Exhibit 10.5


 


REGISTRATION RIGHTS AGREEMENT


 


by and
among


 


PARAGON SHIPPING INC.


 


and


 


INNOVATION HOLDINGS S.A.


 










 


Dated as
of November 21, 2006


 





















 


REGISTRATION
RIGHTS AGREEMENT dated as of November 21, 2006, by and between PARAGON SHIPPING
INC., a company formed under the laws of the Republic of the Marshall Islands
(the “Company”, and INNOVATIONS HOLDINGS S.A., a company formed under
the laws of the Republic of Panama (the “Shareholder”).


 


In consideration
of the mutual covenants and agreements herein contained and other good and
valid consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:


 


1.        Certain Definitions.


 


In addition to the
terms defined elsewhere in this Agreement, the following terms shall have the
following meanings:


 


1.1      “Affiliate” of any Person
means any other Person which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person. The term “control” (including the terms “controlling,” “controlled
by” and “under common control with”) as used with respect to any Person means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.


 


1.2      “Agreement” means this
Registration Rights Agreement, including all amendments, modifications and
supplements and any exhibits or schedules to any of the foregoing, and shall
refer to this Registration Rights Agreement as the same may be in effect at the
time such reference becomes operative.


 


1.3      “Class A Common Shares”
means the Class A common shares, par value $0.001 per common share, of the
Company and any other common shares into which such Class A common shares are
converted pursuant to a recapitalization or reorganization.


 


1.4      “Company” has the meaning
set forth in the introductory paragraph.


 


1.5      “Exchange Act” means the
Securities Exchange Act of 1934, as amended.


 


1.6      “Exchange Offer” means the
our offer to exchange shares of Class A Common Stock and warrants to purchase
shares of Class A Common Stock registered under the Securities Act for the
shares of Class A Common Stock and warrants to purchase shares of Class A
Common Stock issued to the initial purchasers of the Company’s sale of up to
11,148,400 shares of Class A Common Stock and 2,229,680 warrants to purchase
Class A Common Stock pursuant to Rule 144A and Regulation S of the Securities
Act.


 


1.7      “Governmental Entity” means
any national, federal, state, municipal, local, territorial, foreign or other
government or any department, commission, board, bureau, agency, regulatory
authority or instrumentality thereof, or any court, judicial, administrative or
arbitral body or public or private tribunal.


 


1.8      “Holder” means any holder of
record of Registrable Class A Common Shares and any transferees of at least 50%
of such Registrable Class A Common Shares from any such Holder. For purposes of
this Agreement, the Company may deem and treat the registered


 


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holder of Registrable
Class A Common Shares as the Holder and absolute owner thereof, and the Company
shall not be affected by any notice to the contrary.


 


1.9      “Person” means any
individual, sole proprietorship, partnership, limited liability company, joint
venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, Governmental Entity or any other
entity.


 


1.10    “Prospectus” means the
prospectus or prospectuses included in any Registration Statement, as amended
or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Class A Common Shares covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by reference in such prospectus or prospectuses.


 


1.11    “Registrable Class A Common
Shares” means the Class A Common Shares held by the Shareholder or affiliates
of the Shareholder as of the date the Company is eligible to file a
registration statement on Form F-3 (or any successor form), together with the
one fifth of one warrant to purchase shares of Class A Common Stock, provided
however, Registrable Class A Common Shares shall not include any securities
sold by a Person to the public either pursuant to a Registration Statement or
Rule 144.


 


1.12    “Registration Expenses” has
the meaning set forth in Section 4(a) hereof.


 


1.13    “Registration Statement” means
any registration statement of the Company which covers any of the Registrable
Class A Common Shares pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all materials
incorporated by reference in such Registration Statement.


 


1.14    “SEC” means the United States
Securities and Exchange Commission.


 


1.15    “Securities Act” means the
Securities Act of 1933, as amended.


 


1.16    “Shareholder” has the meaning
set forth in the introductory paragraph.


 


1.17    “Suspension Notice” has the
meaning set forth in Section 3(f) hereof.


 


1.18    “Underwritten registration or
underwritten offering” means a registration in which securities of the Company
are sold to underwriters for reoffering to the public.


 


2.        Shelf Registration.


 


(a)      (i)
Upon the later of (i) 12 months from the completion of the Exchange Offer and
(ii) such time as the Company is able to use Form F-3 under the Securities Act
(or any successor form) for sales of Registrable Class A Common Shares by a
Holder, at the request of Holders of the lesser of (x) 5% of the Registrable
Class A Common Shares (without reduction for Class A Common Shares that cease
to be Registrable Class A Common Shares) and (y) Registrable Class A Common
Shares having an aggregate market value of at least $10 million, the Company
shall use its commercially reasonable efforts to effect, as expeditiously as possible,
the registration under the Securities Act of any number of Registrable Class A
Common Shares for which it receives requests in accordance with this Section
2(a) (the “Shelf Registration”). The Company shall use its commercially
reasonable best efforts to cause such


 


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Registration Statement to
become effective as promptly as practicable and maintain the effectiveness of
such Registration Statement (subject to the terms and conditions herein) for a
period ending on the earlier of (i) two years following the date on which such
Registration Statement first becomes effective (but one year if the Company is
not able to use Form F-3 under the Securities Act (or any successor form)), and
(ii) the date on which all Registrable Class A Common Shares covered by such
Registration Statement have been sold and the distribution contemplated thereby
has been completed or have become freely tradeable pursuant to Rule 144 without
regard to volume.


 


(b)      The
Shelf Registration Statement pursuant to this Section 2 shall to the extent
possible under applicable law, be effected to permit sales on a continuous
basis pursuant to Rule 415 under the Securities Act. Any takedown under the
Shelf Registration pursuant to this Section 2 may or may not be underwritten.
The Company shall be entitled to effect the Shelf Registration on any available
form under the Securities Act.


 


(c)      In the
event of a request for a Shelf Registration pursuant to Section 2(a), the
Company shall give written notice of the proposed filing of the Registration
Statement in connection therewith to all Holders of Registrable Class A Common
Shares offering to each such Holder the opportunity to have any or all of the
Registrable Class A Common Shares held by such Holder included in such
registration statement. Each Holder of Registrable Class A Common Shares
desiring to have its Registrable Class A Common Shares registered under this
Section 2(c) shall so advise the Company in writing within 15 days after the
date of such notice from the Company (which request shall set forth the amount
of Registrable Class A Common Shares for which registration is requested), and
the Company shall include in such Registration Statement all such Registrable
Class A Common Shares so requested to be included therein.


 


(d)      The
number, percentage, fraction or kind of Class A Common Stock referred to in
this Section 2 shall be appropriately adjusted for any stock dividend, stock
split, reverse stock split, combination, recapitalization, reclassification,
merger or consolidation, exchange or distribution in respect of the Class A
Common Stock.


 


(e)      The
Company, and any other holder of the Company’s securities who has registration
rights, may include its securities in any Shelf Registration effected pursuant
to this Section 3.


 


3.        Registration Procedures.


 


(a)      Whenever
the Holders request that any Registrable Class A Common Shares be registered
pursuant to this Agreement, the Company shall use its commercially reasonable
best efforts to effect the registration and the sale of such Registrable Class
A Common Shares in accordance with the intended methods of disposition thereof,
and pursuant thereto the Company shall as expeditiously as possible:


 


(i)        prepare and file with the
SEC a Registration Statement with respect to such Registrable Class A Common
Shares and use its commercially reasonable best efforts to cause such
Registration Statement to become effective as soon as practicable thereafter;
and before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, furnish to the Holders of Registrable Class A Common
Shares covered by such Registration Statement and the underwriter or
underwriters, if any, copies of all such documents proposed to be filed,
including documents incorporated by reference in the Prospectus and, if
requested by such Holders, the exhibits incorporated by reference, and such
Holders shall have the opportunity to object to any information pertaining to
such Holders that is contained therein and the Company will make the
corrections


 


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reasonably requested by
such Holders with respect to such information prior to filing any Registration
Statement or amendment thereto or any Prospectus or any supplement thereto;


 


(ii)       prepare and file with the
SEC such amendments and supplements to such Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective for a period of not less than two years or
such shorter period as is necessary to complete the distribution of the
securities covered by such Registration Statement and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement;


 


(iii)      furnish to each seller of
Registrable Class A Common Shares such number of copies of such Registration
Statement, each amendment and supplement thereto, the Prospectus included in
such Registration Statement (including each preliminary Prospectus) and such
other documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Class A Common Shares owned by such seller;


 


(iv)      use its commercially
reasonable best efforts to register or qualify such Registrable Class A Common
Shares under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate
the disposition in such jurisdictions of the Registrable Class A Common Shares
owned by such seller (provided, that the Company will not be required to (1)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph 6(a)(iv), (2)
subject itself to taxation in any such jurisdiction, or (3) consent to general
service of process in any such jurisdiction);


 


(v)       notify each seller of such
Registrable Class A Common Shares, at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, of the occurrence
of any event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the request of
any such seller, the Company shall prepare a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Class A Common Shares, such Prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;


 


(vi)      in the case of an
underwritten offering, enter into such customary agreements (including
underwriting agreements in customary form with customary indemnification
provisions) and take all such other actions as the Holders of a majority of the
Registrable Class A Common Shares being sold or the underwriters reasonably
request in order to expedite or facilitate the disposition of such Registrable
Class A Common Shares (including, without limitation, making members of senior
management of the Company available to participate in, and cause them to
cooperate with the underwriters in connection with,


 


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“road-show” and other
customary marketing activities (including one-on-one meetings with prospective
purchasers of the Registrable Class A Common Shares)) and cause to be delivered
to the underwriters and the sellers, if any, opinions of counsel to the Company
in customary form, covering such matters as are customarily covered by opinions
for an underwritten public offering as the underwriters may request and
addressed to the underwriters and the sellers;


 


(vii)     make available, for
inspection by any seller of Registrable Class A Common Shares, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company’s officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement;


 


(viii)    use its commercially
reasonable best efforts to cause all such Registrable Class A Common Shares to
be listed on each securities exchange on which securities of the same class
issued by the Company are then listed;


 


(ix)      if requested, cause to be
delivered, immediately prior to the effectiveness of the Registration Statement
(and, in the case of an underwritten offering, at the time of delivery of any
Registrable Class A Common Shares sold pursuant thereto), letters from the
Company’s independent certified public accountants addressed to each selling
Holder (unless such selling Holder does not provide to such accountants the
appropriate representation letter required by rules governing the accounting
profession) and each underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the Securities Act and the
applicable rules and regulations adopted by the SEC thereunder, and otherwise
in customary form and covering such financial and accounting matters as are
customarily covered by letters of the independent certified public accountants
delivered in connection with primary or secondary underwritten public
offerings, as the case may be;


 


(x)       make generally available to
its stockholders a consolidated earnings statement (which need not be audited)
for the 12 months beginning after the effective date of a Registration
Statement as soon as reasonably practicable after the end of such period, which
earnings statement shall satisfy the requirements of an earning statement under
Section 11(a) of the Securities Act; and


 


(xi)      promptly notify each seller
of Registrable Class A Common Shares and the underwriter or underwriters, if
any:


 


(A)     when the Registration
Statement, any pre-effective amendment, the Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement has been
filed and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective;


 


(B)      of any comments of the SEC
or of any written request by the SEC for amendments or supplements to the
Registration Statement or Prospectus;


 


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(C)      of the notification to the
Company by the SEC of its initiation of any proceeding with respect to the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement; and


 


(D)      of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any Registrable Class A Common Shares for sale under the applicable
securities or blue sky laws of any jurisdiction.


 


(b)       The
Company shall ensure that no Registration Statement (including any amendments
or supplements thereto and Prospectuses contained therein) shall contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein not
misleading (except, with respect to any Holder, for an untrue statement or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact made in reliance on and in conformity with written information
furnished to the Company by or on behalf of such Holder specifically for use
therein).


 


(c)      The
Company shall make available to each Holder whose Registrable Class A Common
Shares are included in a Registration Statement (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of each Registration Statement and any amendment thereto,
each preliminary Prospectus and Prospectus and each amendment or supplement
thereto, each letter written by or on behalf of the Company to the SEC or the
staff of the SEC (or other governmental agency or self-regulatory body or other
body having jurisdiction, including any domestic or foreign securities
exchange), and each item of correspondence from the SEC or the staff of the SEC
(or other governmental agency or self-regulatory body or other body having
jurisdiction, including any domestic or foreign securities exchange), in each
case relating to such Registration Statement (other than any portion thereof
which contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a Prospectus, including a
preliminary Prospectus, and all amendments and supplements thereto and such
other documents as such Holder may reasonably request in order to facilitate
the disposition of the Registrable Class A Common Shares owned by such Holder.
The Company will promptly notify each Holder by facsimile of the effectiveness
of each Registration Statement or any post-effective amendment. The Company
will promptly respond to any and all comments received from the SEC, with a view
towards causing each Registration Statement or any amendment thereto to be
declared effective by the SEC as soon as practicable and shall file an
acceleration request as soon as practicable following the resolution or
clearance of all SEC comments or, if applicable, following notification by the
SEC that any such Registration Statement or any amendment thereto will not be
subject to review.


 


(d)      At all
times after the Company has filed a registration statement with the SEC
pursuant to the requirements of either the Securities Act or the Exchange Act,
the Company shall file all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder, and take such further action as any Holders may reasonably
request, all to the extent required to enable such Holders to be eligible to
sell Registrable Class A Common Shares pursuant to Rule 144 (or any similar
rule then in effect).


 


(e)      the
Company may require each seller of Registrable Class A Common Shares as to
which any registration is being effected to furnish to the Company any other
information regarding such seller and the distribution of such securities as
the Company may from time to time reasonably request in writing.


 


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(f)      Each
seller of Registrable Class A Common Shares agrees by having its Common Shares
treated as Registrable Class A Common Shares hereunder that, upon notice of the
happening of any event as a result of which the Prospectus included in such
Registration Statement contains an untrue statement of a material fact or omits
any material fact necessary to make the statements therein not misleading (a “Suspension
Notice”), such seller will forthwith discontinue disposition of Registrable
Class A Common Shares for a reasonable length of time not to exceed 60 days
until such seller is advised in writing by the Company that the use of the
Prospectus may be resumed and is furnished with a supplemented or amended
Prospectus as contemplated by Section 6(c) hereof, and, if so directed by the
Company, such seller will deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies then in such seller’s possession, of
the Prospectus covering such Registrable Class A Common Shares current at the
time of receipt of such notice; provided, however, that such postponement of
sales of Registrable Class A Common Shares by the Holders shall not exceed 90
days in the aggregate in any one year. If the Company shall give any notice to
suspend the disposition of Registrable Class A Common Shares pursuant to a
Prospectus, the Company shall extend the period of time during which the
Company is required to maintain the Registration Statement effective pursuant
to this Agreement by the number of days during the period from and including
the date of the giving of such notice to and including the date such seller
either is advised by the Company that the use of the Prospectus may be resumed
or receives the copies of the supplemented or amended Prospectus contemplated
by Section 6(e). In any event, the Company shall not be entitled to deliver
more than three (3) Suspension Notices in any one year.


 


4.         Registration Expenses.


 


(a)      All
expenses incident to the Company’s performance of or compliance with this
Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, listing
application fees, printing expenses, transfer agent’s and registrar’s fees,
cost of distributing Prospectuses in preliminary and final form as well as any
supplements thereto, and fees and disbursements of counsel for the Company and
all independent certified public accountants and other Persons retained by the
Company (all such expenses being herein called “Registration Expenses”)
(but not including any underwriting discounts or commissions attributable to
the sale of Registrable Class A Common Shares or fees and expenses of more than
one counsel representing the Holders of Registrable Class A Common Shares),
shall be borne by the Company. In addition, the Company shall pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance
and the expenses and fees for listing the securities to be registered on each
securities exchange on which they are to be listed.


 


(b)      The
obligation of the Company to bear the expenses described in Section 7(a) and to
reimburse the Holders for the expenses described in Section 7(b) shall apply
irrespective of whether a registration, once properly demanded, if applicable,
becomes effective, is withdrawn or suspended, is converted to another form of
registration and irrespective of when any of the foregoing shall occur,
provided, however, that Registration Expenses for any Registration Statement
withdrawn solely at the request of a Holder of Registrable Class A Common
Shares or any supplements or amendments to a Registration Statement or
Prospectus resulting from a misstatement furnished to the Company by a Holder
shall be borne by such Holder.


 


5.         Indemnification.


 


(a)      The
Company shall indemnify, to the fullest extent permitted by law, each Holder,
its officers, directors and Affiliates and each Person who controls such Holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue or alleged
untrue statement of material fact contained in any Registration Statement,


 


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Prospectus or preliminary
Prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading or any violation or alleged
violation by the Company of the Securities Act, the Exchange Act or applicable “blue
sky” laws, except insofar as the same are made in reliance and in conformity
with information relating to such Holder furnished in writing to the Company by
such Holder expressly for use therein or caused by such Holder’s failure to
deliver to such Holder’s immediate purchaser a copy of the Registration
Statement or Prospectus or any amendments or supplements thereto (if the same
was required by applicable law to be so delivered). In connection with an
underwritten offering, the Company shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders.


 


(b)      In
connection with any Registration Statement in which a Holder of Registrable
Class A Common Shares is participating, each such Holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement or
Prospectus and, shall indemnify, to the fullest extent permitted by law, the
Company, its officers, directors Affiliates, and each Person who controls the
Company (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses arising out of or based upon any untrue or
alleged untrue statement of material fact contained in the Registration
Statement, Prospectus or preliminary Prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that the same are made in reliance and in
conformity with information relating to such Holder furnished in writing to the
Company by such Holder expressly for use therein or caused by such Holder’s
failure to deliver to such Holder’s immediate purchaser a copy of the
Registration Statement or Prospectus or any amendments or supplements thereto
(if the same was required by applicable law to be so delivered) after the
Company has furnished such Holder with a sufficient number of copies of the
same; provided, however, that the obligation to indemnify shall be several, not
joint and several, among such Holders and the liability of each such Holder
shall be in proportion to and limited to the net amount received by such Holder
from the sale of Registrable Class A Common Shares pursuant to such
Registration Statement.


 


(c)      Any
Person entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification, provided that the failure to notify the indemnifying party
shall not relieve the indemnifying party from any liability that it may have
under this Section 5 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it may
have to an indemnified party otherwise than under this Section 5 and (ii)
unless in such indemnified party’s reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. If such defense
is assumed, the indemnifying party shall not be subject to any liability for
any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in
the reasonable judgment of any indemnified party there may be one or more legal
or equitable defenses available to such indemnified party which are in addition
to or may conflict with those available to another indemnified party with
respect to such claim. Failure to give prompt written notice shall not release
the indemnifying party from its obligations hereunder.


 


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(d)      The
indemnification provided for under this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.


 


(e)      If the
indemnification provided for in or pursuant to this Section 5 is due in
accordance with the terms hereof, but is held by a court to be unavailable or
unenforceable in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which result
in such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
on the one hand and of the indemnified Person on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party, and by such party’s relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. In no event shall the liability of any selling Holder be greater in
amount than the amount of net proceeds received by such Holder upon such sale
or the amount for which such indemnifying party would have been obligated to
pay by way of indemnification if the indemnification provided for under Section
5(a) or 5(b) hereof had been available under the circumstances.


 


6.        Participation in
Underwritten Registrations.


 


No Holder may
participate in any registration hereunder which is underwritten unless such
Holder (a) agrees to sell such Holder’s securities on the basis provided in any
underwriting arrangements approved by the Holder or Holders entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.


 


7.        Rule 144.


 


The Company
covenants that following the effectiveness of the Company’s registration
statement relating to the Exchange Offer (or such earlier time as the Company
becomes subject to the reporting requirements of the Exchange Act) it will file
the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, and
it will take such further action as any Holder may reasonably request to make
available adequate current public information with respect to the Company
meeting the current public information requirements of Rule 144(c) under the
Securities Act, to the extent required to enable such Holder to sell
Registrable Class A Common Shares without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such information and requirements.


 


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8.        Miscellaneous.


 


(a)      Notices.
All notices, requests, consents and other communications required or permitted
hereunder shall be in writing and shall be hand delivered or mailed postage
prepaid by registered or certified mail or by facsimile transmission (with
immediate telephone confirmation thereafter):


 


	
  If to the Company:

  	
  If to the Stockholder:

  
	
   

  	
   

  	
  Paragon Shipping Inc.

  	
   

  	
  Innovation Holdings
  S.A.

  
	
   

  	
   

  	
  Voula Center

  	
   

  	
  c/o Mr. Michael
  Bodouroglou

  
	
   

  	
   

  	
  102-104 V. Pavlou
  Street

  	
   

  	
  c/o Paragon Shipping
  Inc.

  
	
   

  	
   

  	
  Voula 16673,

  	
   

  	
  Voula Center

  
	
   

  	
   

  	
  Athens, Greece

  	
   

  	
  102-104 V. Pavlou
  Street

  
	
   

  	
   

  	
  Facsimile No: +30 210
  8995085

  	
   

  	
  Voula 16673,

  
	
   

  	
   

  	
  Athens, Greece

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No: +30 210
  8995085

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
  Seward & Kissel LLP

  	
   

  	
   

  
	
   

  	
   

  	
  One Battery Park Plaza

  	
   

  	
   

  
	
   

  	
   

  	
  New York, New York 10004

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Gary J. Wolfe, Esq.

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No.: (212) 480-8421

  	
   

  	
   

  
							



 


or if to another Holder,
to the addresses set forth on the counterpart signature pages of this Agreement
signed by such Holders.


 


If to a transferee
Holder, to the address of such Holder set forth in the transfer documentation
provided to the Company or at such other address as such party may specify by
written notice to the others, and each such notice, request, consent and other
communication shall for all purposes of the Agreement be treated as being
effective or having been given when delivered personally or upon receipt of
facsimile confirmation if transmitted by facsimile, or, if sent by mail, at the
time of its receipt.


 


(b)     No
Waivers. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.


 


(c)     Successors
and Assigns. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, it being understood that subsequent Holders of the Registrable Class A
Common Shares are intended third party beneficiaries of this Agreement.


 


(d)     Governing
Law. The laws of the State of New York shall govern the enforceability and
validity of this Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties, without regard to the
principles of conflicts of laws thereof.


 


(e)     Jurisdiction.
Any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may be brought in any federal or state court
located in the County and State of New York, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate


 


10





















 


courts therefrom) in any
such suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing,
each party agrees that service of process on such party as provided in Section
10(a) shall be deemed effective service of process on such party.


 


(f)     Waiver
of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


(g)     Counterparts;
Effectiveness. This Agreement may be executed in any number of counterparts
(including by facsimile) and by different parties hereto in separate counterparts,
with the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument. This Agreement shall become effective
when each party hereto shall have received counterparts hereof signed by all of
the other parties hereto.


 


(h)     Entire
Agreement. This Agreement contains the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes and replaces
all other prior agreements, written or oral, among the parties hereto with
respect to the subject matter hereof.


 


(i)     Captions.
The headings and other captions in this Agreement are for convenience and
reference only and shall not be used in interpreting, construing or enforcing
any provision of this Agreement.


 


(j)     Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.


 


(k)     Amendments.
The provisions of this Agreement, including the provisions of this sentence,
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given without the prior
written consent of the Holders of a majority of the Registrable Class A Common
Shares (as constituted on the date hereof); provided, however, that without a
Holder’s written consent no such amendment, modification, supplement or waiver
shall affect adversely such Holder’s rights hereunder in a discriminatory
manner inconsistent with its adverse effects on rights of other Holders
hereunder (other than as reflected by the different number of Class A common
shares held by such Holder); provided, further, that the consent or agreement
of the Company shall be required with regard to any termination, amendment,
modification or supplement of, or waivers or consents to departures from, the
terms hereof, which affect the Company’s obligations hereunder. This Agreement
cannot be changed, modified, discharged or terminated by oral agreement.


 


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(1)     Aggregation
of Common Shares. All Registrable Class A Common Shares held by or acquired
by any Affiliated Persons will be aggregated together for the purpose of
determining the availability of any rights under this Agreement.


 


(m)     Equitable
Relief. Without limiting the remedies available, the parties hereto
acknowledge that any failure by the Company to comply with its obligations
under this Agreement will result in material irreparable injury to the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, any Holder shall have the right to obtain such relief as may be
required to specifically enforce the Company’s obligations under this Agreement.


 


[Signature page
follows]


 


12





















 


 IN WITNESS WHEREOF, this Registration Rights
Agreement has been duly executed by each of the parties hereto as of the date
first written above.


 


 


	
  PARAGON SHIPPING INC.

  	
  INNOVATION HOLDINGS
  S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
  By:

  	
  /s/ Michael Bodouroglou

  	
   

  
	
  Name:

  	
  [ILLEGIBLE]

  	
  Name:

  	
  MICHAEL BODOUROGLOU

  
	
  Title:

  	
  Secretary

  	
  Title:

  	
  President &
  Secretary