be purchased by
the Underwriter, (ii) the second sentence of the fourth paragraph regarding the
manner in which Shares may be offered by the Underwriter; (iii) the fifth
paragraph regarding resales and commissions and (iv) in the eleventh, twelfth,
thirteenth,

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UBS Securities LLC
February 28, 2007
Page 30 
 
fourteenth and fifteenth paragraphs regarding stabilization, short positions and
passive market making constitute the only information furnished by or on behalf
of the Underwriter as such information is referred to in Sections 3, 4 and 9
hereof.
 
11. No Fiduciary Duty. The Company hereby acknowledges that the Underwriter is
acting solely as an underwriter in connection with the purchase and sale of the
Company’s securities. The Company further acknowledges that the Underwriter is
acting pursuant to a contractual relationship created solely by this
Underwriting Agreement entered into on an arm’s length basis and in no event do
the parties intend that the Underwriter act or be responsible as a fiduciary to
the Company, its management, stockholders, creditors, or any other person in
connection with any activity that the Underwriter may undertake or has
undertaken in furtherance of the purchase and sale of the Company’s securities,
either before or after the date hereof. The Underwriter hereby expressly
disclaims any fiduciary or similar obligations to the Company, either in
connection with the transactions contemplated by this Underwriting Agreement or
any matters leading up to such transactions, and the Company hereby confirms
their understanding and agreement to that effect. The Company and the
Underwriter agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Underwriter to the Company regarding such
transactions, including but not limited to any opinions or views with respect to
the price or market for the Company’s securities, do not constitute advice or
recommendations to the Company. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against
the Underwriter with respect to any breach or alleged breach of any fiduciary or
similar duty to the Company in connection with the transactions contemplated by
this Underwriting Agreement or any matters leading up to such transactions.
 
12. Notices. Except as otherwise herein provided, all statements, requests,
notices and agreements shall be in writing or by facsimile or telegram and, if
to the Underwriter, shall be sufficient in all respects if delivered or sent to
UBS Securities LLC, 299 Park Avenue, New York, N.Y. 10171-0026, Attention:
Syndicate Department and, if to the Company, shall be sufficient in all respects
if delivered or sent to the Company at the offices of the Company at 477 Madison
Avenue, New York, New York 10022, Attention: Sophocles N. Zoullas
 
13. Governing Law; Construction. This Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way relating
to this Agreement (“Claim”), directly or indirectly, shall be governed by, and
construed in accordance with, the laws of the State of New York. The section
headings in this Agreement have been inserted as a matter of convenience of
reference and are not a part of this Agreement.
 
14. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any

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UBS Securities LLC
February 28, 2007
Page 31 
 
court in which any Claim arising out of or in any way relating to this Agreement
is brought by any third party against the Underwriter or any indemnified party.
The Underwriter and the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) waives all right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company each agrees that a final judgment in any such action,
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon the Company may be enforced in any other courts to the jurisdiction
of which the Company is or may be subject, by suit upon such judgment. The
Company hereby appoint, without power of revocation, Seward & Kissel LLP, One
Battery Park Plaza, New York, New York 10004 as their respective agents to
accept and acknowledge on their behalf service of any and all process which may
be served in any action, proceeding or counterclaim in any way relating to or
arising out of this Agreement.
 
15. Parties at Interest. The Agreement herein set forth has been and is made
solely for the benefit of the Underwriter, the Company and to the extent
provided in Section 11 hereof the controlling persons, partners, directors and
officers referred to in such Section, and their respective successors, assigns,
heirs, personal representatives and executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from the Underwriter) shall acquire or have any right under or by
virtue of this Agreement.
 
16. Counterparts. This Agreement may be signed by the parties in one or more
counterparts which together shall constitute one and the same agreement among
the parties.
 
17. Successors and Assigns. This Agreement shall be binding upon the Underwriter
and the Company and their successors and assigns and any successor or assign of
any substantial portion of the Company’s, and any of the Underwriter’s
respective businesses and/or assets.
 
18. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG, is not a
bank and is separate from any affiliated bank, including any U.S. branch or
agency of UBS AG. Because UBS is a separately incorporated entity, it is solely
responsible for its own contractual obligations and commitments, including
obligations with respect to sales and purchases of securities. Securities sold,
offered or recommended by UBS are not deposits, are not insured by the Federal
Deposit Insurance Corporation, are not guaranteed by a branch or agency, and are
not otherwise an obligation or responsibility of a branch or agency.
 
[Remainder of page left blank]

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If the foregoing correctly sets forth the understanding among the Company and
the Underwriter, please so indicate in the space provided below for that
purpose, whereupon this agreement and your acceptance shall constitute a binding
agreement among the Company and the Underwriter.
 
Very truly yours,
 
EAGLE BULK SHIPPING INC.
 

           By:

/s/ SOPHOCLES ZOULLAS

              Name: Sophocles Zoullas
Title: Chief Executive Officer      

Accepted and agreed to as of the
date first above written
 
UBS SECURITIES LLC
 

           By:

/s/ SIMON SMITH

              Name: Simon Smith
Title: Managing Director      

 

           By:

/s/ MICHAEL WELSH

              Name: Michael Welsh
Title: Associate Director      

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Schedule A
 
Underwriter
Number of
Shares
UBS Securities LLC .
5,400,000
   
Total
5,400,000

 
1

--------------------------------------------------------------------------------

Schedule B
 
Subsidiaries of the Company
 
Eagle Shipping International
Condor Shipping LLC
Hawk Shipping LLC
Falcon Shipping LLC
Harrier Shipping LLC
Osprey Shipping LLC
Kite Shipping LLC
Sparrow Shipping LLC
Griffon Shipping LLC
Shikra Shipping LLC
Peregrine Shipping LLC
Cardinal Shipping LLC
Heron Shipping LLC
Merlin Shipping LLC
Jaeger Shipping LLC
Kestrel Shipping LLC
Tern Shipping LLC
Kittiwake Shipping LLC
Oriole Shipping LLC
Robin Shipping LLC
Crested Eagle Shipping LLC
Crowned Eagle Shipping LLC
Shrike Shipping LLC
Skua Shipping LLC
Eagle Bulk (Delaware) LLC
 
2

--------------------------------------------------------------------------------

 
Schedule C
 
Pricing Information
 

 
1.
Permitted Free Writing Prospectus dated February 28, 2007, filed by the Company
with the Commission pursuant to Rule 433 on March 1, 2007.

--------------------------------------------------------------------------------

 
Exhibit A

Form of Lock-Up Agreement
 
Eagle Bulk Shipping Inc.
 
Common Stock
 
($0.01 Par Value)
 
February 28, 2007
 

UBS Securities LLC
299 Park Avenue
New York, N.Y. 10171-0026
Ladies and Gentlemen:

This Lock-Up Agreement is being delivered to you in connection with the proposed
Underwriting Agreement (the “Underwriting Agreement”) to be entered into by
Eagle Bulk Shipping Inc., a Marshall Islands corporation (the “Company”) and
you, with respect to the sale by you (the “Offering”) of your common stock, par
value $0.01 per share (the “Common Stock”).
 
In order to induce you to enter into the Underwriting Agreement, the undersigned
agrees that, for a period (the “Lock-Up Period”) beginning on the date hereof
and ending on, and including, the date that is 45 days after the date of the
final prospectus relating to the Offering, the undersigned will not, without the
prior written consent of UBS Securities LLC (i) sell, offer to sell, contract or
agree to sell, hypothecate, pledge, grant any option to purchase or otherwise
dispose of or agree to dispose of, directly or indirectly, or file (or
participate in the filing of) a registration statement with the Securities and
Exchange Commission (the “Commission”) in respect of, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder
(the “Exchange Act”) with respect to, any Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or warrants or
other rights to purchase Common Stock or any such securities, (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 Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or warrants or
other rights to purchase Common Stock or any such securities, whether any such
transaction is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise or (iii)

--------------------------------------------------------------------------------

publicly announce an intention to effect any transaction specified in clause (i)
or (ii). The foregoing sentence shall not apply to (a) the registration of or
sale to you of any Common Stock pursuant to the Offering and the Underwriting
Agreement, (b) bona fide gifts, provided the recipient thereof agrees in writing
with you be bound by the terms of this Lock-Up Agreement or (c) dispositions to
any trust for the direct or indirect benefit of the undersigned and/or the
immediate family of the undersigned, provided that such trust agrees in writing
with you to be bound by the terms of this Lock-Up Agreement. For purposes of
this paragraph, “immediate family” shall mean the undersigned and the spouse,
any lineal descendent, father, mother, brother or sister of the undersigned.

In addition, the undersigned hereby waives any rights the undersigned may have
to require registration of Common Stock in connection with the filing of a
registration statement relating to the Offering. The undersigned further agrees
that, for the Lock-Up Period, the undersigned will not, without the prior
written consent of UBS Securities LLC make any demand for, or exercise any right
with respect to, the registration of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock or any such securities.
 
Notwithstanding the above, if (i) during the period that begins on the date that
is fifteen calendar days plus three business days before the last day of the
Lock-Up Period and ends on the last day of the Lock-Up Period, the Company
issues an earnings release or material news or a material event relating to the
Company occurs, or (ii) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the sixteen day
period beginning on the last day of the Lock-Up Period, the restrictions imposed
by this Lock-Up Agreement shall continue to apply until the expiration of the
date that is fifteen calendar days plus three business days after the date on
which the issuance of the earnings release or material news or the material
event occurs; provided, however, that this sentence shall not apply if the
research published or distributed with respect to the Company is issued in
compliance with or pursuant to Rule 139 of the Securities Act of 1933, as
amended, and the Company’s securities are “actively traded” as such term is
defined in Rule 101(c)(1) of Regulation M of the Exchange Act. In addition, the
undersigned hereby waives any and all preemptive rights, participation rights,
resale rights, rights of first refusal and similar rights that the undersigned
may have in connection with the Offering or with any issuance or sale by the
Company of any equity or other securities before the Offering, except for any
such rights as have been heretofore duly exercised.
 
The undersigned hereby confirms that the undersigned has not, directly or
indirectly, taken, and hereby covenants that the undersigned will not, directly
or indirectly, take, any action designed, or which has constituted or will
constitute or might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of shares of Common
Stock.
 
If (i) the Company notifies you in writing that it does not intend to proceed
with the Offering, (ii) the registration statement filed with the Commission
with respect to the Offering is withdrawn or (iii) for any reason the
Underwriting Agreement shall be terminated prior to the “time of purchase” (as
defined in the Underwriting Agreement), this Lock-Up

--------------------------------------------------------------------------------

Agreement shall be terminated and the undersigned shall be released from its
obligations hereunder.
 

        Yours very truly,  
   
   
          

  Name:

--------------------------------------------------------------------------------

Exhibit A-1
 
List of Additional Persons Required to Execute Lock-Up Agreements
 
Name
 
Position
     
1. Sophocles N. Zoullas
 
Chief Executive Officer, Chairman, Director
2. Alan S. Ginsberg
 
Chief Financial Officer
3. Michael B. Goldberg
 
Director
4. Joseph Cianciolo
 
Director
5. Frank J. Loverro
 
Director
6. David B. Hiley
 
Director
7. Douglas Haensel
 
Director
8. Michael Mitchell
 
Director
9. Claude G. Thouret, Jr.
 
Chief Operating Officer
10. Edward H. James
 
Chartering Manager
11. Sunil Damodar
 
Controller

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Exhibit B-1
 
Form of Opinion of the Company’s Special United States Counsel
 
We have acted as special United States counsel to Eagle Bulk Shipping Inc., a
Marshall Islands corporation (the “Company”), in connection with the
Underwriting Agreement, dated February 28, 2007 (the “Underwriting Agreement”),
between you (the “Underwriter”) and the Company, relating to the sale by the
Company to you of 5,400,000 shares (the “Firm Shares”) of the Company’s Common
Shares, par value $0.01 per share (the “Common Stock”) and up to an additional
810,000 shares of Common Stock (the “Option Shares”) at the Underwriters’ option
to cover over-allotments. The Firm Shares and the Option Shares are collectively
referred to herein as the “Securities.”
 
This opinion is being furnished to you pursuant to Section 7(a) of the
Underwriting Agreement.
 
In rendering the opinions set forth herein, we have examined and relied on
originals or copies of the following:
 

(a)           
the registration statement on Form S-3 (File No. 333-139745) of the Company
relating to the Securities and other securities of the Company filed with the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933 (the “Securities Act”) allowing for delayed offerings pursuant to Rule
415 under the Securities Act, including information deemed to be a part of the
registration statement pursuant to Rule 430B of the General Rules and
Regulations under the Securities Act (the “Rules and Regulations”) and the
Notice of Effectiveness of the Commission posted on its website declaring such
registration statement effective on January 9, 2007 (such registration
statement, as so amended, being hereinafter referred to as the “Registration
Statement”);

 

(b)           
the prospectus, dated January 9, 2007 (the “Base Prospectus”), which forms a
part of and is included in the Registration Statement;

 

(c)           
the prospectus supplement, dated February 28, 2007 (the “Prospectus Supplement”
and, together with the Base Prospectus, the “Prospectus”), relating to the
offering of the Securities, in the form filed by the Company pursuant to Rule
424(b) of the Rules and Regulations;

 

(d)           
the documents identified on Schedule I hereto, filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934 and incorporated by
reference into the Prospectus as of the date hereof (collectively, the
“Incorporated Documents”);

 

--------------------------------------------------------------------------------

 

(e)           
an executed copy of the Underwriting Agreement;

 

(f)            
an executed copy of the Registration Rights Agreement, dated as of June 28,
2005, between the Company and Eagle Bulk Ventures LLC (the “Registration Rights
Agreement”);

 

(g)           
the certificate of Sophocles N. Zoullas, Chairman of the Board and Chief
Executive Officer of the Company and Alan S. Ginsberg, Chief Financial Officer,
of the Company, dated the date hereof, a copy of which is attached as Exhibit A
hereto (the “Company’s Certificate”); and

 

(h)           
copies of each of the Applicable Contracts (as defined below).

 
We have also examined originals or copies, certified or otherwise identified to
our satisfaction, of such records of the Company and such agreements,
certificates and receipts of public officials, certificates of officers or other
representatives of the Company and others, and such other documents as we have
deemed necessary or appropriate as a basis for the opinions set forth below.
 
In our examination, we have assumed the legal capacity of all natural persons,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as facsimile, electronic, certified or photostatic copies, and
the authenticity of the originals of such copies. In making our examination of
executed documents, we have assumed that the parties thereto, including the
Company, had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and, except to the extent expressly set
forth in the opinion set forth in paragraph 1 below, the execution and delivery
by such parties of such documents and the validity and binding effect thereof on
such parties. We have also assumed that the Company has been duly organized and
is validly existing in good standing, and has requisite legal status and legal
capacity, under the laws of its jurisdiction of organization and that the
Company has complied and will comply with all aspects of the laws of all
relevant jurisdictions (including the laws of the Republic of the Marshall
Islands) in connection with the transactions contemplated by, and the
performance of its obligations under, the Underwriting Agreement, other than the
laws of the United States of America and the State of New York insofar as we
express our opinions herein. As to any facts material to the opinions expressed
herein that we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of the
Company and others and of public officials, including the facts set forth in the
Company’s Certificate.
 
As used herein, (i) “Applicable Contracts” means those agreements or instruments
identified in Schedule II hereto, (ii) “Applicable Laws” means those laws, rules
and regulations of the State of New York and those federal laws, rules and
regulations of the United States of America, in each case that, in our
experience, are normally applicable to transactions of the type
 

--------------------------------------------------------------------------------

 
contemplated by the Underwriting Agreement (other than the United States federal
securities laws, state securities or blue sky laws, antifraud laws and the rules
and regulations of the National Association of Securities Dealers, Inc.), but
without our having made any special investigation as to the applicability of any
specific law, rule or regulation; (iii) “Governmental Authorities” means any
court, regulatory body, administrative agency or governmental body of the State
of New York or the United States of America having jurisdiction over the Company
under Applicable Laws; (iv) “Governmental Approval” means any consent, approval,
license, authorization or validation of, or filing, qualification or
registration with, any Governmental Authority required to be made or obtained by
the Company pursuant to Applicable Laws, other than any consent, approval,
license, authorization, validation, filing, qualification or registration that
may have become applicable as a result of the involvement of any party (other
than the Company) in the transactions contemplated by the Underwriting Agreement
or because of such parties’ legal or regulatory status or because of any other
facts specifically pertaining to such parties; and (v) “Applicable Orders” means
those judgments, orders or decrees identified on Schedule A to the Company’s
Certificate.
 
The opinions set forth below are subject to the following further
qualifications, assumptions and limitations:
 

 
(a)
we do not express any opinion as to the effect on the opinions expressed herein
of (i) the compliance or noncompliance of any party to the Underwriting
Agreement (other than with respect to the Company to the extent necessary to
render the opinions set forth herein) with any state, federal or other laws or
regulations applicable to it or them or (ii) the legal or regulatory status or
the nature of the business of any party (other than with respect to the Company
to the extent necessary to render the opinions set forth herein);

 

 
(b)
the opinion set forth in paragraph 2 below is based solely on our discussions
with the officers and other representatives of the Company responsible for the
matters discussed therein, our review of documents furnished to us by the
Company and our reliance on the representations and warranties of the Company
contained in the Underwriting Agreement and the Company’s Certificate; we have
not made any other inquiries or investigations or any search of the public
docket records of any court, governmental agency or body or administrative
agency. In addition, we note that we have not been engaged by, nor have we
rendered any advice to, the Company in connection with any legal or governmental
proceedings. Accordingly, we do not have any special knowledge with respect to
such matters. We understand that such matters have been and are being handled by
other counsel; and

 

 
(c)
we note that certain of the Applicable Contracts are governed by laws other than
Applicable Laws; our opinions expressed herein are based solely upon our
understanding of the plain language of such agreement or instrument, and we do
not express any opinion with respect to the validity, binding nature or
enforceability of any such agreement or instrument, and we do not assume any
responsibility with respect to the effect on the opinions or statements set
forth herein of any interpretation thereof inconsistent with such understanding.

 

 
We do not express any opinion as to any laws other than Applicable Laws and the
federal laws of the United States of America to the extent referred to
specifically herein. Insofar as the opinions expressed herein relate to matters
governed by laws other than those set forth in the preceding sentence, we have
assumed, without having made any independent investigation, that such laws do
not affect any of the opinions set forth herein. The opinions expressed herein
are based on laws in effect on the date hereof, which laws are subject to change
with possible retroactive effect.
 
Based upon and subject to the foregoing and to the qualifications and
limitations hereafter expressed, we are of the opinion that:
 

 
   1.
The Underwriting Agreement has been duly executed and delivered by the Company,
to the extent such execution and delivery are governed by the laws of the State
of New York.

 

2.  
To our knowledge, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or to which any property
of the Company or a subsidiary is subject that are required to be disclosed in
the Prospectus pursuant to Item 103 of Regulation S-K of the Rules and
Regulations that are not so disclosed.

 

3.  
The execution and delivery by the Company of the Underwriting Agreement and the
consummation by the Company of the transactions contemplated thereby, including
the issuance and sale of the Securities, will not (i) constitute a violation of,
or a breach or default under, the terms of any Applicable Contract or (ii)
violate or conflict with, or result in any contravention of, any Applicable Law
or any Applicable Order. We do not express any opinion, however, as to whether
the execution, delivery or performance by the Company of the Underwriting
Agreement will constitute a violation of, or a default under, any covenant,
restriction or provision with respect to financial ratios or tests or any aspect
of the financial condition or results of operations of the Company or any of its
subsidiaries.

 

4.  
No Governmental Approval, which has not been obtained or taken and is not in
full force and effect, is required to authorize, or is required for, the
execution or delivery of the Underwriting Agreement by the Company or the
consummation by the Company of the transactions contemplated thereby.

 

5.  
The statements in the Prospectus under the caption “Underwriting”, insofar as
such statements purport to summarize certain provisions of the Underwriting
Agreement, fairly summarize such provisions in all material respects.

 

--------------------------------------------------------------------------------

 

6.  
The Company is not and, solely after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Prospectus, will not be an “investment company” as such term is defined in the
Investment Company Act of 1940.

 

7.  
Except as provided pursuant to the Registration Rights Agreement and in the
Securities Purchase Agreement dated June 22, 2006 between the Company and the
Investors listed in Exhibit A thereto, there are no persons with rights under
any Applicable Contract to have any Common Shares or shares of any other capital
stock or equity interests of the Company registered by the Company under the
Securities Act.

 

8.  
There are no persons with rights under any Applicable Contract to have any
Common Shares or shares of any other capital stock or equity interests of the
Company registered under the Registration Statement.

 

9.  
Under the laws of the State of New York relating to personal jurisdiction, the
Company has validly and irrevocably submitted to the personal jurisdiction of
any state court in the City, County and State of New York (each, a “New York
Court”) in any action arising out of or relating to the Underwriting 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 Seward & Kissel LLP as its authorized agent for the
purpose described in Section 16 of the Underwriting Agreement; and service of
process effected on such agent in the manner set forth in Section 16 of the
Underwriting Agreement will be effective insofar as the law of the State of New
York is concerned to confer valid personal jurisdiction over the Company.

 
We advise you that Mr. Michael Mitchell, of counsel to Skadden, Arps, Slate,
Meagher & Flom LLP, is a director of Eagle Bulk Shipping Inc. and as of the date
hereof beneficially owns 13,333 options exercisable into shares of Eagle Bulk
Shipping Inc.’s common stock and dividend equivalent rights with respect to
14,815 shares of common stock.
 
This opinion is furnished only to you and is solely for your benefit in
connection with the closing occurring today and the offering of the Securities,
in each case pursuant to the Underwriting Agreement. Without our prior written
consent, this opinion may not be used, circulated, quoted or otherwise referred
to for any other purpose or relied upon by, or assigned to, any other person for
any purpose, including any other person that acquires Securities or that seeks
to assert your rights in respect of this opinion (other than your successor in
interest by means of merger, consolidation, transfer of a business or other
similar transaction).
 
Very truly yours,
 

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Exhibit B-2
 
Form of Negative Assurance Letter of the Company’s Special United States Counsel
 
We have acted as special United States counsel to Eagle Bulk Shipping Inc., a
Marshall Islands corporation (the “Company”), in connection with the
Underwriting Agreement, dated February 28, 2007 (the “Underwriting Agreement”),
between you (the “Underwriter”) and the Company, relating to the sale by the
Company to you of 5,400,000 shares (the “Firm Shares”) of the Company’s Common
Shares, par value $0.01 per share (the “Common Stock”) and up to an additional
810,000 shares of Common Stock (the “Option Shares”) at the Underwriters’ option
to cover over-allotments. The Firm Shares and the Option Shares are collectively
referred to herein as the “Securities.”
 
This letter is being furnished to you pursuant to Section 7(a) of the
Underwriting Agreement.
 
In the above capacity, we have reviewed the registration statement on Form S-3
(File No. 333-139745) of the Company relating to the Securities and other
securities of the Company filed on December 29, 2006 with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933 (the
“Securities Act”) allowing for delayed offerings pursuant to Rule 415 under the
Securities Act, including the Incorporated Documents (as defined below) and the
information deemed to be a part of the registration statement pursuant to Rule
430B of the General Rules and Regulations under the Securities Act (the “Rules
and Regulations”), and the Notice of Effectiveness of the Commission posted on
its website declaring such registration statement effective on January 9, 2007
(such registration statement, as so amended, being hereinafter referred to as
the “Registration Statement”), and (i) the prospectus, dated January 9, 2007
(the “Base Prospectus”), which forms a part of and is included in the
Registration Statement, (ii) the preliminary prospectus supplement, dated
February 28, 2007 (together with the Base Prospectus and the Incorporated
Documents, the “Preliminary Prospectus”), relating to the offering of the
Securities in the form filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations and (iii) the prospectus supplement, dated February 28,
2007 (the “Prospectus Supplement” and, together with the Base Prospectus and the
Incorporated Documents, the “Prospectus”), relating to the offering of the
Securities in the form filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations. We also have reviewed the documents identified on
Schedule I hereto filed by the Company pursuant to the Securities Exchange Act
of 1934 and incorporated by reference into the Prospectus as of the date hereof
(collectively, the “Incorporated Documents”), each “issuer free writing
prospectus” (as defined in Rule 433(h)(1) of the Rules and Regulations)
identified on Schedule II hereto relating to the Securities (collectively, the
“Issuer General Use Free Writing Prospectuses”) and such other documents as we
deemed appropriate. We have been orally advised by the Commission that no stop
order suspending the effectiveness of the Registration Statement has been issued
and, to our knowledge, no proceedings for that purpose have been instituted or
are pending or threatened by the Commission.
 

--------------------------------------------------------------------------------

 
In addition, we have participated in conferences with officers and other
representatives of the Company, Marshall Islands counsel for the Company,
representatives of the independent accountants of the Company and
representatives of the Underwriters and counsel for the Underwriters at which
the contents of the Registration Statement, the Prospectus and the General
Disclosure Package (as defined below) and related matters were discussed. We do
not pass upon, or assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement, the
Prospectus or the General Disclosure Package and have made no independent check
or verification thereof (except to the limited extent referred to in paragraph 5
of our opinion to you dated the date hereof).
 
On the basis of the foregoing, (i) the Registration Statement, at the Applicable
Time (defined below), and the Prospectus, as of the date of the Prospectus
Supplement, appeared on their face to be appropriately responsive in all
material respects to the requirements of the Securities Act and the Rules and
Regulations (except that in each case we do not express any view as to the
financial statements, schedules and other financial information included or
incorporated by reference therein or excluded therefrom) and (ii) no facts have
come to our attention that have caused us to believe that the Registration
Statement, at the Applicable Time contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus,
as of the date of the Prospectus Supplement and as of the date hereof contained
or contains 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 (except that in
each case we do not express any view as to the financial statements, schedules
and other financial information included or incorporated by reference therein or
excluded therefrom or the statements contained in the exhibits to the
Registration Statement). In addition, on the basis of the foregoing, no facts
have come to our attention that have caused us to believe that the General
Disclosure Package, as of the Applicable Time, contained an untrue statement of
a material fact or omitted 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 (except that we do not express any view as to the financial
statements, schedules and other financial information included or incorporated
by reference therein or excluded therefrom or the statements contained in the
exhibits to the Registration Statement).
 
As used herein, (i) “Applicable Time” means 8:45 a.m. (Eastern time) on March 1,
2007, which you advised us is the time of the first contract of sale of the
Securities, and (ii) “General Disclosure Package” means the issuer free writing
prospectus, dated February 28, 2007, in the form filed by the Company pursuant
to Rule 433 of the Rules and Regulations on March 1, 2007, and the Preliminary
Prospectus, all considered together.
 
In addition, based on the foregoing, we confirm to you that (i) the Prospectus
has been filed with the Commission within the time period required by Rule 424
of the Rules and Regulations and (ii) any required filing of Issuer General Use
Free Writing Prospectuses pursuant to Rule 433 of the Rules and Regulations has
been filed with the SEC within the time period required by Rule 433(d) of the
Rules and Regulations.
 
This letter is furnished only to you and is solely for benefit in connection
with the closing occurring today and the offering of the Securities, in each
case pursuant to the
 

--------------------------------------------------------------------------------

 
Underwriting Agreement. Without our prior written consent, this letter may not
be used, circulated, quoted or otherwise referred to for any other purpose or
relied upon by, or assigned to, any other person for any purpose, including any
other person that acquires Securities or that seeks to assert your rights in
respect of this letter (other than your successor in interest by means of
merger, consolidation, transfer of a business or other similar transaction).
 
Very truly yours,
 

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Exhibit C-1
 
Form of Opinion to the Underwriter of the Company’s Special United States Tax
Counsel
 
We have acted as special United States counsel to Eagle Bulk Shipping Inc., a
corporation organized under the laws of the Republic of the Marshall Islands
(the “Company”) and each of the subsidiaries of the Company listed on Schedule I
hereto (collectively the “Subsidiaries”) in connection with (i) the sale by the
Company, of up to [                 ] shares of the Company’s common stock, par
value $.01 per share (the “Shares”); (ii) the Underwriting Agreement dated
February 28, 2007 (the “Underwriting Agreement”) among the Company, and UBS
Securities LLC (the “Underwriter”) and (C) the preparation of a registration
statement on Form S-3 (File No. 333-139745), including the prospectus of the
Company contained therein and a final prospectus supplement thereto date
February 28, 2007 (as may be amended, the “Prospectus”), with respect to the
sale of the Shares included therein (as may be amended, the “Registration
Statement”). This opinion is furnished to the Underwriter pursuant to Section
7(b) of the Underwriting Agreement. Except as otherwise provided herein,
capitalized terms used herein but not otherwise defined herein shall have the
meanings set forth in the Underwriting Agreement.
 
In rendering this opinion we have examined and relied on originals or copies of
the following:
 

1)             
the Registration Statement (including the documents incorporated by reference
therein); and

2)             
the Prospectus and the Pre-Pricing Prospectus (as defined herein).

We have also examined and relied, as to factual matters, upon originals, or
copies certified to our satisfaction, of such records, documents, certificates
of officers of the Company, the Subsidiaries and of public officials and other
instruments, and made such other inquiries, as, in our judgment, are necessary
or appropriate to enable us to render the opinion expressed below. As to
questions of fact material to this opinion, we have, with your approval, where
relevant facts were not independently established, relied upon, among other
things, the representations made in the Underwriting Agreement and certificates
of officers of the Company or the Subsidiaries.
 
Based upon and subject to the foregoing and to the limitations hereafter
expressed, we are of the opinion that the statements contained in the Company’s
annual report on Form 10-K for the period ending December 31, 2006 and
incorporated by reference into the Registration Statement under the captions
“Risk Factors—Company Specific Risk Factors—We may have to pay tax on United
States source income, which would reduce our earnings”, “Risk Factors—Company
Specific Risk Factors—United States tax authorities could treat us as a “passive
foreign investment company”, which could have adverse United States federal
income tax consequences to United States holders”, the statements contained in
the Prospectus and the
 

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preliminary prospectus supplement dated February 28, 2007 relating to the Shares
(including the base prospectus attached thereto and the documents incorporated
by reference therein, the “Pre-Pricing Prospectus”) under the heading “Tax
Considerations—United States Federal Income Tax Considerations”, insofar as such
statements constitute a summary of documents or matters of law, or that are
descriptions of contracts, agreements or other legal documents or of legal
proceedings, or refer to statements of law or legal conclusions, are accurate in
all material respects.
 
Members of our firm are members of the bar of the State of New York. Our opinion
is limited to the federal laws of the United States. We express no opinion with
respect to the laws of any other jurisdiction or statute.
 
This opinion is rendered as of the date hereof, and we have no responsibility to
update this opinion for events or circumstances occurring after the date hereof,
nor do we have any responsibility to advise you of any change in the laws after
the date hereof.
 
This opinion is rendered only to the Underwriter and is solely for its benefit
in connection with its purchase of the Shares. This opinion may not be relied
upon by the Underwriter for any other purpose or by any other person, firm or
corporation for any purposes whatsoever without our prior written consent.
 
Very truly yours,
 

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Exhibit C-2
 
Form of Opinion to the Company of the Company’s Special United States Tax
Counsel
 
I. INTRODUCTION
 
We have acted as counsel to UBS Securities LLC (the “Underwriters”), in
connection with the sale of up to [                          ] shares of the
common stock (the “Shares”) of Eagle Bulk Shipping Inc., a Marshall Islands
corporation (“Eagle” or the “Company”) by in a public offering (the “Offering”).
In this capacity, we have advised the Underwriters regarding the extent to which
Eagle and Eagle’s wholly-owned subsidiaries incorporated outside the United
States (the “Subsidiaries”) will be subject to United States federal income
taxation (Eagle and its Subsidiaries, collectively, the “Eagle Group”). The
Underwriters have requested our opinion regarding whether Eagle will constitute
a “passive foreign investment company” (a “PFIC”) for United States federal
income tax purposes.
 
Section II below sets forth our understanding of the relevant facts relating to
the activities of the Eagle Group. Our analysis of the legal authorities
relating to the PFIC classification of the members of the Eagle Group and our
opinion on this issue are contained in Sections III and IV, respectively.
 
II.  RELEVANT FACTS
 
Except as described below, Eagle will not engage in any activities other than
its ownership of all of the stock of the Subsidiaries. The Subsidiaries will own
and operate a fleet of vessels which will transport dry bulk commodities along
worldwide shipping routes. Each of the Subsidiaries has elected to be
disregarded as an entity separate from Eagle for United States federal income
tax purposes. Therefore, Eagle is the only entity in the Eagle Group which will
file a United States federal income tax return. Prior to and after the Offering,
the Shares of Eagle will be publicly traded on the Nasdaq Global Select Market.
 
A separate Subsidiary will own and operate each of the 16 Handymax dry bulk
carriers. For purposes of this opinion, all of the carriers currently operated,
and that are expected to be operated in the future, by the Subsidiaries are
collectively referred to herein as the “Vessels.”
 
After the Offering, the Vessels will be chartered (or continue to be chartered)
under time charters1 or under voyage charters2 to unrelated third parties (the
“Charterers”).
 

1     A time charter is a contract for the use of space in a vessel for a fixed
period of time. Under such a charter, the owner of the vessel remains in control
over the navigation and management of the vessel, paying and being responsible
for the crew, supplies, repairs and maintenance, provisions, insurance, fees,
etc. The time charterer is in control of where the vessel is to go, the cargo to
be transported on the vessel, and is subject to charges for fuel, port charges,
commissions and expenses connected with the cargo.
 

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Under a time charter, Subsidiaries will typically receive a basic hire rate
determined on a per day basis, which will be payable monthly in advance and, in
the case of a long-term charter, will increase annually. Under a voyage charter,
the Subsidiaries will typically receive a basic hire rate determined on a per
voyage basis, which will be payable in advance (the time and voyage charter
fees, collective, the “Charter Fees”). As of the date of this opinion, none of
the Vessels are subject to bareboat charters.3   
 
Eagle currently charters the Vessels in the period charter market. The period
charter market consists of time charters which last for a long period of time,
often up to several years. After the Offering, Eagle intends to deploy all of
its vessels under period charters lasting for periods of one year to three
years.4   
 
V.Ships (“VS”), a company unaffiliated with Eagle, currently acts and will
continue to act after the Offering, as technical manager for the fleet of
Vessels owned by the Subsidiaries and will provide services such as supervising
the crewing, supplying and drydocking of the Vessels. Eagle International (USA)
LLC (“Eagle (USA)”), a wholly-owned Marshall Islands subsidiary of Eagle that
has elected to be disregarded as an entity separate from that of Eagle for
United States federal income tax purposes, currently provides and will continue
to provide after the Offering commercial management services, including
operations, chartering, sale and purchase, post-fixture administration,
accounting and freight invoicing, to the Subsidiaries.
 
Under its time charters and voyage charters of the Vessels, the Subsidiaries
generally are responsible for the payment of the operating expenses of the
Vessels that typically are borne by vessel owners, including crew wages and all
related costs, Vessel supplies, insurance, tonnage taxes, routine repairs and
maintenance and other direct operating costs. In a time charter, the charterer
is responsible for voyage expenses (such as fuel and port charges), whereas, in
a voyage charter, the Subsidiaries are responsible for such expenses. The time
charters and voyage charters which are entered into by the Subsidiaries are
standard industry
 

Footnote continued from previous page.
 
2     A voyage charter is similar to a time charter except that the vessel is
chartered for a specified voyage instead of a specified period of time.

 
3     A bareboat charter is a contract for the use of a vessel whereby the
charterer performs functions normally performed by the owner of the vessel, such
as furnishing of the crew and supplies. The charterer is in complete possession,
control and command of the vessel and the owner of the vessel bears none of the
expenses or responsibilities of the operation of the vessel.
 
4     The two Vessels which will be acquired after the Offering will be deployed
in the period market.
 
2
 

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charter party agreements (the “Charter Agreements”) and generally provide, among
other things, that:
 

12.           
throughout the duration of the charter, the Vessel will “have a full and
efficient complement of master, officers and crew for a vessel of her
tonnage . . . who shall be trained to operate the vessel and her equipment
competently and safely”;

 

13.           
throughout the duration of the charter, the Subsidiaries shall “exercise due
diligence so as to maintain or restore the vessel”;

 

14.           
the Subsidiaries guarantee that throughout the duration of the charter, and
unless otherwise ordered by the Charterers, the Vessel’s crew will “prosecute
all voyages with the utmost dispatch, render all customer assistance, and load
and discharge cargo as rapidly as possible . . . . ”;

 

15.           
the Subsidiaries “undertake to provide and to pay for all provisions, wages, and
shipping and discharging fees and all other expenses of the master, officers and
crew” and, with certain specified exceptions, “for all insurance on the vessel,
for all deck, cabin and engine room stores, and for water, except water used for
clearing, for all drydocking, overhaul, maintenance and repairs to the vessel,
and for all fumigation expenses and de-rat certificates”;

 

16.           
in the case of a time charter, the Charterers shall provide and pay for all fuel
(except fuel used for domestic services), towage and pilotage and shall pay
agency fees, port charges, commissions, expenses of loading and unloading
cargoes, canal dues and all charges other than those payable by the Subsidiaries
under clause (iv) above. In a voyage charter, the Subsidiaries shall provide and
pay for the above expenses; and

 

17.           
the Subsidiaries have the right and obligation to drydock the Vessel at regular
intervals at the expense of the Subsidiaries.

 
Eagle and each Subsidiary has entered into identical technical management
agreements (the “Technical Management Agreements”), pursuant to which the
Subsidiary appoints VS as the technical manager of the Subsidiary’s Vessel.
Under the Technical Management Agreements, VS will be paid a fixed monthly
management fee of $8,333 per Vessel plus actual costs incurred by the Vessels
(the “Management Fee”).
 
In consideration for the Management Fee, VS agrees to provide the following
technical management services:
 

1.             
engaging and providing for crew for the Vessels, including all payroll, pension
and insurance arrangements;

 

2.             
arranging for and supervising the proper maintenance of the Vessels;

 
3
 

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3.             
arranging for the Vessel and its crew to at all times be properly insured and in
compliance with all applicable laws, rules and regulations;

 

4.             
arranging for the supply of such provisions, stores, lubricating oil and other
consumables; and

 

5.             
making certain specified capital improvements to the Vessels.

 
Virtually all of the technical management functions relating to the Vessels are
conducted by VS, including activities such as supervising the maintenance and
general efficiency of the Vessels, crewing, arrangement and supervision of
drydocking and repairs, alterations and the upkeep of the Vessels, arrangement
of the supply of necessary stores, spares and lubricating oil, and appointment
of supervisors and technical consultants.
 
In 2006, VS employed numerous employees in connection with the management of the
Vessels. VS also is responsible for providing the approximately 336 seafaring
personnel who are employed by the Subsidiaries. The relevant Subsidiary employs
seagoing personnel for the duration of each voyage. VS ensures that all seamen
have the qualifications and licenses required to comply with international
regulations and shipping conventions, and that the Vessels employ experienced
and competent personnel.
 
The commercial management of the Vessels is conducted by Eagle (USA). Eagle(USA)
performs most of the operations, chartering, and financial management services
necessary to support the Vessels. Eagle (USA) employs approximately eight
shore-based personnel engaged in the commercial management of the Vessels.
Additionally, the seafaring employees of the Subsidiaries perform most of the
necessary ordinary course maintenance on the Vessels. These employees inspect
all of the Vessels, both at sea and while the Vessels are in port.
 
For purposes of rendering our opinion, you have authorized us to assume that,
based on the expectations of the Eagle Group with respect to the future
operations of the Vessels, the Eagle Group, in the aggregate, has not and will
not derive more than 25 percent of its gross income with respect to any taxable
year from income other than Charter Fees which could constitute “passive income”
within the meaning of Code section 1297(a).
 
III.  ANALYSIS OF THE PFIC STATUS OF THE MEMBERS OF THE EAGLE GROUP
 

A.    
Introduction

 
A special and adverse United States federal income tax regime applies to United
States persons5 who own, directly or indirectly pursuant to specific
constructive stock ownership
 

5     Individuals who are citizens or residents of the United States,
corporations formed under domestic law and estates and trusts which are subject
to United States federal income taxation regardless of the source of their
income are treated as United States persons for
 
Footnote continued from previous page.
 
4
 

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rules, shares in a foreign corporation which is a PFIC within the meaning of
section 1297 of the Internal Revenue Code of 1986, as amended (the “Code”). In
general, a foreign corporation will be treated as a PFIC for any taxable year in
which either (i) at least 75 percent of its gross income for the year consists
of certain specified types of “passive income,” or (ii) at least 50 percent of
the average value of the assets held by the corporation during the taxable year
produce, or are held for the production of, “passive income.”6 For purposes of
determining whether a foreign corporation is a PFIC, the corporation generally
will be treated as earning and owning its proportionate share of the income and
assets, respectively, of any subsidiary corporation in which it owns (directly
or indirectly) at least 25 percent of the value of the subsidiary’s stock.7   In
addition, a foreign corporation will be treated as earning and owning the income
and assets respectively of any subsidiary entity which is treated as an entity
disregarded from such corporation for United States federal income tax purposes.
 
Code section 1297(b)(1) provides that, subject to certain specified exceptions,
the term “passive income” for PFIC purposes “means any income which is of a kind
which would be foreign personal holding company income as defined in section
954(c).”8   
 
Code section 954(c)(1) provides that the term “foreign personal holding company
income” includes gross income consisting of, among other items, “rents” and the
net gains, if any, derived from the sale or exchange of property that produces
rental income, other than property held by the foreign corporation as inventory
or primarily for sale to customers in the ordinary course of its trade or
business.9 Notwithstanding this general inclusion of “rents” as
 

Footnote continued from previous page.
 
United States federal income tax purposes.
 
6      Code § 1297(a).
 
7      Code § 1297(c).
 
8     Under Code section 1297(b)(2), certain types of income which would
otherwise be treated as “passive income” will not be so treated if they are
derived in the active conduct of a licensed banking or insurance business or are
received or accrued by a foreign corporation from a related person to the extent
such income is properly allocable to income of such related person which is not
“passive income.” 
 
9     In addition to “foreign personal holding company income,” income subject
to Subpart F of the Code also included, for taxable years prior to January 1,
2005, “foreign base company shipping income,” which was defined in former Code
section 954(g) to include “income derived from, or in connection with, the use
(or hiring or leasing for use) of any vessel in foreign commerce, or from, or in
connection with, the performance of services directly related to the use of any
such vessel….” Former Code section 954(b)(6)(A) provided that income of a
foreign corporation which constituted “foreign base company shipping income”
 
Footnote continued on next page.
 
5
 

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“passive income,” Code section 954(c)(2)(A) provides that “foreign personal
holding company” income does not include “rents . . . which are derived in the
active conduct of a trade or business” and which are received from persons who
are not “related persons” to the foreign corporation (within the meaning of Code
section 954(d)(3)). Treas. Reg. § 4.954-2(b)(6) provides specific rules for
applying this statutory exception for “active” rental income. Income derived by
the performance of services does not constitute “foreign personal holding
company income” within the meaning of Code section 954(c).
 
Based on the statutory and regulatory provisions cited above, it appears clear
that the PFIC rules were generally not intended to apply to foreign corporations
engaged in the active conduct of a trade or business. Rather, as indicated by
the legislative history of the Tax Reform Act of 1986 (the “1986 Act”), these
rules were enacted principally to prevent United States persons from deferring
the taxation of investment income and possibly converting the character of such
income from ordinary income into capital gains.10  Further, based on our
interpretation of the purposes of the PFIC rules and the corresponding
legislative history, we believe it is clear that the PFIC rules were not
intended to apply to holding corporations who conduct an active trade or
business through a group of entities formed solely for the purpose of providing
limited liability.
 

B.     
Applicability of the PFIC Rules to the Eagle Group

 
1.  Introduction
 
Based on the rules discussed in subsection A above, it is clear that the Charter
Fees could constitute “passive income” for purposes of determining whether any
member of the
 

Footnote continued from previous page.
 
was not considered as subpart F income under any other provision of Code section
954(a). Because characterization of shipping income took priority over “passive
income” for purposes of Code section 954 in an overlap situation, it could be
argued that income which would have constituted “foreign base company shipping
income” cannot also constitute “foreign personal holding company income” for
purposes of Code section 1297(a). However, notwithstanding the priority noted in
the preceding sentence, we believe the better view is that, for PFIC
classification purposes, (i) the term “passive income” would not take into
account any of the exclusions or special rules contained in Code section 954(b),
and (ii) income which would have constituted “foreign base company shipping
income” can nevertheless constitute “passive income” for purposes of Code
section 1297(a) if such income is “of a kind which would be foreign personal
holding company income” (i.e., rents).
 
10   See, e.g., S. Rep. No. 99-313, 99th Cong., 2nd Sess. at pp. 393-394 (1986)
and General Explanation of the Tax Reform Act of 1986, Joint Committee on
Taxation, 99th Cong., 2nd Sess. at pp. 1023-1024 (Jt. Comm. Print).
 
6
 

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Eagle Group is a PFIC, only if the Charter Fees are treated for such purposes as
“rents.” We are not aware of any definitive authority addressing the tax
characterization for purposes of Code section 1297(a) of fees derived by a
foreign corporation from the time and voyage chartering of its vessels. However,
as discussed more fully below, there is a significant amount of authority
relating to other provisions of the Code supporting the view that time and
voyage chartering fees should be treated as service income, rather than “rents,”
for purposes of Code section 1297(a) since the owner of the vessel remains in
possession, command and control of the vessel and provides significant services
in connection with the charterer’s use of the vessel.
 
2.  Code Section 7701(e)
 
Treatment of the Charter Fees as services income for federal income tax purposes
is supported by Code section 7701(e) and the case law authority preceding its
enactment. This statutory provision was enacted in 1984 to provide specific
rules for distinguishing between a service contract and a lease of property for
most United States federal income tax purposes.11   Code section 7701(e)
provides that, for purposes of sections 1 through 1400 of the Code, a contract
which purports to be a service contract will be treated as a lease if the
contract is properly treated as a lease of property by taking into account all
relevant factors, including, whether or not:
 

1.             
the service recipient is in physical possession of the property;

 

2.             
the service recipient controls the property;

 

3.             
the service recipient has a significant economic possessory interest in the
property;

 

4.             
the service provider does not bear any risk of substantially diminished receipts
or substantially increased expenditures if there is nonperformance under the
contract;

 

5.             
the service provider does not use the property concurrently to provide
significant services to entities unrelated to the service recipient; and

 

6.             
the total price payable by the service recipient under the service contract does
not substantially exceed the rental value of the property for the contract
period.12 

 

11    The principal purpose of this legislation was to address the fact that a
taxpayer derived greater investment tax credits and accelerated depreciation
deductions if an agreement is determined to be a service contract, rather than a
lease. See Section 31(e) of the Tax Reform Act of 1984 (P.L.98-369).
 
12    The factors set forth in Code section 7701(e) are substantially similar to
those utilized by the
 
Footnote continued from previous page.
 
7
 

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Applying the factors enumerated in Code section 7701(e) to the time and voyage
charters of the Vessels entered into by the Subsidiaries, we believe that these
charters should qualify as service contracts, rather than leases. Thus, pursuant
to these charters:
 

(i)            
the Subsidiaries remain in physical possession and control of the Vessels
because the Vessels will at all times be operated by personnel employed by, or
on behalf of, the Subsidiaries;

 

(ii)           
the Subsidiaries retain the possessory and economic interest in the Vessels
because (x) the Vessels will not be used by any of the Charterers for a
substantial portion of the Vessels’ useful lives, and (y) the Subsidiaries
retain all of the benefits and burdens of ownership of the Vessels (i.e., the
Charterers do not bear any risk of loss with respect to the Vessels or share in
any appreciation in the value of the Vessels);

 

(iii)          
under its charters, the Subsidiaries generally bear the risk of substantially
increased expenditures if there is nonperformance under the charters by either
the Subsidiaries or the Vessels; and

 

(iv)          
the amount of the Charter Fees payable with respect to each charter of a Vessel
reflects the operating costs that are attributable to items other than the
operations of the Vessel without any cargo (e.g., the costs of the crew employed
by an Subsidiary to operate the Vessel).13 

 

Footnote continued from previous page.
 
courts in distinguishing between a service contract and a lease prior to the
enactment of that statutory provision. See, e.g., Xerox Corporation v. United
States, 656 F.2d 659 (Ct. Cl. 1981) (holding that contracts pursuant to which
photocopying machines were installed with various governmental and tax-exempt
organizations were management contracts rather than leases) and Amerco v. United
States, 82 T.C. 654 (1984) (holding that U-Haul International was the lessee of
trailers, trucks and towbars owned by the lessors of such equipment). The
legislative history of Code section 7701(e) indicates that this provision
extends, rather than codifies, prior case law by mandating the examination of
other facts and circumstances that may not have been considered by the courts.
General Explanation of the Deficit Reduction Act of 1984, 98th Cong., 2d Sess.
at p. 59 (Jt. Comm. Print. 1984).
 
13    The only statutorily enumerated factor that indicates that a time or
voyage charter should be treated as a lease for tax purposes is that a Vessel
may not concurrently be used by multiple charterers.
 
8
 

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3.  Code Section 883
 
In Revenue Ruling 74-170, 1974-1 C.B. 175, the Internal Revenue Service (the
“IRS”) ruled that the income derived by a foreign corporation that is actively
engaged within the United States in the leasing of vessels for time charters and
voyage charters qualifies for the tax exemption provided by Code section 883
because the corporation’s income is “generated by the business of transporting
goods and passengers, as distinguished from the income from investment.” This
holding was based on the IRS’s interpretation of the language in Code section
883 which then provided a United States tax exemption for the income of a
foreign corporation “derived from the operation of a ship.”14 In this regard,
the IRS noted that the shipping tax agreements entered into between the United
States and certain foreign countries define the phrase “operation of a ship” to
mean the “business or enterprise, carried on by owners or charterers of a ship
or ships, of transporting persons, articles, mails and other cargo. . . .”
 
Of particular relevance to the characterization of the Charter Fees for purposes
of Code section 1297(a) is the clear distinction made by the IRS in Revenue
Ruling 74-170 between rental income derived by a ship owner from the bareboat
charter of a ship and the rental income derived from a time charter or voyage
charter of the ship. The IRS noted that payments received by the owner of a
bareboat chartered vessel are generally regarded as “rents” received from an
investment and not as shipping profits excludable from gross income under Code
section 883. In contrast to bareboat charter rental,15   the IRS stated that
this statutory exclusion does apply if the “owner is actively engaged in the
shipping business” and held that a foreign corporation that is “actively engaged
in the leasing of vessels to others under time charters and voyage charters is
considered engaged in the shipping business. . . .” Further, the IRS stated that
this holding would not change even if the vessel owner “acts through an agent”
provided that the owner “retained . . . the risk of the venture.”
 
We believe the holding and rationale of Revenue Ruling 74-170 supports excluding
the Charter Fees as “passive income” for purposes of Code section 1297(a). The
IRS has clearly recognized that the significant services provided by, and the
risks of operation borne by, a ship owner in time charters and voyage charters
of ships cause the owner to be treated as engaged in a business activity for
purposes of Code section 883(a). While Code sections 883(a) and 1297(a) have
different statutory language, both provisions make a clear distinction between
activities generating investment income, which the IRS views as passive
“non-operational” income, and those comprising a business, which the IRS views
as “operational” income. If time and voyage charters are treated as business
activities of a ship owner for purposes of Code
 

14    Code section 883(a) has since been amended to provide a United States tax
exemption for the income derived by a foreign corporation from the
“international” operation of a ship.
 
15    We note that the 1986 Act amended Code section 883 to specifically treat
income derived from a bareboat charter of a vessel as income qualifying for that
statutory exclusion. See Code sections 883(a)(4) and 872(b)(6).
 
9
 

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section 883(a), we do not see a sound basis for the IRS treating such charters
as investment activities for PFIC purposes.
 
The IRS’s distinction between time and voyage charters and bareboat charters in
Revenue Procedure 91-12, 1991-1 C.B. 473, provides additional support for the
treatment of the Charter Fees as services income for federal income tax
purposes. This Revenue Procedure sets forth the IRS position regarding the
proper procedures to be followed by foreign persons for claiming the exemption
from federal income taxation provided under Code section 883 or an applicable
income tax treaty and for computing, reporting and paying the four percent tax
on shipping income that is not eligible for any such tax exemption.16 In
Section 4.08 of this Revenue Procedure, the IRS defined the term “leasing” for
purposes of applying the special rules for determining under Code section
887(b)(4) whether “United States source gross transportation income” derived by
a foreign person constitutes “effectively connected income” with respect to such
person. In this regard, the IRS stated that “the term ‘leasing’ means the
bareboat charter of a vessel or aircraft. Time or voyage charter income is not
considered income from leasing for this purpose. It is considered income from
the use (or operation) of a vessel or aircraft.” We do not see any reason why
the distinction made by the IRS between the different types of charter income
for purposes of Code section 887(b)(4) should not be equally applicable for
other purposes of the Code, including Code section 1297(a).
 
4.  S Corporations
 
A substantial line of authority interpreting the definition of the term “rents”
for purposes of the statutory provisions relating to subchapter S corporations
(“S corporations”) also supports treatment of the Charter Fees as services
income, rather than as rental income, for federal income tax purposes. Code
section 1375 imposes a corporate tax on S corporations that were formerly
C corporations and derive more than 25 percent of their gross receipts in any
taxable year from “passive investment income.” The term “passive investment
income” is statutorily defined to expressly include “rents” but does not include
income derived from the performance of services.17 The applicable Treasury
regulations define the term “rents” to mean amounts received for the use of, or
right to use, real or personal property other than rental income derived in the
active conduct of trade or business and provide that a taxpayer is engaged in
such conduct if it provides “significant services” and incurs substantial costs
in connection with its lease of property.18 As discussed more fully below, the
IRS and the courts have held that income derived from time and voyage charters
of ships and rents received from the chartering of aircraft where the owner
provides significant services to the charterer do not constitute “rents” for
purposes of the statutory provisions concerning S corporations.

 
16    See Code § 887.
 
17    See Code § 1362(d)(3)(C)(i).
 
18    Treas. Reg. § 1.1362-2(c)(5)(ii)(B)(1), (2).
 
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In Revenue Ruling 81-197, 1981-1 C.B. 166, the IRS held that amounts received by
an S corporation from the full service charter of an aircraft are not “rents”
for purposes of the “passive investment income” tests contained in the
predecessor to Code section 1375.19   In connection with the chartering of its
aircraft, the S corporation involved in Revenue Ruling 81-197 conducted
negotiations for chartering the aircraft, actually chartered the aircraft and
collected the charter fees. In consideration for the charter fees, the
S corporation provided all pilots, fuel, catering and operating supplies and
paid for all hull and liability insurance, landing and parking fees, taxes and
governmental fees and charges. The pilots of the aircraft were employees of the
S corporation. The S corporation also entered into a management agreement with
the aircraft manufacturer to secure assistance in maintaining the aircraft. The
charter arrangements between the S corporation and the charterers of the
aircraft permitted the charterers to specify the aircraft’s destination and a
desired time to depart for that destination.
 
In holding that the charter payments did not constitute “rents” for
S corporation purposes, the IRS stated that the first issue to consider is
“whether the payments were in return for the use of, or right to use, property
of the corporation, as opposed to being made for some other reason, such as
compensation for services rendered.” Under the facts involved in the ruling, the
IRS stated that the S corporation retained “possession, command and control” of
the aircraft because the pilot was an employee of the S corporation and had
primary authority for the safety and actual operation of the aircraft. Based on
this finding, the IRS held that the S corporation was using the aircraft to
“furnish a transportation service” and that the payments it received under its
charters were “compensation for transportation services rendered and not
payments for the use of the aircraft.”
 
The rationale set forth in General Counsel Memorandum 38525 (September 30, 1980)
(“GCM 38525”), which the IRS issued in connection with its issuance of Revenue
Ruling 81-197, provides additional support for treating the Charter Fees as
income from the performance of services. In GCM 38525, the IRS stated that a
payment does not constitute “rent” within the meaning of Code section
1372(e)(5)(C) if either (i) the payor receives a service in return for it,
rather than the use of corporate property as such, or (ii) the S corporation
also provides “significant services” to the payor in connection with the
payment. As an example, the IRS indicated that a taxicab fare escapes
classification as rent “because it is a payment for a transportation service,
rather than for the use of property (even though the corporation’s property, the
taxicab, is used in providing the service).” This same rationale would appear to
be applicable to a ship owner who enters into a time or voyage charter with
respect to a vessel. In each case, the ship owner is bearing substantially all
(since fuel costs typically are paid by the
 

19    Prior to its replacement in 1982 by Code section 1375, Code section
1372(e)(5) provided for the termination of a corporation’s S corporation
election if the corporation derived more than 20 percent of its gross receipts
in any taxable year from “passive investment income.” As with respect to the
current Treasury regulations, the then applicable Treasury regulations provided
that payments for the use of personal property do not constitute “rents” for
purposes of the S corporation provisions if “significant services” were rendered
in connection with such payment. See former Treas. Reg. § 1.1372-4(b)(5)(vi).
 
11
 

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charterer) of the costs of operating the vessel and the vessel is being operated
by crew members who are employees of the ship owner. As in the case of the
taxpayer in Revenue Ruling 81-197, at all times during a time or voyage charter
of a ship, the ship owner is in “possession, command and control” of the
vessel.20   
 
Even more compelling support for treating the Charter Fees as services income is
found in the reliance in GCM 38525 on the holding and rationale of Revenue
Ruling 74-170, supra. In GCM 38525, the IRS stated that “the issue and factual
context in Revenue Ruling 74-170 are similar “to those in Revenue Ruling
81-197”, and “the conclusion as to time and voyage charters is extremely
relevant to the instant case in that essentially what is concluded is that
earnings derived from such charters are income generated by the business of
transporting goods and passengers rather than payments for the use of the
vessel.” In this regard, the IRS noted that, based on the holding in Revenue
Ruling 74-170, it had drafted a proposed revenue ruling holding that fees
received by a ship owner for time and voyage charters does not constitute
“rents” for purposes of the definition of “personal holding company income”
contained in Code section 543(a)(2). While the issuance of this proposed revenue
ruling had been postponed due to the fact that the issue was being considered in
connection with a pending regulations project, the IRS indicated that “the
proposed revenue ruling would provide extremely persuasive support” for the
position taken in Revenue Ruling 81-197. Thus, the IRS clearly viewed the
rationale of Revenue Rulings 81-197 and 74-170 to be nearly identical.
 
The decision of the Tax Court in Winn v. Commissioner, 67 T.C. 499 (1976),
aff’d. in part and rev’d. in part, 595 F.2d 1060 (5th Cir. 1979) and its
reference to the Supreme Court decision in United States v. Shea, 152 U.S. 178
(1894) also support the different tax characterizations of fees derived from
time and voyage charters of ships and fees derived from bareboat charters of
ships. In Winn, the Tax Court held that amounts received by an S corporation
from its bareboat charters of barges constituted “rents” for S corporation
eligibility purposes because the S corporation did not, under the particular
facts involved in that case, provide “significant services” to the charterer in
connection with its bareboat charters. However, in rejecting the S corporation’s
contention that bareboat charter income cannot constitute “rent,” the Tax Court
relied upon the Supreme Court’s decision in the Shea case. In that decision, the
Supreme Court emphasized the distinction between bareboat charters of ships and
“contracts of affreightment” where, as with respect to time and voyage charters,
the ship owner agrees to transport goods for hire and retains the “possession
and control” of the ship. In this regard, the Supreme Court stated that the
latter contracts were “contract[s] for a special service to be rendered by the
owner of the vessel.” The Supreme Court’s recognition that contracts of
affreightment are service contracts which do not involve “rents” clearly
supports the conclusion that the Charter Fees derived by the Subsidiaries from
such “service contracts” should not constitute “rents” for purposes of the PFIC
rules.
 

20    In essence, a time charter is a series of voyage charters taking place at
the direction of the charterer during a specified time period. In GCM 38525, the
IRS stated that the aircraft owner remains “in control” of the aircraft even
though the charterers of the aircraft may decide the time and destination of
flights. 
 
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Further, in General Counsel Memorandum 39169 (November 28, 1973) (“GCM 39169”),
the IRS held that charter fees derived by an S corporation from the chartering
of its aircraft constituted “payments for transportation services,” and not
“rents,” for purposes of former Code section 1372(e)(5)(C) even though most of
the services provided by the S corporation in connection with such chartering
were actually performed by an independent third party pursuant to an Aircraft
Agency Agreement. Similarly, in Private Letter Ruling 8916057 (Jan. 25,
1989),21   the IRS held that income derived by an S corporation from the time
and voyage charters of vessels owned by a limited liability partnership in which
the S corporation was a limited partner did not constitute “rents” or “passive
investment income” within the meaning of Code section 1362(d)(3). In this
regard, the limited partnership involved in this ruling had entered into an
Operating Management Agreement with a corporation pursuant to which the
corporation, in exchange for a specified fee, acted as the limited partnership’s
agent in connection with the operation and management of the partnership’s
vessels, including performing the transportation services required by the time
and voyage charters (including hiring the crews), collecting the charter fees,
and paying all of the operational expenses of the vessels (including the
salaries of the crew). In reaching its holding in this private letter ruling,
the IRS stated that the limited partnership “through the Agent” receives
compensation for services rendered and not “rent” for purposes of the
S corporation provisions of the Code. Relying upon its holding in Revenue Ruling
74-170, the IRS stated that the limited partnership, not its agent, will enjoy
any “profit and bear any loss from the charter business.”
 
5.  Code Sections 543 and 553
 
Additional support for not treating the Charter Fees as “rents” within the
meaning of Code section 1297(a) is found in the authority interpreting the
definition of that term for purposes of the personal holding company provisions
of the Code. Code section 543(a)(2) provides that the term “personal holding
company income” includes “rents.” Treasury regulation § 1.543-1(b)(10) defines
the term “rents” for this purpose to mean “compensation (however designated) for
the use, or right to use, property of the corporation  . . .” including “charter
fees.”
 
As with respect to the other statutory provisions discussed above, the courts
and the IRS have held that amounts received under leasing arrangements do not
constitute “rents” for purposes of Code section 543(a)(2) where the owner of the
leased property also provides significant services to the lessee.22    
 

21    While the Subsidiaries may not rely upon a private letter ruling or a
Technical Advice Memorandum received by another taxpayer, such a pronouncement
by the National Office of the IRS indicates the position of the IRS at the time
of the ruling on the technical issue involved therein.
 
22    See, e.g., Webster Corporation v. Commissioner, 25 T.C. 55 (1955), aff’d.
per curiam, 240 F.2d 164 (2d Cir. 1957) (holding that income derived from farms
operated and managed by a corporation through a supervising agent who engaged
farmers to operate the properties under a crop-sharing arrangement was not
“rent” for personal holding company purposes)
 
Footnote continued on next page.
 
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More relevant to the proper tax characterization of the Charter Fees is the IRS
holding in Technical Advice Memorandum 7202140920A (February 14, 1972) that
charter fees received by a ship owner from time and voyage charters of tankers
did not constitute “rents” for purposes of Code section 543(a)(2) because the
IRS regarded the charters as contracts for transportation services. In reaching
this holding, the IRS relied, in part, on the distinctions between bareboat
charters and time and voyage charters contained in the treatise by Gilmore and
Black entitled The Law of Admiralty. With regard to time and voyage charters,
the IRS concluded that “the legal attributes of a voyage charter place the
taxpayer in the position of owner, possessor and user of the vessel, but the
economics of a voyage charter make it clear that this is a straightforward
business operation, with the risks of profit or loss which normally attend a
business operation.”
 
Based on the similarity of the facts between those set forth in this Technical
Advice Memorandum and those relating to the time charters entered into by the
Subsidiaries relating to the Vessels, we believe that the rationale adopted by
the IRS in the Technical Advice Memorandum should be applicable in determining
whether the Charter Fees constitute “rents” for purposes of both Code sections
954(c) and 1297(a). Support for this view is found in the fact that the
definition of “foreign personal holding company income” for purposes of Code
section 954(c) should be interpreted in the same manner as the term “personal
holding company income” which is contained in Code section 543. Thus, the
applicable Treasury regulations indicate that the term “rent” has the same
definition for purposes of the “foreign personal holding company” provisions of
Code section 553 as it does for Code section 543.23 Further, prior to the 1986
Act, the definition of “foreign personal holding company income” contained in
Code section 954(c) specifically referred to the definition of that term in Code
section 553.24 While this specific cross-reference to Code section 553 was
eliminated by the 1986 Act when Code section 954(c) was amended to include
several additional types of passive income (such as foreign currency gains and
income equivalent to interest) in the definition of “foreign personal holding
company income” for subpart F purposes, there is no indication in the
legislative history of the 1986 Act that this statutory amendment was intended
to change the meaning of the term “rents” for
 

Footnote continued from previous page.
 
and Revenue Ruling 67-423, 1967-2 C.B. 221 (holding that payments received by a
corporation from its lease of farmland under a crop-sharing arrangement did not
constitute “rents” for personal holding company purposes where the corporation
materially participated in the management of the farm production). 
 
23    See Treas. Reg. § 1.553-1
 
24    Code Section 553 was repealed as part of the American Jobs Creation Act of
2004. P.L. 108-357, § 413 (2004)./DIV>
 
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purposes of Code section 553.25  
 
6.  Code Section 512(b)(3)
 
The tax treatment of the Charter Fees as income derived by the Subsidiaries from
their performance of services, rather than rents, is also supported by the
authority under Code section 512(b)(3). This statutory provision provides that,
subject to certain limited exceptions not applicable to the chartering of the
Vessels, income constituting “rents from real property” does not constitute
“unrelated business income” that could be taxable to a tax-exempt organization
pursuant to Code section 511. The Treasury regulations defining the term “rents
from real property” for this purpose provide that such term does not include
payments for the use or occupancy of rooms and other space where (i) services
are rendered primarily for the convenience of the occupant, and (ii) the
services are not usually or customarily rendered in connection with the rental
of rooms or other space for occupancy only.26 These Treasury regulations
indicate that amounts received by an owner of leased property may not be treated
as “rents” for relevant federal income tax purposes where the owner provides
services to the lessee in addition to permitting the lessee to use the leased
property.
 
7.  Other Statutory Provisions Defining the Term “Rent”
 
In reaching its holding in Revenue Ruling 81-197 that the aircraft charter fees
derived by the taxpayer involved in that ruling did not constitute “rents” for
S corporation purposes, the IRS relied upon its prior holdings in three Revenue
Rulings concerning the applicability of the excise tax imposed by Code section
4261 on amounts paid within the United States for “taxable transportation”
services. In Revenue Ruling 60-311, 1960-2 C.B. 341, the IRS held that certain
helicopter rental companies are considered to be furnishing a “transportation
service” pursuant to service contracts taxable under Code section 4261 where
they enter into contracts, designated as leases, whereby they (1) lease
helicopters with pilots to an oil company for use in transporting the company’s
personnel and equipment, (2) retain possession, command and control of the
helicopters, and (3) perform all services in connection with the operation of
the helicopters. A similar conclusion was reached in Revenue Ruling 76-394,
1976-2 C.B. 355, and Revenue Ruling 76-431, 1976-2 C.B. 328. In GCM 38525, the
IRS analyzed the rationale of Revenue Ruling 60-311 in distinguishing between a
lease and a service contract for purposes of Code section 4261 and concluded
that “no significance” should be given to the use of the term “lease” in that
Revenue Ruling in determining whether a particular transaction is a service
contract or a lease for such purposes.
 
Further, the IRS has ruled that income derived from a lease of property may
properly be treated as income from the performance of services, rather than
rents, for purposes of 
 

25    See generally, H. Rep. No. 99-426, 99th Cong., 1st Sess. 389-401 (1986);
S. Rep. No. 99-313, 99th Cong., 2nd Sess. 361-370 (1986). 
 
26    Treas. Reg. § 1.512(b)-1(c)(5).
 
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Code section 165(g)(3)(B). Thus, in Revenue Ruling 88-65, 1988-2 C.B. 32, the
IRS held that amounts received by a corporation with respect to the leasing of
automobiles and trucks do not constitute “rents” within the meaning of Code
section 165(g)(3)(B) (which statutory provision relates to the definition of an
“affiliated” corporation for purposes of the rules concerning worthless
securities) where the corporation performs significant services in connection
with such leasing activities.27   
 
C.    Tax Characterization of the Charter Fees
 
Based upon the facts set forth in Section II above and the authorities discussed
in subsection B above, we believe that the Charter Fees should be characterized
as services income, rather than “rents,” for purposes of determining whether any
member of the Eagle Group is a PFIC. Although there is no authority directly
holding that fees received by a ship owner from time charters or voyage charters
of a vessel do not constitute “passive income” for purposes of Code section
1297(a), we believe that the authorities discussed above clearly support the
conclusion that such charter fees should not be characterized as “rents” for
relevant federal income tax purposes if the owner of the property involved
retains the “possession, command and control” of the property and/or provides
“significant services” to the person using the property. Each Subsidiary is
responsible under its time charters of the Vessels for providing the crew and
bearing substantially all of the costs relating to the operations of the Vessels
and retains the risk of loss with respect to the Vessel. Therefore, each
Subsidiary should be treated as both (i) retaining the “possession, command and
control” of the Vessels within the meaning of the relevant authorities, and
(ii) providing “significant services” to the charterers of the Vessels.
 
Our view regarding the tax characterization of the Charter Fees is not affected
by the fact that VS, rather than the Subsidiaries, may be the signatory on the
employment contracts with the various members of the crews that operate the
Vessels. Pursuant to the Technical Management Agreements, each Subsidiary bears
the entire cost of the crew and the operations of the Vessels through its
reimbursement payments to VS. As set forth in the Technical Management
Agreement, each crew member “will be employed” by the Subsidiary and VS will
execute the employment contracts with such members on behalf of the Subsidiary.
As such and as expressly stated in the Technical Management Agreement, VS is
merely acting as the agent for each Subsidiary in connection with an agency
agreement and each employment contract executed by VS. Therefore, the activities
of VS should be attributed to the Subsidiaries for purposes of determining the
tax characterization of the Charter Fees and the necessary tax .
 

27    While noting that the term “rents” as used in Code section 165(g)(3)(B) is
not defined or discussed in the Code, the legislative history of the statutory
provision or its predecessor provisions or the underlying Treasury regulations,
the IRS relied upon the definition of that term in Code section 1244(c)(1)(C)
regarding the definition of “section 1244 stock” and former Code section
1372(e)(5)(C). The IRS further stated that “it is appropriate to distinguish
between active and passive rental income” for purposes of Code section
165(g)(3)(B).
 
16

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analysis under Code section 1297(a) should be undertaken as if the Subsidiaries
directly engaged in all of the activities engaged in by VS as described in the
Technical Management Agreements.
 
This view is supported by a number of the authorities discussed above. Thus, in
Revenue Ruling 74-170, the IRS held that ship owners who entered into a time
charter of its vessels was engaged in the shipping business and entitled to the
benefits of the Code section 883 tax exemption regardless of whether the owner
“charters the vessels directly or through agents.” In this regard, the IRS
stated that “[t]he fact that a charterer acts through an agent does not change
his entitlement to the exclusion, the crucial factor being retention by the
charterer of the risk of the venture.” The same conclusion is reached by
GCM 39169 (where the IRS held that charter fees derived by an S corporation from
the chartering of its aircraft constituted “payments for transportation
services,” and not “rents,” for purposes of former Code section 1372(e)(5)(C)
even though most of the services provided by the S corporation in connection
with such chartering were actually performed by an independent third party
pursuant to an Aircraft Agency Agreement) and Private Letter Ruling 8916057
(where the IRS held that income derived by an S corporation from the time and
voyage charters of vessels owned by a limited liability partnership in which the
S corporation was a limited partner did not constitute “rents” or “passive
investment income” within the meaning of Code section 1362(d)(3) even though an
agent of the partnership conducted all of the activities relating to the
operation and management of the partnership’s vessels on behalf of the
partnership).
 
IV.  OPINION
 
In rendering the opinion set forth below, we have examined the registration
statement and such other documents and materials as we have deemed relevant.
 
Based upon all of the foregoing and our review of the Code, the final, temporary
and proposed Treasury regulations promulgated under the Code, Revenue Rulings,
Revenue Procedures and other published pronouncements of the IRS, the published
opinions of the United States Tax Court and other United States federal courts,
and such other authorities, as we consider relevant, each as they exist as of
the date hereof, we are of the opinion that Eagle should not be treated as a
“passive foreign investment company” for United States federal income tax
purposes. However, because there is no authority directly on point, we believe
it is possible that the IRS might, upon an audit of the United States federal
income tax returns filed by Eagle, disagree with this opinion. If the IRS were
to fully litigate the issue involved, we believe that a court should ultimately
agree with our opinion, although there can be no assurance in this regard.
Because our opinion is based upon current law, no assurance can be given that
existing United States federal income tax laws will not be changed by future
legislative or administrative or judicial interpretation, any of which could
affect the opinion expressed above.
 
This opinion is provided to the Underwriters in connection with the Offering.
This opinion may not be quoted or relied upon by any other person or entity, or
for any other purpose, without our prior written consent.
 
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Exhibit D
 
Form of Opinion of the Company’s Special Marshall Islands Counsel
 
Ladies and Gentlemen:
 
We have acted as your counsel in connection with your purchase (the “Offering”)
of up to [  ] shares of Common Stock, par value $.01 per share (the “Shares”),
of Eagle Bulk Shipping Inc., a Marshall Islands corporation (the “Company”),
pursuant to the Underwriting Agreement dated February 28, 2007 among you and the
Company (the “Underwriting Agreement”). In connection with the Offering, you
have asked us to deliver the following opinions with respect to the Company and
to each of the Marshall Islands subsidiaries of the Company listed on Schedule I
hereto (collectively the “Subsidiaries”) and with respect to the prospectus of
the Company (as may be amended, the “Prospectus”) and a supplement thereto
included in a registration statement on Form S-3 (file No. 333-139745) (as may
be amended, the “Registration Statement”).
 
In rendering this opinion, we have examined and relied on originals or copies of
the following:
 

i.              
the Registration Statement;

 

ii.             
the Underwriting Agreement;

 

iii.            
any document incorporated or deemed to be incorporated by reference into the
Registration Statement;

 

iv.            
the Amended and Restated Articles of Incorporation and Bylaws of the Company;
and

 

v.             
the limited liability company agreements or the amended and restated limited
liability company agreements, as the case may be, of each of the Subsidiaries.

 
We have also examined and relied, as to factual matters, upon originals, or
copies certified to our satisfaction, of such records, documents, certificates
of officers of the Company, the Subsidiaries, and of public officials and other
instruments, and made such other inquiries, as, in our judgment, are necessary
or appropriate to enable us to render the opinion expressed below. As to
questions of fact material to this opinion, we have, with your approval, where
relevant facts were not independently established, relied upon, among other
things, the representations made in the Underwriting Agreement and certificates
of officers of the Company or the Subsidiaries.
 
18
 

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For the purpose of this opinion, we have further assumed:
 

i.              
the power, authority and legal right of the parties to the Underwriting
Agreement (other than the) to enter into and to perform their respective
obligations thereunder and that the Underwriting Agreement has been duly
authorized, executed and delivered by each such party;

 

ii.             
the genuineness of all signatures on all documents and the completeness, and the
conformity to original documents, of all copies submitted to us;

 

iii.            
due compliance of the Underwriting Agreement with all matters of, and the
validity and enforceability thereof under, all such laws as govern or relate to
them (other than the laws of the Republic of the Marshall Islands as to which we
are opining);

 

iv.            
that you have duly and validly executed and delivered the Underwriting Agreement
and has complied with all legal requirements pertaining to its status as such
status relates to its rights to seek benefits of and enforce the Underwriting
Agreement against the Company;

 

v.             
that any required consents, licenses, permits, approvals, exemptions,
qualifications or authorizations of or by, and any required registrations or
filings with, any governmental authority or regulatory body of any jurisdiction
other than the Republic of the Marshall Islands in connection with the
transactions contemplated by the Underwriting Agreement have been duly obtained
or made;

 

vi.            
insofar as the opinions expressed herein relate to the issuance and delivery of
the Shares, that such issuance and delivery are occurring as of the date hereof;
and

 

vii.           
that with respect to opinion 21 only, you are not deemed to be resident,
domiciled, or carrying on any commercial activity in the Republic of the
Marshall Islands.

 
In rendering this opinion, we advise you that we are not admitted to practice
before the courts of the Republic of the Marshall Islands. However, certain
members of this firm participated in the drafting of The Associations Law of
1990 and The Maritime Act of 1990 of the Republic of the Marshall Islands, and
such members have, in the past, rendered legal opinions on similar subjects.
Insofar as Marshall Islands law is involved in the opinions hereinafter
expressed, we have relied upon opinions and advice of Marshall Islands counsel
rendered in transactions which we consider to be sufficiently similar to those
contemplated by the Underwriting Agreement as to afford a satisfactory basis for
such opinions, upon our independent examination of the Marshall Islands
Associations Law 1990 and the Marshall Islands Maritime Act of 1990, including
amendments thereto effective as of May 9, 2005 as made available to us by the
Marshall Islands Maritime & Corporate Administrators, Inc. and
 
19
 

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upon our knowledge of the interpretation of analogous laws in the United States
of America. In rendering the opinions set forth below, we have assumed that the
Marshall Islands laws and regulations examined by us have not been the subject
of any further amendments and that the persons who executed the aforementioned
certificates of public officials are duly authorized to act in such capacity on
behalf of the Registrar of Corporations of the Republic of the Marshall Islands.
 
Based upon and subject to the foregoing and having regard to legal
considerations we deem relevant, we are of the opinion that, insofar as the laws
of the Republic of the Marshall Islands are concerned:
 
1.  The Company has been duly incorporated and validly exists as a corporation
in good standing under the laws of the Marshall Islands, with full power and
authority to own, lease and operate its properties and conduct its business as
described in the Registration Statement, the preliminary prospectus relating to
the Shares (including the base prospectus attached thereto and the documents
incorporated by reference therein, the “Pre-Pricing Prospectus”) in the
Prospectus and the Company has the full power and authority to execute and
deliver the Underwriting Agreement.
 
2.  Each of the Subsidiaries has been duly formed and validly exists as a
limited liability company, in good standing under the laws of the Marshall
Islands, with full power and authority to own, lease and operate its properties
and conduct its business as described in the Registration Statement, the
Pre-Pricing Prospectus, the Prospectus and the Free Writing Prospectus attached
hereto as Annex A.
 
3.  The authorized capital stock of the Company conforms as to legal matters to
the description thereof contained in the Registration Statement, the Pre-Pricing
Prospectus and the Prospectus. All of the issued shares of common stock of the
Company, including the Shares, have been duly authorized and are validly issued,
fully paid and non-assessable and are not subject to any preemptive rights. The
Shares to be delivered on the closing of the Offering by the Company have been
duly authorized and are fully paid and non-assessable. The Shares conform to the
descriptions of the Company’s common stock contained in the Registration
Statement, the Pre-Pricing Prospectus and the Prospectus.
 
4.  All of the issued and outstanding limited liability company interests of
each of the Subsidiaries have been duly authorized and are validly issued, fully
paid and non-assessable and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims, except as
described in the Registration Statement, the Pre-Pricing Prospectus and the
Prospectus.
 
5.  The Underwriting Agreement has been duly and validly authorized, executed
and delivered by the Company.
 
6.  The filing of the Registration Statement, the Pre-Pricing Prospectus and the
Prospectus with the U.S. Securities and Exchange Commission has been duly
authorized by and
 
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on behalf of the Company and the Registration Statement has been duly executed
pursuant to such authorization by and on behalf of the Company.
 
7.  Other than as set forth or contemplated in the Prospectus and insofar as
matters of the Republic of the Marshall Islands are concerned, to our knowledge,
there are no judicial, regulatory or other legal or governmental proceedings
pending to which the Company or any of the Subsidiaries is a party or of which
any property of the Company or any of the Subsidiaries is the subject which, if
determined adversely to the Company or any of the Subsidiaries, would
individually or in the aggregate have a material adverse effect on the financial
position or results of operations of the Company.
 
8.  The execution and delivery by the Company, and performance by the Company of
its obligations under, the Underwriting Agreement and the consummation of the
transactions contemplated by the Underwriting Agreement, the Registration
Statement, the Pre-Pricing Prospectus and the Prospectus will not violate or
conflict with any provision of the Company’s Amended and Restated Articles of
Incorporation or Bylaws, the limited liability company agreements of any of the
Subsidiaries, any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease, contract or
other agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their respective properties may be
bound or affected, or any rule or regulation, or, to our knowledge, any order of
any court or governmental agency or body in the Republic of the Marshall Islands
having jurisdiction over the Company or any of the Subsidiaries.
 
9.  No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any Marshall Islands court or any
judicial, regulatory or other legal or governmental agency or body is required
for the execution and delivery of, and performance of the Company’s obligations
under the Underwriting Agreement or the consummation of the transactions
contemplated by the Underwriting Agreement, the Registration Statement, the
Pre-Pricing Prospectus and the Prospectus, except such as have been duly
obtained and are in full force and effect.
 
10.  Each of the Company and its Subsidiaries has such authorizations of, and
has made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other tribunals
as are necessary to own, lease, license and operate its respective properties
and to conduct its business, except where the failure to have any such
authorization or to make any such filing or notice would not, singly or in the
aggregate, have a material adverse effect; each such authorization is valid and
in full force and effect and each of the Company and its Subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such authorization; and such authorizations contain no restrictions that
are burdensome to the Company or any of its Subsidiaries; except where such
failure to be valid and
 
21
 

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in full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in the
aggregate, have a material adverse effect.

 
11.  The Company has the full right, power and authority to execute and deliver
the Underwriting Agreement and to perform its obligations thereunder, and all
corporate action required to be taken by the Company for the due and proper
authorization, execution and delivery of the Underwriting Agreement and the
consummation of the transactions contemplated by the Underwriting Agreement as
described in the Registration Statement, the Pre-Pricing Prospectus and the
Prospectus have been duly and validly taken.
 
12.  The Company and each of the Subsidiaries 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
governmental authorities and all courts and other tribunals, in the Marshall
Islands, necessary to own or lease, as the case may be, and to operate its
respective properties and to carry on its respective business as conducted as of
the date hereof (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 or the respective
Subsidiary).
 
13.  Neither the Company nor its Subsidiaries are in violation of their
respective articles of incorporation, bylaws or limited liability company
agreement or other charter documents.
 
14.  The certificates evidencing the Shares are in due and proper form and the
holders of Shares evidenced by such certificates will not be subject to any
personal liability by reason of holding such Shares.
 
15.  Each of the vessels listed on Schedule I hereto is duly and validly
registered as a vessel in the sole ownership of the Subsidiary set forth next to
its name on Schedule I hereto under the laws of the Republic of the Marshall
Islands; each vessel owning Subsidiary has good and marketable title to the
vessel set forth next to its name on Schedule I hereto, free and clear of all
liens, claims, charges, debts or encumbrances and defects of title of record on
the Marshall Islands Ships Register, except as described in the Registration
Statement, the Pre-Pricing Prospectus and the Prospectus; and each such vessel
is in good standing with respect to the payment of past and current taxes, fees
and other amounts payable under the laws of the Republic of the Marshall Islands
as would affect its registry with the Marshall Islands Ships Register.
 
16.  The statements contained in the Company’s annual report on Form 10-K for
the period ending December 31, 2006 and incorporated by reference into the
Registration Statement under the captions “Risk Factors—Company Specific Risk
Factors—We cannot assure you that our board of directors will declare
dividends”, “Risk Factors—Risks Relating to Our Common Stock—We are incorporated
in the Marshall Islands, which does not have a well-developed body of corporate
law” and “Exchange Controls”; the statement contained in the Company’s
registration statement on Form 8-A filed with the U.S. Securities and Exchange
Commission on
 
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June 20, 2005 under the heading “Description of Capital Stock”; the statement
contained in the Pre-Pricing Prospectus and the Prospectus under the heading
“Tax Considerations—Marshall Islands Tax Considerations” insofar as such
statements constitute a summary of documents or matters of law, and those
statements in the Registration Statement, and Prospectus that are descriptions
of contracts, agreements or other legal documents or of legal proceedings, or
refer to statements of law or legal conclusions, are accurate in all material
respects.
 
17.  The agreement of the Company to the choice of law provisions set forth in
Section 13 of the Underwriting Agreement will be recognized by the courts of the
Marshall Islands; the Company can sue and be sued in its own name under the laws
of the Marshall Islands; the irrevocable submission of the Company to the
jurisdiction of any court of the State of New York or the United States District
Court for the Southern District of the State of New York (each a “New York
Court”), the waiver by the Company of any objection to the venue of a proceeding
in a New York Court, the appointment by the Company of Seward & Kissel LLP as
their agent for service of process and the agreement of the Company that the
Underwriting Agreement shall be governed by and construed in accordance with the
laws of the State of New York are legal, valid and binding; service of process
effected in the manner set forth in Section 14 of the Underwriting Agreement
will be effective, insofar as the laws of the Marshall Islands are concerned, to
confer valid personal jurisdiction over the Company.
 
18.  Neither the Company nor any of its Subsidiaries is required to file tax
returns or is subject to taxation in the Republic of the Marshall Islands. All
dividends and other distributions declared and payable on the shares of Common
Stock of the Company and the capital stock of each of its Subsidiaries may under
the current laws and regulations of the Republic of the Marshall Islands be paid
in United States dollars and may be freely transferred out of the Republic of
the Marshall Islands, 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 and are otherwise free and clear of any
withholding, stamp, transfer, excise or other tax, and may be declared and paid
without 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.
 
19.  You will not be deemed to be resident, domiciled, carrying on any
commercial activity in the Republic of the Marshall Islands or subject to any
taxation in the Republic of the Marshall Islands solely by reason only of the
entry into, performance or enforcement of the Underwriting Agreement to which it
is a party or the transactions contemplated by the Underwriting Agreement, the
Registration Statement, the Pre-Pricing Prospectus and the Prospectus. It is not
necessary under the laws of the Republic of the Marshall Islands that you be
authorized, licensed, qualified or otherwise entitled to carry on business in
the Republic of the Marshall Islands for their execution, delivery, performance
or enforcement of the Underwriting Agreement.
 
20.  No stamp or other issuance or transfer taxes or duties and no capital
gains, income, withholding or other taxes are payable to the Republic of the
Marshall Islands or to any political subdivision or taxing authority thereof or
therein in connection with the sale and
 
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delivery of the Shares by the Company to or for your respective accounts or in
connection with the resale of the Shares by you.
 
We also qualify our opinion to the extent that (i) the enforceability of the
rights and remedies provided for in the Underwriting Agreement (a) may be
limited by insolvency, bankruptcy, reorganization, moratorium, fraudulent
transfer, fraudulent conveyance or other similar laws affecting generally the
enforceability of creditors’ rights from time to time in effect and (b) is
subject to general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law, including
application of principles of good faith, fair dealing, commercial
reasonableness, materiality, unconscionability and conflict with public policy
and other similar principles; (ii) while there is nothing in Marshall Islands
law which prohibits a Marshall Islands corporation from submitting to the
jurisdiction of a forum other than the Republic of the Marshall Islands, the
validity and enforceability of the submission to jurisdiction provisions set
forth in the Underwriting Agreement are not dependent upon Marshall Islands law
and such provisions may not be enforceable under the laws of a particular
jurisdiction; (iii) Marshall Islands courts are not bound by a foreign judgment
and have the right to review a case on the merits if a motion is made to the
court to the effect that there is no merit to the case or the foreign court
lacked jurisdiction; and (iv) different results might be obtained under laws
other than those of the State of New York by which the Underwriting Agreement is
expressed to be governed.
 
This opinion is limited to matters of law of the Republic of Marshall Islands.
We express no opinion with respect to the law of any other jurisdiction.
 
                                                                                                                                    Very
truly yours,
 
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Schedule I
 
LIST OF MARSHALL ISLANDS SUBSIDIARIES AND VESSELS OWNED BY
EACH MARSHALL ISLANDS SUBSIDIARY OF THE COMPANY

Subsidiary
 
Vessel
Condor Shipping LLC
 
(ii) Condor
Hawk Shipping LLC
 
Hawk I
Falcon Shipping LLC
 
Falcon
Harrier Shipping LLC
 
Harrier
Osprey Shipping LLC
 
Osprey I
Kite Shipping LLC
 
Kite
Sparrow Shipping LLC
 
Sparrow-
Griffon Shipping LLC
 
Griffon
Shikra Shipping LLC
 
Shikra
Peregrine Shipping LLC
 
Peregrine
Cardinal Shipping LLC
 
Cardinal
Heron Shipping LLC
 
Heron
Merlin Shipping LLC
 
Merlin
Jaeger Shipping LLC
 
Jaeger
Kestrel Shipping LLC
 
Kestrel I
Tern Shipping LLC
 
Tern
Kittiwake Shipping LLC
 
Kittiwake
Oriole Shipping LLC
 
-
Robin Shipping LLC
 
-
Golden Eagle Shipping LLC
 
-
Imperial Eagle Shipping LLC
 
-
Crested Eagle Shipping LLC
 
 
Crowned Eagle Shipping LLC
 
 
Shrike Shipping LLC
 
Shrike
Skua Shipping LLC
 
Skua

 

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Annex A

None
 

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Exhibit E
 
Form of Opinion of the Company’s Special Marshall Islands Counsel
 
We have acted as special Marshall Islands counsel to Eagle Bulk Shipping Inc., a
non-resident domestic corporation organized and existing under the laws of the
Republic of the Marshall Islands (the “RMI”) (the “Company”), in connection with
the purchase by you of up to [_______] shares (the “Shares”), of Common Stock,
par value US$0.01 per share (the “Common Stock”), pursuant to the Underwriting
Agreement (the “Underwriting Agreement”), dated January 10, 2007, among the
Company and you. This opinion is furnished to you pursuant to Section 7(e) of
the Underwriting Agreement. We are licensed to practice law in the RMI and are
members in good standing of the Bar of the RMI. We have sufficient knowledge of
the laws of the RMI and are therefore qualified to give the opinions set forth
herein. It is our understanding that the Company will be offering the Shares for
sale and we are acting as special counsel to the Company for the purpose of
rendering this opinion to you regarding the above mentioned laws.
 
We express no opinion as to matters governed by, or the effect or applicability
of any laws of any jurisdiction other than the laws of the RMI which are in
effect as of the date hereof. This opinion speaks as of the date hereof, and it
should be recognized that changes may occur after the date of this letter which
may effect the opinions set forth herein. We assume no obligation to advise the
parties, their counsel, or any other party seeking to rely upon this opinion, of
any such changes, whether or not material, or of any other matter which may
hereinafter be brought to my attention.
 
This opinion is based on our review of the RMI Associations Law of 1990, the RMI
Maritime Act of 1990, and the legal opinion, dated the date hereof, of Seward &
Kissel LLP, RMI counsel to the Company, a copy of which is attached to this
opinion (the “SK Opinion Letter”), and is furnished solely for your benefit and
may not be used for any other purpose or relied upon by, nor copies disseminated
to any person without my prior written consent in each case.
 
Based on the above we are of the opinion that there have not been any amendments
to the RMI Associations Law of 1990 or the RMI Maritime Act of 1990 during 2006,
and through the date of this letter, that substantively affect the legal
opinions of Seward & Kissel LLP set forth in the Opinion Letter.

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Exhibit F
 
Form of Officers’ Certificate
 
Pursuant to Section 7(n) of the Underwriting Agreement (the “Underwriting
Agreement”), dated February 28, 2007, among Eagle Bulk Shipping Inc., a Marshall
Islands corporation (the “Company”) and UBS Securities LLC (the “Underwriter”),
each of the undersigned, Sophocles N. Zoullas, the duly appointed Chief
Executive Officer of the Company, and Alan S. Ginsberg, the duly appointed Chief
Financial Officer of the Company, does hereby certify that:
 
1.  He has reviewed the Registration Statement and the Prospectus.
 
2.  The representations and warranties of the Company as set forth in the
Underwriting Agreement are true and correct as of the date hereof and as if made
on the date hereof.
 
3.  The Company has performed all of its obligations under the Underwriting
Agreement as are to be performed at or before the date hereof.
 
4.  The conditions set forth in paragraphs (j), (k) and (l) of Section 7 of the
Underwriting Agreement have been met.
 
5.  The financial statements and other financial information included in the
Registration Statement or the Prospectus fairly present the financial condition,
results of operations and cash flows of the Company and the Subsidiaries as of,
and for, the periods therein presented.
 
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Underwriting Agreement.
 
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on this March
6, 2007.
 

       
   
   
    By:      

 
Name: Sophocles N. Zoullas
Title: Chief Executive Officer

 

       
   
   
    By:      

 
Name: Alan S. Ginsberg
Title: Chief Financial Officer

 

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