Exhibit 10.6


 


 


WARRANT AGREEMENT


 


 


between


 


 


PARAGON SHIPPING INC.


 


 


and


 


 


COMPUTERSHARE TRUST COMPANY,
N.A. and

COMPUTERSHARE, INC.


 




 
























 










 


 


Dated as of November 21, 2006


 


 










 


Warrants to Purchase Shares of Common Stock


 


2





















 


WARRANT AGREEMENT


 


THIS WARRANT
AGREEMENT, dated as of November 21, 2006, is entered into between PARAGON
SHIPPING INC., a Marshall Islands corporation (the “Company”),
and Computershare, Inc. a Delaware corporation and its fully owned subsidiary
Computershare Trust Company, N.A. a federally chartered trust company, having
its principal office at 250 Royall Street, Canton, MA 02021 (Collectively (“Warrant Agent”), or individually “Computershare” and the “Trust
Company”, respectively),  agree as
follows:, as warrant agent (the “Warrant Agent”).


 


RECITALS


 


A.            The Company proposes to issue
Warrants, as hereinafter described (the “Warrants”),
each to purchase at the Warrant Price (as defined below) one share of Class A
Common Stock, par value $.001 per share, of the Company.


 


B.            The Company desires the Warrant
Agent to act on behalf of the Company, and the Warrant Agent is willing to act
on behalf of the Company, in connection with the issuance of the Warrant
Certificates (as defined below) and the other matters provided herein.


 


AGREEMENT


 


NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set forth, the parties hereto agree as follows:


 


ARTICLE 1


 


DEFINITIONS


 


“Additional Common Stock” shall mean all Common Stock issued
or issuable by the Company after the date of this Agreement, other than the
Warrant Shares.


 


“Affiliate” shall mean, as to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control of such Person. For purposes of this definition, “control” when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the foregoing. Notwithstanding the
foregoing, “Affiliate” shall not include any
wholly-owned Subsidiary of the Company.


 


“Agreement” shall mean this Warrant Agreement, as the same
may be amended, modified or supplemented from time to time.


 


“Approval Date” shall mean the date on which the sale of the
number of firm shares stated in the final prospectus related to a Qualified IPO
is consummated.


 


“Beneficial Owner” shall have the meaning given to such term
in Section 2.5(b) hereof.


 


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“Book-Entry Warrant Certificate” shall have the meaning given
to such term in Section 2.1 hereof.


 


“Business Day” shall mean any day other than a Saturday,
Sunday or a day on which the New York Stock Exchange in New York, New York is
not open.


 


“Capital Stock” of any Person shall mean any and all shares,
interests, participations or other equivalents however designated of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such Person and any rights (other than debt securities
convertible or exchangeable into an equity interest), warrants or options to
acquire an equity interest in such Person.


 


“Class A
Common Stock” shall mean the Class A Common Stock,
$0.001 par value per share, of the Company.


 


“Class B Common Stock” shall mean the Class B Common Stock,
$0.001 par value per share, of the Company.


 


“Common Stock” shall mean (i) the Class A Common Stock,
par value U.S. $0.001 per share, of the Company, as constituted on the original
issuance of the Warrants, (ii) any Capital Stock into which such Common
Stock may thereafter be changed and (iii) any share of the Company of any
other class issued to holders of such Common Stock upon any reclassification
thereof.


 


“Company” shall mean the company identified in the preamble
hereof and its successors and assigns.


 


“Company Order” shall mean a written request or order signed
in the name of the Company by its Chairman of the Board, its Chief Executive
Officer, its President, any Vice President, its Chief Financial Officer and by
its Treasurer, any Assistant Treasurer its Secretary or any Assistant
Secretary, and delivered to the Warrant Agent.


 


“Consummation of an Exchange Offer” shall mean the
consummation of an offer by the Company to exchange and issue a number of
registered Units, registered shares of Class A Common Stock, registered
Warrants and, if permitted, registered Warrant Shares (registered pursuant to
an effective registration statement filed with the SEC under the Securities
Act) equal to number of securities tendered in connection with such exchange
and issuance.


 


“Corporate Agency Office” shall mean an office maintained by
the Warrant Agent in the United States of America, where Warrant Certificates
may be surrendered for registration of transfer or exchange and where Warrant
Certificates may be surrendered for exercise of Warrants evidenced thereby,
which office is Computershare Trust Company, N.A., 350 Indiana Street, Suite
800, Golden, Colorado, 80401, on the date hereof. The Warrant Agent will give
prompt written notice to the Company of any change in the location of such
office.


 


“Countersigning Agent” shall mean any Person authorized by
the Warrant Agent to act on behalf of the Warrant Agent to countersign Warrant
Certificates.


 


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“Current Market Price” of the shares of Common Stock or other
capital stock or similar equity interests on any date shall mean (i) on the
Approval Date, the public offering price in a Qualifying IPO or (ii) on any
date after the Approval Date the closing sale price per share (or, if no
closing sale price is reported, the average of the closing bid and ask prices
or, if more than one in either case, the average of the average closing bid and
the average closing ask prices) on such date as reported on the principal
United States securities exchange or inter-dealer quotation system, including
the OTC Bulletin Board, on which
shares of Common Stock or such other capital stock or similar equity interests
are traded. In the absence of such a quotation, the Board of Directors of the
Company shall be entitled to determine in good faith the Current Market Price on
such basis as it considers appropriate. The Current Market Price shall be
determined without reference to extended or after hours trading.


 


“Depository” shall have the meaning given to such term in
Section 2.3 hereof.


 


“Exchange Act” shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.


 


“Expiration Date” shall mean November 21, 2011, or such
earlier date as determined in accordance with Article 5.


 


“Holder” or “Warrantholder”
shall mean have the meaning given in Section 2.5(a) hereof.


 


“Initial Purchaser Registration Rights Agreement” shall mean
the Initial Purchaser Registration Rights Agreement, dated as of November 21,
2006, among the Company and Cantor Fitzgerald & Co., CRT Capital Group LLC and
Oppenheimer & Co. Inc. (collectively, the “Initial
Purchasers”), as such agreement may be amended, modified or
supplemented from time to time.


 


“Initial
Purchasers’ Option” shall have the meaning set forth
in Section 6.2 hereof.


 


“IPO Price” shall have the meaning set forth in Section 6.1(f)
hereof.


 


“Non-Surviving Combination” shall mean any merger,
consolidation or other business combination by the Company with one or more
other entities in a transaction in which the Company is not the surviving entity.


 


“Participant” shall have the meaning given to such term in
Section 2.3 hereof.


 


“Person” shall mean an individual, a corporation, a
partnership, a limited liability company, an association, a trust or any other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.


 


“Purchase Agreement” shall mean the Purchase Agreement, dated
November 15, 2006, between the Company and the Initial Purchasers.


 


“Qualified Institutional Buyer” shall have the meaning given
such term in Rule 144A under the Securities Act.


 


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“Qualified IPO” shall mean any public offering of the Company’s
Class A Common Stock that raises at least $50.0 million in gross proceeds for
the Company.


 


“Recipient” shall have the meaning given such term in Section
3.2(e).


 


“Registration Rights Agreement” shall mean that certain
Registration Rights Agreement, dated November 21, 2006, by and among the
Company, Innovation Holdings S.A. and the Initial Purchasers as such agreement
may be amended, modified or supplemented from time to time.


 


“Regulation S”
shall mean Regulation S under the Securities Act.


 


“Regulation S
Securities” shall mean Warrants offered and sold in reliance on
Regulation S under the Securities Act.


 


“Restricted
Period” shall mean the “one-year distribution compliance period”
(within the meaning of Rule 903(b)(2) of Regulation S) following the date of
this Agreement.


 


“Restricted Warrants” shall have the meaning given such term
in Section 2.2(b).


 


“Restricted Warrant Legend” shall mean the legend so
designated on the Warrant Certificate attached hereto as Exhibit A.


 


“Rule 144” shall mean Rule 144 promulgated under the
Securities Act.


 


“Rule 144A Securities” shall mean shall mean Warrants offered
and sold in reliance on Rule 144A under the Securities Act.


 


“SEC” shall mean the U.S. Securities and Exchange Commission
or any successor agency thereto.


 


“Securities Act” shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.


 


“Separation Date” shall have the meaning given to such term
in Section 2.1.


 


“Subsidiary” shall mean, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of such Person or a
combination thereof.


 


“Unit” shall
mean units, consisting of one share of Class A Common Stock and one-fifth of
one Warrant, issued by the Company.


 


“Warrant Agent” shall mean the warrant agent named in the
preamble hereof or the successor or successors of such Warrant Agent appointed
in accordance with the terms hereof.


 


“Warrant Certificates” shall mean those certain warrant
certificates evidencing the Warrants, substantially in the form of Exhibit A
attached hereto.


 


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“Warrant Price” shall mean the exercise price per Warrant
Share, initially set at $10.00, subject to adjustment as provided in Section
6.1.


 


“Warrant Register” shall have the meaning given such term in
Section 2.3(f).


 


“Warrant Shares” shall mean the Common Stock issuable upon
exercise of the Warrants, the number of which is subject to adjustment from
time to time in accordance with Article 6.


 


“Warrants” shall mean those warrants issued hereunder to
purchase initially up to an aggregate of 2,299,680 Warrant Shares at the
Warrant Price, subject to adjustment pursuant to Article 6.


 


ARTICLE 2


 


WARRANT CERTIFICATES


 


Section 2.1     Issuance of Warrants.  Each
Warrant shall represent the right, subject to the provisions contained herein
and therein, to purchase one share of Class A Common Stock at the Exercise
Price, subject to adjustment as provided in Article 6. One-fifth of one Warrant
shall be issued together with one share of Common Stock as part of a single
Unit, and shall not be separately transferable before the Consummation of an
Exchange Offer or, if no Exchange Offer is conducted, the date on which a registration
statement covering the resale of Units, and the Class A Common Stock and Warrants
forming components of the Units, and the Warrant Shares, by the Holders thereof
is declared effective by the SEC, unless Cantor Fitzgerald & Co. determines
that an earlier date is acceptable (such date of transferability, the “Separation Date”).
All of the Warrants shall initially be represented by one or more Book-Entry
certificates (each, a “Book-Entry
Warrant Certificate”). Each Warrant Certificate included in such
Unit shall evidence one-fifth of one Warrant.


 


Section 2.2     Form, Execution and Delivery of Warrant
Certificate.


 


(a)    One
or more Warrant Certificates evidencing Warrants to purchase not more than
2,299,680 shares of Class A Common Stock (except as provided in Article 6) may
be executed by the Company and delivered to the Warrant Agent upon the
execution of this Agreement or from time to time thereafter.


 


(b)    Each
Warrant Certificate, whenever issued, shall be in registered form substantially
in the form set forth in Exhibit A hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement (but which do not affect the rights, duties or responsibilities of
the Warrant Agent). Each Warrant
Certificate will bear the Restricted Warrant Legend unless removed in
accordance with Section 2.5(e) (the Warrants represented by such Warrant
Certificate(s), “Restricted Warrants”) Each
Book-Entry Warrant Certificate shall bear such legend or legends as may be
required by the Depository (as defined below) in order for it to accept the
Warrants for its book-entry settlement system. Each Warrant Certificate shall
be printed, lithographed, typewritten, mimeographed or engraved or otherwise
reproduced in any other manner as may be approved by the officers executing the
same (such execution to be conclusive evidence of such approval) and may have
such letters, numbers or other marks of identification or designation and such
legends or 


 


5

















 


endorsements
printed, lithographed or engraved thereon as the officers of the Company
executing the same may approve (such execution to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto, or with any regulation of any stock exchange
or electronic market on which the Units, Class A Common Stock or Warrants may
be listed, or to conform to usage. Each Warrant Certificate shall be signed on
behalf of the Company by its Chairman of the Board, Chief Executive Officer,
President, Chief Financial Officer or any Vice President. The signature of any
such officer on any Warrant Certificate may be manual or facsimile. Each
Warrant Certificate, when so signed on behalf of the Company, shall be
delivered to the Warrant Agent together with an order for the countersignature
and delivery of such Warrants.


 


(c)    The
Warrant Agent shall, upon receipt of any Warrant Certificate duly executed on
behalf of the Company, countersign such Warrant Certificate and deliver such
Warrant Certificate to or upon the order of the Company. Each Warrant
Certificate shall be dated the date of its countersignature.


 


(d)    No
Warrant Certificate shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose, and no Warrant evidenced thereby may be
exercised, unless such Warrant Certificate has been countersigned by the manual
or facsimile signature of the Warrant Agent. Such signature by the Warrant
Agent upon any Warrant Certificate executed by the Company shall be conclusive
evidence that such Warrant Certificate has been duly issued under the terms of
this Agreement.


 


(e)    If
any officer of the Company who has signed any Warrant Certificate either
manually or by facsimile signature shall cease to be such officer before such
Warrant Certificate shall have been countersigned and delivered by the Warrant
Agent, such Warrant Certificate nevertheless may be countersigned and delivered
as though the person who signed such Warrant Certificate had not ceased to be
such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by such persons as, at the actual date of the execution
of such Warrant Certificate, shall be the proper officers of the Company as
specified in this Section 2.2, regardless of whether at the date of the
execution of this Agreement any such person was such officer.


 


(f)     The
Holders (as defined below) shall, except as stated below with respect to
Warrants evidenced by a Book-Entry Warrant Certificate, be entitled to receive
Warrants in physical, certificated form.


 


(g)    A
Book-Entry Warrant Certificate may be exchanged for a new Book-Entry Warrant
Certificate, or one or more new Book-Entry Warrant Certificates may be issued,
to reflect the issuance by the Company of additional Warrants. To effect such
an exchange, the Company shall deliver to the Warrant Agent one or more new
Book-Entry Warrant Certificates duly executed on behalf of the Company as
provided in this Section 2.2. The Warrant Agent shall countersign each new Book
Entry Warrant Certificate as provided in this Section 2.2 and shall deliver
each new Book-Entry Warrant Certificate to the Depository. The Warrant Agent
shall cancel each Book-Entry Warrant Certificate delivered to it by the
Depository in exchange for each new Book-Entry Warrant Certificate it delivers
to the Depository.


 


6

















 


Section 2.3     Transfer of Warrants.


 


(a)    All
of the Warrants shall initially be represented by one or more Book-Entry
Warrant Certificates deposited with The Depository Trust Company (the “Depository”) and
registered in the name of Cede & Co., a nominee of the Depository and,
subject to Section 2.5(e) hereof, shall bear the Restricted Warrant Legend. Except
as provided for in Section 2.3(b) hereof, no person acquiring Warrants with
book-entry settlement through the Depository shall receive or be entitled to
receive physical delivery of definitive Warrant Certificates evidencing such
Warrants. Ownership of beneficial interests in the Warrants shall be shown on,
and the transfer of such ownership shall be effected through, records
maintained by (i) the Depository or its nominee for each Book-Entry Warrant
Certificate, or (ii) institutions that have accounts with the Depository (such
institution, with respect to a Warrant in its account, a “Participant”).


 


(b)    If
the Depository subsequently ceases to make its book-entry settlement system
available for the Warrants, the Company may instruct the Warrant Agent in
writing regarding making other arrangements for book-entry settlement. In the
event that the Warrants are not eligible for, or it is no longer necessary to
have the Warrants available in, book-entry form, the Warrant Agent shall
provide written instructions to the Depository to deliver to the Warrant Agent
for cancellation each Book-Entry Warrant Certificate, and the Company shall
instruct the Warrant Agent in writing to deliver to the Depository definitive
Warrant Certificates in physical form evidencing such Warrants. Such definitive
Warrant Certificates shall be in the form annexed hereto as Exhibit A
with appropriate insertions, modifications and omissions, as provided above.


 


(c)    Prior
to the Separation Date, Warrants may be transferred or exchanged only together
with the Units in which such Warrants are included, and only for the purpose of
effecting, or in conjunction with, a transfer or exchange of such Units.
Furthermore, prior to the Separation Date, each transfer of Units on the register relating to such Units shall operate also to
transfer the Warrants included in such Units. From and after the Separation
Date, this Section 2.3(c) shall be of no further force and effect.


 


(d)    A
Warrant Certificate may be transferred at the option of the Holder thereof upon
surrender of such Warrant Certificate at the stock transfer division of the
Warrant Agent, properly endorsed or accompanied by appropriate instruments of
transfer and written instructions for transfer, all in form satisfactory to the
Company and the Warrant Agent; provided, however, that except as
otherwise provided herein or in any Book-Entry Warrant Certificate, each
Book-Entry Warrant Certificate may be transferred only in whole and only to the
Depository, to another nominee of the Depository, to a successor depository, or
to a nominee of a successor depository. Upon any such registration of transfer,
the Company shall execute, and the Warrant Agent shall countersign and deliver,
as provided in Section 2.2, in the name of the designated transferee a new
Warrant Certificate or Warrant Certificates of any authorized denomination
evidencing in the aggregate a like number of unexercised Warrants.


 


(e)    After
the Separation Date, upon surrender at the stock transfer division of the
Warrant Agent, properly endorsed or accompanied by appropriate instruments of
transfer and written instructions for such exchange, all in form satisfactory to the Company and the
Warrant Agent, one or more Warrant Certificates may be exchanged for one or
more Warrant Certificates


 


7

















 


in
any other authorized denominations; provided, that such new Warrant
Certificate(s) evidence the same aggregate number of Warrants as the Warrant
Certificate(s) so surrendered. Upon any such surrender for exchange, the
Company shall execute, and the Warrant Agent shall countersign and deliver, as
provided in Section 2.2, in the name of the Holder of such Warrant
Certificates, the new Warrant Certificates.


 


(f)     The
Warrant Agent shall keep or cause to be kept, at its stock transfer division,
books in which it shall register Warrant Certificates in accordance with
Section 2.2 and transfers, exchanges, exercises and cancellations of outstanding Warrant Certificates (the “Warrant Register”). Whenever any Warrant Certificates are
surrendered for transfer or exchange in accordance with this Section 2.3, an
authorized officer of the Warrant Agent shall countersign and deliver the
Warrant Certificates that the Holder making the transfer or exchange is entitled
to receive. Until a Warrant Certificate is transferred in the Warrant Register,
the Company and the Warrant Agent may treat the person in whose name the
Warrant Certificate is registered as the absolute owner thereof and of the
Warrants represented thereby for all purposes, notwithstanding any notice to
the contrary. Neither the Company nor the Warrant Agent will be liable or
responsible for any registration or transfer of any Warrants that are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary.


 


(g)    No
service charge shall be made for any transfer or exchange of Warrant
Certificates, but the Company may require payment of a sum sufficient to cover
any stamp or other tax or governmental charge that may be imposed in connection
with any such transfer or exchange. The Warrant Agent shall promptly forward any such sum
collected by it to the Company or to such persons as the Company shall specify
by written notice. The Warrant Agent shall have no duty or obligation under this
Section unless and until it is satisfied that all such taxes and/or
governmental charges have been paid


 


Section 2.4     Cancellation of Warrant Certificates.  Any Warrant Certificate surrendered for the
purpose of transfer, exchange or exercise of the Warrants evidenced thereby
shall, if surrendered to the Company, be delivered to the Warrant Agent for
cancellation or in cancelled form, or, if surrendered to the Warrant Agent,
will be promptly canceled by the Warrant Agent and shall not be reissued and, except
as expressly permitted by this Agreement, no Warrant Certificate shall be
issued hereunder in lieu thereof. Any Warrant Certificate surrendered to the
Company for transfer, exchange or exercise of the Warrants evidenced thereby
shall be promptly delivered to the Warrant Agent and such transfer, exchange or
exercise shall not be effective until such Warrant Certificate has been
received by the Warrant Agent. The Company will deliver to the Warrant Agent
for cancellation and retirement, and the Warrant Agent will so cancel and
retire, any other Warrant Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Warrant Agent will destroy the
cancelled and retired Warrant Certificates and notify the Company of the
destruction of such Warrant Certificates.


 


Section 2.5     Treatment of Holders and Beneficial Owners of Warrant Certificates.


 


(a)    The
term “Holder”, as used herein,
shall mean any person in whose name at the time any Warrant Certificate shall be registered upon the Warrant Register or,
prior to the Separation Date, the person in whose name the Unit in which such
Warrant Certificate was initially included is registered upon the Warrant
Register relating to such Units.


 


8

















 


(b)    The
term “Beneficial Owner” as used
herein shall mean any person in whose name ownership of beneficial interests in Warrants evidenced by a Book-Entry
Warrant Certificate is recorded in the records maintained by the Depository or
its nominee, or by a Participant or, prior to the Separation Date, the person
in whose name the Unit in which such Warrant Certificate was initially attached
is registered upon the Warrant
Register relating to such Units.


 


(c)    Every
Holder and every Beneficial Owner consents and agrees with the Company, the
Warrant Agent and with every subsequent Holder and Beneficial Owner that until
the Warrant Certificate is transferred on the books of the Warrant Agent, the
Company and the Warrant Agent may treat the registered Holder of such Warrant
Certificate as the absolute owner of the Warrants evidenced thereby for any
purpose and as the person entitled to exercise the rights attaching to the
Warrants evidenced thereby, any notice to the contrary notwithstanding.


 


(d)    If
a Holder of a Restricted Warrant wishes at any time to transfer such Restricted
Warrant to a Person who wishes to take delivery thereof in the form of a
Restricted Warrant, such holder may, subject to the restrictions on transfer
set forth herein and in such Restricted Warrant, cause the exchange of such
Restricted Warrants for one or more Restricted Warrants of any authorized
denomination or denominations and exercisable for the same aggregate number of
Warrant Shares. Upon receipt by the Warrant Agent at its Corporate Agency
Office of (1) such Restricted Warrant, duly endorsed as provided herein,
(2) instructions from such holder directing the Warrant Agent to
authenticate and deliver one or more Restricted Warrants exercisable for the
same aggregate number of Warrant Shares as the Restricted Warrant to be
exchanged, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Restricted Warrants to be so issued and appropriate delivery instructions,
(3) a certificate in the appropriate form of Exhibit B attached
hereto given by the Person acquiring the Restricted Warrants, to the effect set
forth therein, and (4) an opinion of counsel to the transferor of such
Restricted Warrant substantially to the effect set forth in Exhibit C
hereto, to the effect set forth therein, then the Warrant Agent shall (i) in
the case of definitive Warrant Certificates cancel or cause to be cancelled
such Restricted Warrant and, concurrently therewith, the Company shall execute,
and the Warrant Agent shall authenticate and deliver, one or more Restricted
Warrants to the effect set forth therein, in accordance with the instructions
referred to above or (ii) in the case of Book-Entry Warrant Certificates, instruct
the Depository to reduce or reflect on its records a reduction of the Rule 144A
Security by the aggregate principal amount of the beneficial interest in such
Rule 144A Security to be so exchanged or transferred and the Warrant Agent,
shall instruct the Depository, to, concurrently with such reduction, increase
or reflect on its records an increase of the principal amount of such
Regulation S Security by the aggregate principal amount of the beneficial
interest in such Rule 144A Security to be so exchanged or transferred, and to
credit or cause to be credited to the account of the Holder specified in such
instructions (who shall be the agent member of Euroclear or Clearstream
Banking, or both, as the case may be) a beneficial interest in such Regulation
S Security equal to the reduction in the principal amount of such Rule 144A
Security.


 


(e)    If Warrants are issued upon
the transfer, exchange or replacement of Warrants bearing the Restricted
Warrant Legend, or if a request is made to remove such Restricted Warrant
Legend, the Warrants so issued shall bear the Restricted Warrant Legend; or 


 


9

















 


the Restricted Warrant
Legend shall not be removed, as the case may be, unless (i) there is
delivered to the Company satisfactory evidence, which may include an opinion of
counsel as may be reasonably required by the Company to the effect that neither
the Restricted Warrant Legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the
provisions of the Securities Act or, with respect to Restricted Warrants, that
such Warrants are not “restricted” within the meaning of Rule 144 under the
Securities Act or (ii) there is an Effective Registration with respect to
the Warrants then in effect or the Warrants as to which the Restricted Warrant
Legend is sought to be removed have been disposed of in accordance with the
Warrants Shelf Registration. Upon (i) provision of such satisfactory
evidence, or (ii) notification by the Company to the Warrant Agent of an
the Consummation of an Exchange Offer or an Effective Registration with respect
to the Warrants, the Warrant Agent, at the direction of the Company, shall
authenticate and deliver Warrant Certificates that do not bear the Restricted
Warrant Legend with respect to the Warrants issued upon Consummation of the
Exchange Offer or included in the shelf registration statement covering the
Warrants.


 


(f)     In the event of the
Consummation of an Exchange Offer or the effective date of a shelf registration
statement covering the Warrants and the Warrant Shares, the Company shall
notify the Warrant Agent within two Business Days after the Consummation of an Exchange
Offer or the effective date of such a shelf registration statement, respectively.
Promptly after delivering to the Warrant Agent notice of the Consummation of an
Exchange Offer or an Effective Registration, the Company shall cause to be
delivered to the Warrant Agent certificates for Warrants without legends and
the Warrant Agent shall authenticate and deliver Book-Entry Warrant
Certificates to the Depository and registered in the name of Cede & Co., a
nominee of the Depository, without the Restricted Warrant Legend and if Holders
are entitled to receive definitive Warrant Certificates in accordance with
Section 2.2(f) and Section 2.3(b) hereof, certificated Warrants without legends
to Holders presenting their certificated Warrants for exchange to transferees
of Warrants tendered in the exchange offer or covered by the shelf registration
covering the Warrants in the names and denominations specified by them.


 


ARTICLE 3


 


EXERCISE AND EXPIRATION OF WARRANTS


 


Section 3.1     Right to Acquire Warrant Shares Upon Exercise.  Each Warrant Certificate shall, when
countersigned by the Warrant Agent, entitle the Holder thereof, subject to the
provisions thereof and of this Agreement, to acquire from the Company, for each
Warrant evidenced thereby, one Warrant Share at the Warrant Price, subject to
adjustment as provided in this Agreement. The Warrant Price shall be adjusted
from time to time as required by Section 6.1.


 


Section 3.2     Exercise and Expiration of Warrants.  (a)  Exercise of Warrants. Subject to the terms and conditions
set forth herein, including, without limitation, the exercise procedure
described in Section 3.2(c), a Holder of a Warrant Certificate may exercise all
or any whole number of the Warrants evidenced thereby, on any Business Day from
and after the Approval Date until 5:00 p.m., New York City time, on the
Expiration Date (subject to earlier expiration pursuant to Article 5) for the
Warrant Shares purchasable thereunder.


 


10

















 


(b)    Expiration
of Warrants. The Warrants shall terminate and become void as of 5:00
p.m., New York time on the Expiration Date, subject to earlier expiration in
accordance with Article 5. In the event that the Warrants are to expire by
reason of Article 5, the term “Expiration Date”
shall mean such earlier date for all purposes of this Agreement.


 


(c)    Method of
Exercise. All or any of the Warrants are exercisable by the Holder
in a “cash”  exercise by delivering to
the Warrant Agent at the Corporate Agency Office (i) a written notice of
such Holder’s election to exercise Warrants, duly executed by such Holder in
the form set forth on the reverse of, or attached to, such Warrant Certificate,
which notice shall specify the number of Warrant Shares to be delivered to such
Holder and the amount of cash that is being delivered to the Company in respect
of the Warrant Price for such exercise., and (ii) the Warrant Certificate
evidencing such Warrants or, in the case of a Book-Entry Warrant Certificate,
the Warrants to be exercised (the “Book-Entry Warrants”)
free on the records of the Depository to an account of the Warrant Agent at the
Depository designated for such purpose in writing by the Warrant Agent to the
Depository from time to time.


 


(d)    Partial
Exercise. If fewer than all the Warrants represented by a Warrant
Certificate are exercised, such Warrant Certificate shall be surrendered and a
new Warrant Certificate of the same tenor and for the number of Warrants which
were not exercised shall be executed by the Company. The Warrant Agent shall
countersign the new Warrant Certificate, registered in such name or names,
subject to the provisions of Article 9, as may be directed in writing by the
Holder, and shall deliver the new Warrant Certificate to the Person or Persons
in whose name such new Warrant Certificate is so registered. The Company,
whenever required by the Warrant Agent, will supply the Warrant Agent with
Warrant Certificates duly executed on behalf of the Company for such purpose.


 


(e)    Issuance of
Warrant Shares. Upon surrender of a Warrant Certificate evidencing
Warrants in conformity with the foregoing provisions and payment of the Warrant
Price in respect of the exercise of one or more Warrants evidenced thereby, the
Warrant Agent shall, when such payment is received, deliver to the Company the
notice of exercise received pursuant to Section 3.2(c). The Company shall
thereupon, as promptly as practicable, and in any event within three Business
Days after receipt by the Company of such notice of exercise, in execute or
cause to be executed and deliver or cause to be delivered to the Recipient (as
defined below) a certificate or certificates representing the aggregate number
of Warrant Shares issuable upon such exercise (based upon the aggregate number
of Warrants so exercised), determined in accordance with Section 3.5 together
with an amount in cash in lieu of any fractional share(s) determined in
accordance with Section 6.5.. The certificate or certificates so delivered
shall be, to the extent possible, in such denomination or denominations as such
Holder shall request in such notice of exercise and shall be registered or
otherwise placed in the name of, and delivered to, the Holder or, such other
Person as shall be designated by the Holder in such notice (the Holder or such
other Person being referred to herein as the “Recipient”).


 


(f)     Time of
Exercise. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date on which all
requirements set forth in Section 3.2(c) applicable to such exercise have been
satisfied. Subject to Section 6.1(g)(iv), certificate(s) evidencing any Warrant
Shares issued upon the exercise of such Warrant shall be deemed to have been
issued and, for all purposes of this Agreement, the Recipient shall, as


 


11

















 


between such Person and
the Company, be deemed to be and entitled to all rights of the holder of record
of such Warrant Shares as of such time.


 


Section 3.3     Payment of Taxes.  The
Company shall pay any and all taxes of any kind (other than income taxes) and
other charges that may be payable in respect of the issue or delivery of
Warrant Shares on exercise of Warrants pursuant hereto. The Company shall not
be required, however, to pay any tax or other charge imposed in respect of any
transfer involved in the issue and delivery of any certificates for Warrant
Shares or payment of cash to any Recipient other than the Holder of the Warrant
Certificate surrendered upon the exercise of a Warrant, and in case of such
transfer or payment, the Warrant Agent and the Company shall not be required to
issue or deliver any certificate or pay any cash until (a) such tax or
charge has been paid or an amount sufficient for the payment thereof has been
delivered to the Warrant Agent or the Company or (b) it has been
established to the Company’s satisfaction that any such tax or other charge
that is or may become due has been paid.


 


Section 3.4     Surrender of Certificates.  Any Warrant Certificate surrendered for
exercise shall, if surrendered to the Company, be delivered to the Warrant
Agent, and all Warrant Certificates surrendered or so delivered to the Warrant
Agent shall be promptly cancelled by such Warrant Agent and shall not be
reissued by the Company. The Warrant Agent shall destroy such cancelled Warrant
Certificates and deliver its certificate of instruction to the Company, unless
the Company shall otherwise direct.


 


Section 3.5     Shares Issuable.  The
number of Warrant Shares “issuable upon exercise” of Warrants at any time shall
be the number of Warrant Shares into which such Warrants are then exercisable. The
number of Warrant Shares “into which each Warrant is exercisable” initially
shall be one share, subject to adjustment as provided in Section 6.1.


 


ARTICLE 4


 


Section 4.1     Registration Rights.  The
Warrantholders and holders of Warrant Shares shall have the registration rights
provided for in the Registration Rights Agreement and, in the case of the
Initial Purchasers, the Initial Purchaser Registration Rights Agreement. The
Warrant Agent shall keep copies of the Registration Rights Agreement available
for inspection by the Holders during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of the Registration Rights Agreement as the Warrant Agent may request.


 


Section 4.2     No Rights as Holders of Shares Conferred by Warrants or Warrant
Certificates.  No Warrant
Certificate or Warrant evidenced thereby shall entitle the Holder thereof to
any of the rights of a holder of any Class A Common Stock, including, without
limitation, the right to receive dividends, if any, or, subject to
Article V, payments upon the liquidation, dissolution or winding up of the
Company or to exercise voting rights, if any.


 


Section 4.3     Holder and Beneficial Owner of Warrant May Enforce Rights.  Notwithstanding any of the provisions of this
Agreement, any Holder or any Beneficial Owner of any Warrant, without the
consent of the Warrant Agent or, in the case of a Beneficial Owner, the 


 


12

















 


consent of the Holder of
any Warrant, may, on such Holder’s or Beneficial Owner’s own behalf and for
his, her or its own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise in respect
of, such Holder’s or Beneficial Owner’s right to exercise the Warrants
evidenced by any Warrant Certificate in the manner provided in this Agreement
and such Warrant Certificate.


 


ARTICLE 5


 


DISSOLUTION, LIQUIDATION OR WINDING UP


 


If, on or
prior to the Expiration Date, the Company (or any other Person controlling the
Company) shall propose a voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, the Company shall give written notice
thereof to the Warrant Agent and all Holders of Warrant Certificates in the
manner provided in Article 13 prior to the date on which such transaction is
expected to become effective or, if earlier, the record date for such
transaction. Such notice shall also specify the date as of which the holders of
record of the Common Stock shall be entitled to exchange their shares for
monies, securities or other property deliverable upon such dissolution,
liquidation or winding up, as the case may be, on which date each Holder of
Warrant Certificates shall be entitled to receive the monies, securities or
other property which such Holder would have been entitled to receive had such
Holder been the holder of record of the Warrant Shares into which the Warrants
were exercisable immediately prior to such dissolution, liquidation or winding
up (net of the then applicable Warrant Price) and the rights to exercise the
Warrants shall terminate.


 


In case of any
such voluntary or involuntary dissolution, liquidation or winding up of the
Company, the Company shall deposit with the Warrant Agent any monies,
securities or other property which the Holders are entitled to receive under
this Agreement, together with a Company Order as to the distribution thereof. After
receipt of such deposit from the Company and after any Holder has surrendered a
Warrant Certificate to the Warrant Agent, the Warrant Agent shall make payment
in the appropriate amount to such Person or Persons as it may be directed in
writing by the Holder surrendering such Warrant Certificate. The Warrant Agent
shall not be required to pay interest on any money deposited pursuant to the
provisions of this Article 5 except such as it shall agree with the Company to
pay thereon. Any monies, securities or other property which at any time shall
be deposited by the Company or on its behalf with the Warrant Agent pursuant to
this Article 5 shall be, and are hereby, assigned, transferred and set over to
the Warrant Agent in trust for the purpose for which such monies, securities or
other property shall have been deposited; provided that monies, securities or
other property need not be segregated from other monies, securities or other
property held by the Warrant Agent except to the extent required by law.


 


ARTICLE 6



ADJUSTMENTS


 


Section 6.1     Adjustments.  The
number of Warrant Shares into which each Warrant is exercisable and/or the
Warrant Price shall be subject to adjustment from time to time after the date
hereof in accordance (and only in accordance) with the provisions of this
Article 6:


 


13

















 


(a)    Stock
Dividends, Subdivisions and Combinations. In case at any time or
from time to time after the date of this Warrant Agreement the Company shall:


 


(i)      pay to the holders of its Common Stock a
dividend payable in, or make any other distribution on any class of its capital
stock in, Common Stock (other than a dividend or distribution upon a merger or
consolidation or sale to which Section 6.1(i) applies);


 


(ii)     subdivide its outstanding Common Stock into
a larger number of shares of Common Stock (other than a subdivision upon a
merger or consolidation or sale to which Section 6.1(i) applies); or


 


(iii)    combine its outstanding Common Stock into a
smaller number of shares of Common Stock (other than a combination upon a
merger o r consolidation or sale to which Section 6.1(i) applies);


 


then,
(x) in the case of any such dividend or distribution, effective
immediately after the opening of business on the day after the date for the
determination of the holders of Common Stock entitled to receive such dividend
or distribution or (y) in the case of any subdivision or combination,
effective immediately after the opening of business on the day after the day
upon which such subdivision or combination becomes effective, the number of
Warrant Shares into which each Warrant is exercisable shall be adjusted to that
number of Warrant Shares determined by (A) in the case of any such
dividend or distribution, multiplying the number of Warrant Shares into which
each Warrant is exercisable at the opening of business on the day after the day
for determination by a fraction (not to be less than one), (1) the
numerator of which shall be equal to the sum of the number of shares of Common
Stock outstanding at the close of business on such date for determination and
the total number of shares constituting such dividend or distribution and
(2) the denominator of which shall be equal to the number of shares of
Common Stock outstanding at the close of business on such date for
determination, or (B) in the case of any such combination, by
proportionately reducing, or, in the case of any such subdivision, by
proportionately increasing, the number of Warrant Shares into which each
Warrant is exercisable at the opening of business on the day after the day upon
which such subdivision or combination becomes effective.


 


(b)    Reclassifications.
A reclassification of the Common Stock (other than any such reclassification in
connection with a merger or consolidation or sale to which Section 6.1(j)
applies) into Common Stock and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Stock of such
shares of such other class of stock and, if the outstanding number of shares of
Common Stock shall be changed into a larger or smaller number of shares of
Common Stock as a part of such reclassification, such change shall be deemed a
subdivision or combination, as the case may be, of the outstanding Common Stock
for the purposes and within the meaning of Section 6.1(a) (and the effective
date of such reclassification shall be deemed to be “the day upon which such
subdivision or combination becomes effective” for the purposes and within the
meaning of Section 6.1(a)).


 


(c)    Distribution
of Warrants or Other Rights to Holders of Common Stock. In case at
any time or from time to time after the date of this Warrant Agreement the
Company shall 


 


14

















 


make a distribution to
all holders of Common Stock of any warrants, options or other rights to
subscribe for or purchase any Additional Common Stock or securities convertible
into or exchangeable for Additional Common Stock (other than a distribution of
such warrants, options or rights upon a merger or consolidation or sale to
which Section 6.1(j) applies), whether or not the rights to subscribe or
purchase thereunder are immediately exercisable, and the consideration per
share for which Additional Common Stock may at any time thereafter be issuable
pursuant to such warrants or other rights shall be less than the Current Market
Price per share of Common Stock on the date fixed for determination of the
holders of Common Stock entitled to receive such distribution, then, for each
such case, effective immediately after the opening of business on the day after
the date for determination, the number of Warrant Shares into which each
Warrant is exercisable shall be adjusted to that number determined by
multiplying the number of Warrant Shares into which each Warrant is exercisable
at the opening of business on the day after such date for determination by a
fraction (not less than one), (i) the numerator of which shall be the
number of shares of Common Stock outstanding at the close of business on such
date for determination plus the maximum number of Additional Common Stock
issuable pursuant to all such warrants or other rights and (ii) the
denominator of which shall be the number of shares of Common Stock outstanding
at the close of business on such date for determination plus the number of
shares of Common Stock that the minimum consideration received and receivable
by the Company for the issuance of such maximum number of shares of Additional
Common Stock pursuant to the terms of such warrants or other rights would
purchase at such Current Market Price.


 


(d)    Sale of Additional
Shares of Common Stock. If at any time after the date hereof and
prior to the Consummation of a Qualifying IPO (except as hereinafter provided)
issue or sell Additional Common Stock in exchange for consideration in an
amount per additional share of Common Stock less than the Warrant Price in
effect immediately prior to such issuance or sale of Additional Common Stock,
then the Warrant Price as to the Class A Common Stock into which this Warrant
is exercisable immediately prior to such adjustment shall be adjusted by
multiplying the Warrant Price by a fraction, of which:


 


(A)      the numerator shall be (x) the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
of Additional Common Stock plus (y) the number of shares of Class A Common
Stock which the aggregate amount of consideration, if any, received by the
Company for the total number of such Additional Common Stock so issued or sold
would purchase at the greater of (i) the Market Price per share of the
Class A Common Stock in effect immediately prior to such issuance or sale of
Additional Common Stock or (ii) the Warrant Price in effect immediately
prior to such issuance or sale of Additional Common Stock, and


 


(B)       the denominator shall be the number of
shares of Common Stock outstanding immediately after such issuance or sale of
Additional Common Stock;


 


provided,
however, that such adjustment shall be made only if the Warrant Price
determined from such adjustment shall be less than the Warrant Price in effect
immediately prior to the issuance of such Additional Common Stock.


 


15

















 


The provisions of this Section 6.1(d) shall not apply to any issuance
of Additional Common Stock for which an adjustment is provided under Section
6.1(a), (c) or (f).


 


(e)      (i)       Issuance of Warrants or
Other Rights. If at any time prior to the Consummation of a
Qualifying IPO (i) the Company shall in any manner (whether directly or by
assumption in a merger in which the Company is the surviving corporation) issue
or sell any warrants or other rights to subscribe for or purchase any
Additional Common Stock or any securities convertible into Common Stock,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the consideration received for such warrants or other rights
or such convertible securities shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the Warrant Price
shall be adjusted as provided in Section 6.1(d). No further adjustments of the
Warrant Price shall be made upon the actual issue of such Common Stock or of
such convertible securities upon exercise of such warrants or other rights or
upon the actual issue of such Common Stock upon such conversion or exchange of
such convertible securities.


 


(ii)      Issuance of Convertible
Securities. If at any time prior to the Consummation of a Qualifying
IPO the Company shall in any manner (whether directly or by assumption in a
merger in which the Company is the surviving corporation) issue or sell, any
securities convertible into Common Stock, whether or not the rights to convert
thereunder are immediately exercisable, and the consideration received for such
convertible securities shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the Warrant Price
shall be adjusted as provided in Section 6.1(d). No adjustment of the Warrant
Price shall be made under this Section 6.1(e)(ii) upon the issuance of any
convertible securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants
or other rights pursuant to Section 6.1(e)(i). No further adjustments of the
Warrant Price shall be made upon the actual issue of such Common Stock upon
conversion of such convertible securities and, if any issue or sale of such
convertible securities is made upon exercise of any warrant or other right to subscribe
for or to purchase any such convertible securities for which adjustments of the
Warrant Price have been or are to be made pursuant to other provisions of this
Section 6, no further adjustments of the Warrant Price shall be made by reason
of such issue or sale.


 


The provisions of this Section 6.1(e) shall not apply to any issuance
of Additional Common Stock for which an adjustment is provided under Section
6.1(a), (c), (d) or (f).


 


(f)     Qualifying
IPO Adjustment.  If the price
per share to the public (the “IPO Price”) in
a Qualifying IPO is less than the Exercise Price in effect immediately prior to
the consummation of the sale of the firm shares in the Qualifying IPO, the
Warrant Price shall be adjusted to the IPO Price.


 


(g)    Superseding
Adjustment of Number of Warrant Shares into Which Each Warrant is Exercisable.
 In case at any time after any adjustment
of the number of Warrant Shares into which each Warrant is exercisable shall
have been made pursuant to Section 6.1(c) 


 


16

















 


on the basis of the
distribution of warrants or other rights or after any new adjustment of the
number of Warrant Shares into which each Warrant is exercisable shall have been
made pursuant to this Section 6.1(g), such warrants or rights shall expire, and
all or a portion of such warrants or rights shall not have been exercised,
then, and in each such case, upon the election of the Company by written notice
to the Warrant Agent, such previous adjustment in respect of such warrants or
rights which have expired without exercise shall be rescinded and annulled as
to any then outstanding Warrants, and the Additional Common Stock that were
deemed for purposes of the computations set forth in Section 6.1(c) to have
been issued or sold by virtue of such adjustment in respect of such warrants or
rights shall no longer be deemed to have been distributed.


 


(h)    Other
Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of Warrant Shares into which each Warrant is exercisable and to the
Warrant Price under this Section 6.1:


 


(i)         Treasury Stock.
The sale or other disposition (other than any shares specified in the
definition of “Additional Common Stock”) of any
issued Common Stock owned or held by or for the account of the Company shall be
deemed an issuance or sale of Additional Common Stock for purposes of this
Article 6. The Company shall not pay any dividend on or make any distribution
on Common Stock held in the treasury of the Company. For the purposes of this
Section 6.1, the number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of Common
Stock.


 


(ii)        When Adjustments Are to be
Made. The adjustments required by Sections 6.1(a), 6.1(b), 6.1(c),
6.1(d), 6.1(e) and 6.1(f) shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that no adjustment of the
Warrant Shares into which each Warrant is exercisable that would otherwise be
required shall be made unless and until such adjustment either by itself or
with other adjustments not previously made increases or decreases the Warrant
Shares into which each Warrant is exercisable immediately prior to the making
of such adjustment by at least 1%. Any adjustment representing a change of less
than such minimum amount (except as aforesaid) shall be carried forward and
made as soon as such adjustment, together with other adjustments required by
Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e) and 6.1(f) and not previously
made, would result in such minimum adjustment.


 


(iii)       Fractional Interests.
In computing adjustments under this Article 6, fractional interests in Common
Stock shall be taken into account to the nearest one-thousandth of a share.


 


(iv)      Deferral of Issuance upon
Exercise. In any case in which this Article 6 shall require that an
adjustment to the Warrant Shares into which each Warrant is exercisable be made
effective pursuant to Section 6.1(a)(i) or 6.1(c) prior to the occurrence of a
specified event and any Warrant is exercised after the time at which the
adjustment became effective but prior to the occurrence of such specified event
the 


 


17

















 


Company may elect to
defer until the occurrence of such specified event the issuing to the Holder of
the Warrant Certificate evidencing such Warrant (or other Person entitled
thereto) of, and may delay registering such Holder or other Person as the
recordholder of, the Warrant Shares over and above the Warrant Shares issuable
upon such exercise determined in accordance with Section 3.5 on the basis of
the Warrant Shares into which each Warrant is exercisable prior to such
adjustment determined in accordance with Section 3.5; provided, however, that
the Company shall deliver to such Holder or other person a due bill or other
appropriate instrument evidencing the right of such Holder or other Person to
receive, and to become the record holder of, such Additional Common Stock, upon
the occurrence of the event requiring such adjustment.


 


(i)     Warrant
Price Adjustment. Whenever the number of Warrant Shares into which a
Warrant is exercisable is adjusted as provided in this Section 6.1 (other than
pursuant to Section 6.1(d) or 6.1(e)), the Warrant Price payable upon exercise
of the Warrant shall simultaneously be adjusted by multiplying such Warrant
Price immediately prior to such adjustment by a fraction, the numerator of
which shall be the number of Warrant Shares into which such Warrant was
exercisable immediately prior to such adjustment, and the denominator of which
shall be the number of Warrant Shares into which such Warrant was exercisable
immediately thereafter.


 


(j)     Merger,
Consolidation or Combination. In the event the Company merges,
consolidates or otherwise combines with or into any Person, then, as a
condition of such merger, consolidation or combination, lawful and adequate
provisions shall be made whereby Warrantholders shall, in addition to their
other rights hereunder, thereafter have the right to purchase and receive upon
the basis and upon the terms and conditions specified in this Agreement upon
exercise of the Warrants and in lieu of the Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding Common
Stock equal to the number of Warrant Shares immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, and in any
such case appropriate provision shall be made with respect to the rights and
interests of the Warrantholders to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the number of
Warrant Shares) shall thereafter be applicable, as nearly as may be
practicable, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof.


 


(k)    Compliance
with Governmental Requirements. Before taking any action that would
cause an adjustment reducing the Warrant Price below the then par value of any
of the Warrant Shares into which the Warrants are exercisable, the Company will
take any corporate action that may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at such
adjusted Warrant Price.


 


(l)     Optional Tax
Adjustment. The Company may at its option, at any time during the
term of the Warrants, increase the number of Warrant Shares into which each
Warrant is exercisable, or decrease the Warrant Price, in addition to those
changes required by Section 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(f) or
6.1(h), as deemed advisable by the Board of 


 


18

















 


Directors of the Company,
in order that any event treated for federal income tax purposes as a dividend
of stock or stock rights shall not be taxable to the Recipients.


 


(m)   Warrants
Deemed Exercisable. For purposes solely of this Article 6, the
number of Warrant Shares which the holder of any Warrant would have been
entitled to receive had such Warrant been exercised in full at any time or into
which any Warrant was exercisable at any time shall be determined assuming such
Warrant was exercisable in full at such time, although such Warrant may not be
exercisable in full at such time pursuant to Section 3.2(a).


 


(n)    In the event of any
transaction not covered by a specific formula or any provision herein, the
Company and the Board of Directors shall take such actions as are necessary and
equitable to adjust the number of Warrant Shares into which a Warrant is
exercisable and/or the Warrant Price or to permit the holders of the Warrants
to participate in the transaction on a basis that the Board of Directors
determines, in good faith, to be fair and appropriate in light of the basis on
which the holders of Common Stock are permitted to participate.


 


Section 6.2     Exception to Adjustment of Exercise Price.  Anything herein to the contrary
notwithstanding, the Company shall not make adjustments to the Exercise Price
or the number of Warrant Shares for which the Warrants are exercisable:  (i) issuance of any Units upon any exercise
of the Initial Purchasers’ option (the “Initial Purchasers’ Option”)
to purchase 1,512,400 pursuant to Section 1(a) of the Purchase Agreement, (ii)
issuance of any Class B Common Stock as a result of the exercise of the Initial
Purchasers’ Option, (iii) issuance of Class A Common Stock upon conversion of
the shares of Class B Common Stock or (iv) any issuances of Class A Common
Stock or other equity awards under the Company’s 2006 Equity Incentive Plan.


 


Section 6.3     Notice of Adjustment.  Whenever the number of Warrant Shares into
which a Warrant is exercisable is to be adjusted, or the Warrant Price is to be
adjusted, in either case as herein provided, the Company shall compute the
adjustment in accordance with Section 6.1, shall, promptly after such
adjustment becomes effective, cause a notice of such adjustment or adjustments
to be given to all Holders in accordance with Section 11.1(b) and shall deliver
to the Warrant Agent a certificate of the Chief Financial Officer of the
Company setting forth the number of Warrant Shares into which each Warrant is
exercisable after such adjustment, or the adjusted Warrant Price, as the case
may be, and setting forth in brief a statement of the facts requiring such
adjustment and the computation by which such adjustment was made. As provided
in Section 9.1, the Warrant Agent shall be entitled to rely on such certificate
and shall be under no duty or responsibility with respect to any such
certificate, except to exhibit the same from time to time to any Holder
desiring an inspection thereof during reasonable business hours.


 


Section 6.4     Statement on Warrant Certificates.  Irrespective of any adjustment in the number
or kind of shares into which the Warrants are exercisable, Warrant Certificates
theretofore or thereafter issued may continue to express the same price and
number and kind of shares initially issuable pursuant to this Agreement.


 


Section 6.5     Fractional Interest.  The
Company shall not issue fractional Warrant Shares on the exercise of Warrants. If
Warrant Certificates evidencing more than one Warrant 


 


19

















 


shall be presented for
exercise at the same time by the same Holder, the number of full Warrant Shares
which shall be issuable upon such exercise thereof shall be computed on the
basis of the aggregate number of Warrants so to be exercised. If any fraction
of a Warrant Share would, except for the provisions of this Section 6.5, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall, in lieu of issuing any fractional Warrant Shares, pay an amount
in cash calculated by it to be equal to the then Current Market Price per
Common Stock on the date of such exercise multiplied by such fraction computed
to the nearest whole cent. The Holders, by their acceptance of the Warrant
Certificates, expressly waive their right to receive any fraction of a Warrant
Share or a stock certificate representing a fraction of a Warrant Share.


 


ARTICLE 7


 


LOSS OR MUTILATION


 


Upon
(i) receipt by the Company and the Warrant Agent of an affidavit of
non-receipt; and an open penalty bond of indemnity in a form and substance and
from a surety company satisfactory to the Warrant Agent and (ii) surrender, in the case of
mutilation, of the mutilated Warrant Certificate to the Warrant Agent and
cancellation thereof, then, in the absence of notice to the Company or the
Warrant Agent that the Warrants evidenced thereby have been acquired by a bona
fide purchaser, the Company shall execute and upon its written request the
Warrant Agent shall countersign and deliver to the registered Holder of the
lost, stolen, destroyed or mutilated Warrant Certificate, in exchange therefor
or in lieu thereof, a new Warrant Certificate of the same tenor and for a like
aggregate number of Warrants. At the written request of such registered Holder,
the new Warrant Certificate so issued shall be retained by the Warrant Agent as
having been surrendered for exercise, in lieu of delivery thereof to such
Holder, and shall be deemed for purposes of Section 3.2 to have been
surrendered for exercise on the date the conditions specified in clauses (i)
and (ii) of the preceding sentence were first satisfied.


 


Upon the
issuance of any new Warrant Certificate under this Article 7, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and other expenses (including
the fees and expenses of the Warrant Agent and of counsel to the Company) in
connection therewith.


 


Every new
Warrant Certificate executed and delivered pursuant to this Article 7 in lieu
of any lost, stolen or destroyed Warrant Certificate shall constitute an
additional contractual obligation of the Company, whether or not the allegedly
lost, stolen or destroyed Warrant Certificate shall be at any time enforceable
by anyone, and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder.


 


The provisions
of this Article 7 are exclusive and shall preclude (to the extent lawful) all
other rights or remedies with respect to the replacement of mutilated, lost,
stolen, or destroyed Warrant Certificates.


 


20

















 


ARTICLE 8


 


RESERVATION AND AUTHORIZATION OF WARRANT SHARES


 


The Company
shall at all times reserve and keep available, free from preemptive rights,
solely for issue upon the exercise of Warrants as herein provided, such number
of its authorized but unissued shares of Class A Common Stock deliverable upon
the exercise of Warrants as will be sufficient to permit the exercise in full
of all outstanding Warrants. The Company covenants that all Warrant Shares
will, at all times that Warrants are exercisable, be duly approved for listing
subject to official notice of issuance on each securities exchange, if any, on
which the Common Stock are then listed. The Company covenants that (i) all
Warrant Shares that may be issued upon exercise of Warrants shall upon issuance
be duly and validly authorized, issued and fully paid and nonassessable and
free of preemptive or similar rights and (ii) the stock certificates
issued to evidence any such Warrant Shares will comply with the Marshall
Islands Business Corporations Act and any other applicable law.


 


The Company
hereby authorizes and directs its current and future transfer agents for the
Common Stock at all times to reserve stock certificates for such number of authorized
shares as shall be requisite for such purpose. The Warrant Agent is hereby
authorized to requisition from time to time from any such transfer agents stock
certificates required to honor outstanding Warrants upon exercise thereof in
accordance with the terms of this Agreement, and the Company hereby authorizes
and directs such transfer agents to comply with all such requests of the
Warrant Agent. The Company will supply such transfer agents with duly executed
stock certificates for such purposes. Promptly after the date of expiration of
all of the Warrants in accordance with Section 3.2(b), the Warrant Agent shall
certify to the Company the aggregate number of Warrants then outstanding, and
thereafter no Warrant Shares shall be reserved in respect of such Warrants.


 


ARTICLE 9



CONCERNING THE WARRANT AGENT


 


Section 9.1     Nature of Duties and Responsibilities Assumed.  The Company hereby appoints the Warrant Agent
to act as agent of the Company as set forth in this Agreement. The Warrant
Agent hereby accepts the appointment as agent of the Company and agrees to
perform that agency upon the terms and conditions set forth in this Agreement
and in the Warrant Certificates or as the Company and the Warrant Agent may
hereafter agree, by all of which the Company and the Holders of Warrant
Certificates, by their acceptance thereof, shall be bound; provided,
however, that the terms and conditions contained in the Warrant
Certificates are subject to and governed by this Agreement or any other terms
and conditions hereafter agreed to by the Company and the Warrant Agent.


 


The Warrant
Agent shall not, by countersigning Warrant Certificates or by any other act
hereunder, be deemed to make any representations as to validity or
authorization of (i) the Warrants or the Warrant Certificates (except as
to its countersignature thereon), (ii) any securities or other property
delivered upon exercise of any Warrant, (iii) the accuracy of the
computation of the number or kind or amount of stock or other securities or other
property 


 


21

















 


deliverable upon exercise of any Warrant or (iv) the correctness
of any of the representations of the Company made in such certificates that the
Warrant Agent receives. The Warrant Agent shall not at any time have any duty
to calculate or determine whether any facts exist that may require any
adjustments pursuant to Article 6 hereof with respect to the kind and amount of
shares or other securities or any property issuable to Holders upon the
exercise of Warrants required from time to time. The Warrant Agent shall have
no duty or responsibility to determine the accuracy or correctness of such
calculation or with respect to the methods employed in making the same. The
Warrant Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any Warrant Shares or of any securities or property
which may at any time be issued or delivered upon the exercise of any Warrant
or upon any adjustment pursuant to Article 6 hereof, and it makes no
representation with respect thereto. The Warrant Agent shall not be responsible
for any failure of the Company to make any cash payment or to issue, transfer
or deliver any Warrant Shares or stock certificates or other securities or
property upon the surrender of any Warrant Certificate for the purpose of
exercise or upon any adjustment pursuant to Article 6 hereof or to comply with
any of the covenants of the Company contained in Article 10 hereof.


 


The Warrant
Agent shall not (i) be liable for any recital or statement of fact
contained herein or in the Warrant Certificates or for any action taken,
offered or omitted by it in good faith on the belief that any Warrant
Certificate or any other documents or any signatures are genuine or properly
authorized, (ii) be responsible for any failure on the part of the Company
to comply with any of its covenants and obligations contained in this Agreement
or in the Warrant Certificates or (iii) be liable for any act or omission
in connection with this Agreement except for its own gross negligence, bad
faith or willful misconduct.


 


The Warrant
Agent is hereby authorized to accept and is protected in accepting instructions
with respect to the performance of its duties hereunder by Company Order and to
apply to any such officer named in such Company Order for instructions (which
instructions will be promptly given in writing when requested), and the Warrant
Agent shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with the instructions in any Company Order.


 


The Warrant
Agent may execute and exercise any of the rights and powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys,
agents or employees, provided that reasonable care has been exercised in the
selection and in the continued employment of any such attorney, agent or
employee. The Warrant Agent shall not be under any obligation or duty to
institute, appear in or defend any action, suit or legal proceeding in respect
hereof, unless first indemnified to its satisfaction, but this provision shall
not affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without such indemnity. The Warrant
Agent shall promptly notify the Company in writing of any claim made or action,
suit or proceeding instituted against it arising out of or in connection with
this Agreement.


 


The Company
shall perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further acts, instruments and
assurances as may reasonably be required by the Warrant Agent in order to
enable it to carry out or perform its duties under this Agreement.


 


22

















 


The Warrant
Agent shall act solely as agent of the Company hereunder and does not assume
any obligation or relationship of agency or trust for or with any of the
Holders or any beneficial owners of Warrants. The Warrant Agent shall not be
liable except for the failure to perform such duties as are specifically set
forth herein or specifically set forth in the Warrant Certificates, and no
implied covenants or obligations shall be read into this Agreement against the
Warrant Agent whose duties and obligations shall be determined solely by the
express provisions hereof or the express provisions of the Warrant
Certificates.


 


Section 9.2     Right to Consult Counsel.  The Warrant Agent may at any time consult with
legal counsel satisfactory to it (who may be legal counsel for the Company),
and the Warrant Agent shall incur no liability or responsibility to the Company
or to any Holder for any action taken, suffered or omitted by it in good faith
in accordance with the opinion or advice of such counsel.


 


Section 9.3     Compensation, Reimbursement and Indemnification.  The Company agrees to pay the Warrant Agent
from time to time compensation for all fees and expenses relating to its
services hereunder as the Company and the Warrant Agent may agree from time to
time and to reimburse the Warrant Agent for reasonable expenses and
disbursements, including reasonable counsel fees and expenses incurred in
connection with the execution and administration of this Agreement. The Company
further agrees to indemnify the Warrant Agent for and save it harmless against
any losses, liabilities or reasonable expenses arising out of or in connection
with the acceptance and administration of this Agreement, including the
reasonable costs, legal fees and expenses of investigating or defending any
claim of such liability, except that the Company shall have no liability
hereunder to the extent that any such loss, liability or expense results from
the Warrant Agent’s own gross negligence, bad faith or willful misconduct.


 


Section 9.4     Warrant Agent May Hold Company Securities.  The Warrant Agent, any Countersigning Agent
and any stockholder, director, officer or employee of the Warrant Agent or any
Countersigning Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or its Affiliates, become pecuniarily interested in
transactions in which the Company or its Affiliates may be interested, contract
with or lend money to the Company or its Affiliates or otherwise act as fully
and freely as though it were not the Warrant Agent or the Countersigning Agent,
respectively, under this Agreement. Nothing herein shall preclude the Warrant
Agent or any Countersigning Agent from acting in any other capacity for the
Company or for any other legal entity.


 


Section 9.5     Resignation and Removal; Appointment of Successor.  (a)  The
Warrant Agent may resign its duties and be discharged from all further duties
and liability hereunder (except liability arising as a result of the Warrant
Agent’s own gross negligence or willful misconduct) after giving thirty (30)
days’ prior written notice to the Company. The Company may remove the Warrant
Agent upon thirty (30) days’ written notice, and the Warrant Agent shall
thereupon in like manner be discharged from all further duties and liabilities
hereunder, except as aforesaid. The Warrant Agent shall, at the expense of the
Company, cause notice to be given in accordance with Section 11.1(b) to each
Holder of a Warrant Certificate of said notice of resignation or notice of
removal, as the case may be. Upon such resignation or removal, the Company
shall appoint in writing a new Warrant Agent. If the Company shall fail to make
such appointment within a period of thirty (30) calendar days after it has been
notified in writing of 


 


23














 


such resignation by the
resigning Warrant Agent or after such removal, then the Holder of any Warrant
Certificate, or the Warrant Agent, may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent,
whether appointed by the Company or by such a court, shall be a corporation
doing business under the laws of the United States or any state thereof in good
standing, authorized under such laws to act as Warrant Agent, and having a
combined capital and surplus of not less than $50,000,000. The combined capital
and surplus of any such new Warrant Agent shall be deemed to be the combined
capital and surplus as set forth in the most recent annual report of its
condition published by such Warrant Agent prior to its appointment, provided
that such reports are published at least annually pursuant to law or to the
requirements of a Federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new Warrant Agent, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be
reasonably necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the reasonable expense of
the Company and shall be legally and validly executed and delivered by the
resigning or removed Warrant Agent. Not later than the effective date of any
such appointment, the Company shall file notice thereof with the resigning or
removed Warrant Agent. Failure to give any notice provided for in this Section
9.5(a), however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of a new Warrant Agent, as the case may be.


 


(b)    Any corporation into which
the Warrant Agent or any new Warrant Agent that be merged, or any corporation
resulting from any consolidation to which the Warrant Agent or any new Warrant
Agent shall be a party, shall be a successor Warrant Agent under this Agreement
without any further act, provided that such corporation would be eligible for
appointment as successor to the Warrant Agent under the provisions of Section
9.5(a). Any such successor Warrant Agent shall promptly cause notice of its
succession as Warrant Agent to be given in accordance with Section 11.1(b) to
each Holder of a Warrant Certificate at such Holder’s last address as shown on
the Warrant Register.


 


Section 9.6     Appointment of Countersigning Agent.  (a)  The
Warrant Agent may appoint a Countersigning Agent or Agents which shall be
authorized to act on behalf of the Warrant Agent to countersign Warrant
Certificates issued upon original issue and upon exchange, registration of
transfer or pursuant to Article 2, and Warrant Certificates so countersigned
shall be entitled to the benefits of this Agreement equally and proportionately
with any and all other Warrant Certificates duly executed and delivered
hereunder. Wherever reference is made in this Agreement to the countersignature
and delivery of Warrant Certificates by the Warrant Agent or to Warrant
Certificates countersigned by the Warrant Agent, such reference shall be deemed
to include countersignature and delivery on behalf of the Warrant Agent by a
Countersigning Agent and Warrant Certificates countersigned by a Countersigning
Agent. Each Countersigning Agent shall be acceptable to the Company and shall
at the time of appointment be a corporation doing business under the laws of
the United States of America or any State thereof in good standing, authorized
under such laws to act as Countersigning Agent, and having a combined capital
and surplus of not less than $50,000,000. The combined capital and surplus of
any such new Countersigning Agent shall be deemed to be the combined capital
and surplus as set forth in the most recent annual report of its condition
published by such 


 


24

















 


Countersigning Agent
prior to its appointment, provided that such reports are published at least
annually pursuant to law or to the requirements of a Federal or state
supervising or examining authority.


 


(b)    Any corporation into which
a Countersigning Agent may be merged, or any corporation resulting from any
consolidation to which such Countersigning Agent shall be a party, shall be a
successor Countersigning Agent without any further act, provided that such
corporation would be eligible for appointment as a new Countersigning Agent
under the provisions of Section 9.6(a), without the execution or filing of any paper or any further act
on the part of the Warrant Agent or the Countersigning Agent. Any such
successor Countersigning Agent shall promptly cause notice of its succession as
Countersigning Agent to be given in accordance with Section 11.1(b) to each
Holder of a Warrant Certificate at such Holder’s last address as shown on the
Warrant Register.


 


(c)    A Countersigning Agent may
resign at any time by giving thirty (30) days’ prior written notice thereof to
the Warrant Agent and to the Company. The Warrant Agent may at any time
terminate the agency of a Countersigning Agent by giving thirty (30) days’
prior written notice thereof to such Countersigning Agent and to the Company.


 


(d)    The Warrant Agent agrees to
pay to each Countersigning Agent from time to time reasonable compensation for
its services under this Section, and the Warrant Agent shall be entitled to be
reimbursed for such payments, subject to the provisions of Section 9.3.


 


(e)    Any Countersigning Agent
shall have the same rights and immunities as those of the Warrant Agent set
forth in Section 9.1.


 


ARTICLE 10



ADDITIONAL COVENANTS OF THE COMPANY


 


Section 10.1   Reports to Holders.  (a)  The
Company agrees with each Holder, for so long as any Warrants remain outstanding
and during any period in which the Company (i) is not subject to Section 13 or
15(d) of the Exchange Act, to (a) make available on its website quarterly
reports containing selected unaudited financial data for the first three
quarters of each fiscal year within 60 days of the end of such fiscal quarter
and an annual report containing audited financial statements for each fiscal
year within 150 days of such fiscal year end and (b) to the extent not already
available on the Company’s website, make available, upon request of any Holder,
to such Holder or beneficial owner of such Warrants in connection with any sale
thereof and any prospective purchaser of such Warrants designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A under the Securities Act, and (ii) is subject
to Section 13 or 15(d) of the Exchange Act, to make all filings required
thereby in a timely manner, in order to permit resales of such Warrants to Rule
144.


 


(b)    The Company shall provide
the Warrant Agent with a sufficient number of copies of all reports and other
documents and information that the Warrant Agent may be required to deliver to
the Holders of the Warrants under this Section 10.1.


 


25

















 


Section 10.2   Compliance with Agreements.  The Company shall comply in all material
respects with the terms and conditions of the Registration Rights Agreement and
the Initial Purchaser Registration Rights Agreement.


 


Section 10.3   Maintenance of Office.  The Company hereby initially designates the
office of the Warrant Agent at Computershare Trust Company, N.A..,  350 Indiana St., Suite 800, Golden, CO 80401, or such other
location as the Company may designate upon notice from the Warrant Agent as the
office or agency for each such purpose In case the Company shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands
may be made and notices may be served at the Corporate Agency Office.


 


ARTICLE 11


 


NOTICES


 


Section 11.1   Notices Generally.  (a)  Any request, notice, direction,
authorization, consent, waiver, demand or other communication permitted or
authorized by this Agreement to be made upon; given or furnished to or filed
with the Company or the Warrant Agent by the other party hereto or by any
Holder shall be sufficient for every purpose hereunder if in writing (including
telecopy communication) and telecopied or delivered by hand (including by
courier service) as follows:


 


26

















 


If to the
Company, to it at:


 


Paragon Shipping Inc.

Voula Center

102-104, V. Pavlou Str.

GR, Greece 16 673

Attention:  Chief Executive Officer

Facsimile:  30 210 899 5086


 


with a copy to


 


Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

Attention:  Gary Wolfe, Esq.

Facsimile:  (212) 480-8421


 


or


 


If to the
Warrant Agent, to it at:


 


Computershare, Inc.


350 Indiana Street, Suite 800


Golden, CO 80401


Attention:  Corporate Actions


Facsimile:  303-262-0604


 


or, in either
case, such other address as shall have been set forth in a notice delivered in
accordance with this Section 11.1(a).


 


All such
communications shall, when so telecopied or delivered by hand, be effective
when telecopied with confirmation of receipt or received by the addressee, respectively.


 


Any Person
that telecopies any communication hereunder to any Person shall, on the same
date as such telecopy is transmitted, also send, by first class mail, postage
prepaid and addressed to such Person as specified above, an original copy of the
communication so transmitted.


 


(b)    Where this Agreement
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at the
address of such Holder as it appears in the Warrant Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice.


 


27

















 


In case by
reason of the suspension of regular mail service or by reason of any other
cause it shall be impracticable to give such notice by mail, then such
notification as shall be made by a method approved by the Warrant Agent as one
which would be most reliable under the circumstances for successfully
delivering the notice to the addressees shall constitute a sufficient
notification for every purpose hereunder.


 


Section 11.2   Required Notices to Holders.  In case the Company shall propose (i) to
pay any dividend payable in stock of any class to the holders of its Common
Stock or to make any other distribution to the holders of its Common Stock for
which an adjustment is required to be made pursuant to Article 6, (ii) to
distribute to the holders of its Common Stock rights to subscribe for or to
purchase any Additional Common Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification
of its Common Stock, (iv) to effect any transaction described in Section
6.1(j) or (v) to effect the liquidation, dissolution or winding up of the
Company, then, and in each such case, the Company shall cause to be filed with
the Warrant Agent and shall give to each Holder of a Warrant Certificate, in
accordance with Section 11.1(b), a notice of such proposed action or event. Such
notice shall specify (x) the date on which a record is to be taken for the
purposes of such dividend or distribution; and (y) the date on which such
reclassification, transaction, event, liquidation, dissolution or winding up is
expected to become effective and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their Common
Stock for securities, cash or other property deliverable upon such
reclassification, transaction, event, liquidation, dissolution or winding up. Such
notice shall be given, in the case of any action covered by clause (i) or (ii)
above, at least ten (10) days prior to the record date for determining holders
of the Common Stock for purposes of such action or, in the case of any action
covered by clauses (iii) through (v), at least twenty (20) days prior to the
applicable effective or expiration date specified above or, in any such case,
prior to such earlier time as notice thereof shall be required to be given pursuant
to Rule 10b-17 under the Exchange Act, if applicable.


 


If at any time
the Company shall cancel any of the proposed transactions for which notice has
been given under this Section 11.2 prior to the consummation thereof, the
Company shall give each Holder prompt notice of such cancellation in accordance
with Section 11.1(b) hereof.


 


ARTICLE 12


 


APPLICABLE LAW


 


THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT
EVIDENCED THEREBY AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


EACH OF THE PARTIES HERETO CONSENTS TO THE NON-EXCLUSIVE JURISDICTION
OF ANY COURT LOCATED WITHIN THE CITY, COUNTY AND STATE OF NEW YORK. EACH OF THE
PARTIES HERETO HEREBY WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES 


 


28

















 


HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF VIA OVERNIGHT COURIER, TO SUCH PARTY AT THE ADDRESS
SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FOURTEEN CALENDAR
DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF EITHER PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST THE
OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE
PERMITTED BY ANY APPLICABLE LAW.


 


ARTICLE 13


 


PERSONS BENEFITING


 


This Agreement
shall be binding upon and inure to the benefit of the Company and the Warrant
Agent, and their respective successors and assigns and the Holders from time to
time. Nothing in this Agreement is intended or shall be construed to confer
upon any Person, other than the Company, the Warrant Agent and the Holders, any
right, remedy or claim under or by reason of this Agreement or any part hereof.
Each Holder agrees to all of the terms and provisions of this Agreement
applicable thereto.


 


ARTICLE 14


 


COUNTERPARTS


 


This Agreement
may be executed in any number of counterparts, each of which shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.


 


ARTICLE 15


 


AMENDMENTS


 


The Company
and the Warrant Agent may, without the consent or concurrence of the Holders,
by supplemental agreement or otherwise, amend this Agreement for any of the
following purposes:


 


(i) to
cure any ambiguity or to correct or supplement any defective or inconsistent
provision or clerical omission or mistake or manifest error herein contained;


 


(ii) to
add to the covenants and agreements of the Company in this Agreement further
covenants and agreements of the Company thereafter to be observed, or surrender
any rights or powers reserved to or conferred upon the Company in this
Agreement;


 


29

















 


(iii) to
comply with any requirement of the SEC in connection with the registration of
the Units, Warrants or Warrant Shares or in relation to the requirements of any
securities exchange or interdealer quotation system on which the Units,
Warrants or Warrant Shares are or are to be listed or quoted on; or


 


(iv) to make
any other change that does not adversely affect the rights or interests of the
Holders hereunder in any material respect.


 


This Agreement
may otherwise be amended by the Company and the Warrant Agent only with the
consent of the Holders of a majority of the then outstanding Warrants. Any such
amendment shall be binding upon all Holders of Warrants. Notwithstanding the
foregoing, the consent of each Holder affected shall be required for any
amendment pursuant to which the Warrant Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided herein).


 


The Warrant
Agent shall join with the Company in the execution and delivery of any such
amendment unless such amendment affects the Warrant Agent’s own rights, duties
or immunities hereunder, in which case the Warrant Agent may, but shall not be
required to, join in such execution and delivery. Upon execution and delivery
of any amendment pursuant to this Article 15, such amendment shall be
considered a part of this Agreement for all purposes and every Holder theretofore
or thereafter countersigned and delivered hereunder shall be bound thereby.


 


Promptly after
the execution by the Company and the Warrant Agent of any such amendment, the
Company shall give notice to the Holders, setting forth in general terms the
substance of such amendment, in accordance with the provisions of Section
11.1(b). Any failure of the Company to mail such notice or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment.


 


ARTICLE 16


 


INSPECTION


 


The Warrant
Agent shall cause a copy of this Agreement to be available at all reasonable
times at the Corporate Agency Office of the Warrant Agent for inspection by the
Holder of any Warrant Certificate. The Warrant Agent may require such Holder to
submit his Warrant Certificate for inspection by it.


 


ARTICLE 17


 


SUCCESSOR TO THE COMPANY


 


So long as
Warrants remain outstanding, the Company will not enter into any Non-Surviving
Combination unless the acquirer shall expressly assume by a supplemental agreement,
executed and delivered to the Warrant Agent, in form reasonably satisfactory to
the Warrant Agent, the due and punctual performance of every covenant of this
Agreement on the part of the Company to be performed and observed and shall
have provided for exercise rights in accordance with Section 6.1(j). Upon the
consummation of such Non-Surviving Combination,


 


30

















 


the acquirer shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Agreement with the same effect
as if such acquirer had been named as the Company herein.


 


ARTICLE 18


 


ENTIRE AGREEMENT


 


This Agreement
sets forth the entire agreement of the parties hereto as to the subject matter
hereof and supersedes all previous agreements among all or some of the parties
hereto with respect thereto, whether written, oral or otherwise.


 


ARTICLE 19


 


HEADINGS


 


The
descriptive headings of the several Sections of this Agreement are inserted for
convenience and shall not control or affect the meaning or construction of any
of the provisions hereof.


 


[Signature page follows.]


 


31

















 


IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year first above written.


 


	
   

  	
  PARAGON SHIPPING INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMPUTERSHARE TRUST COMPANY, N.A. 

  and COMPUTERSHARE, INC On behalf of both

  Entities

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


EXHIBIT A


 


FORM OF WARRANT CERTIFICATE


 


NEITHER THIS SECURITY NOR THE WARRANT SHARES ISSUABLE UPON ITS EXERCISE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.


 


THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS
THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), OR (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS
SECURITY AND THE WARRANT SHARES ISSUABLE UPON ITS EXERCISE IN AN OFFSHORE
TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, AND
(2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR THE WARRANT
SHARES ISSUABLE UPON ITS EXERCISE, PRIOR TO THE DATE WHICH IS [IN THE CASE OF
RULE 144A SECURITIES:  TWO YEARS] [IN THE
CASE OF REGULATION S SECURITIES:  ONE
YEAR] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY, ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT THAT SUCH
OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT.


 


BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO
HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY
SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN
EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 


 


A-1

















 


1974, AS AMENDED (“ERISA”), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR
OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE “CODE”), OR PROVISIONS UNDER ANY FEDERAL, STATE,
LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH
PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, “SIMILAR LAWS”), OR OF AN ENTITY
WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF SUCH PLANS,
ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE AND HOLDING OF THIS SECURITY
WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE
SIMILAR LAWS.


 


THIS SECURITY (I) WAS INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS,
EACH OF WHICH CONSISTS OF ONE SHARE OF THE COMPANY’S CLASS A COMMON STOCK AND
ONE-FIFTH OF A WARRANT TO PURCHASE ONE SHARE OF THE COMPANY’S CLASS A COMMON
STOCK. PRIOR TO THE EARLIER TO OCCUR OF (1) THE CONSUMMATION OF AN EXCHANGE
OFFER FOR THE UNITS OR, IF AN EXCHANGE OFFER IS NOT CONDUCTED, THE DATE A
REGISTRATION STATEMENT COVERING THE RESALE OF UNITS, AND THE CLASS A COMMON STOCK AND WARRANTS
FORMING COMPONENTS OF THE UNITS, AND THE WARRANT SHARES, BY THE HOLDERS THEREOF
IS DECLARED EFFECTIVE BY THE SEC AND (2) SUCH DATE AS CANTOR FITZGERALD
& CO., IN ITS SOLE DISCRETION SHALL DETERMINE, THE CLASS A COMMON STOCK AND
THE WARRANTS MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM EACH OTHER,
BUT MAY BE TRANSFERRED OR EXCHANGED ONLY AS A UNIT AND (II) CANNOT BE EXERCISED
IN WHOLE OR IN PART UNTIL THE COMPANY’S COMPLETION OF A QUALIFIED IPO.


 


EXERCISABLE ONLY IF COUNTERSIGNED BY THE
WARRANT


AGENT AS PROVIDED HEREIN.


 


Warrant Certificate evidencing Warrants to
Purchase


Common Stock, par value $.001


 


PARAGON SHIPPING INC.


 


	
  No.

  	
   

  	
   

  	
  CUSIP No.

  	
   

  



 


VOID AFTER 5:00 P.M., NEW YORK TIME,


ON NOVEMBER 21, 2011, OR UPON EARLIER
REDEMPTION


 


This certifies that                                         
or registered assigns is the registered holder of                                                                   
warrants to purchase certain securities (each a “Warrant”). Each Warrant entitles the holder thereof, subject to
the provisions contained herein and in the Warrant Agreement (as defined
below), to purchase from Paragon Shipping Inc., a 


 


A-2

















 


Marshall Islands corporation (the “Company”), one share of the Company’s Common Stock  (each, a “Share”),
at the Exercise Price set forth below. The exercise price of each Warrant (the “Exercise Price”) shall be $10.00
initially, subject to adjustments as set forth in the Warrant Agreement (as
defined below).


 


Subject to the terms of the Warrant
Agreement, each Warrant evidenced hereby may be exercised in whole but not in
part at any time, as specified herein, on any Business Day (as defined below) occurring
during the period (the “Exercise Period”)
commencing on the Company’s Completion (as defined below) of a Qualified IPO
(as defined below) and ending at 5:00 P.M., New York time, on November 21, 2011
(the “Expiration Date”). Each
Warrant remaining unexercised after 5:00 P.M., New York time, on the Expiration
Date shall become void, and all rights of the holder of this Warrant
Certificate evidencing such Warrant shall cease.


 


The holder of the Warrants represented by this Warrant Certificate may
exercise any Warrant evidenced hereby by delivering, not later than 5:00 P.M.,
New York time, on any Business Day during the Exercise Period (the “Exercise Date”) to Computershare Trust Company
N.A. (the “Warrant Agent”, which
term includes any successor warrant agent under the Warrant Agreement described
below) at its stock transfer division at                                         ,
(i) this Warrant Certificate and the Warrants to be exercised (the “Book-Entry Warrants”) free on the
records of The Depository Trust Company (the “Depository”) to an account of the Warrant Agent at the Depository
designated for such purpose in writing by the Warrant Agent to the Depository,
(ii) an election to exercise (“Notice
of Exercise”), properly executed by the holder hereof attached hereto as
Exhibit 1 properly executed by the institution in whose account the Warrant is
recorded on the records of the Depository (the “Participant”), and substantially in the form included on the
reverse of hereof.


 


If any of (a) this Warrant Certificate or the Book-Entry Warrants, or
(b) the Notice of Exercise is received by the Warrant Agent after 5:00 P.M.,
New York time, on the specified Exercise Date, the Warrants will be deemed to
be received and exercised on the Business Day next succeeding the Exercise
Date. If the date specified as the Exercise Date is not a Business Day, the
Warrants will be deemed to be received and exercised on the next succeeding day
which is a Business Day. If the Warrants to be exercised are received or deemed
to be received after the Expiration Date, the exercise thereof will be null and
void and any funds delivered to the Warrant Agent will be returned to the
holder as soon as practicable. The validity of any exercise of Warrants will be
determined by the Warrant Agent in its sole discretion and such determination
will be final and binding upon the holder of the Warrants and the Company.
Neither the Warrant Agent nor the Company shall have any obligation to inform a
holder of Warrants of the invalidity of any exercise of Warrants.


 


“Business Day”
means any day that is not a Saturday or Sunday and is not a United States
federal holiday or a day on which the New York Stock Exchange in New York, New
York is not open.


 


“Qualified IPO”
shall mean any public offering of the Company’s Class A Common Stock that
raises at least $50.0 million in gross proceeds for the Company.


 


A-3

















 


“Completion” shall mean such time as the
sale of the number of firm shares stated in the final prospectus related to a
Qualified IPO is consummated.


 


“Consummation of an Exchange Offer”
shall mean the consummation of an offer by the Company to exchange and issue a
number of registered Units, registered shares of Class A Common Stock,
registered Warrants and, if permitted, registered Warrant Shares (registered
pursuant to an effective registration statement filed with the Securities
Exchange Commission under the Securities Act) equal to number of securities
tendered in connection with such exchange and issuance.


 


Warrants may be exercised only in whole numbers of Warrants. If fewer
than all of the Warrants evidenced by this Warrant Certificate are exercised, a
new Warrant Certificate for the number of Warrants remaining unexercised shall
be executed by the Company and countersigned by the Warrant Agent as provided
in Section 2.2 of the Warrant Agreement, and delivered to the holder of this
Warrant Certificate at the address specified on the books of the Warrant Agent
or as otherwise specified by such registered holder.


 


This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of November 21, 2006 (the “Warrant Agreement”), between the Company and
the Warrant Agent and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the holder of this
Warrant Certificate and the beneficial owners of the Warrants represented by
this Warrant Certificate consent by acceptance hereof. Copies of the Warrant
Agreement are on file and can be inspected at the above-mentioned office of the
Warrant Agent.


 


The accrual of dividends, if any, on the Shares issued upon the valid
exercise of any Warrant will be governed by the terms generally applicable to
such Shares. From and after the issuance of such Shares, the former holder of
the Warrants exercised will be entitled to the benefits generally available to
other holders of Shares and such former holder’s right to receive payments of
dividends and any other amounts payable in respect of the Shares shall be
governed by, and shall be subject to, the terms and provisions generally
applicable to such Shares.


 


The Exercise Price and the number of Warrants for which this Warrant is
exercisable shall be subject to adjustment as provided pursuant to Section 6.1
of the Warrant Agreement.


 


Prior to the Separation Date, the Warrants represented by this Warrant
Certificate may be exchanged or transferred only together with the Shares to
which such Warrants are attached (together, the “Units”), and only for the purpose of effecting, or in conjunction
with, an exchange or transfer of such Units. Additionally, prior to the
Separation Date, each transfer of such Units on the register of the Units shall
operate also to transfer the Warrants included in such Units. From and after
the Separation Date, the provisions of the two preceding sentences shall be of
no further force and effect. Upon due presentment for registration of transfer
or exchange of this Warrant Certificate at the stock transfer division of the
Warrant Agent, the Company shall execute, and the Warrant Agent shall
countersign and deliver, as provided in Section 2.2 of the Warrant Agreement,
in the name of the designated transferee one or more new Warrant Certificates
of any authorized denomination evidencing in the aggregate a like number of
unexercised Warrants, subject to the limitations provided in the Warrant
Agreement.


 


A-4

















 


Neither this Warrant Certificate nor the Warrants evidenced hereby shall
entitle the holder hereof or thereof to any of the rights of a holder of the
Shares, including, without limitation, the right to receive dividends, if any,
or, subject to Article V of the Warrant Agreement, payments upon the
liquidation, dissolution or winding up of the Company or to exercise voting
rights, if any.


 


The Warrant Agreement and this Warrant Certificate may be amended as
provided in the Warrant Agreement including, under certain circumstances
described therein, without the consent of the holder of this Warrant
Certificate or the Warrants evidenced thereby.


 


THIS WARRANT CERTIFICATE AND ALL RIGHTS
HEREUNDER AND UNDER THE WARRANT AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS FORMED AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.


 


This Warrant Certificate shall not be entitled to any benefit under the
Warrant Agreement or be valid or obligatory for any purpose, and no Warrant evidenced hereby may be exercised,
unless this Warrant Certificate has been countersigned by the manual signature
of the Warrant Agent.


 


IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.


 


Dated as of             
    , 200  


 


	
   

  	
  PARAGON SHIPPING INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  COMPUTERSHARE TRUST COMPANY, N.A.

      as Warrant Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  	
   

  	
   

  	
   

  



 


A-5

















 


Notice of Exercise


 


To: Paragon Shipping Inc.


 


The undersigned hereby irrevocably elects to exercise, on                     ,
             (the “Exercise Date”),
                    
Warrants, evidenced by this Warrant Certificate.


 


             The undersigned elects to pay the Warrant
Price in cash pursuant to the cash exercise provisions of Section 3.2(c) and
herewith delivers payment of the Warrant Price.


 


	
  Dated:

  	
                                 ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
           (Please Print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /    /    /    /
  - /    /    /-
  /    /    /    /    /

  	
   

  	
   

  	
   

  
	
  (Insert Social Security

  or Other Identifying

  Number of Holder)

  	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
   

  	
   

  
									



 


A-6

















 


EXHIBIT B-1


 


FORM OF TRANSFER CERTIFICATE

FOR EXCHANGE OR TRANSFER FROM RULE 144A CERTIFICATE

TO REGULATION S CERTIFICATE

PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD


 


COMPUTERSHARE TRUST COMPANY, N.A.


350 Indiana Street, Suite 800


Golden, CO 80401


Attention: 
Corporate Actions


 


Re:                               Paragon Shipping Inc. Warrant to Purchase Common Stock


 


Reference is hereby made to the
Warrant Agreement, dated as of November 21, 2006 (the “Warrant Agreement”),
between Paragon Shipping Inc. (the “Company”) and Computershare Trust Company,
N.A., as warrant agent. Capitalized terms not defined in this Certificate shall
have the meanings given to them in the Warrant Agreement.


 


This Certificate relates to [                ] principal amount of Certificates represented by a
beneficial interest in the Rule 144A Global Certificate (CUSIP No.                 ) held with the The Depository Trust Company (the “Depositary”)
by or on behalf of [                                ] as beneficial owner (the “Transferor”). The
Transferor has requested an exchange or transfer of its beneficial interest for
an interest in the Regulation S Certificate (CUSIP (CINS) No                ) to be held (ISIN Code                 ) (Common Code •) through the Depositary.


 


In connection with such request and
in respect of such Certificates, the Transferor does hereby certify that such
exchange or transfer has been effected in accordance with the transfer
restrictions set forth in the Certificates and pursuant to and in accordance
with Rule 903 or Rule 904 (as applicable) of Regulation S under
the Securities Act of 1933, as amended (the “Securities Act”), and accordingly
the Transferor does hereby certify that:


 


(1)                                  the Transferor is not a distributor of the
Certificates, an affiliate of the Company or any such distributor or a person
acting on behalf of any of the foregoing;


 


(2)                                  the offer of the Certificates was not made to a person
in the United States;


 


(3)                                  either:     (A)                              at the time the buy order was originated, the transferee was outside the
United States or the Transferor and any person acting on its behalf reasonably
believed that the transferee was outside the United States, or


 


(B)                                the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither the Transferor


 


B-1

















 


nor any person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States;


 


(4)                                  no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of Regulation S, as
applicable;


 


(5)                                  if the Transferor is a dealer in securities or has
received a selling concession, fee or other remuneration in respect of the
Certificates covered by this transfer certificate then the requirements of Rule
904(c)(1) have been satisfied;


 


(6)                                 the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and


 


(7)                                  upon completion of the transaction, the beneficial
interest being transferred as described above is to be held with the
Depositary.


 


This Certificate and the statements
contained herein are made for your benefit and the benefit of the Company and
the Initial Purchaser of such Certificates being exchanged or transferred.


 


	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  cc: 
  Paragon Shipping Inc.

  	
   

  	
   

  
						



 


 


B-2

















 


EXHIBIT B-2


 


FORM OF TRANSFER CERTIFICATE FOR TRANSFER

OR EXCHANGE FROM RULE 144A CERTIFICATE

TO REGULATION S CERTIFICATE AFTER THE

EXPIRATION OF THE RESTRICTED PERIOD


 


Computershare Trust Company, Inc.


350 Indiana Street, Suite 800


Golden, CO 80401


Attention: 
Corporate Actions


 


Re:                               Paragon Shipping Inc. Warrant to Purchase Common Stock


 


Reference is hereby made to the
Warrant Agreement, dated as of November 21, 2006 (the “Warrant Agreement”),
between Paragon Shipping Inc. (the “Company”) and Computershare Trust Company,
N.A.., as warrant agent. Capitalized terms not defined in this Certificate
shall have the meanings given to them in the Warrant Agreement.


 


This Certificate relates to [                                ]
principal amount of Certificates represented by a beneficial interest in the
Rule 144A Global Certificate (CUSIP No.                  )
held with The Depository Trust Company (the “Depositary”) by or on behalf of [                                ]
as beneficial owner (the “Transferor”). The Transferor has requested an
exchange or transfer of its interest for an interest in the Regulation S Global
Certificate (CUSIP (CINS) No.                       )
to be held (ISIN Code                      )
(Common Code -) through the Depositary.


 


In connection with such request and
in respect of such Certificates, the Transferor does hereby certify that such
exchange or transfer has been effected in accordance with the transfer
restrictions set forth in the Certificates and that, with respect to transfers
made in reliance on Regulation S under the Securities Act, pursuant to and in
accordance with Regulation S under the Securities Act, and accordingly the
Transferor does hereby further certify that:


 


(1)                                  (A)          the
offer of the Certificates was not made to a person in the United States;


 


(B)                                either:


 


(i)      at the time
the buy order was originated, the transferee was outside the United States or
the Transferor and any person acting on its behalf reasonably believed that the
transferee was outside the United States, or


 


(ii)      the transaction
was executed in, on or through the facilities of a designated offshore
Securities market and neither the Transferor nor any person acting on its
behalf knows that the transaction was pre-arranged with a buyer in the United
States;


 


B-3

















 


(C)      no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or 904(b) of Regulation S, as applicable; and


 


(D)      the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act.


 


or


 


(2)                                 With respect to transfers made in reliance on Rule 144
under the Securities Act, the Certificates are being transferred in a
transaction permitted by Rule 144 under the Securities Act.


 


This Certificate and the statements
contained herein are made for your benefit and the benefit of the Company and
the Initial Purchaser of such Certificates being exchanged or transferred.


 


	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  cc: 
  Paragon Shipping Inc.

  	
   

  	
   

  
						



 


B-4

















 


EXHIBIT B-3


 


FORM OF TRANSFER CERTIFICATE FOR TRANSFER OR

EXCHANGE FROM REGULATION S CERTIFICATE

TO RULE 144A CERTIFICATE AFTER THE EXPIRATION 

OF THE RESTRICTED PERIOD


 


Computershare Trust Company, N.A.


350 Indiana Street, Suite 800


Golden, CO 80401


Attention: 
Corporate Actions


 


Re:                               Paragon Shipping Inc. Warrant to Purchase Common Stock


 


Reference is hereby made to the
Warrant Agreement, dated as of November 21, 2006 (the “Warrant Agreement”),
between Paragon Shipping Inc. (the “Company”) and Computershare Trust Company,
N.A., as warrant agent. Capitalized terms not defined in this Certificate shall
have the meanings given to them in the Warrant Agreement.


 


This Certificate relates to [                           ]
principal amount of Certificates which are held in the form of the Regulation S
Certificate (CUSIP No.              )
(ISIN Code                    )
(Common Code •) through the Depositary by or on behalf of transferor
as beneficial owner (the “Transferor”). The Transferor has requested an
exchange or transfer of its interest in the Certificates for an interest in the
Rule 144A Certificate (CUSIP No.                       ).


 


In connection with such request, and
in respect of such Certificates, the Transferor does hereby certify that such
transfer is being effected in accordance with the transfer restrictions set
forth in the Declaration of Trust and pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the “Securities
Act”), to a transferee that the Transferor reasonably believes is purchasing
the Certificates for its own account or an account with respect to which the
transferee exercises sole investment discretion and the transferee and any such
account is a “qualified institutional buyer” within the meaning of Rule 144A,
in each case in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United
States or any other jurisdiction.


 


B-5

















 


This Certificate and the statements
contained herein are made for your benefit and the benefit of the Company and
the Initial Purchaser of the Certificates being transferred.


 


	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  cc: 
  Paragon Shipping Inc.

  	
   

  	
   

  
						



 


B-6

















EXHIBIT C


 


FORM OF LEGAL OPINION ON TRANSFER


 


                          
    , 20    


 


COMPUTERSHARE TRUST COMPANY, N.A.


350 Indiana Street, Suite 800


Golden, CO 80401


Attention: 
Corporate Actions


 


Re:          Paragon Shipping Inc. Warrants to
Purchase Common Stock


 


Ladies and
Gentlemen:


 


This opinion
is being furnished to you in connection with the sale by                           
(the “Transferor”) to                                                     
(the “Purchaser”) of Warrants to purchase Common Stock exercisable for an
aggregate of                  
shares of Class A Common Stock, par value $0.001 per share (“Class A Common
Stock”), of Paragon Shipping Inc. (the “Warrants”).


 


We have
examined such documents and records as we have deemed appropriate. In our
examination of the foregoing, we have assumed the authenticity of all
documents, the genuineness of all signatures and the due authorization,
execution and delivery of the aforementioned by each of the parties thereto. We
have further assumed the accuracy of the representations contained in the
Transferee Certificate executed and delivered by the Purchaser in connection
with its purchase of the Warrants made by the parties executing such document. We
have also assumed that the sale of the Warrants to the Transferor was exempt
from the registration and prospectus delivery requirements of the Securities
Act of 1933, as amended (the “Securities Act”).


 


Based on the
foregoing, we are of the opinion that the sale to the Purchaser of the Warrants
does not require registration of such Warrants or the Class A Common Stock
issuable upon exercise thereof under the Securities Act.


 


Very truly yours,


 


C-1