Dated 8 February 2013 PARAGON SHIPPING INC. as Borrower -and- READING NAVIGATION CO. DONNA MARINE CO. and PROTEA INTERNATIONAL INC. as Owners -and- THE BANKS AND FINANCIAL INSTITUTIONS listed in the Schedule as Lenders -and- COMMERZBANK AG as Agent,...

Exhibit 4.14

Dated 8 February 2013

PARAGON SHIPPING INC.

as Borrower

-and-

READING NAVIGATION CO.

XXXXX MARINE CO. and

PROTEA INTERNATIONAL INC.

as Owners

-and-

THE BANKS AND FINANCIAL INSTITUTIONS

listed in the Schedule

as Lenders

-and-

COMMERZBANK AG

as Agent, as Arranger

and as Security Trustee

-and-

COMMERZBANK AG

as Swap Bank

AMENDING AND RESTATING AGREEMENT

relating to an amended and restated secured term loan

facility of (originally) up to US$57,000,000

Xxxxxx, Xxxxxx & Xxxxxxxx

Index
Clause		Page
1	Interpretation	3
2	Agreement of the Creditor Parties	3
3	Conditions Precedent	4
4	Representations and Warranties	5
5	Amendment and Restatement of Loan Agreement and other Finance Documents	6
6	Further Assurances	7
7	Fees and Expenses	7
8	Communications	8
9	Supplemental	8
10	Law and Jurisdiction	8
Schedule 1 Lenders		9
Execution Pages		10
Appendix 1 Part A Form of Amended and Restated Loan Agreement marked to indicate Amendments to the Loan Agreement		13
Part B form of Clean Version Amended and Restated Loan Agreement		14
Appendix 2 Form of Mortgage Addendum		15

THIS AGREEMENT is made on 8 February 2013

BETWEEN

(1) PARAGON SHIPPING INC., a corporation incorporated in the Xxxxxxxx Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Xxxxxxxx Xxxxxxx XX 00000 (the "Borrower");

(2) READING NAVIGATION CO, and PROTEA INTERNATIONAL INC., each a corporation incorporated in Liberia whose registered office is at 00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx and XXXXX MARINE CO., a corporation incorporated in the Xxxxxxxx Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Xxxxxxxx Xxxxxxx XX 00000 (together, the "Owners" and each an "Owner");

(3) THE BANKS AND FINANCIAL INSTITUTIONS listed in the Schedule as Lenders (the "Lenders");

(4) COMMERZBANK AG, acting through its office at Xxxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx (the "Agent");

(5) COMMERZBANK AG, acting through its office at Xxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx (the "Arranger");

(6) COMMERZBANK AG, acting through its office at Xxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx (the "Security Trustee"); and

(7) COMMERZBANK AG, acting through its office at Xxxxxxxxxxxxx 00, 00000, Xxxxxxxxx xx Xxxx, Xxxxxxx (the "Swap Bank").

BACKGROUND

(A) By a loan agreement dated 12 August 2011 and made between (i) the Borrower, (ii) the Lenders, (iii) the Agent, (iv) the Arranger, (v) the Security Trustee, and (vi) the Swap Bank, the Lenders have made available to the Borrower a secured term loan facility of (originally) up to US$57,000,000.

(B) On 18 August 2011 the Lenders advanced to the Borrower the total amount of $57,000,000 and as at the date of this Amending and Restating Agreement, the principal amount outstanding is $50,550,000.

(C) The Borrower has requested that the Lenders:

(i) give their consent to certain amendments to the minimum security cover requirements specified in clause 15.1 of the Loan Agreement;

(ii) waive the application of the financial covenants set out in paragraphs (a) and (b) of clause 12.4 of the Loan Agreement and give their consent to certain amendments to the financial covenants set out in paragraphs (c) and (e) of clause 12.4 of the Loan Agreement;

(iii) waive the application of clause 19.1(f) of the Loan Agreement in respect of any events of default in connection with the Financial Indebtedness of the Borrower (or any of its subsidiaries) created under any loan or any other credit facility agreements (as amended, supplemented or restated, the "Existing Facility Agreements") with any other bank and financial institution in respect of the Fleet Vessels and ships currently under construction executed by the Borrower (or any of its subsidiaries) prior to the date of this Agreement for a period of 30 days from the date of this Agreement;

(iv) agree to waive the breaches of the financial covenants set out in clause 12.4 of the Loan Agreement and of the minimum security cover required to be maintained pursuant to clause 15.1 of the Loan Agreement on or prior to the Effective Date;

(v) agree to the reduction of the Repayment Instalments falling due during the fourth financial quarter in 2012 (which, for the avoidance of doubt, has been repaid prior to the date of this Agreement) and the Financial Year ending on 31 December 2013 (the "Reduced Instalments") by an amount equal to $3,500,000 in aggregate (the "Deferred Amount") which amount shall be added to the Balloon Instalment and be repaid (at the Borrower's discretion) on or prior to the Final Repayment Date;

(vi) consent to a reduction in the minimum liquidity to be maintained by the Group as required by clause 12.5 of the Loan Agreement;

(vii) consent to the application of the Partial Cash Collateral Amount in or towards partial repayment of any Repayment Instalments falling due during the period commencing on 1 July 2014 and ending on 31 December 2015 subject to the terms and conditions set out in the Amended and Restated Loan Agreement; and

(viii) consent to the application of an amount equal to $150,000 from the Partial Cash Collateral Amount towards the repayment of each Reduced Instalment subject to the Borrower first contributing an amount of $600,000 towards the same Reduced Instalment.

(D) The Lenders' consent to the Borrower's requests referred to in Recital C above is subject to, inter alia, the following conditions:

(i) no dividends shall be declared and/or distributed by the Borrower or make any form of investment (save for any investments funded through an equity contribution by the Borrower that does not have a negative effect on the Group's cash flow) up until 30 June 2014 without the Agent's prior written consent and following that date subject to the Borrower agreeing with the Agent the manner of prepayment of the Deferred Amount prior to the Final Repayment Date;

(ii) the Margin being increased to 3 per cent. per annum during the period which the Deferred Amount remains outstanding;

(iii) the Borrower paying to the Agent a non-refundable upfront fee in the amount and on the dates set out in Clause 7 of this Agreement;

(iv) the repayment schedule applicable to the Loan being amended in the manner set out in the Amended and Restated Loan Agreement;

(v) the provision of evidence in a form and substance satisfactory to the Agent of an equity contribution in the amount of at least $10,000,000;

(vi) the provision of evidence acceptable to the Agent that each of the Existing Facility Agreements has been amended, supplemented or, as the case may be, restructured and any defaults under each such Existing Facility Agreement have been waived in a satisfactory manner within 30 days from the date of this Agreement; and

(vii) the Borrower undertaking to ensure that if any of the terms, conditions and covenants contained in the Existing Facility Agreements (but excluding any amending, supplemental or restating agreement entered thereto after the date of this Agreement) are more favourable than those contained in the Amended and Restated Loan Agreement, it shall or, as the case may be, shall procure the execution of any such additional documents as may be required by the Agent so that the Lenders also receive the benefit of such favourable rights.

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(E) This Agreement sets out the terms and conditions on which the Creditor Parties agree, with effect on and from the Effective Date, at the request of the Security Parties to amend certain terms of the Loan Agreement as further set out in Clause 2.1 and to other consequential amendments to the Loan Agreement and the other Finance Documents in connection with those matters.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Defined expressions

Words and expressions defined in the Loan Agreement shall have the same meanings when used in this Agreement unless the context otherwise requires.

1.2 Definitions

In this Agreement, unless the contrary intention appears:

"Amended and Restated Loan Agreement" means the Loan Agreement as amended and restated by this Agreement in the form set out in Appendix 1;

"Effective Date" means the date on which the conditions precedent in Clause 3 are satisfied;

"Loan Agreement" means the loan agreement referred to in Recital (A); and

"Mortgage Addendum" means, in respect of each Mortgage, an addendum thereto to be executed by the relevant Owner in favour of the Security Trustee in the form set out in Appendix 2 and, in the plural, means all of them.

1.3 Application of construction and interpretation provisions of Loan Agreement

Clauses 1.2 and 1.5 of the Loan Agreement apply, with any necessary modifications, to this Agreement.

2 AGREEMENT OF THE CREDITOR PARTIES

2.1 Agreement of the Lenders

The Lenders agree, subject to and upon the terms and conditions of this Agreement, to:

(a) change the loan to value ratio requirements set out in clause 15.1 of the Loan Agreement;

(b) waive in their entirety or, as the case may be, adjust the financial covenants contained in clause 12.4 of the Loan Agreement;

(c) amend the manner of repayment of the Loan;

(d) waive the application of clause 19.1(f) of the Loan Agreement in respect of any events of default in connection with the Financial Indebtedness of the Borrower (or any of its subsidiaries) created under any Existing Facility Agreements for a period of 30 days from the date of this Agreement;

3

(e) waive the breaches of the financial covenants set out in clause 12.4 of the Loan Agreement and of the minimum security cover required to be maintained pursuant to clause 15.1 of the Loan Agreement on or before the Effective Date;

(f) the reduction of the Reduced Instalments by an amount equal to the Deferred Amount to be distributed equally between each such Reduced Instalment (including, for the avoidance of doubt, the Reduced Instalment payable during the fourth financial quarter in 2012);

(g) the reduction of the minimum liquidity required to be maintained by the Borrower pursuant to clause 12.5 of the Loan Agreement and allow the Borrower to use the Partial Cash Collateral Amount (or any relevant part thereof) in or towards the repayment of the Repayment Instalments referred to in paragraphs (h) and (i) of this Clause 2.1;

(h) consent to the application of the Partial Cash Collateral Amount (or any relevant part thereof) in or towards partial repayment of any Repayment Instalments falling due during the period commencing on 1 July 2014 and ending on 31 December 2015 subject to the terms and conditions set out in the Amended and Restated Loan Agreement;

(i) consent to the application of an amount equal to $150,000 from the Partial Cash Collateral Amount towards the repayment of each Reduced Instalment; and

(j) the consequential amendments to the Loan Agreement and the other Finance Documents in connection with the matters referred to in paragraphs (a) to (i) above.

2.2 Agreement of the Creditor Parties

The Creditor Parties agree, subject to and upon the terms and conditions of this Agreement, to the amendments to the Loan Agreement referred to in Clause 2.1 and to all other consequential amendments to the Loan Agreement and the other Finance Documents in connection with the matters referred to in Clause 2.1.

2.3 Effective Date

The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 shall have effect on and from the Effective Date.

3 CONDITIONS PRECEDENT

3.1 General

The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 is subject to the fulfilment of the conditions precedent in Clause 3.2.

3.2 Conditions precedent.

The conditions referred to in Clause 3.1 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Agent and its lawyers on or before the date of this Agreement or such later date as the Agent may agree with the Borrower and the other Security Parties:

(a) documents of the kind specified in paragraphs 3, 4 and 5 of Schedule 4, Part A to the Loan Agreement in relation to the Borrower and each Owner in connection with their execution of this Agreement and the Mortgage Addenda, updated with appropriate modifications to refer to this Supplemental Agreement;

(b) an original of this Agreement duly executed by the parties to it and counter-signed by the Approved Manager;

4

(c) documentary evidence that each Mortgage Addendum has been duly recorded against the Ship to which that Mortgage Addendum relates as a valid addendum to the Mortgage on that Ship according to the laws of the Republic of Liberia and, in the case of "PEARL SEAS", the Republic of Xxxxxxxx Islands;

(d) favourable opinions from lawyers appointed by the Agent on such matters concerning the laws of the Xxxxxxxx Islands and Liberia and such other relevant jurisdictions as the Agent may require;

(e) payment to the Agent of the first instalment of the fee set out in Clause 7;

(f) evidence in a form and substance satisfactory to the Agent of an equity contribution in the amount of at least $10,000,000;

(g) evidence that an amount of not less than $2,850,000 is standing to the credit of the Reserve Account;

(h) documentary evidence that the agent for service of process named in clause 30 of the Loan Agreement has accepted its appointment on behalf of the Borrower under the Shares Security Deed; and

(i) any further opinions, consents, agreements and documents in connection with this Agreement and the Finance Documents which the Agent may request by notice to the Borrower prior to the Effective Date.

3.3 Waiver of conditions precedent

If the Agent (with the authorisation of the Lenders) consents to the request of the Borrower before certain of the conditions referred to in paragraph 3 above are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 days after the date of this Agreement (or such longer period as the Agent (with the authorisation of the Lenders) may specify in writing).

3.4 Condition subsequent

The Borrower will send to the Agent as soon as possible, but in no event later than 30 days after the date of this Agreement, documentary evidence in form and substance acceptable to the Agent, that all Existing Facility Agreements have been restructured or, as the case may be, amended and supplemented and any defaults under each such Existing Facility Agreement have been waived in a satisfactory manner and with the approval of all banks and financial institutions which are parties to the Existing Facility Agreements. Failure by the Borrower to do so by such time will be an Event of Default under the Loan Agreement.

4 REPRESENTATIONS AND WARRANTIES

4.1 Repetition of Loan Agreement representations and warranties

The Borrower represents and warrants to the Creditor Parties that the representations and warranties in clause 10 of the Loan Agreement (other than Clause 10.10), as amended and restated by this Agreement and updated with appropriate modifications to refer to this Agreement and, where appropriate, the Mortgage Addenda, remain true and not misleading if repeated on the date of this Agreement with reference to the circumstances now existing.

4.2 Repetition of Finance Document representations and warranties

The Borrower and each Owner represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Loan Agreement) to which it is a party, as amended and restated by this Agreement and updated with

5

appropriate modifications to refer to this Agreement and, where appropriate, the Mortgage Addenda, remain true and not misleading if repeated on the date of this Agreement with reference to the circumstances now existing.

5 AMENDMENT AND RESTATEMENT OF LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS

5.1 Specific amendments to Loan Agreement

With effect on and from the Effective Date the Loan Agreement shall be, and shall be deemed by this Agreement to be, amended and restated in the form of the Amended and Restated Loan Agreement; and, as so amended and restated, the Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended and restated.

5.2 Amendments to the Master Agreement

With effect on and from the Effective Date the Master Agreement shall be, and shall be deemed by this Agreement to be, amended so that the definition of, and references throughout to, the Loan Agreement and the Credit Support Documents (as defined in the Master Agreement) shall be construed as if the same referred to the Loan Agreement and those Credit Support Documents (as defined in the Master Agreement) as amended or supplemented by this Agreement, each Mortgage Addendum and, as so amended the Master Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended.

5.3 Amendments to the Finance Documents

With effect on and from the Effective Date each of the Finance Documents other than the Loan Agreement and the Mortgages which are amended and supplemented by the Mortgage Addenda, shall be, and shall be deemed by this Agreement to be, amended as follows:

(a) the definition of, and references throughout each of the Finance Documents to, the Loan Agreement, the Master Agreement and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement, the Master Agreement and those Finance Documents as amended and restated or supplemented by this Agreement;

(b) the definitions of, and references throughout each of the Finance Documents to, a Mortgage or to the Mortgages shall be construed as if the same referred to such Mortgage or Mortgages as amended and supplemented by the relevant Mortgage Addendum; and

(c) by construing references throughout each of the Finance Documents to "this Agreement", "this Deed", "hereunder" and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement.

5.4 Finance Documents to remain in full force and effect

The Finance Documents other than the Loan Agreement shall remain in full force and effect as amended by:

(a) the amendments contained or referred to in Clause 5.3 and the Mortgage Addenda; and

(b) such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement.

6

6 FURTHER ASSURANCES

6.1 Borrower's and each Security Party's obligation to execute further documents etc.

The Borrower and each Owner shall:

(a) execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Agent may, in any particular case, specify;

(b) effect any registration or notarisation, give any notice or take any other step;

which the Security Trustee may, by notice to the Borrower or that Security Party, specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.

6.2 Purposes of further assurances

Those purposes are:

(a) validly and effectively to create any Security Interest or right of any kind which the Agent intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and restated or supplemented by this Agreement, or by the Mortgage Addenda; and

(b) implementing the terms and provisions of this Agreement.

6.3 Terms of further assurances

The Security Trustee may specify the terms of any document to be executed by the Borrower or the relevant Owner under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee considers appropriate to protect its interests.

6.4 Obligation to comply with notice

The Borrower or any Security Party shall comply with a notice under Clause 6.1 by the date specified in the notice.

6.5 Additional corporate action

At the same time as the Borrower or any Security Party delivers to the Security Trustee any document executed under Clause 6.1(a), the Borrower or any Security Party shall also deliver to the Security Trustee a certificate signed by the Secretary of the Borrower or that Owner which shall:

(a) set out the text of a resolution of the Borrower's or that Owner's directors specifically authorising the execution of the document specified by the Security Trustee; and

(b) state that either the resolution was duly passed at a meeting of the directors validly convened and held throughout which a quorum of directors entitled to vote on the resolution was present or that the resolution has been signed by all the directors and is valid under the Borrower's or that Owner's articles of association or other constitutional documents.

7 FEES AND EXPENSES

7.1 Fees

7

7.2 The Borrower shall pay to the Agent a non-refundable up-front fee of $256,500 in four instalments as follows:

(a) the amount of $102,600 has been paid on 11 January 2013 (being the date of acceptance of the Agent's commitment letter dated 14 December 2012); and

(b) three equal instalments in the amount of $51,300 each shall be paid, respectively, on 29 March 2013, 30 June 2013 and 30 September 2013.

7.3 Expenses

The provisions of clause 20 (fees and expenses) of the Loan Agreement, as amended and restated by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

8 COMMUNICATIONS

8.1 General

The provisions of clause 28 (notices) of the Loan Agreement, as amended and restated by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

9 SUPPLEMENTAL

9.1 Counterparts

This Agreement may be executed in any number of counterparts.

9.2 Third party rights

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Xxx 0000 to enforce or to enjoy the benefit of any term of this Agreement.

10 LAW AND JURISDICTION

10.1 Governing law

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.

10.2 Incorporation of the Loan Agreement provisions

The provisions of clause 30 (law and jurisdiction) of the Loan Agreement, as amended and restated by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.

This Agreement has been duly executed and delivered as a deed on the date stated at the beginning of this Agreement.

8

SCHEDULE 1 LENDERS

Lender		Lending Office
COMMERZBANK AG		Xxxxxxxxx 00
		00000 Xxxxxxx
		Xxxxxxx

9

EXECUTION PAGES

BORROWER	)
	)
EXECUTED and DELIVERED as a DEED	)
by PARAGON SHIPPING INC.	)
acting by Xxxxxx Xxxxx and Xxxxx Xxxxxxxx	)		/s/ Xxxxxx Xxxxx	/s/ Xxxxx Xxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of:	)
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx
OWNERS	)
	)
EXECUTED and DELIVERED as a DEED	)
by READING NAVIGATION CO.	)
acting by Xxxxx Xxxxxxxx	)		/s/ Xxxxx Xxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of: /s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx	)
EXECUTED and DELIVERED as a DEED	)
by XXXXX MARINE CO.	)
acting by Xxxxx Xxxxxxxx	)		/s/ Xxxxx Xxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of:	)
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx
EXECUTED and DELIVERED as a DEED	)
by PROTEA INTERNATIONAL INC.	)
acting by Xxxxx Xxxxxxxx	)		/s/ Xxxxx Xxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of:	)
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx
LENDERS
EXECUTED and DELIVERED as a DEED	)
by COMMERZBANK AG	)
acting by Xxxxxxxxx Xxxxxxxxxxxxx	)		/s/ Xxxxxxxxx Xxxxxxxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of:	)
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx
AGENT
EXECUTED and DELIVERED as a DEED	)
by COMMERZBANK AG	)
acting by Xxxxxxxxx Xxxxxxxxxxxxx	)		/s/ Xxxxxxxxx Xxxxxxxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of: /s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx	)

10

ARRANGER
EXECUTED and DELIVERED as a DEED	)
by COMMERZBANK AG	)
acting by Xxxxxxxxx Xxxxxxxxxxxxx	)		/s/ Xxxxxxxxx Xxxxxxxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of: /s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx	)
SECURITY TRUSTEE
EXECUTED and DELIVERED as a DEED	)
by COMMERZBANK AG	)
acting by Xxxxxxxxx Xxxxxxxxxxxxx	)		/s/ Xxxxxxxxx Xxxxxxxxxxxxx
its duly authorised	)
attorney-in-fact in the presence of:	)
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx
SWAP BANK
EXECUTED and DELIVERED as a DEED	)
by COMMERZBANK AG	)
acting by Xxxxxxxxx Xxxxxxxxxxxxx	)		/s/ Xxxxxxxxx Xxxxxxxxxxxxx
its duly authorized	)
attorney-in-fact in the presence of:	)
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxxxx 00 Xxxx Xxxxxxx Xxxxxxx 000 00 - Xxxxxx

11

COUNTERSIGNED this 8th day of February 2013 by the following party which by its execution hereof, confirms and, acknowledges that it has read and understood the terms and conditions of this Agreement, that it agrees in all respects to the same and that the Finance Document or Finance Documents to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Loan Agreement and the Master Agreement.

/s/ Xxxxx Xxxxxxxx

Xxxxx Xxxxxxxx

for and on behalf of

ALLSEAS MARINE S.A.

12

APPENDIX 1

PART A

FORM OF AMENDED AND RESTATED LOAN AGREEMENT MARKED TO INDICATE AMENDMENTS TO THE LOAN AGREEMENT

Amendments are indicated as follows:

1 additions are indicated by underlined text; and

2 deletions are shown by strike-through text.

13

Date 12 August 2011

as amended and restated by the Amending and Restating Agreement

dated February 2013

PARAGON SHIPPING INC.

as Borrower

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

- and -

COMMERZBANK AG

as Agent, Arranger and as Security Trustee

- and -

COMMERZBANK AG

as Swap Bank

LOAN AGREEMENT

relating to a secured term loan facility of (originally).

up to US$57,000,000 to refinance existing indebtedness of

the Borrower secured on

m.vs. "DIAMOND SEAS", "PEARL SEAS"

and "SAPPHIRE SEAS"

Xxxxxx, Xxxxxx & Xxxxxxxx

Index
Clause		Page
1.	Interpretation	1
2	Facility	17
3	Position of the Lenders, the Swap Bank and the Majority Lenders	18
4	Drawdown	19
5	Interest	20
6	Interest Periods	22
7	Default Interest	23
8	Repayment and Prepayment	24
9	Conditions Precedent	28
10	Representations and warranties	29
11	General Undertakings	31
12	Corporate Undertakings	36
13	Insurance	40
14	Ship Covenants	45
15	Security Cover	50
16	Payments and Calculations	51
17	Application of Receipts	53
18	Application of Earnings	54
19	Events of Default	56
20	Fees and Expenses	61
21	Indemnities	62
22	No Set-Off or Tax Deduction	64
23	Illegality, etc	65
24	Increased Costs	66
25	Set-Off	67
26.	Transfers and changes in Lending Offices	68
27	Variations and Waivers	72
23	Notices	73
29	Supplemental	75
30	Law and Jurisdiction	75
Schedule 1 Lenders		77
Schedule 2 Details of Ships and Owners		78
Schedule 3 condition Precedent Documents		79
Schedule 4 Transfer Certificate		83
Schedule 5 Form of Compliance Certificate		86
Schedule 6 Mandatory Cost Formula		88
Schedule 7 Designation Notice		90
Execution pages		91

THIS LOAN AGREEMENT is originally made on 12 August 2011 as amended and restated by the Amending and Restating Agreement dated 8 February 2013

BETWEEN:

(1) PARAGON SHIPPING INC. a corporation incorporated in the Xxxxxxxx Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Xxxxxxxx Xxxxxxx XX 00000 as Borrower;

(2) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders;

(3) COMMERZBANK AG acting through its office at Xxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx, as Agent;

(4) COMMERZBANK AG acting through its office at Xxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx, as Arranger;

(5) COMMERZBANK AG acting through its office at Xxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx, as Security Trustee;

(6) COMMERZBANK AG acting through its office at Xxxxxxxxxxxxx 00, 00000 Xxxxxxxxx xx Xxxx, Xxxxxxx, as Swap Bank.

WHEREAS

(A) The Lenders have agreed to make made available to the Borrower a secured term loan facility in an amount of up to the lesser of (a)US$57,000,000 and (b) 70 per cent. of the aggregate Initial Market Value of m.vs "DIAMOND SEAS", "PEARL SEAS" and "SAPPHIRE SEAS" (the "Ships") for the purposes of refinancing the existing indebtedness of the Borrower secured on the Ships (as defined below).

(B) The Swap Bank has agreed to enter into interest rate swap transactions with the Borrower from time to time to hedge the Borrower's exposure under this Agreement to interest rate fluctuations.

(C) The Lenders and the Swap Bank have agreed to share pari passu in the security to be granted to the Security Trustee pursuant to this Agreement.

(D) By the Amending and Restating Agreement (as defined below) the Creditor Parties agreed to certain amendments to the Loan Agreement, the Master Agreement and the Finance Documents.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions.

1.1 Subject to Clause 1.5, in this Agreement:

"Account" means  each of the Earnings Accounts, the Retention Account and the Reserve Account and, in the plural, means all of them;

"Affected Lender" has the meaning given in Clause 5.7(c);

"Agency and Trust Deed" means the agency and trust deed executed or to be dated 12 August 2011 executed between the Borrower, the Lenders, the Agent, the Security Trustee, the Arranger and the Swap Bank in the Agreed Form;

"Agent" means Commerzbank AG and any of its successors including, without limitation, any successor appointed under clause 5 of the Agency and Trust Deed;

"Agreed Form" means, in relation to any document, that document in the form approved in writing by the Agent (acting on the instructions of the Lenders) or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document;

"Amending and Restating Agreement" means the amending and restating agreement dated  8 February 2013 and made between (i) the Borrower, (ii) the Owners, (iii) the Lenders, (iv)  the Agent, (v) the Arranger, (vi) the Security Trustees and (vii) the Swap Bank;

"Applicable Accounts" means, as at the date of calculation or, as the case may be, in respect of an accounting period, the annual audited consolidated accounts and financial statements of the Group or the quarterly unaudited accounts and financial statements of the Group, in each case, which the Borrower is obliged to deliver to the Agent pursuant to Clause 11.6;

"Approved Broker" means each of X. Xxxxxxxx & Company Limited of London, England, Xxxxx Xxxxxxxx Xxxxxx X.X. of Paris, France, X.X. Xxxxxx Shipbrokers A.S. of Oslo, Norway, Arrow Sale & Purchase (UK) Ltd. of London, England, Xxxxxxx Xxxxxx & Xxxxx of London, England, Fearnley AS of Oslo, Norway and, Xxxxxxxxx'x Limited of London, England, Breamar Seascope (London), Maersk Brokers K.S.;

"Approved Charter" means, in relation to : "PEARL SEAS", a time charterparty dated 16 November 2011 and made between Xxxxx and the Approved Charterer (as amended and supplemented from time to time) pursuant to which  "PEARL SEAS" is time chartered by Xxxxx to the Approved Charterer for a time period of at least 22 months at a gross daily charter hire rate of at lease $12,125 and on such other terms approved by the Agent prior to this Agreement;

(a) "DIAMOND SEAS", a time charter party dated 12 March 2007 (as amended  and supplemented form time to time) and made between Reading and the relevant Approved Charterer for a time period of at least 2 years at a gross daily charter hire rate of at least $16,250 and on such other terms approved by the Agent prior to this Agreement;

"PEARL SEAS", a recap dated 23 June 2011 and made between Xxxxx and the relevant Approved Charterer (and to be documented in a time charter to be entered into between Xxxxx and the relevant Approved Charterer) (as amended and supplemented from time to time) pursuant to which (b) "PEARL SEAS" is time chartered by Xxxxx to the relevant Approved Charterer for a time period of at least 4 months at a gross daily charter hire rate of at least $13,000 and on such other terms approved by the Agent prior to this Agreement; and

(c) "SAPPHIRE SEAS," a time charter party dated 4 November 2009 (as amended and supplemented from time to time) and made between Protea and the relevant Approved Charter for a time period of at least 2 years at a gross daily charter hire rate of at least $13,700 and on such other terms approved by the Agent prior to this Agreement,

and, in the plural, means all of them;

"Approved Charter Assignment" means-, in relation to an the Approved Charter, a specific deed of assignment of the rights of the Owner of the relevant Ship in respect of that Approved Charter, in the Agreed Form;

"Approved Charterer" means, in relation to : "PEARL SEAS", Xxxxxxx International SA, a company incorporated in Geneva;

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(a) "DIAMOND SEAS", Xxxxx X.X., a company incorporated in Geneva, Switzerland;

(b) "PEARL SEAS", Global Maritime Investments, Limited, a company incorporated in the Cayman Islands, and

(c) "SAPPHIRE SEAS", STX Pan Ocean (UK) Co., Ltd., a company incorporated in London, England;

and, in the plural, means all of them;

"Approved Flag" means the flag of any country which is a member of the European Union, the Xxxxxxxx Islands flag, the Liberian flag or such other flag as the Agent may, in its sole and absolute discretion, approve as the flag on which a Ship shall be registered;

"Approved Flag State" means any country which is a member of the European Union, the Xxxxxxxx Islands, Liberia or any other country in which the Agent, may in its sole and absolute discretion, approve that a Ship be registered;

"Approved Manager" means, in relation to each Ship, Aliseas Marine S.A. a corporation organised and existing under the laws of the Republic of Liberia, having its registered office at 00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx and maintaining a ship management office at 00 Xxxxxxxxx Xxxxxx, 000 00 Xxxxx, Xxxxxx or any other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the technical and/or commercial manager of a Ship;

"Arranger" means Commerzbank AG acting through its office at Xxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx,

"Availability Period" means the period commencing on the date of this Agreement and ending on:

(a) 30 October 2011 or such later date as the Agent may, with the authorization of all the Lenders, agree with the Borrower; or

(b) if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

"Balloon Instalment" has the meaning given to that term in Clause 8.1;

"Xxxxxxxxxxx Family" means, together, each of the following:

(a) Xx. Xxxxxxx Xxxxxxxxxxx;

(b) all the lineal descendants in direct line of Xx. Xxxxxxx Xxxxxxxxxxx;

(c) a husband or wife, or former husband or wife, or widower or widow of any of the above persons;

(d) the estates, trusts or legal representatives of any of the above persons (whether controlled by any of them or being the beneficiaries of any of them); and

(e) each company (other than a member of the Borrower's Group) legally or beneficially owned or (as the case may be) controlled by one or more of the persons or entities which would fall within paragraphs (a) to (e) of this definition,

and each one of the above shall be referred to as "a member of the Xxxxxxxxxxx Family";

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"Borrower" means Paragon Shipping Inc., a corporation incorporated in the Xxxxxxxx Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Xxxxxxxx Xxxxxxx XX 00000;

"Business Day" means a day on which banks are open in London, Athens, Hamburg and any other city in which a Lender is incorporated or maintains its lending office and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

"Charterparty Assignment" means, in relation to each Ship, an assignment of the rights of the Owner of that Ship under any charterparty or other contract of employment referred to in Clause 14.17 executed or to be executed by the relevant Owner in favour of the Security Trustee, in each case, in the Agreed Form and, in the plural, means all of them;

"Commitment" means, in relation to a Lender, the amount set opposite its name in the Schedule 1 or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and "Total Commitments" means the aggregate of the Commitments of all the Lenders);

"Compliance Certificate" means a certificate in the form set out in Schedule 6 (or in any other form which the Agent approves or reasonably requires) to be provided at the times and in the manner set out in Clause 12.7;

"Compliance Date" means 31 March, 30 June, 30 September and 31 December in each calendar year (or such other dates as of which the Borrower prepares the consolidated financial statements which it is required to deliver pursuant to Clause 11.6);

"Contractual Currency" has the meaning given in Clause 21.5;

"Confirmation" and "Early Termination Date" in relation to any continuing Designated Transaction, have the meanings given in the Master Agreement;

"Contribution" means, in relation to a Lender, the part of the Loan which is owing to that Lender;

"Creditor Party" means the Agent, the Arranger, the Security Trustee, the Swap Bank or any Lender, whether as at the date of this Agreement or at any later time;

"Debt" means the aggregate (without double counting) of secured or unsecured bank loans, finance lease obligations, bonds and any other financial obligations included as a liability on the balance sheet in terms of IFRS, but excluding the xxxx to market of swaps and other derivative instruments and excluding contingent liabilities as shown in the Applicable Accounts;

"Deed of Covenant" means a deed of covenant collateral to a mortgage on a Ship to be executed in favour of the Security Trustee by the Owner of the relevant Ship in the Agreed Form and, in the plural, means all of them;

"Deferred Amount" has the meaning given in Clause 8.15;

"Designated Transaction" means a Transaction which fulfils the following requirements:

(a) it is entered into by the Borrower pursuant to the Master Agreement with the Swap Bank which, at the time the Transaction is entered into, is also a Lender;

(b) its purpose is the hedging of the Borrower's exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the final Repayment Date; and

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(c) it is designated by the Borrower, by delivery by the Borrower to the Agent of a notice of designation in the form set out in Schedule 8, as a Designated Transaction for the purposes of the Finance Documents;

"Dividend Payment Date" means in respect of each quarterly period during each Financial Year, a date (being a Business Pay) after the end of the relevant preceding financial quarter when the Borrower pays dividends to its shareholders;

"Dollars" and "$" means the lawful currency for the time being of the United States of America;

"Drawdown Date" means the date requested by the Borrower for the Loan to be advanced, or (as the context requires) the date on which the Loan is was actually advanced; to the Borrower;

"Drawdown Notice" means a notice in the form set out in Schedule 3 (or in any other form which the Agent approves or reasonably requires);

"Earnings" means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the relevant Owner or the Security Trustee in the event of requisition of that Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

(b) all moneys which are at any time payable under Insurances; and

(c) if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

"Earnings Account" means, in relation to a Ship, an account in the name of the Owner of that Ship with the Agent designated "[name of Ship] - Earnings Account", or any other account (with that or another office of the Agent which is designated by the Agent as the Earnings Account for that Ship for the purposes of this Agreement and, in the plural, means all of them;

"Earnings Account Pledge" means, in relation to an Earnings Account, an agreement creating security in favour of the Security Trustee over that account in the Agreed Form and, in the plural, means all of them;

"EBITDA" means, as at the date of calculation or, as the case may be, for any accounting period, the consolidated net income of the Group for that accounting period:

(a) plus, to the extent deducted in computing consolidated net income of the Group for that accounting period, the sum, without duplication, of:

(i) all federal, state, local and foreign taxes and tax distributions;

(ii) Net Interest Expenses; and

(iii) depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including, without limitation, non-cash

5

transaction expenses and the amortisation of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;

(b) minus, to the extent added in computing consolidated net income of the Group for that accounting period, any non-cash income or non-cash gains and any extraordinary gains not incurred in the ordinary course of business;

all determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the Applicable Accounts;

"Environmental Claim" means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and "claim" means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

"Environmental Incident" means, in relation to a Ship:

(a) any release of Environmentally Sensitive Material from that Ship; or

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship or the Owner thereof and/or any operator or manager is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Owner thereof and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

"Environmental Law" means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

"Environmentally Sensitive Material" means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

"Event of Default" means any of the events or circumstances described in Clause 19.1;

"Existing Facility Agreements" has the meaning given in Clause 11.21;

"Existing Indebtedness" means, at any date the outstanding Financial Indebtedness of the Borrower under a loan agreement dated 29 November 2007 and made between (i) the Borrower, (ii) the banks and financial institutions listed in schedule 1 thereto as lenders and

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(iii) Commerzbank AG as swap bank, agent, arranger and security trustee in respect of a revolving credit facility of (originally) $250,000,000;

"Final Repayment Date" means the date falling on the sixth anniversary of the drawdown date18 August 2017;

"Finance Documents" means:

(a) this Agreement;

(b) the Amending and Restating Agreement;

(c) (b)the Agency and Trust Deed;

(d) (c)the Guarantees;

(e) (d)the Master Agreement Assignment;

(f) (e)the Mortgages;

(g) (f)the General Assignments;

(h) (g)the Deeds of Covenant;

(i) (h)the Shares Security Deeds;

(j) (i)the Earnings Account Pledges;

(k) (j)the Retention Account Pledge;

(l) (k)the Reserve Account Pledge;

(m) (l)the Approved Charter Assignments;

(n) (m)any Charterparty Assignment;

(o) (n)the Manager's Undertakings; and

(p) (o)any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower, any Owner or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amounts payable to the Lenders and/or the Swap Bank under this Agreement or any of the documents referred to in this definition;

"Financial Indebtedness" means, in relation to a person (the "debtor"), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

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(e) under any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

"Financial Year" means, in relation to the Group, each period of 1 year commencing on 1 January in respect of which its consolidated accounts are or ought to be prepared;

"Fleet Vessels" means, together, all of the vessels (including, but not limited to, the Ships) from time to time owned by members of the Group;

"GAAP" means generally accepted accounting principles in the United States of America, including IFRS;

"General Assignment" means, in relation to a Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation of that Ship dated 18 August 2011 in the Agreed Form and, in the plural, means all of them;

"Group" means the Borrower and its subsidiaries (whether direct or indirect and including, but not limited to, the Owners) from time to time during the Security Period and "member of the Group" shall be construed accordingly;

"Guarantee" means, in relation to each Owner, a guarantee to bedated 18 August 2011 given by that Owner in favour of the Security Trustee guaranteeing the obligations of the Borrower under (inter alia) this Agreement, the Master Agreement and the other Finance Documents in the Agreed Form and, in the plural, means all of them;

"IACS" means the International Association of Classification Societies;

"IFRS" means international accounting standards within the meaning of the IAS Regulations 1606/2002 to the extent applicable to the relevant financial statements;

"Initial Market Value" means, in relation to each Ship, the market value thereof calculated in accordance with paragraph 5 of Schedule 4, Part B;

"Insurances" means, in relation to a Ship:

(a) all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, her Earnings or otherwise in relation to the Ship; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

"Interest Period" means a period determined in accordance with Clause 6;

"ISM Code" means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation as the same may be amended or supplemented from time to time (and the terms "safety management system", "Safety Management Certificate" and "Document of Compliance" have the same meanings as are given to them in the ISM Code);

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"IPS Code" means the International Ship and Port Facility Security Code as adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time;

"ISSC" means a valid and current International Ship Security Certificate issued under the ISPS Code;

"Lender" means, subject to Clause 26.6, a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrower under Clause 26.14) or its transferee, successor or assignor;

"LIBOR" means, for Interest Period:

(a) the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period (and, for the purposes of this Agreement), "REUTERS BBA Page LIBOR 01" means the display designated as "REUTERS BBA Page LIBOR 01" on the Reuters Money News Services or such other page as may replace REUTERS BBA Page LIBOR 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers' Association for the purpose of displaying British Bankers' Association Interest Settlement Rates for Dollars); or

(b) if no rate is quoted on REUTERS BBA Page LLBOR 01, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.) of the rates per annum notified to the Agent by each Reference Bank to be the rate per annum at which deposits in Dollars are offered to that Reference Bank by leading banks in the London Interbank Market at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it and, if any such rate is below zero, LIBOR shall be deemed to be zero;

"Liquid Assets" means, at any relevant time hereunder, the aggregate of:

(a) cash in hand or held with banks or other financial institutions of the Borrower and/or any other member of the Group and restricted cash in Dollars or another currency freely convertible into Dollars;

(b) the market value of transferable certificates of deposit in a freely convertible currency acceptable to the Lenders (being for the purposes of this Agreement, Dollars, Japanese Yen, Swiss Francs, Euros or Sterling) issued by a prime international bank; and

(c) the market value of equity securities (if and to the extent that the Agent is satisfied that such equity securities are readily saleable for cash and that there is a ready market therefor) and investment grade debt securities which are publicly traded on a major stock exchange or investment market (valued at market value as at any applicable date of determination);

in each case owned by the Borrower or any other member of the Group where:

(i) the market value of any asset specified in paragraph (b) and (c) shall be the bid price quoted for it on the relevant calculation date by the Agent; and

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(ii) the amount or value of any asset denominated in a currency other than Dollars shall be converted into Dollars using the Agent's spot rate for the purchase of Dollars with that currency on the relevant calculation date;

"Loan" means the principal amount for the time being outstanding under this Agreement;

"Major Casualty" means, in relation to each Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or, the equivalent in any other currency;

(a) before the Loan has been advanced, Lenders whose Commitments total at least 66 2/3 per cent. of the Total Commitments; and

:

"Majority Lenders" means(b) after the Loan has been made, Lenders whose Contributions total 66 2/3 per cent. of the Loan;

"Manager's Undertaking" means, in relation to a Ship, a letter of undertaking executed or to be dated 18 August 2011 executed by the Approved Manager in favour of the Security Trustee in the Agreed Form agreeing certain matters in relation to the management of that Ship and subordinating the rights of the Approved Manager against the Ship and the Owner thereof to the rights of the Creditor Parties under the Finance Documents and the Master Agreement and, in the plural, means all of them;

"Management Agreement" means, in relation to a Ship, an agreement made or to be made between the Owner of that Ship and the Approved Manager in respect of the commercial and technical management of the Ship and, in the plural, means all of them;

"Mandatory Cost" means the percentage rate per annum calculated by the Agent in accordance with Schedule 7;

"Margin" means2.35 per cent. per annum;:

(a) at any time during the Deferred Amount remains outstanding, 3.00 per cent. per annum; and

(b) at all other times, 2.35 per cent per annum;

"Market Value" means, in relation to each Ship and each Fleet Vessel, the market value thereof calculated in accordance with Clause 15.3;

"Market Value Adjusted Net Worth" means Paid-Up Capital plus General Reserves plus Retained Earnings adjusted to reflect the difference between the book values of the Fleet Vessels and the Market Values of all Fleet Vessels at any relevant time;

"Master Agreement" means the master agreement (on the 1992 or, as the case may be, 2002 ISDA (Multicurrency - Crossborder) form) in the Agreed Form made between the Borrower and the Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement;

"Master Agreement Assignment" means, the assignment of the Master Agreement in the Agreed Form;

"Maximum Net Debt" means, in respect of any relevant period, the Debt as reduced by the amount of the cash and cash equivalents as shown in the latest Applicable Accounts;

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"Mortgage" means, in relation to a Ship, the first preferred or, as the case may be, priority ship mortgage on the Ship dated 18 August 2011 under the relevant Approved Flag State executed by the Owner of that Ship in favour of the Security Trustee, each in the Agreed Form and, in the plural, means all of them;

"Mortgage Addendum" means, in respect of each Mortgage, an addendum thereto executed or to be executed by the relevant Owner in favour of the Security Trustee each in the Agreed Form and, in the plural, means all of them;

"Negotiation Period" has the meaning given in Clause 5.10;

"Net Interest Expenses" means, in respect of any relevant period, the aggregate of all interest, commitment and other fees, commissions, discounts and other costs, charges or expenses accruing due from all the members the Group during that accounting period less interest income received, determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the Applicable Accounts;

"Notifying Lender" has the meaning given in Clause 23.1 or Clause 24.1 as the context requires;

"Owner" means, in relation to:

(a) "DIAMOND SEAS", Reading Navigation Co., a corporation incorporated in the Republic of Liberia having its registered office at 00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx of Liberia;,

(b) "PEARL SEAS", Xxxxx Marine Co., a corporation incorporated in the Republic of the Xxxxxxxx Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Xxxxxxxx Xxxxxxx XX 00000; and

(c) "SAPPHIRE SEAS", Protea International Inc., a corporation incorporated in the Republic of Liberia having its registered office at 00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx of Liberia

each being a corporation which is a direct or indirect wholly-owned subsidiary of the Borrower and, in the plural, means all of them;

"Paid-Up Capital", "General Reserves" and "Retained Earnings" have the meanings ascribed to them in the Applicable Accounts;

"Payment Currency" has the meaning given in Clause 21.5;

"Permitted Security Interests" means:

(a) Security Interests created by the Finance Documents;

(b) liens for unpaid crew's wages in accordance with usual maritime practice;

(c) liens for salvage;

(d) liens arising by operation of law for not more than 2 months' prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;

(e) liens for master's disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested

11

by the relevant Owner in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(f);

(f) any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the relevant Owner is prosecuting or defending such action in good faith by appropriate steps; and

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

"Pertinent Jurisdiction", in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company's central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above;

"Potential Event of Default" means an event or circumstance which, with the giving of any notice, the lapse of time, would constitute an Event of Default;

"Quotation Date" means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

"Reference Banks" means, subject to Clause 26.16, the branch of Commerzbank AG at Xxxxxxxxx 00, 00000, Xxxxxxx, Xxxxxxx and the London branch of any other bank or financial institution selected by the Agent;

"Relevant Percentage" has the meaning given to that term in Clause 15.1;

"Relevant Person" has the meaning given to that term in Clause 19.9;

"Repayment Instalment" has the meaning given to that term in Clause 8.1;

"Requisition Compensation" includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of "Total Loss";

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"Reserve Account" means an account in the name of the Borrower with the Agent in Hamburg designated "Paragon Shipping Inc. - Reserve Account", or any other account (with that or another office of the Agent) which is designated by the Agent as the Reserve Account for the purposes of this Agreement;

"Reserve Account Pledge" means a pledge agreement creating security in favour of the Security Trustee in respect of the Reserve Account in the Agreed Form;

"Retention Account " means an account in the name of the Borrower with the Agent in Hamburg designated "Paragon Shipping Inc. - Retention Account", or any other account (with that or another office of the Agent) which is designated by the Agent as the Retention Account for the purposes of this Agreement;

"Retention Account Pledge" means a pledge agreement creating security in favour of the Security Trustee in respect of the Retention Account in the Agreed Form;

"Secured Liabilities" means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or the Master Agreement or any judgment relating to the Finance Documents or the Master Agreement; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

"Security Interest" means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b) the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

"Security Party" means each Owner, the Approved Manager and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of "Finance Documents";

"Security Period" means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the Lenders that:

(a) all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents or the Master Agreement have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document or the Master Agreement;

(c) neither the Borrower nor any Security Party has any future or contingent liability under Clause 20, 21 or 22 below or any other provision of this Agreement, another Finance Document or the Master Agreement; and

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(d) the Agent, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document or the Master Agreement would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or the Master Agreement or any asset covered (or previously covered) by a Security Interest created by a Finance Document or the Master Agreement;

"Security Trustee" means Commerzbank AG and any of its successors including, without limitation, any successor appointed under clause 5 of the Agency and Trust Deed;

"Shares Security Deed" means, in relation to an Owner, a deed creating security over the share capital of that Owner dated 18 August 2011 in the Agreed Form and, in the plural, means all of them;

"Ships" means, together, the ships referred to in Schedule 2 and, in the singular, means any of them;

"Six Months' Debt Service" means, at any date of determination, the amount of principal and interest in respect of the Financial Indebtedness of the Group payable during the consecutive 6-month period immediately following the date of determination and, for the purposes of this definition, interest for such 6-month period shall be applicable interest rate for such Financial Indebtedness;

"SMC" means a safety management certificate issued in respect of a Ship in accordance with Rule 13 of the ISM Code;

"Swap Bank" means Commerzbank AG acting through its office at Xxxxxxxxxxxxx 00, 00000, Xxxxxxxxx xx Xxxx, Xxxxxxx;

"Swap Exposure" means, as at any relevant date, the amount certified by the Swap Bank to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrower to the Swap Bank under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrower and the Swap Bank;

"Total Assets" means, as at the relevant date, the aggregate value of all current assets, fixed assets, and other assets and restricted cash of the Group (valued in accordance with GAAP);

"Total Liabilities" means, as at the date of calculation, the aggregate Financial Indebtedness of the Group (but excluding the Borrower's exposure to any derivative transactions of up to US$10,000,000);

"Total Loss" means, in relation to each Ship:

(a) actual, constructive, compromised, agreed or arranged total loss of that Ship;

(b) any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority;

(c) any condemnation of the Ship by any tribunal;

(d) any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless she is within 90 days redelivered to the full control the relevant Owner;

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"Total Loss Date" means:

(a) in the case of an actual loss of a Ship, the date on which it occurred or, if that is unknown, the date falling 10 days after when that Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of a Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the relevant Owner, with the Ship's insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

"Transfer Certificate" has the meaning given in Clause 26.2;

"Transaction" has the meaning given in the Master Agreement; and

"Trust Property" has the meaning given in clause 3.1 of the Agency and Trust Deed.

1.2 Construction of certain terms.

In this Agreement:

"approved" means, for the purposes of Clause 13, approved in writing by the Agent;

"asset" includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

"company" includes any partnership, joint venture and unincorporated association;

"consent" includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

"contingent liability" means a liability which is not certain to arise and/or the amount of which remains unascertained;

"document" includes a deed; also a letter, fax or telex;

"excess risks" means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of her insured value being less than the value at which that Ship is assessed for the purpose of such claims;

"expense" means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

"law" includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

"legal or administrative action" means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

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"liability" includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

"months" shall be construed in accordance with Clause 1.3;

"obligatory insurances" means, in relation to a Ship, all insurances effected, or which the Borrower and/or the Owner owning the Ship is obliged to effect, under Clause 13 below or any other provision of this Agreement or another Finance Document;

"parent company" has the meaning given in Clause 1.4;

"person" includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

"policy", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

"protection and indemnity risks" means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in this clause 6 of the International Time Clauses (1/11/02 or 1/11/03) or clause 8 of the Institute Time Clauses (Hulls) (1/10/1983) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

"regulation" includes any regulation, rule, official directive, request or guideline (either having the force of law or compliance with which is reasonable in the ordinary course of business of the party concerned) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

"subsidiary" has the meaning given in Clause 1.4;

"successor" includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person's rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

"tax" includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

"war risks" includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls)(1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).

1.3 Meaning of "month".

A period of one or more "months" ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started ("the numerically corresponding day"), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

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(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and "month" and "monthly" shall be construed accordingly.

1.4 Meaning of "subsidiary".

A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attached to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of 5; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;,

and any company of which S is a subsidiary is a parent company of S.

1.5 General Interpretation.

(a) In this Agreement:

(i) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(ii) references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and

(iii) words denoting the singular number shall include the plural and vice versa.

(b) Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears.

(c) References in Clause 1.1 to a document being in the form of a particular Appendix or Schedule include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires.

(d) The clause headings shall not affect the interpretation of this Agreement.

2 FACILITY

2.1 Amount and purpose of facility.  Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower a secured term loan facility in an amount- not exceeding the lesser of (i) $57,000,000 and (ii) 70 per cent. of the aggregate initial Market Value of the-Ships for the purpose of refinancing the Existing Indebtedness secured on the Ships.

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Subject to the provision of this Agreement, the Lenders have made available to the Borrower a secured term loan facility of US$57,000,000 for the purpose of refinancing the Existing Indebtedness secured on the Ships.

2.2 Lenders' participations in Loan.  Subject to the other provisions of this Agreement, each Lender shall participate in the Loan in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments.

Subject to the other provisions of this Agreement, each Lender participates in the Loan in the proportion set out in Schedule 1 of this Agreement.

2.3 Purpose of the Loan.  The Borrower undertakes with each Creditor Party to use the Loan only for the purpose stated in the preamble to this Agreement and Clause 2.1.

3 POSITION OF THE LENDERS, THE SWAP BANK AND THE MAJORITY LENDERS

3.1 Interests of Lenders and Swap Bank several

3.1Interests of Lenders and Swap Bank several.  The rights of the Lenders and the Swap Bank under this Agreement and the Master Agreement are several; accordingly (a) each Lender shall be entitled to xxx for any amount which has become due and payable by the Borrower to it under this Agreement; and (b) the Swap Bank shall be entitled to xxx for any amount which has become due and payable by the Borrower to it under the Master Agreement without joining the Agent, the Security Trustee or any other Lender or the Swap Bank as additional parties in the proceedings.

3.2 Proceedings by individual Lender or Swap Bank.

However, without the prior consent of the Majority Lenders, neither a Lender nor a Swap Bank may bring proceedings in respect of:

(a) any other liability or obligation of the Borrower or a Security Party under or connected with a Finance Document or the Master Agreement; or

(b) any misrepresentation or breach of warranty by the Borrower or a Security Party in or connected with a Finance Document or the Master Agreement.

3.3 Obligations several

3.3Obligations several. The obligations of the Lenders under this Agreement and of the Swap Bank under the Master Agreement are several; and a failure of a Lender to perform its obligations under this Agreement or of the Swap Bank to perform its obligations under the Master Agreement shall not result in:

(a) the obligations of the other Lenders being increased; nor

(b) the Borrower, any Security Party or any other Creditor Party being discharged (in whole or in part) from its obligations under any Finance Document or under the Master Agreement;,

and in no circumstances shall a Lender have any responsibility for a failure of another Lender or the Swap Bank to perform its obligations under this Agreement and the Master Agreement.

3.4 Parties bound by certain actions of Majority Lenders.

Every Lender, the Swap Bank, the Borrower and each Security Party shall be bound by:

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(a) any determination made, or action taken, by the Majority Lenders under any provision of a Finance Document;

(b) any instruction or authorisation given by the Majority Lenders to the Agent or the Security Trustee under or in connection with any Finance Document;

(c) any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation.

3.5 Reliance on action of Agent.

However, the Borrower and each Security Party:

(a) shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take; and

(b) shall not be entitled to require any evidence that such an instruction or authorisation has been given.

3.6 Construction

3.6Construction.  In Clauses 3.4 and 3.5 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.

4 DRAWDOWN

4.1 Request for Loan.  Subject to the following conditions, the Borrower may request the Loan to be advanced by ensuring that the Agent receives a completed Drawdown Notice not later than 11:00 a.m. (Hamburg time) 2 Business Days prior to the intended Drawdown Date.

4.2 Availability.  The conditions referred to in Clause 4.1 are that:

4.1 Request for Loan

The Creditor Parties and the Borrower acknowledge that on 18 August 2011, the Lenders advanced to the Borrower the total amount of $57,000,000 which was used to refinance Existing Indebtedness secured on the Ships.

(a) a Drawdown Date has to be a Business Day during the Availability Period;

(b) the amount of the Loan shall not exceed the lesser of (i) $57,000,000 and (ii) 70 per cent. of the aggregate initial Market Value of the Ships;

(c) the aggregate principal amount of the Loan shall not exceed the Total Commitments.

4.3 Notification to Lenders of receipt of Drawdown Notice.  The Agent shall promptly notify the Lenders that it has received the Drawdown Notice and shall inform each Lender of:

(a) the amount of the Loan and the Drawdown Date;

(b) the amount of that Lender's participation in the Loan; and

(c) the duration of the first Interest Period.

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4.4 Drawdown Notice Irrevocable.  The Drawdown Notice must be signed by a director of the Borrower; and once served, the Drawdown notice cannot be revoked without the prior written consent of the Agent, acting on the authority of the Majority Lenders.

4.5 Lenders to make available Contributions.  Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender on the Drawdown Date under Clause 2.2.

4.6 Disbursement of Loan.  Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrower shall be made;

(a) to the account which the Borrower specifies in the Drawdown Notice; and

(b) in the like funds as the Agent received the payments from the Lenders.

4.7 Disbursement of Loan.  The Borrower acknowledges and agrees that the Loan shall be applied in fully repaying the Existing Indebtedness and hereby irrevocably and unconditionally authorise the Agent to make such application.  Upon the application of the Loan in the manner aforesaid, the Borrower shall thereupon become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender's Contribution.

5 INTEREST

5.1 Payment of normal interest.

Subject to the provisions of this Agreement, interest on the Loan and each part thereof in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

5.2 Normal rate of interest.

Subject to the provisions of this Agreement, the rate of interest on the Loan and each part thereof in respect of an Interest Period shall be the aggregate of (i) the Margin, (ii) the Mandatory Cost (if any) and (iii) LIBOR for that Interest Period.

5.3 Payment of accrued interest.

In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

5.4 Notification of Interest Periods and rates of normal interest.

The Agent shall notify the Borrower and each Lender of:

(a) each rate of interest; and

(b) the duration of each Interest Period,

as soon as reasonably practicable after each is determined.

5.5 Obligation of Reference Banks to quote.

A Reference Bank which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement.

5.6 Absence of quotations by Reference Banks.

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If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks; but if 2 or more of the Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5.

5.7 Market disruption.

The following provisions of this Clause 5 apply if:

(a) no rate is quoted in REUTERS BBA Page LIBOR 01 and the Reference Banks (or, if there is only one Reference Bank at the relevant time, that Reference Bank) do not or, as the case may be, does not, before 1.00 p.m. (Hamburg time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or

(b) at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent. of the Loan (or, if the Loan has not been made, Commitments amounting to more than 50 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or

(c) at least 1 Business Day before the start of an Interest Period, the Agent is notified by a Lender (the "Affected Lender") that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

5.8 Notification of market disruption.

The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.7 which have caused its notice to be given.

5.9 Suspension of drawdown.  If the Agent's notice under Clause 5.8 is served before the Loan is made:

(a) in a case falling within Clauses 5.7(a) or (b), the Lenders' obligations to make the Loan;

(b) in a case falling within Clause 5.7(c), the Affected Lender's obligation to participate in the Loan;

shall be suspended while the circumstances referred to in the Agent's notice continue.

5.9 Negotiation of alternative rate of interest

5.10Negotiation of alternative rate of interest.  If the Agent's notice under Clause 5.8 is served after the Loan is made, the Borrower, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.8 (the "Negotiation Period"), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution plus the Mandatory Cost (if any) during the Interest Period concerned.

5.10 5.11Application of agreed alternative rate of interest.

Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

5.11 Alternative rate of interest in absence of agreement

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5.12Alternative rate of interest in absence of agreement.  If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution to the Loan plus the Margin and the Mandatory Cost (if any); and the procedure provided for by this Clause 5.12 5.11 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

5.12 Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12

5.13If the Borrower does not agree with an interest rate set by the Agent under Clause 5.11, the Borrower may give the Agent not less than 15 Business Days' notice of its intention to prepay the Loan at the end of the interest period set by the Agent.

5.13 Prepayment

(a) 5.14Prepayment; termination of Commitments.  A notice under Clause 5.13 5.12 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower's notice of intended prepayment; and :on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; andon the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

5.14 5.15Application of prepayment.

The provisions of Clause 8 shall apply in relation to the prepayment.

6 INTEREST PERIODS

6.1 Commencement of Interest Periods. The first Interest Period shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

6.1 6.2Duration of normal Interest Periods.

Each Interest Period shall be:

(a) 3, 6, 9 or 12 months as notified by the Borrower to the Agent not later than 11.00 a.m. (Hamburg time) 3 Business Days before the commencement of the Interest Period; or;

(b) 3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a) above; or

(c) such other period as the Agent may, with the Majority Lenders' authority, agree with the Borrower.

6.2 6.3Duration of Interest Periods for Repayment instalments.

In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

6.3 6.4Non-availability of matching deposits for Interest Period selected.

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If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than 6 months, any Lender notifies the Agent by 11.00 a.m. (Hamburg time) on the second Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

7 DEFAULT INTEREST

7.1 Payment of default interest on overdue amounts.

The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

7.2 Default rate of interest.

Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent. above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at paragraphs (a) and (b) of Clause 7.3; or

(b) in the case of any other overdue amount, the rate set out at paragraph (b) of Clause 7.3.

7.3 Calculation of default rate of interest.

The rates referred to in Clause 7.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

(b) the aggregate of the Mandatory Cost (if any) and the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

(i) LIBOR; or

(ii) if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent (after consultation with the Reference Banks) by reference to the cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time reasonably determine.

7.4 Notification of interest periods and default rates.

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The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent's notification.

7.5 Payment of accrued default interest.

Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

7.6 Compounding of default interest.

Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

7.7 Application to Master Agreement.

For the avoidance of doubt, this Clause 7 does not apply to any amount payable under the Master Agreement in respect of any continuing Designated Transaction as to which section 2(e) (Default Interest; Other Amounts) of the Master Agreement shall apply.

8. REPAYMENT AND PREPAYMENT

8.1 Amount of repayment instalments.  The Borrower shall repay the Loan by 24

8.1Save as otherwise repaid or prepaid, the Borrower shall repay the Loan by 19 consecutive quarterly instalments (each a "Repayment Instalment" and together the "Repayment Instalments") as follows:

(a) in the case of the first to the fourth sixth (inclusive) Repayment Instalments, in the amount of $1,425,000,000 750,000 each;

(b) in the case of the fifth to the twelfth (inclusive) seventh Repayment InstalmentsInstalment, in the amount of $1,250,000 each;

(c) in the case of the thirteenth eighth to the twenty-fourth nineteenth (inclusive) Repayment Instalments, in the amount of $1,425,000 each; and

(d) a balloon instalment in the amount of $24,200,000 27,700,000 (as the case same may be adjusted pursuant to the proviso of this Clause 8.18.15, the "Balloon Instalment"),

In respect of the first to the fourth (inclusive) Repayment Instalments the Borrower shall be entitled to apply an amount equal to $150,000 from the funds (or any part thereof) standing to the credit of the Reserve Account towards the repayment of each such Repayment Instalment Provided that the Borrower has first contributed from its own resources an amount of $600,000 towards the prepayment of the same Repayment Instalment.

Provided that if:

(i) the Borrower shall use its best endeavours to increase the amount of the Repayment Instalments referred to in Clause 8.1(b) to $1,425,000 each (with the Balloon instalment being reduced by an amount in aggregate equal to the amount by which each Repayment Instalment actually repaid exceeds the amount of $1,250,000) if the Owners are able to increase the aggregate Earnings of the Ships

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(either through the extension of the Approved Charter in relation to "DIAMOND SEAS" for a period of at least 11 months or otherwise); and

8.2 Repayment Dates

8.2

(ii) the amount drawdown in respect of the Loan is less than $57,000,000, the Repayment instalments and the Balloon Instalment shall be reduced pro rata.

Repayment Dates.  The first Repayment Instalment shall be repaid on the date falling 3 months after the Drawdown Date19 February 2013, each subsequent Repayment Instalment shall be repaid at three-monthly intervals thereafter and the last Repayment Instalment, together with the Balloon Instalment, shall be repaid on the date falling on the sixth anniversary of the Drawdown Date18 August 2017.

8.3 Final Repayment Date.

On the Final Repayment Date, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all principal and other sums then accrued or owing under any Finance Document.

8.4 Voluntary prepayment.

Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan on the last day of an Interest Period.

8.5 Conditions for voluntary prepayment.

The conditions referred to in Clause 8.4 are that:

(a) any partial prepayment to be applied against the Loan shall be $1,425,000 1,000,000 or a higher multiple thereof;

(b) the Agent has received from the Borrower at least 15 days' prior written notice specifying the amount to be repaid and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period);

(c) the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrower or any Security Party has been complied with; and

(d) the Borrower has complied with Clause 8.158.12 on or prior to the date of prepayment.

8.6 Effect of notice of prepayment.

A prepayment notice may not be withdrawn or amended without the consent of the Agent, (not to be unreasonably withheld) given with the authority of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

8.7 Notification of notice of prepayment.

The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).

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8.8 Voluntary Commitment reductions.  Subject to the following conditions, the Total Commitments may be permanently reduced, cancelled or terminated by the Borrower:

8.9 Conditions for voluntary Commitment reduction.  The conditions referred to in Clause 8.8 are that:

(a) any partial reduction, cancellation or termination of the Total Commitments shall be for an amount of $1,425,000 or a higher integral multiple thereof;

(b) the Agent has received from the Borrower at least 15 Business Days prior written notice specifying the amount of the Total Commitments to be reduced, cancelled or terminated and the date on which such reduction, cancellation or termination is to apply;

(c) a notice served under paragraph (b) may not be given after expiry of the Availability Period and may not be withdrawn or amended without the consent of the Agent given with the authority of the Majority Lenders; and

(d) the Borrower has complied with Clause 8.15 on or prior to the date of the voluntary Commitment reduction.

8.10 Notification of notice of Commitment reduction.  The Agent shall notify the Lenders promptly upon receiving a notice under Clause 8.9(b), and shall notify each Lender of the amount by which its Commitment shall be reduced pursuant thereto.

8.8 Mandatory prepayment

8.11Mandatory prepayment.  The Borrower shall be obliged to prepay the Relevant Amount of the Loan:

(a) if a Ship is sold, on the date on which the sale is completed by delivery of the Ship to the buyer; or

(b) if a Ship becomes a Total Loss, on the earlier of the date falling 150 days after the relevant Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

In this Clause 8.118.8:

"Applicable Amount" " means the Loan multiplied by a fraction whose:

(i) numerator is the Market Value of the Ship being sold or which has become a Total Loss on the date on which such sale is completed or, as the case may be, the date on which the Total Loss occurred; and

(ii) denominator is the aggregate Market Value of the Ships subject to a Mortgage on the date on which the relevant Ship is sold or becomes a Total Loss; and

"Relevant Amount" means the greater of (i) the Applicable Amount and (ii) an amount which after the application of the prepayment to be made pursuant to this Clause 8.118.8, results in the security cover ratio under Clause 15.1 being the greater of (A) the Relevant Percentage and (B) the percentage which applied immediately prior to the applicable event described in paragraph (a) or (b) of this Clause 8.118.8.

8.9 8.12Amounts payable on prepayment

A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the amount prepaid and, if the

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prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.1(b) but without premium or penalty.

8.10 8.13Application of partial prepaymentor cancellation. Each partial prepayment made pursuant to:

Each partial prepayment made pursuant to:

(a) Clause 8.11 8.8 shall be applied, at the Borrower's option, either pro rata against the Repayment Instalments and the Balloon Instalment or against the Balloon Instalment only; and

(b) Clause 8.4 shall be applied, at the Borrower's option, either in the manner referred to in paragraph (a) or in prepayment of the Relevant Repayment Instalments (or any of them).; and

(c) Clause 8.15 shall be applied against the Balloon Instalment only.

In this Clause 8.13-8.10 "Relevant Repayment Instalments" means not more than four consecutive Repayment Instalments payable by the Borrower following the making of the voluntary prepayment by the Borrower pursuant to Clause 8.4.

8.11 No re-borrowing.

8.14No amount prepaid in respect of the Loan may be re-borrowed.

(a) prepays the Loan or any part of it (other than pursuant to Clause 8.11) on or prior to the date falling on the fifth anniversary of the Drawdown Date; or

(b)cancels the Total Commitments or any part of them pursuant to Clause 8.8 on or prior to the last day of the Availability Period,

8.12 Prepayment Fee.  If the Borrower :prepays the Loan or any part of it (other than pursuant to Clause 8.8) on or  prior to 18 August 2015, it shall pay to the Agent (for distribution to the Lenders pro rata to their Contributions) on any Fee Payment Date the applicable Prepayment/Cancellation Fee.

In this Clause 8.12:

"Fee Payment Date" means the date on which the Borrower makes a prepayment of the Loan (or any part of it) or voluntarily cancels the Total Commitments (or any part of them) in accordance with the terms of this Agreement; and

"Prepayment/Cancellation Fee" means, in relation to:

(a) the prepayment of the Loan, if the Fee Payment Date occurs:

(i) during the period commencing on the Drawdown Date and ending on the date falling 364 days thereafter, in an amount equal to 2 per cent. of the amount of the Loan prepaid (the "Prepayment Amount");

(i) (ii)during the period commencing on the first anniversary of the Drawdown Date and ending on the date falling 364 days thereafter, an amount equal to 1.3 per cent. of the amount of-Loan prepaid (the "Prepayment Amount;");

(ii) (iii)during the period commencing on the second anniversary of the Drawdown Date and ending on the date falling 364 days thereafter, an amount equal to 1 per cent. of the amount of the Prepayment Amount; and

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(iii) during the period commencing on the third anniversary of the Drawdown Date and ending on the date falling 364 days thereafter, an amount equal to 0.75 per cent. of the Prepayment Amount; and,

(b) any voluntary cancellation of the Total Commitments, an amount equal to 2 per cent. of the amount of the Total Commitments being voluntarily cancelled.

Provided that the Prepayment Fee shall not be payable in the case the Agent receives Security Interest over assets acceptable to it (both as regarding their characteristics, age and value) in substitution of the Security Interests it is being asked to release on the Prepayment/Cancellation Date.

8.13 Unwinding of Designated Transactions

8.16Unwinding of Designated Transactions.  On or prior to any repayment or prepayment of the Loan under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions to the extent necessary to ensure that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time thereafter pursuant to Clause 8.1.

8.14 Prepayment of Swap Benefit

8.17Prepayment of Swap Benefit.  If a Designated Transaction is terminated in circumstances where the Swap Bank would be obliged to pay an amount to the Borrower under the Master Agreement, the Borrower hereby agrees that such payment shall be paid to the Agent to be applied by the Agent in accordance with Clause 17 and authorises the Swap Bank to pay such amount to the Agent for such purpose; following such payment the Swap Bank is discharged from any liability or obligations under that Designated Transaction.

8.15 Prepayment of the Deferred Amount

At any time throughout the Security Period, the Borrower may, by giving a written notice to the Agent, make a partial prepayment in the amount of $3,500,000 (the "Deferred Amount"), in portions of $500,000 or higher integral multiple thereof, against the Loan with such prepayment being applied in accordance with Clause 8.10.

9 CONDITIONS PRECEDENT

9.1 Documents, fees and no default.

Each Lender's obligation to contribute to the Loan is subject to the following conditions precedent:

(a) that, on or before the date of this Agreement, the Agent receives the documents described in Part A of Schedule 4 in a form and substance satisfactory to the Agent;

(b) that, on the Drawdown Date but prior to the advance of the Loan, the Agent receives the documents described in